Aflac (NYSE: AFL) reported Q3 EPS of $1.51, $0.08 better than the analyst estimate of $1.43. Revenue for the quarter came in at $5.74 billion versus the consensus estimate of $5.72 billion.

OUTLOOK

Commenting on the company's third quarter results, Chairman and Chief Executive Officer Daniel P. Amos stated: "We are pleased with our overall financial results in the third quarter of 2014 and for the first nine months of the year. Aflac Japan, our largest earnings contributor, generated strong financial results for the quarter. During the quarter, we successfully launched our "New Cancer DAYS" product available for sale through all distribution channels in Japan. Additionally, as expected, we are continuing to make gradual but steady progress selling through postal outlets. While it's early in the fourth quarter, we anticipate our sales through Japan Post will benefit from the October 1 introduction of our exclusive new cancer product as well as the expansion of locations selling our cancer product from 3,000 postal outlets to 10,000. Although third sector sales this quarter were down as we anticipated, we continue to believe full year sales for third sector products will come in at the low end of our expectation of a 2% to 7% increase.

"From a financial perspective, Aflac U.S. also continued to perform well in the third quarter. While we expected that changes made to our sales organization could have resulted in short-term disruption, we were instead pleased to see an improved trajectory of U.S. sales, which were essentially flat in the quarter. However, we want to see sustained sales growth before we view this as a turnaround. To that end, we continue to work on initiatives designed to empower our sales channels to grow our new business. Given sales production in the first nine months of the year, we now expect sales for the full year will likely be down 2% to down 4%, which is an improved outlook since the release of our second quarter results.

"We remain committed to maintaining strong capital ratios on behalf of our policyholders and bondholders. Although we have not yet finalized our statutory financial statements, we estimate our third quarter 2014 risk-based capital, or RBC ratio, will exceed 775%. Additionally, we expect that Aflac Japan's estimated third quarter solvency margin ratio, or SMR, will be above 750%. We are currently exploring the possibility of increasing the frequency of capital transfers from Japan to the United States pending completion of our internal governance process. As a result, we have increased the provision for capital repatriation reflected in our estimated September 30 SMR. It is this increased provision that resulted in a lower estimated SMR at the end of the third quarter compared with our ratio at June 30, 2014.

"As part of our capital strategy, we entered into a reinsurance agreement on October 1, which was similar to the transaction we executed in September 2013. This transaction will release approximately ¥55 billion of Aflac Japan's regulatory reserves. Our capital strength gives us the confidence to increase our 2014 share repurchase objective from $1 billion to $1.2 billion of our common stock. In addition, it is our current plan to repurchase $1.3 billion of our common stock in 2015. I am also pleased with the action by the board of directors to increase the quarterly cash dividend by 5.4%, effective with the fourth quarter of 2014. This marks the 32nd consecutive year of increasing our cash dividend. Our objective is to grow the dividend at a rate generally in line with the increase in operating earnings before the impact of foreign currency translation.

"As we've previously stated, we anticipate increased spending in the fourth quarter related to our infrastructure in Japan and our sales force repositioning in the United States. Taking these factors into account, we continue to expect operating earnings per diluted share will increase 3% to 4% for 2014, excluding the impact of the yen. If we achieve that rate of growth and the yen averages 105 to 110 for the last three months of the year, we would expect reported operating earnings for the fourth quarter to be in the range of $1.28 to $1.37 per diluted share. Under that same scenario, we would expect full year operating earnings of $6.14 to $6.23 per diluted share.

"After assessing our business and opportunities for growth in 2015, we're establishing an objective of increasing operating earnings per diluted share 2% to 7% on a currency neutral basis. This range reflects the stability of our businesses in the United States and Japan, the continued opportunities we see for sales growth in both markets and our ability to deploy capital for the benefit of our shareholders."

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