AFL - AFLAC

[hyten1]

anyone looked at aflac?

 

current issue yen going down, since 70%+ of their biz is from japan

 

 

[BargainValueHunter]

One of the best dividend growers out there...

 

http://ycharts.com/companies/AFL/dividend

 

Not sure there are too many more stocks with better compounding of its dividend over the last 20 years or so.

[DooDiligence]

For anyone interested (Castanza)

 

www.thinkadvisor.com/2020/07/29/u-s-covid-19-deaths-are-approaching-aflacs-stress-test-levels/

[Castanza]

For anyone interested (Castanza)

 

www.thinkadvisor.com/2020/07/29/u-s-covid-19-deaths-are-approaching-aflacs-stress-test-levels/

 

Thanks for sharing. Certainly some things to mull over.

[samthefirefly]

Anyone looking at Aflac right now? Did some basic preliminary research, this is what I came up with:

 

What I like:

- ROE consistently above cost of capital

10-year CAGR ROE is 17%, cost of equity is between 7.8% and 10.7% and WACC is between 6.8% and 8.7%

That said, ROE has hung on the lower end (12%) for the past two years, so I would also need to understand the dynamics at play there

 

- High Credit Rating: AM Best confirmed "the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa-" to the life/health insurance units of Aflac. The outlook of the ratings remains stable"

 

- In terms of valuation, stock seems cheap:

P/S 1.49 (current), 1.51 five-year average

P/E 6.98 (current), 10.47 five-year average

P/B 0.96 (current), 1.34 five-year average

 

- Good, healthy fundamentals

Average net margin over the past five years has been around 15%

Debt/Equity ratio: 0.24

Interest coverage: 17.80

 

- Healthy, Growing Dividend

The company has grown its dividend for the last 38 consecutive years and is increasing its dividend by an average of 9.17%. Currently, 3% yield with a payout ratio below 25%

 

- Good company

Seems like a fantastic place to work (which I always enjoy seeing), being listed in "100 Best Companies to Work For", "America's Most Admired Companies", "World's Most Ethical Companies", "Top Companies for Diversity" for like the past 15 years

 

What I Don't Like:

- Stagnant premium growth rates: their 10-year CAGR in premium has been 1.2%. I'm all about prudent premium growth, but compared to average GDP growth over the past decade (i.e., 2.25%) and competitor 10-year premium growth (i.e. Manulife 2.2%, Metlife 4.8%, Allstate 2.4%), it does seem low. Don't know enough about the industry dynamics (will have to conduct research), but I need to understand why their premium growth is so low

 

It seems like the business has been stable/doing well, while the price is still down 19% over the past year. I Will have to do more research on the insurance industry, Aflac's slow premium growth rate, decreasing ROE, and their investment portfolio/risk management history. Interesting stuff.

[Okonomen]

What about the demographics in Japan doesnt that have anything to say? a lot of elderly... low birth rate? Could that explain some of the stagnation or low expactations for life insurance?