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Aflac Incorporated (pronounced /ˈæflæk/) is the largest provider of supplemental insurance in the United States,[1] founded in 1955 and based in MidTown Columbus, Georgia. In the United States, Aflac underwrites a wide range of insurance policies, but is perhaps more known for its payroll deduction insurance coverage, which pays cash benefits when a policyholder has a covered accident or illness. The company states it insures "one of four Japanese households" and is "the largest life insurer in Japan in terms of individual insurance policies in force"[2]. Aflac is also well known for its supplemental medical policies.
Aflac currently is the number one Supplemental Health provider in the U.S., followed closely by Allstate Workplace Division.
Aflac has a field force of over 70,000 agents in the U.S.
In 2009, Aflac acquired Continental American Insurance Company to expand its coverage beyond voluntary benefits alone.



After the closing bell, AFLAC (AFL) reported Q4 operating earnings of $1.33 per share which was two cents below Wall Street’s expectation.

As I said before, I’m not terribly concerned with AFLAC’s earnings. Instead I was focused on earnings guidance for this year.

Earlier, the company had said they expect operating growth to come in at the low end of their 8% to 12% target for 2011. For 2010, AFL’s operating earnings were $5.53 per share. Eight percent growth works out to $5.97 per share on a stock that closed today at $58.53.

Basically, AFLAC isn’t telling us anything we didn’t already know, or reasonably expect. In my book, no bad news is very good news for AFLAC. The stock is going for less than ten times the low end of the company’s estimate.

This is the outlook section from today’s earnings report:

Commenting on the company’s fourth quarter and full-year results, Chairman and Chief Executive Officer Daniel P. Amos stated: “Aflac had a very solid year from a financial perspective, despite ongoing challenges in the economic landscape. Our results were consistent with our guidance for the fourth quarter and the full year. Growth of operating earnings per diluted share was in line with our goal of a 9% to 12% increase before the impact of foreign currency.

“Aflac Japan gets high marks for a great fourth quarter and year, following strong sales results in 2009. Our strategy of offering relevant products through an expanding distribution system contributed to sales results that exceeded our targets for two consecutive years. 2010 was the year of the bank channel, having secured buy-in from more than 90% of banks in Japan who’ve agreed to sell Aflac products. We have also customized our product portfolio to appeal to new market segments by enhancing the benefits of our existing product line. In addition, our Japanese operations continued to improve top-line growth throughout 2010, while the expansion of the profit margin also enhanced Aflac Japan’s earnings growth.

“We are also pleased with the operations and financial results of Aflac U.S. As we discussed throughout 2010, sales growth in the United States was primarily held back by the ongoing weak economic environment. We believe Aflac U.S. sales have been impacted by consumer confidence and small business sentiment that continues to hover at low levels. While we remain cautious in our short-term sales outlook for Aflac U.S., our longer-term view has not changed. We believe the need for the products we sell remains very strong and we are taking measures to better reach potential customers through our product and distribution strategy. This includes broadening our product portfolio to include group products in addition to our traditional individually issued products.

“Furthermore, our balance sheet remained strong throughout 2010, and we believe that our investment approach of effectively matching assets to policy liabilities is the most prudent approach for our policyholders and shareholders. More than anything, we have intensely focused on assessing our capital level. Aflac’s capital position from a U.S. regulatory standpoint steadily improved throughout 2010. Our goal was to end 2010 with a higher risk-based capital (RBC) ratio than our year-end 2009 RBC ratio of 479%. Although we have not yet finalized our statutory financial statements, we estimate our 2010 RBC ratio exceeded 580%. I believe our ability to maintain a strong RBC exemplifies our effective capital management strategy.

“Our decision as to whether to increase the dividend or repurchase our shares is a function of our capital position. As a result of strong capital levels and solid financial strength, I am pleased 2010 marked the 28th consecutive year Aflac has increased cash dividends. Our capital position also gave us the confidence to resume our share repurchase program, and we purchased two million shares in the fourth quarter. We anticipate repurchasing six to 12 million shares in 2011.

“As we look ahead to 2011 sales opportunities in the United States, with the unemployment rate showing little sign of improvement and the confidence of consumers and employers remaining relatively low, we expect sales to be flat to up 5% for Aflac U.S. In Japan, with two consecutive years of strong sales results, we expect sales to be in the range of down 2% to up 3%.

“As I commented in our third quarter release, we will likely be at the low end of the 8% to 12% range for operating earnings per share growth in 2011. Although interest rates have increased somewhat in the United States recently, they have not increased as much in Japan, and yen yields remain very low. If we assume 8% earnings per share growth, we would earn $5.97 per diluted share, excluding the impact of the yen. If the yen averages 80 to 85 to the dollar for the full year, we would expect reported earnings to be in the range of $6.09 to $6.34 per diluted share.”
 
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