In Focus

Taking a Whack at AFLAC

Earlier this month I took my daughters to visit their Mame and Papa, my mom and dad, on the very beautiful St. Simons Island, off the coast of Georgia. It is a wonderful community with terrific restaurants, magnificent beaches, and lots of friendly faces. This wasn't my first time there; my parents go down south every year during the winter... Georgia Snow Birds, if you will. It is part of their retirement plan. Now don't get me wrong, this isn't exactly a "retirement community." It is family-oriented, golf-oriented, and full of retirees of all ages. There are also groups of youthful spring-breakers; enough twenty-one-year-old hard-bodies to make a pregnant woman bury herself in the sand. So you say you haven't heard of this place? Well, neither had I until my parents started hanging out there. Which brings me to something else I had never really heard about, but lemme tell ya, it's a hot topic on the island...

The secret celebrity is AFLAC (NYSE: AFL), American Family Life Assurance Company of Columbus. Columbus, Georgia, that is, where Chick Cheryl's husband is currently filming a Mel Gibson movie (so cool). One afternoon after I returned from the beach this rather obnoxious commercial came on the television. It started with some guy running through the airport and then wiping out... and this very annoying duck. (If you haven't seen it, don't ask, but you can view it yourself at their website, www.aflac.com). Turns out it was for this company, AFLAC. After the 106th time I saw the commercial, I asked my mom about it. She was floored that I had never heard of AFLAC. And after we discussed it for a bit, I couldn't believe it either.

AFLAC is an International Holding Company that provides supplemental insurance to people who have "special conditions." At least that was how they began. For twenty-some years they made a name (and a business) for themselves offering coverage to victims of cancer, but in the 1980's they decided to expand. Now they provide coverage for accident and disability, hospital indemnity, long-term care, and intensive care among others. Although these portions of the business have only been periodically introduced over the last two decades, they now make up a whopping 75% of their sales in the United States.

Another interesting tidbit is their incredible popularity in Japan over the last 26 years. They are the number one foreign provider in that country as well as the third most profitable company operating over there. One out of every four Japanese carries an AFLAC card. Over 95% of companies listed on the Tokyo Stock Exchange offer AFLAC to their employees.

Look at some of the various ways AFLAC has been recognized over the last few years:

1. Number one writer of supplemental insurance marketed at the worksite. (No wonder I had never heard of them. Working out of my house the only thing marketed here is Macaroni and Cheese and Coca-Cola.)
2. Three years straight as one of Fortune 500 Magazine's "100 Best Companies to Work For" in the United States.
3. February 2001, listed as fifth in Fortune 500 Magazine's "Most Admired Company in Life and Health Insurance Sector."
4. Listed on the S&P 500 Index.
5. A+ rating from A.M. Best.
6. Featured by The Chicks at ChicksLayingNestEggs.com. (Had to throw that in there.)

AFLAC was founded in 1955 by Bill Amos. These days it is run by Daniel Paul Amos who began his career with AFLAC back in 1973. He is credited with increasing the sales and product lines in Japan and ultimately seeing revenue grow from $2.7 billion to $9.72 billion. AFLAC's fiscal year ended 12/31/00 with net revenues up 13%, and net income up 20% to $687 million. This company also offers one of those handy-dandy dividend reinvestment plans. Pretty good stuff for a company I had never been interested in.

In doing my research I noted that The Motley Fool listed AFLAC as one of their ten best stocks for uncertain times. The author stated, "According to the company's investor fact sheet, AFLAC has 'increased operating earnings per share [EPS] at an average annual rate of 18.3%' for the past nine years, though that excludes the effect of exchange rates, which are a factor given that Japanese sales account for about 80% of the business. AFLAC has increased operating EPS by at least 10% every year, save one, since 1991. Last year, the company recorded $9.7 billion in sales, and $657 million in operating earnings, a 20.5% increase over 1999."

Needless to say, this is an industry we can never do without. AFLAC stands out in that industry because they are willing to be providers to persons who either could not under normal circumstances afford an illness such as cancer, or weren't able to find someone to cover them once they'd had it. And as for their likeability factor, historically it is a great producer and has proven it can stand the test of time. This is just one of those hidden gems that one has to really look for to find. Kinda like a certain island I know...