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Michael Boone Paul Gerwe Matt Stasie. Itinerary. The Business The Numbers Recommendation. The Business. Company Business Model Economic moat Products Management. Company. International holding company Supplemental health and life insurance Insures more than 50 million people

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michael boone paul gerwe matt stasie
Michael Boone

Paul Gerwe

Matt Stasie

itinerary
Itinerary
  • The Business
  • The Numbers
  • Recommendation
the business
The Business
  • Company
  • Business Model
  • Economic moat
  • Products
  • Management
company
Company
  • International holding company
  • Supplemental health and life insurance
  • Insures more than 50 million people
  • 89% of companies listed on Tokyo Stock Exchange use Aflac
  • Insures ¼ Japanese households
business model
Business Model
  • Offers products at the workplace
  • Avoids individual targeting through sales agents
  • Improvements on benefit lineups at no additional cost
  • Unique, low cost structure
  • Sells through banks and post offices
economic moat
Economic Moat
  • Japan and cancer insurance
  • National healthcare system
  • Regulation in Japan
  • First mover advantage
  • Unique, low-cost business model
  • Customer retention
  • Brand image
products
Products
  • Life insurance
  • Accident
  • Dental and vision
  • Hospital intensive care
  • Short term disability
  • Cancer insurance product DAYS
  • Stand-alone medical product EVER
management
Management
  • Daniel Amos – CEO and Chairman
    • Family ties since 1955 creation
  • 2% outstanding hold in company
  • Long-time shareholder focus
    • Tenfold voting power incentive
  • 16 board members – 3 are family
the numbers
The Numbers
  • Competitors (valuation/profitability)
  • Why not MetLife
  • Industry comparison
  • Japanese insurance outlook
why not metlife
Why not MetLife?
  • No economic moat, pricing power
  • Dividend plateau

Dividend Payouts as of 12/31

why not metlife1
Why not MetLife?
  • Failed the Fed’s stress test
  • Extremely leveraged

ROE as of 12/31

japanese insurance outlook
Japanese Insurance Outlook
  • Recovering after natural disaster
  • Increase in investment/consumption
  • Increase in consumer confidence
    • Leads to an increase in insurance sales
the recommendation
The Recommendation
  • Risk
  • SWOT analysis
  • Valuation
  • Valuation Model
  • Why you should buy
slide17
Risk
  • Deregulation in Japan
  • Investment portfolio

Composition of Purchases by Credit Rating

slide18
Risk
  • Exchange rate

JPY vs. USD Past 5 Years

swot analysis
SWOT Analysis
  • Strengths:
  • Established Japanese market
  • Unique cost structure
  • Customer retention
  • Financial health
  • Weaknesses:
  • U.S. life insurance foothold
  • Dependency on Japan
  • Opportunities:
  • Japan’s national H.C. system
  • Aging Japanese demographic
  • Banks/post office sales vessel
  • Threats:
  • Deregulation in Japan
  • Investment portfolio
  • Exchange rate
valuation
Valuation

Price as of9:47 A.M. on 4/27/12: $45.10

why you should buy
Why You Should Buy
  • Wide, sustainable moat
  • Revenue growth prospects
  • Positive internal signals
  • Unique foothold amidst competition
  • Japanese Yen strengthening vs. USD
  • Exposure to expanding market