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Aflac's Initiatives to Counter Interest Rate Woes Pay Off

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On Sep 5, 2016, we issued an updated research report on AFLAC Inc. (AFL - Free Report) .

The company has been performing favorably over the past many quarters although low interest rates are posing significant challenges to its Japanese operations.

This has been made possible by the company’s coherent efforts to tackle the negative interest rate in Japan by limiting the sale of its first-sector products and emphasizing the sale of third-sector products.

Also, ongoing strategic sales growth initiatives within Aflac’s U.S. operations have driven earnings growth. The company has also witnessed an increase in new annualized premium sales from $1.2 billion in 2005 to $1.5 billion in 2015. In the first half of 2016, new annualized premiums sales inched up 2.3% year over year to $675 million. The company expects annualized premium sales growth for Aflac U.S. in 2016 in the range of 3% to 5%.

Aflac also carries an investment grade rating status from leading rating agencies which reflects its strong risk-adjusted capitalization, excellent financial flexibility and a well-managed investment portfolio.

Aflac is trying to differentiate itself from its customers by paying claims in a single day in a mission called “One Day Pay”. Settling claims in one day has increased brand loyalty, account penetration and production for Aflac.

Based on its strong performance, the company expects operating earnings per share between $6.17 and $6.41 for the full year, implying a growth rate of 0.2–4.1% over 2015 earnings.

Aflac's effective capital management is another positive. Aflac’s balance sheet strength is backed by its robust cash position and shareholders’ equity.

Currently, Aflac carries a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked stocks in the insurance space include Health Insurance Innovations, Inc. , Primerica, Inc. (PRI - Free Report) and Sun Life Financial (SLF - Free Report) . While Health Insurance Innovations sports a Zacks Rank #1 (Strong Buy), the other two stocks hold a Zacks Rank #2 (Buy).

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