I usually write about technology, but I like some diversity in my portfolio and some years ago I bought shares of Aflac (NYSE:AFL).
Aflac, formerly American Family Life Insurance Co., has been known to me since I moved to Atlanta in 1981. It is based in the sleepy Army town of Columbus, an hour southwest of me on the Alabama border. It was founded by three brothers named Amos, and John Amos was still a part of my beat when I was at the Atlanta Business Chronicle in 1982. It's going to remain a family business. Daniel Amos, a son of co-founder Paul, is currently CEO, and his son Paul is COO.
Aflac was known, even in the early 1980s, for its business in Japan. It entered with cancer insurance, a big fear in the land famed for salt and radiation, and is still the largest individual insurer there. It keeps the head of its Japan operations on its board. Here, it's best known for its supplemental insurance policies and its duck symbol, created by New York ad agency Kaplan Thaler.
AFL had a pop in the stock this week because it beat Street estimates on earnings by 11 cents, and it has increased its dividend to 35 cents, giving it a yield of 2.75%.
But the real news here is its slow divorce from Japan. It had hired a new investment guy, Eric Kirsch, from Goldman Sachs as chief investment officer, and he's moving out of Japanese bonds into American corporates to raise yield. These sales added $192 million to the third-quarter profit alone. And there are more potential gains where those came from.
Thanks to the duck, Aflac has had strong U.S. growth throughout the current century, so it's slowly diversifying away from Japan. It is able to predict is earnings with very good accuracy. Since I bought 100 shares in 1999, I have nearly doubled my money, reinvesting dividends, and I haven't given the stock a single thought.
That's a nice thing to be able to do, make money without thought.