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So Aflac (AFL) wants to be a player. The company brings on Timothy Stevens to head its newly...

So Aflac (AFL) wants to be a player. The company brings on Timothy Stevens to head its newly created post of global head of trading. Stevens - formerly of BlackRock - will report to CIO Eric Kirsch, who came over last year from Goldman Sachs. Also joining is Brad Dyslin - who worked with Kirsch at Deutsche Bank - to be global head of credit at Aflac's just-opened investments office in NYC. (PR)
Comments (5)
  • I'm not sure that I like the sound of this at all, after all the trouble this sort of thing has caused other financials? I'm not long AFL because I was hoping it would become more like Goldman and their ilk.

     

    Disclosure: long AFL (for now)
    7 Jun 2012, 11:58 AM Reply Like
  • This development disturbs me. This is not the kind of activity I want in my portfolio.
    7 Jun 2012, 12:26 PM Reply Like
  • They always were a "player" Insurance companies have two sides one is the Insurance policy side that assesses risks that they insure and the other side is the side that assesses risks and rewards of investing the contract float money. They may or may not be in trouble now with euro denominated debt which may mean they had bad outisde player advice and may need to cut some losses. The Euro is a little speculative now. Warren Buffet uses the insurance business for the float and is definately a "player" he will buy commodities and curriencies on occasion. Aflac might be better off hiring the types of managers that Warren buffet is testing now. If Aflac is really hit by a euro failure it could become a berkshire hathaway company with buffet recapitalization in exchange for control. It appears Aflac was taking more risk to get its higher annual returns than some other insurance companies because of real higher risk that are only now exposing themselves. There is clearly a lot of investment competence at Aflac. The risk they will take huge permanent losses is probably low. I had been worried about what a catastrophic earth quake in Japan would do to the company and was happily supprised to see that they could survive and continue to thrive after one actually happened. The quake did not hit Tokyo which would have been a much larger shock. It is clear that Aflac can take big shocks and survive because they manage risks effectively . A lot of that may be due to contractural coverage for earth quakes. It is easy to get euro risk insurance too by legitimate hedging means with financial contract exposure. It the yen or euro collapses then the company can counteract losses making the cost of the contracts worth paying. when currencies are hit usually they recover later. Japan is the most in dept country per capita so they do have risks there too.
    7 Jun 2012, 03:47 PM Reply Like
  • AFLAC making a mistake going outside for advice. but they are in trouble so I am not surprised. Look for a long slide in stock
    7 Jun 2012, 09:41 PM Reply Like
  • Aflac's underwriting operation is not only "not" in trouble, it is bashing its competitors' brains out. They are so far and away the low cost leader and market share (70+%) dominant firm that the only player they fear at all is the Japan Post, a quasi government insurer crammed full of JGB's and out-to-pasture bureaucrats from Okurasho. In fact, Aflac's underwriting margin has been increasing at a rate of about one percent per year for over a decade. Shall we say that again and just savor it? Yessss, ahhhhhh. Aflac is paid about 6% per year just to invest its float. Mmmmmmm.

     

    Aflac could lose half its investments, yes, half, and still be THE dominant insurer and make piles of money in its markets. It would not be a mortal blow (the RBC ratio proves it, take a look at the new FSA reg's)

     

    Sadly, their investment team was not as hot as their underwriting department. Getting serious by digging into serious world-class talent in NYC is precisely what they should do, given that they probably can't interest Lou Simpson in the position... A world class investment team is all they need to be a phenomenal runaway success. Their underwriting is already there.

     

    Who would you chose? I'm long Aflac, and I am delighted my company is taking steps to amp up its investment team. About time.
    13 Jun 2012, 12:56 AM Reply Like
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