Name: Aflac CEO Doesn't Duck Recession Risks: 'We Ought To Be OK'
Uploaded: 2019-11-08
Duration: 5 min 59 s
Description: Aflac's Japanese unit could be the insurance protection it needs if the U.S. slips into recession, as many economists are predicting.

[ MUSIC ] Dan, just about everybody knows Aflac thanks to that famous Aflac duck. What does the duck do for your sales? It's changed everything. We're a household name. So, by doing that, we don't have to explain that we're in the insurance business. And people in your household name they know you're big financially. You don't. You don't have a name this in 90 % of the marketplace without them, not knowing that So it opens the door for everything in terms of sales. The pace of growth obviously has slowed and you recently said that sales could be off for a while. What's changed? When you build a block of business X amount laughs every year, and you've got to replace that and then grow in addition to that So as the block becomes bigger of the sales, then it's just harder to move the needle. So that's part of the reason for it with a lower interest, right? You've got lower revenues if we were getting 5 % return and now we're down to 2 % return, that also affects. We've seen some news about improper sales practices in Japan of Aflac insurance policies. What can you tell us about this whole situation? Well, that's really dealing with Japan post and they're selling our products. And their issue. They also sell for us. And so while they were looking at their issue, we reviewed the 1. 2 million policies that they have enforced with us. And we only found 70 policies that were any issue. So it's basically we've taken care of that. And we're moving on, but it has affected our new sales. In terms of they're focusing on that, so they're not selling for us as much. But I think by the end of the year, it will pick right back up. What is it gonna take to get Aflac back to double- digit growth? Our company is a total return company, dividend in terms of earnings growth. So I think it'll be the combination of the two. And I think we're seeing that shift with shareholders as we're moving more toward that. But the sheer size makes double digit, much harder to do. What's going to generate growth at Aflac? We have recently bought a dental company, and we believe that's going to broaden our base in the United States. So I think that's going to grow our business. In Japan, we're looking at other products and services. So I think we're gonna continue to see growth, and hopefully it will be at the top end of the range. To what extent would a real recession impact adversely your company? Well, again, remember 75 % of our business is in Japan. So you're talking about the US. So, in terms of making our objectives at the corporations level, we ought to be okay. It worries us a little bit, we've been through recessions before. In 30 years I've seen several, so I know what to do when that takes place. But it will have some negative impact, but not to the degree, it [ UNKNOWN ] retail or other things. All right, so you've gone through. Are recessions before >> Right >> And as you make plans for the rest of this year, and going into 2020, what are you doing to prepare for a possible recession ?>> Well the only thing that we are doing differently is something that we have been working on for several years and it's really not major, but it's the thing here to look for technology to lower the operating cost, i have always said. The person that has the lowest operating expense ratio wins, and that in a recession that's even more important given the big sell offs and the volatility that we've seen in the stock market. How are you changing your investment strategy in this climate, we continue to stay on the same path cuz When we sell a policy we expect it to stay on the books for about 13 years. So, we need long- term securities. And so, our strategy has never changed when the environment's strong or weak. We're still moving in that direction. And it's been very positive for us over 30 years. Let's wrap up by talking a little bit about the presidential race and all the debates about health care. Candidates are talking about a lot of proposals as you know, Medicare for all The public option, Obama care basically. Which of these proposals if adopted would have the most opportunities for athletics core business. Medicare for all, is the same in that it's national health care for all in Japan. So we do very well in that environment. So, whatever happens over here for all, we will do well in that environment as well. So fast forward to after the 2020 presidential elections and whether there's a Republican in the White House or a Democrat. Do you expect that there will be during that term, some kind of an overhaul of the American healthcare system, it'll be very difficult. Because you're gonna have to have the president, the Senate, and the House all agree. And any time you do that, you've seen it happen so few times over the history of the nation, it's a difficult time. As someone who's been in this healthcare and insurance business For your lifetime, do you think it's time to bring some kind of new innovation to the US healthcare system? Is this the right time? Any time they can find a solution to this problem, we need to do it because we want everybody insure, we still know they're gonna be gaps and co pays and deductibles and we'll be there to fill those But we absolutely want that to happen. [ BLANK_AUDIO ]

Aflac CEO Doesn't Duck Recession Risks: "We Ought To Be OK"

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Aflac's Japanese unit could be the insurance protection it needs if the U.S. slips into recession, as many economists are predicting.