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Aflac: Strong Where It Counts With An Upside Catalyst

Aflac Incorporated (NYSE: [[AFL]]) reported in-line earnings for 2014 but missed sales expectations on a 5.3% drop in net premiums. Despite the recent weakness, the company has built a strong presence in the United States and Japan that could pay off with higher sales on an aging demographic. Beyond the longer-term upside, a new claims payment program may help to drive near-term upside on new policies.

Strength in the Right Markets

Japan has been a major growth market for the company and now accounts for 81% of pretax operating earnings. Aflac is the largest provider of cancer policies in the country with its strong partnership with local carriers like Japan Post Group. Net premiums in Japan have increased at an annualized rate of 5.1% over the last five years while sales growth in the U.S. has lagged at 2.7% over the period.

The Japanese insurance industry suffered nearly a decade… Read More …