AFL Key Financial Metrics & Ratios

Summary

Business

Earnings Call

Valuation

Profitability

Financial Health

10Y annualized return is very good at 13.4% per year

AFL has met or exceeded earnings expectations in the majority of recent quarters (8/10)

Attractive PE Ratio

Low Price to Sales Ratio

Strong Operating and Net Profit Margins

High Return on Equity

Low Debt Levels

Strong Interest Coverage

Strong Performance in Japan

Solid Capital Management

Innovative Product Development

Growth Initiatives and Market Position

Stable and Strong Dividend Growth

High Price to Free Cash Flow Ratio

Liquidity Ratios Indicate Weakness

Pressure on US Sales

Impact of Reinsurance Transactions

Challenges in Capitalizing on Opportunities

Expected Benefit Ratio Pressure

Aflac demonstrated strong business quality through solid performance in Japan, prudent capital management, and innovative product development. However, challenges in US sales and potential volatility from reinsurance transactions highlight areas for improvement. Looking ahead, the company's focus on growth initiatives and maintaining a strong dividend policy suggest positive future prospects, despite competitive pressures and expected challenges in benefit ratios.

Analysis Date: February 6, 2025
Last Updated: March 11, 2025

+252%

+13.4% per year

Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.

Country US

Exchange NYSE

Industry Insurance - Life

Sector Financial Services

Market Cap $57.34B

CEO Mr. Daniel Paul Amos

Aflac Incorporated is a company that provides extra health and life insurance to help people pay for unexpected medical costs. It operates mainly in two places: Japan and the United States. In Japan, Aflac offers various insurance products, like cancer and life insurance, while in the U.S., they provide coverage for accidents, critical illnesses, and even dental care. People can buy these insurance plans through sales agents and brokers, helping them feel more secure about their health and finances.

Streams of revenue

Aflac Japan Member: 59%

Aflac US Member: 42%

Geographic Distribution

Aflac Japan Member: 59%

Aflac US Member: 42%

Core Products

No core products data available

Business Type

No business type data available

Competitive Advantages

📦

Diverse Product Offering Aflac provides a wide range of insurance products, catering to various customer needs, which enhances cross-selling opportunities.

🌟

Strong Brand Recognition Aflac is a well-recognized brand, especially in the supplemental insurance market, which fosters customer trust and loyalty.

🔍

Focus on Supplemental Insurance Specializing in supplemental insurance allows Aflac to differentiate itself in a crowded market, targeting specific customer needs.

🇯🇵

Strong Market Position in Japan Aflac has a dominant presence in the Japanese market, which is a significant source of revenue and competitive advantage.

🌐

Established Distribution Network Aflac has a robust distribution network, utilizing sales associates and brokers, ensuring broad market reach and customer accessibility.

Key Business Risks

🔧

Operational Risks Failures in internal processes or systems can affect service delivery and customer satisfaction.

📉

Economic Downturns Economic recessions can decrease consumer spending on supplemental insurance products.

🏁

Market Competition Intense competition in the insurance sector can lead to pricing pressures and reduced market share.

⚖️

Regulatory Changes Changes in insurance regulations can impact product offerings and business operations.

💱

Currency Fluctuations Exchange rate volatility can impact profitability, especially in international operations like Aflac Japan.

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Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

Graham Value Metrics

Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.

Intrinsic Value

Estimated fair value based on Graham's formula

$285.64

Current Market Price: $99.77

IV/P Ratio: 2.86x (>1.0 indicates undervalued)

Margin of Safety

Gap between intrinsic value and market price

65.0%

Graham recommended a minimum of 20-30% margin of safety

Higher values indicate a greater potential discount to fair value

Graham Criteria Checklist

Benjamin Graham's value investing checklist for AFL

Positive earnings (5+ years)

Dividend history (5+ years)

P/E ratio ≤ 20 (10.45)

P/B ratio ≤ 1.5 (2.18)

Current ratio ≥ 2.0

Long-term debt < Net current assets

Margin of safety (65.0%)

AFL does not meet all Graham criteria

Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

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About Profitability Metrics

Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.

Return on Equity (ROE)

Measures how efficiently a company uses its equity to generate profits

21.66%

10% 15%

Higher values indicate better returns for shareholders

TTM (as of 2025-04-30)

Gross Profit Margin

Percentage of revenue retained after accounting for cost of goods sold

100.00%

20% 40%

Higher values indicate better efficiency in production

TTM (as of 2025-04-30)

Net Profit Margin

Percentage of revenue retained after accounting for all expenses

28.46%

8% 15%

Higher values indicate better overall profitability

TTM (as of 2025-04-30)

Strong Operating and Net Profit Margins

31.4

Operating Profit Margin

28.62

Net Profit Margin

AFL displays robust operating profit margin of 31.40% and net profit margin of 28.62%, indicating effective cost control and strong pricing power.

High Return on Equity

21.66

Return on Equity

A return on equity (ROE) of 21.66% signifies that the company is proficient in generating profit from its equity investments.

No profitability weaknesses identified.

About Financial Health Metrics

Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.

Debt to Equity Ratio

Total debt divided by total equity

0.29x

1.0x 2.0x

Lower values indicate less financial leverage and risk

Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk

Q4 2024

Current Ratio

Current assets divided by current liabilities

AFL: No data available

Low Debt Levels

0.29

Debt to Equity

0.06

Debt to Assets

A debt-to-equity ratio of 0.29 and a debt-to-assets ratio of 0.06 suggest that AFL maintains a strong balance sheet with manageable debt levels.

Strong Interest Coverage

30.32

Interest Coverage Ratio

An interest coverage ratio of 30.32 indicates that AFL has ample earnings to cover its interest payments, reflecting strong financial stability.

Liquidity Ratios Indicate Weakness

0.0

Current Ratio

0.0

Quick Ratio

0.0

Cash Ratio

Current, quick, and cash ratios are all at 0.0, suggesting potential liquidity issues despite the strong interest coverage.

Meeting Expectations

8 /10

Higher values indicate better execution and credibility

Strong Performance in Japan

36%

Pretax Profit Margin Japan

15.5%

Pretax Adjusted Earnings Growth

93.4%

Premium Persistency

Aflac Japan generated over 70% of the company's pretax adjusted earnings, with a 15.5% increase in pretax adjusted earnings and a record 36% profit margin in 2024. The persistency rate is also noteworthy at 93.4%, reflecting customer loyalty and satisfaction.

Solid Capital Management

$4.1 billion

Unencumbered Liquidity

Above 1150% SMR

Capital Ratios

Aflac has demonstrated prudent capital management with a strong capital position evidenced by $4.1 billion in unencumbered holding company liquidity and a commitment to maintaining high capital ratios.

Innovative Product Development

The company is launching a new cancer insurance product that includes unique features like cancer consultation support and flexible coverage options, targeting younger customers to expand their market reach.

Pressure on US Sales

33%

US Dental Sales Decline Q4

Despite some successes, US sales were lower than expected in the fourth quarter, with a notable 33% decline in dental sales. This indicates competitive pressures and operational challenges in the US market.

Impact of Reinsurance Transactions

5.4%

Net Earned Premium Decline Japan

Aflac Japan experienced a decline in net earned premiums due to internal reinsurance transactions, indicating potential volatility in earnings based on reinsurance strategies.

Growth Initiatives and Market Position

Aflac's focus on integrating innovative products and enhancing distribution channels positions it well for future growth. The emphasis on acquiring younger customers will help in long-term market expansion.

Stable and Strong Dividend Growth

The company has an impressive track record of 42 consecutive years of dividend growth, indicating a strong commitment to returning value to shareholders while maintaining financial health.

Challenges in Capitalizing on Opportunities

The company faces challenges in fully capitalizing on growth opportunities due to competitive pressures and the need for improved execution in product sales, particularly in the US market.

Expected Benefit Ratio Pressure

64-66%

Expected Benefit Ratio Range Japan 2025

For 2025, Aflac anticipates the benefit ratio in Japan to be at the higher end of the 64-66% range, indicating potential pressure on profitability amidst fluctuating market conditions.