Aflac Says Rivals Lust for Our Returns as Japan Pressured

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Aflac Inc. defended its profitability to Wall Street, saying that rivals still covet the insurer’s return on equity, even after results were pressured by low interest rates in Japan.

Executives from competitors say, “‘Gosh, my company sits around and lusts after your metrics,’” President Kriss Cloninger said in Aflac’s conference call Wednesday, adding that his company targets an ROE of about 20 percent.

Aflac executives were challenged on the call by Colin Devine, an analyst at Jefferies Group LLC, who asked at what rate the company expects its ROE to stabilize in Japan after a period of decline. The insurer acknowledged that low bond yields have squeezed investment income. Still Cloninger said he knows how much his company is envied because of what Aflac learned when conducting a search to find someone to replace him as chief financial officer.

Frederick J. Crawford, who joined Aflac in June as CFO, previously worked at insurer CNO Financial Group Inc. CNO has had an ROE of about 9 percent lately. MetLife Inc., the largest U.S. life insurer, said in May that it would probably miss its 12 percent ROE target for 2016.

Aflac rose 3.6 percent to $64.54 at 4:15 p.m. in New York, the biggest gain since 2012. The Columbus, Georgia-based insurer projected Tuesday after markets closed that full-year operating earnings per share will climb at least 4 percent on a currency-neutral basis. The company had previously said the increase could be a little as 2 percent.

Cloninger’s remarks weren’t the first time that he boasted about returns. In 2010, the year that MetLife bought American Life Insurance Co. to expand in Japan, Cloninger dismissed the threat.

“We’ve always beat them,” he said of Alico.

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