Photographer: Kiyoshi Ota/Bloomberg

Aflac Pushes Into Infrastructure Debt Investing in U.S., Japan

  • Insurer invested $13 million in that debt in Japan last year
  • Company also expanded its bets on commercial mortgages

Aflac Inc., the largest seller of supplemental health insurance, has started betting on infrastructure debt at its U.S. and Japan businesses.

The insurer, which pushed into that asset class in the fourth quarter, invested $13 million in the debt last year at its Japan operation and $2 million at its U.S. business, according to a regulatory filing Friday. Aflac is working with a pair of third-party managers in the initiative, said a company spokesman who declined to identify the firms.

Chief Investment Officer Eric Kirsch, who was hired from Goldman Sachs Group Inc. in 2011, has expanded into alternative assets to generate better returns on the insurer’s more than $110 billion investment portfolio and help counter low yields on bonds. The Columbus, Georgia-based company has said it would invest more in commercial loans and stocks, and last year reported that it was selling fixed-rate corporate bonds to help build an allocation to floating-rate loans.

“We are actively engaged in both qualifying and starting the process of preparing to fund as good loans come our direction,” Chief Financial Officer Fred Crawford said about the switch trade this month on a conference call following fourth-quarter results. “We are not in a rush, if you will, to put money to work, ignoring, if you will, the credit fundamentals.”

Kirsch also added bets on bank loans, according to the filing. Wagers on commercial mortgages climbed to $855 million.

Chief Executive Officer Dan Amos has been reshaping the firm in Japan, especially after that country’s central bank adopted a negative-interest rate strategy last year. That led him to cut back on sales of interest-rate sensitive products. Aflac said it will continue to boost dollar-denominated assets in that market to diversify the portfolio and increase returns, according to the filing.

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