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Michael Boone Paul Gerwe Matt Stasie

Michael Boone Paul Gerwe Matt Stasie. Itinerary. The Business The Numbers Recommendation. The Business. Company Business Model Economic moat Products Management. Company. International holding company Supplemental health and life insurance Insures more than 50 million people

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Michael Boone Paul Gerwe Matt Stasie

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  1. Michael Boone Paul Gerwe Matt Stasie

  2. Itinerary • The Business • The Numbers • Recommendation

  3. The Business • Company • Business Model • Economic moat • Products • Management

  4. Company • International holding company • Supplemental health and life insurance • Insures more than 50 million people • 89% of companies listed on Tokyo Stock Exchange use Aflac • Insures ¼ Japanese households

  5. Business Model • Offers products at the workplace • Avoids individual targeting through sales agents • Improvements on benefit lineups at no additional cost • Unique, low cost structure • Sells through banks and post offices

  6. Economic Moat • Japan and cancer insurance • National healthcare system • Regulation in Japan • First mover advantage • Unique, low-cost business model • Customer retention • Brand image

  7. Products • Life insurance • Accident • Dental and vision • Hospital intensive care • Short term disability • Cancer insurance product DAYS • Stand-alone medical product EVER

  8. Management • Daniel Amos – CEO and Chairman • Family ties since 1955 creation • 2% outstanding hold in company • Long-time shareholder focus • Tenfold voting power incentive • 16 board members – 3 are family

  9. The Numbers • Competitors (valuation/profitability) • Why not MetLife • Industry comparison • Japanese insurance outlook

  10. Competitors – Key Statistics

  11. Competitors - Profitability

  12. Why not MetLife? • No economic moat, pricing power • Dividend plateau Dividend Payouts as of 12/31

  13. Why not MetLife? • Failed the Fed’s stress test • Extremely leveraged ROE as of 12/31

  14. Industry Comparison

  15. Japanese Insurance Outlook • Recovering after natural disaster • Increase in investment/consumption • Increase in consumer confidence • Leads to an increase in insurance sales

  16. The Recommendation • Risk • SWOT analysis • Valuation • Valuation Model • Why you should buy

  17. Risk • Deregulation in Japan • Investment portfolio Composition of Purchases by Credit Rating

  18. Risk • Exchange rate JPY vs. USD Past 5 Years

  19. SWOT Analysis • Strengths: • Established Japanese market • Unique cost structure • Customer retention • Financial health • Weaknesses: • U.S. life insurance foothold • Dependency on Japan • Opportunities: • Japan’s national H.C. system • Aging Japanese demographic • Banks/post office sales vessel • Threats: • Deregulation in Japan • Investment portfolio • Exchange rate

  20. Valuation Price as of9:47 A.M. on 4/27/12: $45.10

  21. Valuation – Group Model

  22. Why You Should Buy • Wide, sustainable moat • Revenue growth prospects • Positive internal signals • Unique foothold amidst competition • Japanese Yen strengthening vs. USD • Exposure to expanding market

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