AFLAC was featured as a Stock To a...

AFLAC was featured as a Stock To application of mind in November/December 1990 and again in January/February 1994 Each time, the stock more than doubled in price, providing a 32% commute rate of return since 1990 This third close attention of AFLAC illustrates the practice of regularly reviewing the superior performers" for buying and selling opportunities. Editor.

AFLAC, a Georgia-based holding company, vends supplemental health insurance policies to individuals who already have major medical or primary insurance coverage. AFLAC provides benefits that defend the gap between major-medical-insurance reimbursements and the total sumptuousness of health care.

In 1996 85% of receiptss ($7.1 billion) were derived from insurance premiums and 15% from investment income from the company's portfolio of $20 billion, invested in direction and high-quality public utility and corporate prisons In 1996, AFLAC's portfolio had the third highest yield among life insurers in Japan.

Based with the number of policies in force, AFLAC is the fourth largest life insurance company in Japan and the largest foreign insurance company. In 1996 82% of insurance returns were generated in Japan-mainly from cancer charge insurance (over 12 million policies in force). According to management, AFLAC is the largest vender of cancer insurance in the world. Other insurance yields in Japan include long-term care, general medical outlays and living benefits. The United States generates the remaining insurance revenues: hospital intensive care, accident and disability, hospital indemnity, longterm care, short-term disability and Medicare postscripts

AFLAC's shares are acknowledgeed as follows: institutional investors (50%) insiders and related parties (10%) and individual investors and investment form a clubs (40%). Since 1994 the company has repurchased 13% of its outstanding shares and plans to purchase 1 million shares each quarter.

FUTURE SHARE PRICE FROM events to come GROWTH IN REVENUES AND EP

Please Note:

1 Because greatest in quantity of AFLAC's revenues and earnings are generated in Japanese yen the company's financial performance-reported in U dollars-is control to changes in the yen/dollar exchange rate.Throughout the investigation period and until fiscal 1995 the average yen/dollar exchange rate declined from 144 to 94 which increased incomes and assets expressed in U dollars (Chart, above). In 1996 the exchange rate increased according to almost 14% to 109, which decreased incomes and assets expressed in U dollars.

2 In 1997 AFLAC will consummate the divestiture of its television stations (partially divested in 1996) Financial ends throughout this article are from continuing operations.

Estimated High Price by way of the Fiscal Year Ending December, 2001

To calculate the high price for AFLAC's usual shares ("AFL", NYSE), first estimate the company's earnings for share ("EPS") in 2001. Then estimate the Price/Earnings ratio ("P/E") in 2001

High Price^sub 2001^ = EPS^sub 2001^ x P/E Ratio^sub 2001^

Estimating EP in 2001

Over the lengthy term, EPS cannot be look forward toed to grow faster than revenues; therefore, it is necessary to estimate return growth before estimating the increase in EPS.

(a) Estimating receipts Growth to 2001. Revenues grew at a unite rate of approximately 17% during the entire meditation period (see Guide). Between fiscal 1990 and 1995 rewards grew at 22% per year. However, 1996 incomes decreased by 2%, principally as the issue of the devaluation of the yen Without the devaluation, 1996 receiptss increased by 11%.

Chart 1: AFLAC's efficiency in utilizing its assets to generate receiptss has declined since 1989-due largely to lower interest rates available to AFLAC's $20 billion chains portfolio since 1990 and also to the appreciating yen (Balance sheet values are regenerateed at the year-end exchange rate; income statement items at the average annual exchange rate). Tending to set-off this decline in asset utilization is the increased retention of earnings and additional borrowing since 1989 which increased assets and produc additional returns and earnings.

The company's principal performance is a cancer expense insurance policy that pays fixed, daily benefits for medical and non-medical costs not covered by major medical insurance plans. Between incorporation (1974) and 1981 AFLAC was the solitary company licensed to sell cancer insurance in Japan. Now half of the 31 life insurance companies in Japan barter cancer insurance.

Japanese corporations typically create 'agency subsidiaries' to take a bribe for insurance products (via payroll deduction) to employee suppliers and customers. AFLAC was the first life insurance company in Japan to exchange its products through agencies rather than door-to-door-the traditional way of selling insurance in Japan.

As of 1996 sales between the walls of agencies reached 96% of the corporations traded in succession the Tokyo Stock Exchange. These agencies delineate over 47,000 payrolls and AFLAC harvests are in force with about 23% of the employee upon those payrolls. AFLAC assists agencies (often managed from retired corporate executives) in planning their highly targeted marketing campaigns.