Dan Amos, the chief executive officer of Columbus, Ga.-based AFLAC Inc., the dominant underwriter of supplemental cancer insurance in Japan, has a unique perspective on the U.S. health care debate.
For almost 20 years, AFLAC has been successfully operating under a national health care system that provides insurance for all Japanese citizens. Despite Japan’s national system, 22% of its population relies on AFLAC to provide supplemental policies where primary health insurance does not cover all expenses associated with medical treatment.
Last year, the company commissioned the Center for Hospital and Finance Management at Johns Hopkins University to also study the national care systems in the United Kingdom and Canada as well as Japan. And, according to Mr. Amos’ statement in AFLAC’s recently released 1993 Annual Report, “The Johns Hopkins study confirmed what AFLAC has believed all along: No health care system covers every cost, and as a result, many consumers choose to supplement their primary insurance company.”
Mr. Amos is candid about the difficulties the company faced last year in Japan, which has been experiencing an economic recession.
Calling 1993 “the most difficult year” since AFLAC has operated in Japan, he added that the company’s Japan revenues nevertheless rose 14.2%. In the U.S., AFLAC achieved record results, he said, with sales up 11.1% and revenues up 10.2%.
The key to the company’s U.S. success, he said has been its commitment “toward becoming a diversified supplemental insurer.” AFLAC’s product innovations include hospital intensive care, home health care, accident and disability, Medicare supplemental and long term care protection.
AFLAC also has shown itself to be open to new marketing strategies. In December, it entered into a joint marketing agreement with CIGNA Corp. under which group long term disability products developed jointly have been marketed under AFLAC’s name.
Along the way, AFLAC has picked up some ardent supporters including Peter Lynch, the former manager of the Magellan Fund, the best performing of all mutual funds over a 15-year period. Mr. Lynch calls AFLAC, “My kind of company: a $15 billion operation most people know nothing about.” But, according to Mr. Lynch, “AFLAC is exciting where it counts…Stocks and singers may start out in the hinterlands, but if they keep making beautiful noises, they’re bound to be discovered sooner or later.”
For the near future, AFLAC’s “beautiful noises” will continue primarily to be made in Japanese and English. “We are in good standing with the regulators in Europe,” Mr. Amos said in an interview. But the company is not apt to seriously pursue European markets because of the opportunities which remain in the U.S.
As for potential giant markets such as China or Russia, Mr. Amos recognized that, “One day they could be great,” but probably not in the near future.
To obtain a copy of AFLAC’s 1993 Annual Report, call Kenneth S. Janke Jr., senior vice president investor relations, at (800) 235-2667, or send a fax to (706) 324-6330. AFLAC’s director of public relations and deputy counsel is Kathelen V. Spencer who may be reached by telephone at (706) 596-3789 or by fax at (706) 323-1448.