Since the beginning of 2008, when Aflac (AFL) was worth about $65 per share, the stock has fallen to $43.50, a 33% drop. Cash flows from operations on the other hand have risen from about $5 billion to an estimated $12 billion in 2012 (based on quarterly cash flow of over $3 billion). Cash flows have risen 140% over this time.
Perhaps the market is worried about AFL's large JGB position, and its low yields. New money yields in Japan don't even average 3%, but AFL is investing a bit more in its US portfolio in highly rated corporates that result in new money flows closer to 6%. There is nothing unexpected here: the market has priced in massive investment losses or shareholder dilution. Buying AFL shares today at a total yield of almost 16% is an excellent opportunity if you don't think the world is about to fall apart; simple as that.
Source: Seeking Alpha
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