AFLAC stock goes south on capital level doubts

Shares of AFLAC Inc., a Columbus, Ga.-based health insurer, plunged after a research note from Morgan Stanley aired concerns about the company’s capital levels.
JAN 22, 2009
By  Bloomberg
Shares of AFLAC Inc., a Columbus, Ga.-based health insurer, plunged after a research note from Morgan Stanley aired concerns about the company’s capital levels. New York-based Morgan Stanley expects a large decline in year-end 2008 risk-based-capital ratios due to a combination of the Japanese yen’s appreciation, growing credit impairments and increasing unrealized losses, according to the note, written by Nigel Dally. AFLAC had $4.97 billion of gross unrealized losses in its investment portfolio as of the end of the third quarter. Following the release of the report, AFLAC’s stock plunged to a $23.16 in mid-afternoon trading, from its $32.21-per-share open. Morgan Stanley also predicted that risk-based-capital levels will decline to a range of 435% to 440%, only slightly above the insurer’s target of 400% and way down from the 547% level at the end of 2007. AFLAC’s $7.9 billion exposure to hybrid securities, much of which is related to preferred equity in financial institutions, also caught Mr. Dally’s attention. “We believe the potential for credit loss on these securities is somewhat larger, especially given that some of the prior assumptions on when these securities would be called may no longer be accurate,” he wrote.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave