There are many good reasons that Aflac this week dismissed Gilbert Gottfried as the voice of the Aflac duck for his remarks about the crisis in Japan. And they merely started with the insensitivity of his comments.
Another reason is that Japan is where it does the bulk of its business, making the nation the most important market for Aflac’s life and health insurance policies — much more so than the company’s other market, the United States. While Gottfried was not the voice of the Aflac duck in Japan, the Columbus, Georgia-based company needed to be especially sensitive to any harm his remarks might have caused in that beleaguered country.
As its website notes, "Aflac is the number one insurance company in Japan in terms of individual policies in force and the largest foreign insurer in Japan in terms of premium income. Aflac Japan also ranks first in the number of individual policies in force among all of Japan's life insurers and is the fifth most profitable foreign company in any industry in Japan."
Overall, about 70% of Aflac’s business is done in Japan, and the company actually insures a huge 25% of the country’s entire population. While much of Aflac’s business in the US is disability insurance, nearly all of its business in Japan is health-care policies that fill in the gaps around a nationalized health-care system.
“Their health care doesn’t cover all of their expenses," Paul Amos Jr., chief operating officer and son of CEO Dan Amos, told brandchannel about the company's customers in Japan in an interview last year. “They see the need for our type of product to cover their additional expenses, and they’re very conscious about savings and insurance in a way that American consumers aren’t.”
Aflac got its start in Japan a few years after co-founder John Amos, Paul’s great uncle, attended the Osaka World’s Fair in 1970.
Aflac’s continued dependence on the Japanese was clear on Tuesday as investors discounted its stock heavily. Yet, while CEO Dan Amos told The Wall Street Journal that he doesn’t expect a meaningful impact on Aflac’s earnings this year from the disaster in Japan, he conceded that Aflac could see a short-term spike in claims.
He also told Bloomberg TV that he expects to maintain share buybacks as the company pays claims tied to last week’s earthquake and tsunami.
“We have had the share repurchase going, we plan on hitting our number this quarter,” Amos commented. “We need to monitor this. I am comfortable, as of today, with what we’re doing, but it could change.”
Aflac fell 8.6% on the New York Stock Exchange in the three trading days after the March 11 earthquake and tsunami. The company restarted a buyback program in 2010 and in February forecast repurchases of 6 million shares to 12 million shares this year.
The impact of the disaster on Aflac “is still controlled in terms of our claims,” said Amos to Bloomberg. “I still believe we will make our earnings projections.”
Amos also stated in a press release:
"In addition to sending our thoughts and prayers to each and every Japanese citizen, we want all of our Aflac Japan employees, sales agents and policyholders to know that your Aflac family here in the U.S. sends our support in every way possible. On Friday, we made an initial donation of 100 million yen to the International Red Cross to help with the start of the relief effort. Additionally, funds have been established by both our U.S. and Japanese employees and sales forces for our friends in Japan, including fellow employees and sales associates that have been most impacted by the disaster. Most importantly, we want our policyholders to know that we are here to deliver on our promise - we will be there when they need us most. Having operated in Japan for almost four decades, we know Japanese citizens are incredibly resilient and we want to help in any way possible as they work through this difficult time.
"As we look to the remainder of 2011, we expect Aflac Japan sales will only be minimally impacted by these events. Our earnings guidance for the year remains unchanged: we will likely be at the low end of the 8% to 12% range for operating earnings per diluted share growth in 2011, excluding the impact of currency."
As for the brand's former "voice," Gottfried has removed the offending tweets, and posted the following back-to-back apologies on his Twitter feed: