Aflac shuffles executives; Dan Amos and Kriss Cloninger to remain at least until age 70

Columbus-based company announces moves, effective July 1, at financial briefing in New York

tadams@ledger-enquirer.comMay 22, 2013 

Aflac said Wednesday it is shuffling key management positions and duties to strengthen the company, with the moves obviously setting up an eventual succession plan.

But Aflac Inc. Chairman and Chief Executive Officer Dan Amos, speaking to Wall Street analysts in New York, also signaled that he’s in no hurry to step down.

The 61-year-old said he doesn’t plan on retiring before age 70, while Aflac Inc. President and Chief Financial Officer Kriss Cloninger, who is 65, will remain an active executive at least until that age as well.

“One lesson of the financial crisis is that you never stop learning. Challenges can come from unexpected areas of the company, and you have to plan for the unexpected,” Amos told Wall Street analysts gathered in New York for a presentation on the performance and outlook of the company, which is headquartered on Wynnton Road in Columbus.

“That makes it very important to Kriss and me that we continue to build and enhance our management bench,” Amos said. “In the same way that Aflac broadens its product lines and distribution channels, we are striving to build and broaden the management experience of those who are younger than us.”

The moves unveiled Wednesday, which take effect July 1, include giving Aflac President Paul S. Amos II reporting responsibilities for Aflac Japan and Aflac’s Global Investment Division.

Amos, son of the CEO, will work with Aflac Japan President and Chief Operating Officer Tohru Tonoike, as well as Eric Kirsch, executive vice president of the firm’s investment operation.

Paul Amos, 37, who has led Aflac U.S. for more than eight years, will report to Cloninger, while Kenneth S. Janke Jr., 52, will report to Dan Amos in his new position as Aflac U.S. president. Janke retains his titles of executive vice president and deputy chief financial officer of the holding company, reporting to Cloninger in the latter role.

Cloninger, in a statement, praised the younger Amos, who will not move to Japan.

“With Dan and I committed to several more years in our existing roles, it’s an opportune time to expand Paul’s responsibilities,” he said, pointing out the U.S. division is poised to top $5 billion in earned premium and $1 billion in pretax earnings this year.

“During that time, Aflac U.S. produced a record of strong profit growth, with pretax earnings growth compounding at 9.1 percent annually, making 2012 the most profitable year in U.S. history,” Dan Amos said of his son’s U.S. stint. “I think this is particularly notable during a period where small businesses, which represent 90 percent of our accounts, have struggled in the weak economy.”

Aflac Japan amounts to more than 75 percent of the insurer’s business. The company, which took a financial hit from European investment losses in recent years, also is counting on its investment division to profitably manage its massive cash flow.

Dan Amos pointed out that Aflac’s board of directors requires an annual assessment of the company’s top executives and “potential management talent” moving up in the ranks. The moves announced Wednesday have received the board’s blessing, he said.

Sterne Agee research analyst John Nadel issued a flash note on the New York presentation, pointing out his firm expects Aflac’s earnings per growth will come in between 5 percent and 8 percent in 2014, translating to $6.20 per share. That would be improved from this year’s earnings growth target of 4 percent to 7 percent.

Nadel, who rates Aflac stock a “buy” with a 52-week price target of $65 per share, also mentioned the shuffling of management chores.

“While succession at the senior-most levels of the company now appear five-plus years away, clearly management is broadening roles in anticipation of that ultimate succession,” he said.

Aflac shares, which have been trending higher in recent weeks, reached a 52-week high of $56.76 in midday trading Wednesday on the New York Stock Exchange. But they retreated into negative territory amid an overall market downturn after the U.S. Federal Reserve hinted it may cut back on bond purchases as soon as June. Aflac shares closed down 51 cents apiece, or 0.9 percent, at $55.33.

One other move announced by Aflac Wednesday was the promotion of Teresa White to chief operating officer of the company’s Columbus operations. Her titles include executive vice president and chief service officer.

The firm also reaffirmed its confidence in Tom Giddens, an executive vice president who will continue as chief of the company’s sales force. He has been with the firm more than three decades.

Aflac also is in the “final stages” of choosing a chief operating officer for its Aflac Group office in Columbia, S.C. Both White and the new COO in Columbia will fall under Janke’s oversight.

“These changes will further expand the knowledge base of our management team, ultimately benefitting the future of our company,” CEO Amos said. “I think it also reflects effective corporate governance.”

Aflac posted a record $25.4 billion in total revenue in 2012, along with record net investment income of $3.5 billion, premium income of $22.1 billion, total investments and cash of $118.2 million, and $15.3 billion in benefits and claims paid to policyholders.

The firm has just over 9,000 employees in the U.S. and Japan. Of the 4,300 in the U.S., nearly 4,000 earn a paycheck in Columbus.

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