The ultimate risk manager: Aflac CEO Dan Amos

Dan Amos has been at the helm of insurance giant Aflac (AFL) for more than 34 years, making him one of the longest-serving CEOs in the Fortune 500. He has also presided over an incredible 1500%-plus return on the company's stock, which is celebrating its 50th year of being listed on the NYSE.

At the same time, Aflac's annual revenue has been on the decline since 2019 amid a general decline in supplemental health insurance, and as its largest external market - Japan - also shows signs of slowing.

Add to that the onslaught of technology and large-language artificial intelligence models already shaking up the health and insurance industries, challenges from both startups and established competitors, choosing a successor, and taking Aflac into the digital age. Amos has his work cut out for him.

Yahoo Finance visited with Amos at Aflac’s headquarters in Columbus, Georgia to hear about his future vision for Aflac and where he sees AI taking the insurance industry.

For more on our Lead This Way series, click here, and tune in to Yahoo Finance Live for more expert insight and the latest market action, Monday through Friday.

This post was written by Corey Goldman.

Video transcript

It's a globally recognized name, ah synonymous with health insurance and a dividend darling for investors returning over 15,000% including reinvested cash dividends to shareholders for 41 consecutive years.

CEO Dan Amos has navigated risk to become one of the longest serving CEO S Fortune 500 leading one of the largest insurance companies in the US by market cap.

This is my 34th year as CEO and I've said, I believe we'll see more changes in the next three years than in my last 30.

While the company's total annual revenue has been on the decline since 2019.

Aflac kicked off 2024 with Q one earnings and revenue beating Wall street expectations.

Yahoo finance visited Amos in Columbus, Georgia to hear how he navigates risk in today's challenging sales environment.

The potential for A I to disrupt the industry and changing demographics in their largest market.

Japan Amos says three principles have guided him through the risky health insurance business.

Don't risk a lot for a little, don't risk more than you can afford to lose and consider the odds.

And he's leaned on those principles as the insurance industry evolved from endless paperwork to apps to now.

Generative A I A I models have sped up data analysis allowed claims to be processed faster, which have led to increased savings for companies like Aflac, but for Amos, it's not just about the bottom line when you have a technology like generative A I in a business like yours.

I know the three risk principles.

How does that apply with something that we still really don't know really the limits of it at this point.

What I generally say about running an organization is there's a herd mentality and you can be at the head of the herd or the back of the herd.

But if you get way outside the herd, you can get shot.

We want to be the head of the herd, but we can't overspend to the point that we can't validate.

So technology plays an important role in our company and what we do going forward, but not one that will replace what Amos sees as one of Aflac's core assets.

It's people, I think there'll be hybrid.

We have what we call wellness benefits.

So we encourage you to go to the doctor and get checkups.

You can do that through A I but you don't need to talk to anybody.

You just went to see the doctor, the doctor said you're fine and we need to pay the bill.

I think the human touch is something that is very important for the growth of the company because all we sell is a promise on a piece of paper.

That's all it is.

The COVID-19 pandemic was a wake up call for Aflac to re invent a customer service model that relied on agents on site for that human touch.

This accelerated the one digital AFLAC strategy to create the hybrid digitized model AFLAC uses today.

Another unintended consequence of the pandemic advancements from COVID MRN A vaccines that Amos believes could soon lead to other potential treatments including cancer therapies.

I don't know of anybody that's more excited about our future than I am.

And what I see ahead because people through healthcare are finding cures and these cures cost money.

And so you need the additional coverage to help cover those costs and something like supplemental insurance where it's where it's an addition.

How do you manage sales like that when people are already like I, I can barely afford to cover my bills?

Well, my question is, can you afford if the bills come in that are the health care bills?

You know, somebody asked me one time you paid the claim so fast.

Why does it matter?

And I said it really doesn't.

And there was a shock and then he said, unless you need the money, when you think of supplemental insurance, you think an acronym of American Family Life Insurance Company of Columbus, an arguably risky advertising campaign that cost more than Aflac had ever spent had catapulted the company's brand recognition from 11% to 94% over 14 years according to Aflac making Aflac a household name, redefining the insurance and landscape.

It started with two advertising creatives on a park bench later immortalized in the first commercial which aired January 1st 2000 and they heard the duck quacking and they heard Quack quack Aflac.

They said that sounds like they're saying the name.

Not only was it humorous, but you were making fun of your name.

And I said, we'll absolutely do it.

We'll try it.

But if it fails, going back to my three principles of risk management insurance, we'll pull it immediately.

The likability went through the roof afterward.

And so in a matter of three years, we doubled our sales in the United States.

Aflac now spends roughly $150 million on advertising.

While S and P global market intelligence finds other insurance spend an average of a billion annually.

The Aflac duck is the golden goose.

This is the top floor, but the main board room is straight ahead.

The Amos brothers with principal founder John co-founders, William and Paul Dan's father founded the company in 1955 with the passing of his uncle John Dan stepped up in 1990 as CEO I think it's clear that this is part of the American dream.

Three brothers with no money got together and were able to form an insurance company selling stock door to door is nothing more than an American dream.

The importance of family is evident across the company telling people that we don't expect our company to come first, we expect your family to come first.

So about how many people are in this building.

Despite other us, companies outsourcing call centers, Amos has doubled down on keeping Aflac customers connected close to home, allowing for regular one on one interactions with his employees who Amos says are the heart and soul of Aflac from an administrative perspective, our most talented important people of the call center because they're the line between the company and the customer or the agent and the company.

And so it's very important that we, that we have positive attitudes, help them do whatever we need to do to make sure it works.

So what we're trying to do is verify whether he was transported via ambulance.

And so a lot of people don't know about Aflac's history with, with cancer insurance.

Why did you decide to go that path?

Well, my grandfather was diagnosed with cancer and we saw the high hospital bills and what took place and they decided to develop a policy that was to help cover the cost of cancer.

That's what they did in the fifties and it just grew and grew and grew.

And in Japan, they thought they had an epidemic of cancer taking place after the war.

People only lived to about 58 and today they live in their eighties.

So they saw a skyrocketing number of claims, but they were just living long enough.

So cancer is a disease of age.

The Amos family's experience with cancer has made them hyper aware of rooting cancer claimants to a friendly voice at the other end of the line.

Well, our, our cancer or claims department is much more sensitive to that, especially the newly diagnosed.

They're overwhelmed as a general rule with what to do.

And so they help walk them through a process that takes care of them through the filing of the claim and whatever they need to do.

And our people have numbers and you can call them back if you need to on certain issues.

So cla so goes, claims.

So goes your company while Aflac is a made in America story, its biggest market is Japan where the company says it insures one out of four households.

It all started with our CEO who was my uncle who went to Osaka to the world's fair and saw a thriving economy and he noticed people wearing surgical masks.

People said, well, that's because they don't want to spread a cold and he went, anybody will do that will buy insurance.

I'm gonna get license there.

In 1974 Aflac began selling insurance in Japan.

So we came out with a life insurance policy that paid X amount for death any reason, but it paid 10 times that amount if you had cancer plus it made so much a day for every day in the hospital.

And so that's what kinda took off and built our company over a period of time.

But now Aflac is facing a country with a demographic squeeze at both ends.

By the year 2050 the United Nations predicts the share of China and Korea's 65 and older population will overtake Japan's where its aging population is dying off.

This coupled with a declining birth rate presents a dilemma for Aflac.

Aflac solution says Amos is its hybrid policy.

A combination of cancer insurance and life insurance to attract younger consumers earlier.

So they avoid financial hardships.

Later part of a series of sales campaigns to coincide with Aflac's 50th anniversary of doing business in Japan reliance on Japan as Aflac's biggest market also comes with geographical risk.

Something Amos says he still worries about after the Tohoku earthquake and tsunami of 2011.

It claimed more than 18,000 lives and caused major damage to the Fukushima Daiichi Nuclear Power Station.

Comparisons were being drawn with the 1986 Chernobyl nuclear Power plant disaster.

Both incidents were rated the highest on the international nuclear and Radiological event scale.

Considering the odds, Amos assessed the risk fallout for the region and shareholders when they had the incidents in Chernobyl, we had paid outside consultants to review what the death rate was and what happened over those 20 years.

And so I knew that if I did not respond one way or another.

The stock was going to tank.

And 15 years later, we haven't seen a problem like his principles on risk.

Amos shares a strong commitment to corporate social responsibility, which includes de I seen by Amos as just the right thing to do with qualified candidates.

I'd start by saying women have played an important role since the inception of the company in the US.

So I didn't understand why Japan had not promoted any women.

And I said, I want a woman promoted, you choose them.

Tell me who it is.

After two years, they came back and said they didn't want to and didn't think it was a good idea.

I knew I was about to get the list of officer promotions and I went and got a red magic marker and I wrote as big as I could reject it and I sent it back to him and I said, I don't know how culture works over here, but I know one thing we're not gonna promote a single male till I get a female.

And so God touched them that night and they came back and they said, here's the person.

And after 16 years working at Aflac as a sales representative and later managing the training department, Mike Yamoto became Aflac.

Japan's first female executive as Vice President of Human Resources.

In 1997 20 minutes from Aflac headquarters is a place near and dear to Amos Soma farms.

Amos spelled backwards built to host his Japanese guests and where Amos gets to do what he loves most.

Got first bite.

Got one as the company approaches its 70th anniversary, 72 year old Amos considers what the next 70 years will look like for his successor.

How do you view succession?

And what would you like the next future CEO to take on?

Well, remember 34 years ago, that same question was asked until John passed away, he was the company.

And so the transition will continue.

And it's my responsibility to train someone which I'm working on now.

That'll, that'll have the heart and soul for what we need to do.

And I've, I've got a couple that are in contention and I think I've got someone that can do that but you have to watch them and see, believe it or not.

One of the things I do is is if somebody gets promoted and they stop talking to people on the elevator, they need to go.

That success will also need to carry on Aflac's philanthropic efforts with pediatric cancer patients.

A course extremely important to Amos.

In 1995 Amos was asked for a $25,000 donation from what was formerly Children's Healthcare of Atlanta Amos said no, he had a bigger vision, a $3 million building naming for Aflac.

This relationship blossomed into the Aflac Cancer Center at Children's Healthcare, the largest pediatric cancer center in America, keeping the momentum going for Aflac's philanthropy customers and investors is a balancing act.

Amos and his future successor will have to contend with after 50 years with Aflac Amos says risk is just part of the business.

I worry about all kind of things but not to the degree that I think it's pass fail.

We are global, we are no longer can say, well, we're here in Columbus, Georgia and we don't have to worry about the rest of the world.

I've got to worry about tsunamis in Japan.

I worry about interest rates and what's gonna happen in that regard.

But am I frightened about him?

No, we manage risk.

That's what we do for a living is we're in the risk business.

So I'm not nervous about it, but I worry about it all and if I didn't, I wouldn't be a very good risk manager.