This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

There's Safety in Insurance Stocks

NEW YORK ( TheStreet) -- There's a great deal of money to be made in the business of risk mitigation, a.k.a. "risk management".

It's not the kind of business where you will see gigantic leaps in quarterly earnings growth. However, it does involve a steady flow of multiple revenue streams that offer billions of investment dollars with which these companies can invest and reward shareholders.

I'm speaking of the insurance business -- the largest business in the world when measured by revenue.

Almost everyone with anything to protect -- a home, a car, a business, a career or a life -- spends hundreds if not thousands of dollars each year buying insurance that we hope we won't need.

The insurance companies collect the premiums month after month, year after year, and are able to use that money to increase corporate profits. Their aim is to collect more than they have to pay out in claims, and keep the remainder. It's a win-win business formula.

Take a company like Aflac (AFL - Get Report), which reports second-quarter 2012 quarterly earnings on Tuesday, July 24.

It brings in $49 billion to $50 billion a year in revenue. That's almost $50 per share, and the company has been growing its quarterly revenue at a 20% year-over-year clip.

Aflac pays a 3% dividend to shareholders, which is a very sustainable payout ratio of only 25%. How does it keep firing on all financial cylinders?

American Family Life Assurance Company of Columbus (that's what Aflac stands for) provides supplemental health and life insurance for individuals and groups.

The company offers various voluntary supplemental insurance products, including cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans and annuities, in its Japan division.

It also provides loss-of-income products, such as life and short-term disability plans; and products designed to protect individuals from depletion of assets, which comprise hospital indemnity, fixed-benefit dental, vision care, accident, cancer, critical illness/critical care, and hospital intensive care plans, in the United States. This is what I mean by "multiple streams of income" and revenues.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AFL $68.97 -0.06%
BRK.B $145.48 -0.40%
HIG $44.38 1.42%
MET $45.10 -1.38%
TRV $109.90 0.71%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs