Aflac 2007 Annual Report Download - page 11

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we’re a very transparent and responsive
organization, and Say-on-Pay is con-
sistent with that approach. Our board
of directors unanimously agreed. And
we are proud to be the first company in
the United States to adopt a resolution
giving shareholders this type of advisory
vote on compensation.
QHow has the current subprime
lending crisis impacted Aflac?
AIt hasn’t had a significant impact
on Aflac because we have not invested
directly in subprime lenders. It has
certainly impacted liquidity of the
financial markets, and without a doubt,
our greatest challenge is unchanged —
investing huge cash flows in Japan at
reasonable rates of return. But I believe
in our conservative investment
approach and with only 1.9% of our
investments rated below investment
grade, I think we have one of the
strongest portfolios in the industry.
QWith much talk about the possibility
of an economic downturn, what impact
does the state of the economy have on
Aflac’s business?
AI guess my initial thought on that
topic is to look at our business in Japan.
When you consider how challenging
Japan’s economy has been since the
early 1990s and then compare that to
our growth in Japan during that same
time, it’s easy to see that our business
has been pretty resilient to economic
downturns. Similarly, we haven’t seen
much impact on Aflac U.S. business
when the U.S. economy has weakened.
I think one reason the economy hasn’t
impacted us too much in the past is
simply due to the nature of the
products we sell. Our coverage is much
more of a necessity than a luxury. For
instance, consumers’ disposable income
may be lower in a recession, but serious
medical events don’t go away, which
means a family’s finances could be at
greater risk during a downturn. If our
marketing management and sales force
can effectively communicate that
message, our business should continue
to do well regardless of the economy.
QWhat are the key drivers that
would provide an indication as to whether
Aflac Japan is turning toward positive
sales growth?
AIn the short term, I believe the
drivers are on the distribution side
of our business. We started seeing
better sales momentum in the second
half of 2007. For us to achieve our sales
objective for Japan in 2008, we need to
see continued contributions from our
traditional sales channels and success in
the new bank channel. In the near term
to long term, we need to focus on
building the size of our sales force
through recruiting and improving their
productivity through training. And I’m
hopeful that offering our cancer
product through Japan Post will help
us drive sales momentum in the years
ahead. But we also can’t afford to forget
the importance of our product line.
We believe our products offer great
value to Japanese consumers. As the
market leader, we have an obligation to
be innovative and on top of a changing
health care environment and emerging
consumer needs.
QWhen you are not at work, how do
you spend your time?
AI love spending time with my wife,
Kathelen, and our family. Kathelen and
I value the simple pleasures of hosting
and going to lots of family events. I also
like to spend time at my farm and enjoy
fishing and outdoor sports.
Annual Report for 2007