Aflac 2007 Annual Report Download - page 7

98 99 00 01 02 03 04 05 06 07
.88
1.04
1.2 6 1.2 2
1.49 1.47
2.45
2.92 2.95
$3.31
Net Earnings Per Diluted Share
Internal Performance Measure
Aflac Japan – Achieving Targets
in a Challenging Environment
After a disappointing year for Aflac Japan’s
sales in 2006, our primary focus was to turn
around sales momentum in 2007. We knew
it would be a challenge in a market that is
crowded with competing medical products.
At the same time, consumer skepticism of
the insurance industry lingered due to the
highly publicized revelations of claims pay-
ment errors among life insurers. Along with
each member of the life insurance industry,
Aflac was required by Japan’s Financial
Services Agency (FSA) to conduct a self-
review of claims to identify any claims
underpayments over the last five years. We
took this task very seriously, and conducted
an extremely thorough and timely review.
Our claims error rate was very low, and as a
result, we believe Aflac’s solid reputation
for honoring its contracts in Japan is intact.
Although the FSA still needs to close its files
on this issue, we are hopeful that the cloud
over the insurance industry is lifting now
that the industry’s claims review has
been completed.
Against this challenging backdrop, we felt our
continued commitment to field force training
and new product introductions was crucial to
generating positive sales growth as the year
progressed. From a training perspective, we
continued to focus our efforts on improving
face-to-face consultative sales techniques,
which we believe is especially important in the
competitive Japanese insurance market. We
also launched new products late in the year,
which produced positive results. In August,
we introduced Gentle EVER, a nonstandard,
stand-alone medical product. In September,
we began rolling out Cancer Forte, the first
major revision to our cancer insurance
product since 2001. Both were well-received
by consumers and sales agencies, and we
believe these new products will benefit
Aflac Japan sales in 2008 as well.
We were also very encouraged by new
distribution opportunities that we believe
will benefit Aflac Japan in the long run. In
December, the bank channel was opened
for over-the-counter sales of additional
insurance products, including those sold by
Aflac. By the end of January 2008, our
products were available at 3,300 branches
of 41 banks, and we expect those numbers
to grow in 2008. In addition, Aflac was
selected by the Japan Post Network Co. to
be the provider of cancer insurance for sale
through post offices located throughout
the country. We believe these new channels
will greatly enhance our distribution
network in Japan.
We expect to carry our momentum into
2008 and firmly believe Aflac Japan still
possesses the core competitive strengths
that have positioned us as the number one
seller of both cancer life and stand-alone
medical insurance and as the largest insurer
3
Amounts in 2001 through 2004 have been adjusted to reflect adoption of SFAS 123R on January 1, 2005.
Net Earnings
Per Diluted Share
Net earnings benefited from record
operating results, although realized
investment gains were lower than in
2006. Based on the internal
financial measure we use to assess
management’s performance, which
excludes items that are either
outside management’s control or
inherently unpredictable, we
achieved our primary financial
target in 2007.