Aflac 2009 Annual Report Download - page 6

Message from
Management
Daniel P. Amos
Chairman and CEO
Aac: Spreading Our Wings to Protect
50 Million People and Counting
A year ago, we were happy to see 2008
come to its tumultuous close, although it
became quickly apparent that signicant
challenges around the globe would
follow. Sure enough, 2009 presented the
world with the greatest economic hurdle
this generation has ever experienced.
For the insurance industry in general,
and Aac specically, balance sheet
strength and capital adequacy quickly
emerged as a primary focus. While
the investment community scrutinized
investment portfolios, we were doing
the same. We spent countless hours
analyzing our investments to determine if
they continued to be appropriate for our
portfolio. We also continually assessed
the capital levels of our insurance
operations to ensure that we had
adequate capital resources to fulll all
our obligations and retain the condence
of our policyholders and shareholders.
2009 Financial Results – Resilience,
Strength, and Growth
In the end, we concluded that our
investment approach was indeed the
most prudent course for our business.
We also had condence in our
company’s expected capital generation.
In addition, we made a $500 million
capital contribution from the parent
company to our principal insurance
subsidiary. As a result, our regulatory
capital levels remained strong. At the
end of 2009, our risk-based capital ratio
was a strong 479%, which exceeded
our internal target of 375% for the year.
Our risk-based capital ratio increased
from year-end 2008, despite realized
investment losses and increased capital
requirements resulting from credit rating
downgrades in our portfolio. As a result
of the steady growth of our insurance
operations and the capital contribution,
our regulatory capital level was 25.1%
higher at year-end 2009, compared
with year-end 2008. I believe our
strong capital base demonstrates the
resilience of our business model, which
is ultimately a reection of the need for
our products.
Our capital position enabled us to
maintain dividend payments at a time
when many companies have either cut
or eliminated their dividends. In fact,
Aac’s cash dividend payments in 2009
were 16.7% higher than in 2008. We
are very proud that we have increased
cash dividends for 27 consecutive years,
and we would certainly like to extend
that track record. However, we believe
it is most prudent for us to continue to
closely monitor global nancial markets
and our capital strength before we
commit to further increasing the dividend
in 2010 or to deploy capital for other
purposes, such as share repurchase.
Despite an intense focus on the
balance sheet, we never lost sight
of growing our business. Combined,
we generated more than $2.8 billion
of new annualized premium in the
United States and Japan in 2009. Total
revenues rose 10.3% to $18.3 billion,
reecting solid growth in premium
income and net investment income,
as well as the benet of the stronger
yen/dollar exchange rate for the
year. Importantly, we again achieved
the primary nancial objective we
use internally to assess the growth
of our business. We measure our
performance using the growth of net
earnings per diluted share, excluding
items that are inherently uncontrollable
We’ve got you under our wing.
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