Aflac 2010 Annual Report Download

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2010 YEAR IN REVIEW

Table of contents

  • Page 1
    2 0 1 0 YEAR I N REV I EW

  • Page 2
    Message From Management A Conversation With Chairman and CEO Dan Amos Aflac Incorporated Financial Highlights Aflac Japan Aflac U.S. Selected Financial Data Board of Directors and Executive Management Investor Facts Aflac Milestones Glossary of Selected Terms 4 6 8 10 16 20 22 24 26 28

  • Page 3
    ...million people in Japan and the United States protected by Aflac insurance. See Page 14 for his story. AflAc: Who We Are fmflac voluntary insurance products pay cash benefits directly to the insured to help protect against income and asset loss when a specific health event or life situation causes...

  • Page 4
    Aflac's Goal: To provide customers with the best value in voluntary insurance products in Japan and the United States 2

  • Page 5
    Our Strategy for Growth relevANt products sold through expANded distributioN chANNels yields New AccouNts ANd customers PROTECTING AGAINST: ASSET LOSS INCOmE LOSS SePPLEmENTAL mEdICAL ExPENSES REACHING CeSTOmERS AT: THE WORkSITE HOmE RETAIL LOCATIONS INSeRING: 50 mILLION PEOPLE 3

  • Page 6
    ... new annualized premium sales in the United States and Japan in 2010. Total revenues rose 13.6% to $20.7 billion, reflecting solid growth in premium income and net investment income, as well as the benefit of the stronger yen/dollar exchange rate for the year. Aflac's Growth Strategy: A Foundation...

  • Page 7
    ...means operating the company in a way that rewards those who invest their hard-earned money in Aflac Incorporated stock. There is only one Aflac Duck, and he is one of our most persistent sales agents in both Japan and the United States. But he is not flying solo. The Aflac Duck's wingspan represents...

  • Page 8
    ... ANd CEO dAN AmOS Q : You've just finished 21 years as CEO and you're 59 years old. How long do you plan on staying? A : Well, since I don't play golf, I wouldn't make a "good" retiree. I plan to be around for at least another 10 years. As long as our shareholders and board of directors are...

  • Page 9
    ... need for Aflac products? A : No - in the U.S., most citizens with insurance are covered by a health plan through their employer or other entity and in Japan, citizens are covered by a nationally sponsored health plan. But no matter what type of plan, we know people still have to pay out-ofpocket...

  • Page 10
    ... bo a record $3.0 billion U.S. Japan 01 02 03 04 05 06 07 08 09 10 $18.1 16.6 14.9 12.0 12.3 13.0 Premium income (in billions) 9.9 8.1 8.6 11.3 Premium income rome 8.7% in 2010, benefibing from improved permimbency in Japan and a mbronger average yen/dollar exccange rabe U.S. Japan 01 02 03 04...

  • Page 11
    ... camc rome 20.5% bo $88.2 billion ab bce end of 2010, benefibing from a mbronger yen/dollar exccange rabe and improved markeb valuem U.S. Japan 01 02 03 04 05 06 07 08 09 10 $12.1 11.3 10.5 8.9 9.0 9.3 8.5 7.5 6.3 6.6 Benefits AnD clAims (in billions) aflac paid or provided for $12.1 billion in...

  • Page 12
    .... On the product side of our strategy, not only did Aflac Japan remain the number one seller of cancer and medical insurance policies in Japan, but we also leveraged our presence in the banks by offering products that banks want to sell. Once again, our stable block of in-force business was marked...

  • Page 13
    .... Corsage offers surgery benefits that address the high cost of treating fewale-specific cancers. Resona Bank also offers Aflac's EVER wedical products and WAYS, our hybrid whole-life policy. Resona Bank BRanch Ewployees at Resona Bank's corporate offices research and select insurance products that...

  • Page 14
    ...our wing." ® A f l A c J A PA n P r o D u c t s iNcome-loss protectioN • Life - term - Whole-life - hybrid (WaYs) • Fixed annuity • child endowment Asset-loss protectioN • cancer • care • Life - hybrid (WaYs) supplemeNtAl medicAl • Medical (fixed-benefit) • Life - hybrid (WaYs) 12

  • Page 15
    ..., Aflac became the number one seller of medical insurance in Japan. Since then, we have been expanding our suite of EVER products to appeal to new market segments. In 2009, a new generation of EVER product was introduced with enhanced surgical benefits and gender-specific premium rates. In June 2010...

  • Page 16
    A f l A c J A PA n - K e Y o P e r At i o n A l m e t r i c s tobal Policiem and riderm in force* annualized Premiumm in force** tobal new annualized Premiumm** tobal number of agenciem tobal number of Bankm repremenbing aflac*** 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 *In bcoumandm ...

  • Page 17
    ... 2010, 93.8% of Aflac Japan's debt and perpetual securities were rated investment grade on an amortized cost basis. Japan, allowing us to give consumers quality products at affordable prices while compensating our sales force with competitive commissions. Looking to the Future Technology has long...

  • Page 18
    ... in our U.S. sales growth and finished 2010 with a decline in new annualized premium sales of 4.9%. This result included 2010 new annualized premium sales from Aflac Group Insurance of $83 million, which equated to about 6% of our total sales. Aflac e.S. 2010 Financial Highlights • Premium income...

  • Page 19
    ...individual product portfolio and included accident, critical illness, hospital indemnity, life, and disability policies. These group products are well-suited for distribution by insurance brokers to larger-case accounts with 100 or more employees. Sales from our traditional field force of individual...

  • Page 20
    ... individual sales agents. In addition to expanding our product line, Aflac Group Insurance has given us the opportunity to further our 2009 Aflac for Brokers initiative designed to develop stronger relationships with brokers. Beyond expanding the size and capabilities of our traditional sales force...

  • Page 21
    ... of SNG to accommodate broker needs and empower our sales associates for success. In 2010, about 93% of our applications for coverage were electronically submitted using SNG and other Internet-based programs. In addition, more than 82% of all new payroll accounts were set up with Online Billing...

  • Page 22
    ...Benefits and expenses: Benefits and claims Expenses Total benefits and expenses Pretax earnings Income taxes Net earnings share and per-share Amounts Net earnings (basic) Net earnings (diluted) Items impacting net earnings per diluted share, net of tax: Realized investment gains (losses): Securities...

  • Page 23
    Aï¬,ac Incorporated and Subsidiaries 2006 $ 12,314 2,171 79 52 14,616 9,016 3,336 12,352 2,264 781 $ 1,483 $ 2.99 2.95 2005 $ 11,990 2,071 262 40 14,363 8,890 3,247 12,137 2,226 743 $ 1,483 $ 2.96 2.92 2004 $ 11,302 1,957 (12) 34 13,281 8,482 3,...

  • Page 24
    ... Alabama/West Florida state sales coordinator for Aflac U.S., has served in a variety of sales positions with the company for the past 36 years. He was first elected to Aflac Incorporated's board in 1983. Paul S. Amos II, 35, president of Aflac and chief operating officer of Aflac U.S., joined Aflac...

  • Page 25
    ...Coordination area. She previously served as a director-at-large for the Society for Human Resource Management (SHRM). Teresa L. White, 44, executive vice president; chief administrative officer, joined Aflac in 1998. She has served in various leadership roles within Administration and Sales Support...

  • Page 26
    ... Service...fma2 (Excellent) fm.M. Best ...fm+ (Superior) Rating and Investment Information Inc. (R&I) ...fmfm*Ratings as of 3/1/11 Visit aflac.com and click on Investors to access your AFL account, Aflac's financial information, calendar of events, and dividend reinvestment plan (DRIP) information...

  • Page 27
    ...& Healbc Inmurance Index 150 100 Aflac Incorporated S&P 500 S&P Life & Health Insurance 1 1 1 50 0 2005 2006 2007 2008 103.32 2009 107.91 2010 134.77 ted or index, including 100.00 100.30 138.65 *$100 invested on December 31, 2005, in stock reinvestment of dividends. Fiscal year ending December...

  • Page 28
    ... headquarters office building. A Decade of Momentum The 1980s continued our momentum as we developed our strategy of broadening our product line and expanding our distribution system. The 80s 1982 1989 The company had total assets of more than $1 billion. American Family Life Assurance Company...

  • Page 29
    ... United States and Japan. Aflac Japan became the number one insurance company in Japan in terms of the number of individual policies in force. 2008 Corporate Governance Recognition: Aflac became the first publicly owned company in the United States to give shareholders a "Say on Pay" advisory vote...

  • Page 30
    ... by a major medical plan or universal health care insurance system WAYS - Hybrid insurance product from Aflac Japan's portfolio that starts out as a whole-life policy, but allows a large portion of the life coverage to be converted to a fixed annuity, medical coverage or nursing care benefit at...

  • Page 31
    ...the Securities and Exchange Commission. Contact Information Aflac Worldwide Headquarters 1932 Wynnton Rd. Columbus, GA 31999 tel: 706.323.3431 aflac.com Shareholders in the U.S. with questions about individual stock accounts Institutional investors with questions about the company tel: 800.227...

  • Page 32
    NYSE: AFL aflac.com | 706.596.3264 or 800.235.2667 American Family Life Assurance Company of Columbus 1932 Wynnton Road | Columbus, Georgia 31999