Aflac 2010 Annual Report Download - page 17

Investment Results in
a Low-Interest-Rate
Environment
We looked for, and identified, opportunities
to improve our investment income in a low-
interest-rate environment while ensuring
that our investment quality withstood
challenging credit markets while mitigating
our risks. In doing so, we improved net
income, which we believe ultimately
benefits shareholder value.
We accomplished this through our
primary focus of matching our assets to
our policy liabilities with long-duration, yen-
denominated, investment-grade securities
as well as incrementally increasing the
amount Aflac Japan invests in dollar-
denominated securities.
Despite global credit downgrades
from rating agencies, Aflac Japan’s
overall credit quality remained high.
At the end of 2010, 93.8% of Aflac
Japan’s debt and perpetual securities
were rated investment grade on an
amortized cost basis.
AFLAC DUCK + GOOD LUCK CAT = STRONG BRAND
In 2009, Aflac Japan designed a campaign character to grab
the attention of Japanese consumers: We combined the
popular Aflac Duck with a traditional character, called “maneki
neko,” to promote New EVER, our revised medical product.
Maneki neko is the cat icon that is very widely known in Asia.
Its raised paw is said to attract good luck. This campaign
character, called “maneki neko duck” contributed to a medical
sales increase of 15.6% in 2009. Building on this success,
Aflac Japan continued to feature this character in 2010. The
maneki neko duck became so popular, especially among
children and their mothers, that Aflac Japan expanded the use
of this “maneki neko duck” to promote the cross-selling of our
child endowment product as well.
Administrative Efficiency
Liftoff from Technology
Technology has long been the
essence of what is perhaps Aflac
Japan’s most significant competitive
strength – administrative efficiency.
Our maintenance expenses per policy
in force remain lower than every other
life insurance company operating in
Japan, allowing us to give consumers
quality products at affordable prices
while compensating our sales force
with competitive commissions.
Looking to the Future
Japan’s government continues to
face fiscal pressure. With rising
medical expenses, an aging
population, and a declining birthrate,
Japan’s already-stressed national
health care system may come under
even more pressure in the future.
We believe Japanese citizens,
whose medical costs have already
increased, will continue to look for
solutions to protect their physical and
financial well-being. As we design our
product and distribution initiatives for
the future, we believe the competitive
strengths that have driven Aflac
Japan’s success in 2010 will
continue to benefit us in the future.
Aflac Japan
Investment Highlights for 2010
• Investments and cash increased
21.3% to $77.9 billion at the end of
2010. In yen, investments and cash
were up 7.3%
• Net investment income increased
8.3% to $2.5 billion. In yen, net
investment income was up 1.6%
• The average yield on new
investments was 2.63% in 2010,
compared with 3.03% in 2009
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