Aflac 2012 Annual Report Download - page 34

Communicorp, Aflac’s printing and communications subsidiary,
has received Forest Stewardship Council® (FSC) certification. This
chain-of-custody certification is part of a not-for-profit organization
program that brings people together to find solutions and reward
good forest management.
Aflac® is a registered trademark of American Family Life Assurance Company of Columbus.
Affiliated Corporate Agency – Agency in Japan directly affiliated
with a specific corporation that sells insurance policies primarily to
its employees
Benefit Ratio – Incurred claims plus the change in reserves for
future policy benefits, as a percentage of total revenues
Child Endowment Product – Insurance product traditionally
used in Japan providing cash to help fund higher education costs
associated with a child entering high school and college in Japan
DAYS – Aflac Japan’s revised base cancer policy introduced in
March 2011 that enhances outpatient and anticancer medication
benefits
Derisking – A form of risk management that involves the activity
or series of activities of reducing or lowering risk factors from a
business
Earnings Per Basic Share – Net earnings divided by the weighted-
average number of shares outstanding for the period
Earnings Per Diluted Share – Net earnings divided by the
weighted-average number of shares outstanding for the period plus
the weighted-average shares for the dilutive effect of share-based
awards outstanding
Group Insurance – Insurance issued to a group, such as an
employer or trade association, that covers employees or association
members and their dependents through certificates of coverage
Individual Insurance – Insurance issued to an individual with the
policy designed to cover that person and his or her dependents
In-force Policies – A count of policies that are active contracts at
the end of a period
Net Investment Income – The income derived from interest and
dividends on investment securities, after deducting investment
expenses
New Annualized Premium Sales – Annual premiums, on policies
sold and incremental increases from policy conversions, collected
over a 12-month period, assuming the policies remain in force
Operating Earnings Per Share – Profits per share derived from
operations before realized investment gains and losses from
securities transactions, impairments, and derivative and hedging
activities, as well as nonrecurring items
Perpetual Securities – Financial instruments that have
characteristics of both stocks and bonds. These investments are
subordinate to senior bonds, but rank higher than equities and
generally rank higher than preferred stock. A perpetual security
does not have a stated maturity date, but instead typically has what
is sometimes referred to as an economic maturity. An economic
maturity is a date at which a perpetual security is expected to be
redeemed by the issuer
Persistency – Percentage of premiums remaining in force at the
end of a period, usually one year. For example, 95% persistency
would mean that 95% of the premiums in force at the beginning of
the period were still in force at the end of the period
Premium Income – Revenues that an insurer receives as premiums
paid by its customers for insurance products
Realized Investment Gains and Losses – Securities transactions,
impairments, and derivative and hedging activities that generate
a securities’ value at more than book value, which is a gain; or less
than book value, which is a loss
Return on Average Invested Assets – Net investment income as a
percentage of average cash and investments at amortized cost
Risk-based Capital (RBC) Ratio – Statutory adjusted capital
divided by statutory required capital. This insurance ratio is based
on rules prescribed by the National Association of Insurance
Commissioners (NAIC) and provides an indication of the amount of
statutory capital the insurance company maintains, relative to the
inherent risks in the insurer’s operations
Solvency Margin Ratio (SMR) – Solvency margin total divided
by one half of the risk total. This insurance ratio is prescribed by
the Japan Financial Services Agency (FSA) and is used for all life
insurance companies in Japan to measure the adequacy of the
company’s ability to pay policyholder claims in the event actual risks
exceed expected levels
Total Return to Shareholders – Appreciation of a shareholder’s
investment over a period of time, including reinvested cash
dividends paid during that time
Voluntary Supplemental Insurance – Benefits purchased by a
consumer at the consumer’s own expense in addition to a (typically
employer-provided) major medical plan that cover out-of-pocket
expenses not typically covered under the primary insurance policy
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 a predetermined age
GLOSSARY OF SELECTED TERMS
32 AFLAC INCORPORATED 2012 YEAR IN REVIEW