Aflac 2015 Annual Report Download - page 6

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Once upon a time, John Amos, Aflac’s principal founder,
joined with his brothers, Paul and Bill, to make their
dream of starting an insurance company a reality. They
knew people were facing serious medical health events and
set out to establish a company focused on insurance products
that would help to ease the financial burden of getting sick or
injured. To many, such a venture may have seemed like a tall
tale or an impossible dream back in 1955. But their vision and
dedication laid the groundwork for an incredibly rewarding six
decades in which we’ve grown our business – and in doing
so, we’ve touched millions of lives. The privilege of enriching
the lives of policyholders, sales associates, employees and
shareholders remains our greatest priority and incorporates a
passion that we call The Aflac Way.
The story of Aflac continued in 2015 as we celebrated a
significant milestone: Aflac’s 60th anniversary. Our diamond
anniversary marked another year during which Aflac extended
its lengthy record of success, while pursuing more opportu-
nities. We made significant strides in advancing our vision of
offering high-quality voluntary products, solutions and service
through diverse distribution outlets, building upon our market-
leading position to drive long-term shareholder value.
2015 operating earnings* per diluted share, excluding the impact
of the yen, grew 7.5%. This metric is one of the principal financial
measures used to evaluate management’s performance, and
we believe it continues to be a key driver of shareholder value.
AFLAC JAPAN
In Japan, where we insure one in four households, 2015 was
a year of strengthening relationships with our sales channels
and enhancing our product line to ensure we’re continuing to
meet the needs of consumers. We saw phenomenal success
across all channels in sales of our third sector products,
particularly with the product we pioneered – cancer insurance.
These results helped generate a year in which we achieved
the highest annual growth rate for third sector products in the
past 10 years, helping us to maintain our status as the leading
provider of both medical and cancer insurance in Japan.
AFL AC U.S.
In the United States, Aflac again earned the distinction of being
the number one provider of voluntary insurance at the worksite**.
2015 was a year in which Aflac U.S. generated solid results, and
we’ve been encouraged that the changes we made to our career
and broker management infrastructure are laying the foundation
for expanded long-term sales growth opportunities. We closed
2015 strongly with our fourth quarter new annualized premium
sales hitting an all-time quarterly record in terms of premium
amount. Most notably, I am very proud of the new chapter we
marked in Aflac’s history with the introduction of One Day PaySM,
an industry-first initiative that allows us to process, approve and
pay eligible claims in just one day.
STRONG CAPITAL PROFILE SUPPORTS OUR PROMISE
Our strong capital position reinforces what I believe is the
most important promise an insurance company makes to
its policyholders – to protect them when they need us most
by paying claims fairly and promptly. We believe the financial
strength of our company is important to our business. Our
strong capital ratios demonstrate our commitment to our
policyholders, bondholders and shareholders. This financial
strength is reflected in the quality of our balance sheet. We are
very pleased by our solid capital levels, and we regularly assess
our capital adequacy using extreme economic scenarios to
ensure our financial strength, considering the economic uncer-
tainty in the world. Strong capital ratios serve to protect our
policyholders’ interests.
We’re also proud that the rating agencies continue to recognize
the strength of our balance sheet. Our financial strength ratings,
which reflect our ability to pay claims, are A+ (Superior) by
A.M. Best, Aa3 by Moody’s, A+ by S&P and AA- by Rating &
Investment Information Inc. (R&I).
While policyholders are always top of mind, we also strive to
enhance shareholder value through capital deployment. As
we’ve communicated, when it comes to deploying excess
capital, we still believe that growing the cash dividend and
repurchasing our shares represent the most attractive avenues,
particularly absent other compelling uses of that capital. In
2015, we repurchased 21.2 million of our shares at a cost of
$1.3 billion.
I am also pleased with the action by our board of directors in
2015 to increase the cash dividend to shareholders, marking
the 33rd consecutive year of dividend increases. Our objective is
to grow cash dividends at a rate generally in line with operating
earnings per diluted share before the impact of the yen.
We also take pride in generating an industry-leading return on
equity, or ROE. Excluding the yen impact, our operating ROE
for the full year was 20.2%, which was in line with our 2015
operating ROE target of 20% to 25%.
MESSAGE FROM MANAGEMENT
DANIEL P. AMOS, CHAIRMAN AND CEO
The Story of Aflac: 60 Years in the Making