Aflac Incorporated (AFL) Q1 2013 Earnings Report, Transcript and Summary

Okay. Well, thank you, [Eric], and good morning to everyone. It’s a pleasure to join you this year’s Citi Financial Services Conference. Before we start, let me remind you that some statements in this presentation are forward-looking within the meaning of federal securities laws, although we believe our statements are reasonable, we can give no assurance that they’ll prove to be accurate because they are prospective in nature. Please look at our annual report on Form 10-K to see some of the risk factors that could cause actual results to differ materially from those we discussed today. AFLAC offers voluntary insurance products in the two largest insurance markets in the world, Japan and United States. Our policies cover more than 50 million people world-wide. AFLAC products provide a layer of financial protection against loss of income and assets, by paying fixed cash benefits directly to an insured, primarily upon a specified health event or life situation. Our strategy for growth in Japan and United States has remained straight-forward and consistent for many years, and we believe they have been effective. AFLAC develops relevant products and sales them through expanded distribution channels, which yield new accounts and customers. AFLAC operations in Japan account for about three quarter of our pre-tax insurance earnings. Now today we insure about one out of four households in Japan and we are the number one life insurance company in Japan in terms of individual policies and force. Our third sector cancer and medical products have been and continue to be our pillar products, and the foundation of our product portfolio. AFLAC Japan’s ability to supplement its traditional product portfolio beyond traditional health related products with other products such as WAYS which is our hybrid whole-life insurance product has helped us to generate record sales in 2011…

It’s the Q&A. So, I will kick off with just one and then open it up with anybody in the audience who has a question. Maybe you could start just talking a little bit about competitive trends in Japan across different channels and products, and maybe what gives you confidence that you will be able to grow cancer medical sales in 2013?

We are the leading provider of both cancer and medical insurance in Japan. Most of you know, many of you know, 2012 was a big year in the bank channel and we wrote a lot of life insurance in the bank channel in Japan. Part of that was created by declining trends of interest rates that started in the latter part of 2011 and continued on through 2012. When the bank channel was first deregulated to allow banks to sell life and annuity products and medical products that occurred late 2007, we put a big emphasis on trying to get our medical products into the bank channel. We already had good relationships with almost all of the 400, some 400 banks in Japan because they had AFLAC agencies that would sell. They had insurance agencies that would sell AFLAC products to their employees that when the liberalization of the distributing rules came about they were permitted to sale third-sector products and life insurance products to their customers as well as their employees. And so that created a new source of profits for the banks that have been in financial -- weak financial condition for sometime, gave them a good opportunity to have a new profit sale. So as part of selling more and more insurance products and they sold. They traditionally have sold annuity business and investment trust type products and they got into the variable annuity business a lot and some of that suffered in the financial crisis. And so what happened was after the financial crisis, they turn to companies that did not have difficulty, AFLAC had some difficulty with its investments in the life. We didn’t have the same kind of difficulty. Some of the other foreign companies in Japan had so. They looked at AFLAC as…

Okay. Thank you. Unfortunately, I think we don’t have a lot of time but I appreciate your comments.

Okay. Well, thank you very much. We’ll have some one-on-one sessions later. Thank you.