10-KPeriod: FY2002

AFLAC INC Annual Report, Year Ended Dec 31, 2002

Filed March 27, 2003For Securities:AFL

Summary

AFLAC Incorporated's 2002 Form 10-K filing highlights a strong financial performance driven significantly by its Japanese operations, which accounted for 75% of total revenues. The company continues to be a leader in individually issued supplemental health and life insurance, marketed primarily at worksites. Despite a challenging economic environment in Japan and currency fluctuations, AFLAC Japan demonstrated robust growth in annualized premiums in force, indicating strong policy persistency and effective sales strategies. In the U.S., AFLAC also experienced growth in annualized premiums, with accident and disability coverage being the best-selling product category. The company's investment portfolio remains substantial, with a focus on high-quality fixed-maturity securities. AFLAC emphasizes its operational efficiency, competitive pricing, and strong brand recognition as key drivers of its continued success and market leadership in its chosen segments.

Key Highlights

  • 1AFLAC Japan generated 75% of total revenues in 2002, underscoring its critical importance to the company's overall performance.
  • 2Total revenues reached $10.26 billion in 2002, an increase from $9.60 billion in 2001.
  • 3Net earnings for 2002 were $821 million, or $1.55 per diluted share.
  • 4Annualized premiums in force grew to $9.63 billion for the consolidated company, with AFLAC Japan showing a 17.4% increase in dollar terms to $6.96 billion.
  • 5AFLAC Japan's new annualized premium sales in yen increased by 17.9% in 2002, demonstrating strong market demand.
  • 6AFLAC U.S. saw a 16.4% increase in new annualized premium sales, reaching $1.1 billion in 2002.
  • 7The company reported strong investment income of $1.61 billion in 2002, and maintained a high percentage of investment-grade debt securities in AFLAC Japan's portfolio (97.9%).

Frequently Asked Questions

AFLAC Incorporated's primary business is supplemental health and life insurance, marketed and administered mainly through its subsidiary, American Family Life Assurance Company of Columbus (AFLAC). The company operates in both the United States (AFLAC U.S.) and Japan (AFLAC Japan), with a significant majority of its revenue coming from its Japanese operations.

AFLAC Japan is the company's largest revenue generator. In 2002, it accounted for 75% of AFLAC Incorporated's total revenues, and 84% of its total assets, highlighting its critical role in the company's financial performance.

In Japan, AFLAC offers cancer plans, care plans, general medical expense plans, and various life insurance and accident plans. In the U.S., the company provides cancer plans, accident and disability insurance, dental insurance, and other health insurance products like hospital indemnity and long-term care plans.

AFLAC acknowledges that fluctuations in the Yen/Dollar exchange rate can significantly affect its reported financial position and results. The company translates foreign currency financial statements using end-of-period exchange rates for assets and liabilities, and weighted-average rates for revenues and expenses. Currency translation adjustments are reported in accumulated other comprehensive income, while realized currency exchange gains and losses from transactions are included in earnings. The company also analyzes its performance excluding the effect of currency fluctuations to better understand its underlying operating results.