AFLAC Japan 1 | 2 | 3 | 4 | 5 | 6

Portfolio Produces Solid Returns in Difficult Market

AFLAC Japan's financial strength continues to set it apart from most other insurance companies. According to Financial Services Agency data as of March 31, 2000, our investment portfolio yield was higher than any other life insurer in Japan with assets of more than ¥2 trillion. And the spread between our new money investment yields and our interest rate assumptions for reserving new business has significantly improved in recent years.

While we market our products aggressively, we invest conservatively. We have generally avoided the real estate and equity sectors. Instead, we concentrate on buying long-dated, investment-grade securities to better match asset and liability durations while also achieving our investment income growth objectives. Conservative investing is one reason we believe our balance sheet is significantly stronger than many other companies in the industry.

Outlook - Managing for Continued Growth

As we look ahead, we see both challenges and opportunities for AFLAC Japan. Challenges will likely arise from a more liberalized market as well as the continued economic slump in Japan. However, we have prepared extensively for deregulation for many years, and we have several years of experience at navigating in a difficult economy. At the same time, we believe Japan remains one of the best insurance markets in the world for supplemental insurance products. We believe we can further tap into the vast potential market opportunities by:

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  • Making our product line more complete - We will develop new products that are designed to better meet the needs of Japanese consumers.

  • Growing our distribution system - We will continue to recruit more sales agencies, especially to penetrate the small business and individual markets. We will also work extremely hard to make our marketing alliance with Dai-ichi Mutual Life a success.

  • Improving efficiency - We will continue to invest in new technologies and work processes to extend our cost advantages.

  • Enhancing our brand - We will continue to promote our brand and products through additional advertising.

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