AFLAC U.S. — Another Incredible Year

       There are a lot of words that could be used to describe the year AFLAC U.S. had in 2001. Incredible is a good one! Following our tremendous sales growth in 2000, we set what we thought was a reasonable sales objective for 2001. We upwardly revised the sales target three times during the year. Yet, we still significantly exceeded the revised target. But sales growth was only one facet of our success last year. Our advertising awareness climbed to 91% on the wings of the AFLAC duck. We also experienced a dramatic increase in the size of our sales force. And we produced our fastest rate of revenue growth in decades.

       The highlight of last year for AFLAC U.S. was clearly the dramatic growth of new annualized premium sales. With such strong sales momentum recently, our U.S. sales in 2001 were almost triple our sales level in 1996. Like the preceding seven years, accident/disability was again our number one product. But other products, from our founding cancer expense policy to our new fixed-benefit dental insurance coverage, also contributed to our record sales. In fact, our dental policy has already become our third-best-selling product category even though 2001 was its first full year of sales.

       And like previous years, we generated nearly all of our new premium sales at the worksite. Historically, small businesses have made up the majority of our payroll deduction accounts. That's still the case today. However, we have also been cultivating the large account market. During 2001, we began offering our products to employees at Wal-Mart, which is the largest non-government employer in the United States.

       Our sales grew rapidly in 2001 in great part because our sales force grew rapidly. Our recruiting was at an all-time high, and we saw a substantial increase in the monthly average number of producing sales associates. We believe our successful advertising campaign has contributed to increasing our sales force. The AFLAC duck ads, which we launched at the start of 2000, grew in popularity throughout 2001. As a result, our name recognition is greater than at any time in our history. For 2002 we will be airing at least three new commercials featuring the AFLAC duck.

       We remain very optimistic about the outlook for our U.S. business. The United States is a sizable, underpenetrated market in terms of the products we sell. With an attractive product line, expanded distribution system, and increased name recognition, we believe we will see continued strong gains for AFLAC U.S.

Outlook — Continued Growth Ahead

       We are proud of our accomplishments in 2001. Our ability to meet our overall corporate financial targets during economic downturns in both the United States and Japan points to the underlying strength of our business. But at the same time, we know we can do better. Our challenge in 2002 is to restore the growth of AFLAC Japan's sales. With the introduction of new products, the benefit of our marketing partner and the strengthening of our management team, we expect improvements in sales. And as was the case in 2001, our challenge in the United States is to extend the sales momentum we established several years ago.

       For the next two years, we expect to again produce above-average growth in our industry. Our objective for 2002 and 2003 is to increase operating earnings per share 15% to 17% before currency translation. We are optimistic we will achieve the target each year. Our optimism is based on AFLAC's strong position in the two largest insurance markets in the world. We believe there is great potential for growth in both markets. And with our expertise at the worksite, our valuable but affordable products, and our outstanding customer service, we are confident that employees in both countries will continue to ask about AFLAC at work.

Daniel P. Amos, Chairman
and Chief Executive Officer