Products Provide Foundation for Success

       AFLAC polices are designed to provide coverage that helps consumers pay out-of-pocket expenses. These expenses may be medically related such as hospital care, physician services, dental services, home health care, prescription drugs or nursing care. They may also be nonmedical expenses, including lodging and travel expenses and lost wages. The Health Care Financing Administration estimates that medically related out-of-pocket expenses alone were $200 billion in 1998.

       To help consumers cope with an increasingly large financial burden caused by out-of-pocket expenses, AFLAC offers a variety of products. Since the mid-1980s, we have dramatically broadened our product line, and that strategy has been extremely successful. Although our founding product was a pioneering cancer expense policy, newer products have propelled our recent growth. In fact, accident/disability coverage has been our best-selling product category for eight consecutive years. It is also our number one product category in terms of premiums in force.

       In addition to accident/disability and cancer expense insurance, other products have added greatly to the success of AFLAC's U.S. business. In 1998 we began selling payroll life insurance, which fills an important need for many of our payroll accounts. Payroll life sales jumped by more than 23% in 2001, compared with the year before and represented about 5% of sales last year. In 1999 we introduced a specified event policy that has also sold well, with sales in 2001 increasing by nearly 26%, compared with 2000. But without a doubt, the most successful new product launch was our fixed-benefit dental product. Introduced in July 2000, this product has already become our third-best-selling product category, with sales of $60 million during 2001.

Rapidly Growing Our Sales Force

       We complement our strong focus on product development with an aggressive plan to expand our distribution system by recruiting new sales associates. The expansion of our sales force is crucial to our company's growth. And during 2001 our recruiting remained very strong. We recruited a record 18,000 new sales associates during the year, an increase of more than 25% compared with 2000. The average number of sales associates who produce business each month rose 21.5% to more than 13,000, compared with about 10,800 in 2000. By year-end 2001, AFLAC was represented by more than 43,000 licensed independent sales associates and insurance brokers.