Advertising Benefits Sales, Recruiting

       One of AFLAC's many strengths has been the effectiveness of its advertising campaign. Our unique advertisements, featuring the popular AFLAC duck, have produced a dramatic increase in AFLAC's visibility. As a result, our sales and recruiting have benefited from advertising, as has the general awareness of AFLAC and its products.

       More people than ever before now know of AFLAC. Independent research conducted in 2001 revealed that 91% of Americans were aware of AFLAC's advertising. We believe the new AFLAC duck commercials that will air in 2002 will improve awareness of AFLAC even more. In addition, the AFLAC duck has been increasingly recognized as a symbol of our philanthropic efforts.

Our Commitment to Giving

       AFLAC has long understood that, as a leader in the insurance industry, it is in a unique position to help with health-related issues. And because we have a long history of success with our founding product, cancer expense insurance, it's perhaps understandable that our charitable efforts focus on cancer research and treatment. We intensified those efforts in 1995 when we became the naming sponsor of what is known today as the AFLAC Cancer Center and Blood Disorders Service at Children's Healthcare of Atlanta.

       AFLAC's employees and sales associates are very generous with their time and money when it comes to the AFLAC Cancer Center, which specializes in treating pediatric cancer and blood disorders, including sickle cell anemia. In addition, the proceeds from all the toy AFLAC ducks sold through aflac.com go to the AFLAC Cancer Center. From 1995 through 2001, we raised more than $8 million for the center. Additionally, we announced our largest philanthropic commitment ever to the AFLAC Cancer Center through a gift of $10 million. We feel very fortunate that we are in a position to help improve the lives of young cancer patients and their families, and hope that one day childhood cancer will be cured.

Employing Technology to Accommodate Rapid Growth

       Our explosive sales growth has triggered a new emphasis on using technology to efficiently handle an increasingly large block of business. Clearly, our most recognizable technological achievement to date is SmartApp. This laptop computer software allows our sales associates to electronically transmit policy applications to our headquarters. SmartApp improves service to our customers and saves time by reducing paperwork and speeding up the application process. In many cases, an application processed on SmartApp can be jet-issued, meaning no human intervention is required to process the application. In 2001, we processed about 84% of all payroll applications on SmartApp. Of those applications, more than half were jet-issued. We are in the process of upgrading SmartApp so that it can handle administrative functions in addition to electronically transmitting policy applications. Among other things, SmartApp will be able to electronically transfer policies from one payroll account to another.

       By the end of 2001, one of our newest systems initiatives, Internet billing, became available to payroll accounts in virtually every state. Designed for payroll accounts with fewer than 200 policies in force, Internet billing allows those payroll accounts to pay their invoices online or to electronically submit policy changes such as a change of address, employment status, and more. This software should help ease the administrative burden for many small businesses and benefit AFLAC's operations as well.

       We are also making greater use of the Internet to provide improved service to our sales associates and customers. Our sales associates can now get online updates on the status of their customers' claims and policy applications. This saves time for our associates and our customer service representatives. And for the first time ever, we used a company's intranet to enroll its workers at a large payroll account. In the fourth quarter of 2001, we offered our cancer expense product to Wal-Mart employees, who signed up for coverage at computer terminals at Wal-Mart and Sam's Club stores throughout the country. There is no doubt that technology will play a greater role than ever before in helping us improve work processes and service to our ever-growing customer base.