AFLAC - Annual Report for 2001

Investing Wisely in a Volatile Market

The impact of a weakening economy and the events of September 11 resulted in volatile capital markets that made investing a challenge in 2001. Yet our investment approach required little change. We continued to invest conservatively because our financial assets back the promises we have made to our policyholders. At the same time, our conservative posture helps produce a predictable source of investment income for the company and its shareholders.

We continued to avoid the junk bond market, as well as the investment real estate and mortgage sectors. Our holdings continue to include mostly investment-grade debt securities, which make up about 95% of investments and cash. At the end of the year, more than 72% of our debt securities were rated "A" or better.

Potential for Continued Growth Remains Strong

Despite the incredible sales growth we have produced over the last several years, we believe we have merely scratched the surface of the market. With consumers becoming responsible for an increasing portion of their health care expenses, the need for our products should continue to grow. At the same time, the overall market for potential payroll accounts is enormous. The Small Business Administration estimates that there are more than 5.5 million businesses in the United States with fewer than 500 workers. This means that with 200,000 payroll accounts, AFLAC's penetration of the small to medium-size business market is less than 4%. We believe this greatly illustrates the vast opportunity that awaits us. More importantly, we believe we are well-positioned to tap into that potential. To do that, we will:

Enhance our product line. Our focus on an expanding product line is crucial to our continued success. We will work to explore new product opportunities, while also enhancing our existing products to ensure they offer the best value in the market of supplemental coverage.

Increase our distribution. We know that the adage "success breeds success" applies to a growing commission-based sales force. We believe that our products, commissions, advertising, and reputation will continue to attract top salespeople.

Improve efficiency. Controlling expenses is critical to managing a large and growing policy base. It also allows us to continue to offer the best products and the best service at the best prices to our customers, while also providing our sales associates with competitive compensation.

Expand brand awareness. Although our advertising awareness is already at 91%, we believe we can continue to build on our branding efforts through our popular advertising campaign. Ultimately, we believe our advertising will have more consumers asking about AFLAC at work.

According to the Health Insurance Association of America, approximately 91 million people in the United States are insured at their places of employment.

Investing Wisely in a Volatile Market

The impact of a weakening economy and the events of September 11 resulted in volatile capital markets that made investing a challenge in 2001. Yet our investment approach required little change. We continued to invest conservatively because our financial assets back the promises we have made to our policyholders. At the same time, our conservative posture helps produce a predictable source of investment income for the company and its shareholders.

We continued to avoid the junk bond market, as well as the investment real estate and mortgage sectors. Our holdings continue to include mostly investment-grade debt securities, which make up about 95% of investments and cash. At the end of the year, more than 72% of our debt securities were rated "A" or better.

Potential for Continued Growth Remains Strong

Despite the incredible sales growth we have produced over the last several years, we believe we have merely scratched the surface of the market. With consumers becoming responsible for an increasing portion of their health care expenses, the need for our products should continue to grow. At the same time, the overall market for potential payroll accounts is enormous. The Small Business Administration estimates that there are more than 5.5 million businesses in the United States with fewer than 500 workers. This means that with 200,000 payroll accounts, AFLAC's penetration of the small to medium-size business market is less than 4%. We believe this greatly illustrates the vast opportunity that awaits us. More importantly, we believe we are well-positioned to tap into that potential. To do that, we will:

Enhance our product line. Our focus on an expanding product line is crucial to our continued success. We will work to explore new product opportunities, while also enhancing our existing products to ensure they offer the best value in the market of supplemental coverage.

Increase our distribution. We know that the adage "success breeds success" applies to a growing commission-based sales force. We believe that our products, commissions, advertising, and reputation will continue to attract top salespeople.

Improve efficiency. Controlling expenses is critical to managing a large and growing policy base. It also allows us to continue to offer the best products and the best service at the best prices to our customers, while also providing our sales associates with competitive compensation.

Expand brand awareness. Although our advertising awareness is already at 91%, we believe we can continue to build on our branding efforts through our popular advertising campaign. Ultimately, we believe our advertising will have more consumers asking about AFLAC at work.

According to the Health Insurance Association of America, approximately 91 million people in the United States are insured at their places of employment.

Annual Report Home Contact Information Site Map Download this Report AFLAC.com