Annual Report for 2004 Aflac
Financial Highlights
Our Mission and Philosophy
Cover Story
Composition of Aflac's Market in Japan and the United States
Message from Management
Q & A with the CEO
Aflac Japan
Aflac U.S.
Selected Financial Data
Management's Discussion and Analysis
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Investor Information
Board of Directors and Management
Aflac Duck
Aflac U.S.
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A Year of Building and Growth

2004 was, in part, a year of building for Aflac's future success in the United States. We further enhanced our product line. We also continued building our sales management infrastructure. And we introduced a new branding initiative that represents the most important change to our company since the Aflac Duck was introduced five years ago.

2004 was also a year of solid growth from a financial perspective, and one in which we met our financial targets. Aflac U.S. revenue and pretax operating earnings growth was in line with our expectations. However, total new annualized premium sales, which rose 5.1% to $1.2 billion, fell short of our target for the year. Below are some financial highlights for 2004:

  • Premium income rose 13.1% to $2.9 billion, up from $2.6 billion in 2003.
  • Total revenues were up 12.6% to $3.3 billion, increasing from $3.0 billion in 2003.
  • Pretax operating earnings increased 11.5% to $502 million, compared with $451 million in 2003.

Aflac Products – The Foundation of Our Success

We approach our business with knowledge that the speed of life is unpredictable and different for everyone. And when life gets complicated, we keep things simple by fulfilling the commitments we have made to our policyholders quickly and fairly.

Our unwavering commitment to our customers and our ability to meet consumers' needs with product offerings are the most fundamental elements of our business. As a market leader, we update our product line by periodically refining existing products and looking for new product opportunities. But we do so only after researching consumer needs and receiving input from our sales force.

Based on consumer feedback, we revised our dental product in November 2004. We streamlined the total number of dental plans we offer and increased the value of the wellness benefit, among other changes. We also created a Web site for providers to facilitate benefit verification. In addition, we developed Today's Vision, a new and unique vision care product that goes beyond coverage for exams and vision correction materials by providing benefits for eye health. We will introduce this new product to the market in mid-2005.

Building a Sales Organization to Support Future Growth

Our strategy of adding new products and building distribution has led to tremendous growth for Aflac U.S. While we were very pleased with Aflac's financial results in 2004, we felt new sales growth should have been stronger. It became apparent that we needed more time to adjust to the significant changes we made in our distribution system in 2003 and at the start of 2004.

Following explosive recruiting growth from 2000 through 2002, we concluded that we needed to expand and strengthen our sales management infrastructure, which had not kept pace with our rapidly expanding sales force. The changes we made to our sales infrastructure were the most extensive in our company's history. We have significantly more sales coordinators than in the recent past. These changes proved to be more disruptive than we initially anticipated. However, we believe they were absolutely necessary for us to better manage a greatly expanded sales force and produce strong sales growth in the long run.

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