In response to a changing environment, AFLAC has developed products that can help ease those cost burdens. One of our newer products, called EVER, was designed to meet consumer demand for living benefits. It is the number one selling stand-alone medical product offered by a life insurer in Japan. Standalone medical sales accounted for 28% of total new sales in 2003. Another of our products, a whole-life version of our popular Rider MAX coverage, also offers consumers medical benefits with a level premium for as long as they keep the rider in force. We developed these products in response to research that indicated the vast majority of Japanese consumers want premium rates that remain level over time.

Even with the many changes in Japan’s market, our 21st Century Cancer Life product has been a constant. It continues to be a pillar of our product line and is the standard by which all other cancer policies are measured in Japan. In 2003, cancer life sales accounted for 27% of our total new annualized premium sales.

Distribution Remains an AFLAC Strength

Our distribution system continues to be one of the best in Japan. In 2003, we honed that edge by recruiting more than 4,000 new sales agencies, which exceeded our target of 3,500. We have set a goal for 2004 to recruit at least 4,000 agencies. Our focus has been to recruit individual agencies to better reach workers at the vast number of small to medium-sized businesses in Japan. We estimate that there are more than 38 million potential customers in this segment of the market.

Our relationship with Hojinkai, an association that includes more than 1.2 million small to medium-sized businesses, has helped us tap into that market. This relationship facilitates our sales associates’ access to a very large market. Hojinkai has endorsed EVER, Rider MAX and 21st Century Cancer Life to its member firms.

Another important element of our distribution system is our strategic marketing alliance with Dai-ichi Mutual Life Insurance Co. Dai-ichi Life, through its more than 48,000 salespeople in Japan, offers 21st Century Cancer Life to its customers. We continue to be very pleased with the sales results of the Dai-ichi Life alliance. We have benefited from the extensive distribution network of Dai-ichi Life. At the same time, Dai-ichi is able to offer its customers the best cancer product on the market. In 2003 alone, Dai-ichi Life sold more than 305,000 AFLAC polices to their customers.

We believe new sales agencies and customers are attracted to AFLAC in part because of our integrity and solid reputation. In light of the failure of seven insurance companies since 1997, they are also attracted to our financial strength. In its June 17, 2003, issue, Japan’s Economist magazine ranked AFLAC as the number one life insurer for financial strength in Japan. The magazine came to the same conclusion in its December 16, 2003, issue. In addition, the November 28, 2003, issue of the Nikkei Kinyu, a leading daily financial newspaper in Japan, identified AFLAC as the best life insurer in Japan. We also believe that our effective advertising campaign has helped attract new agencies. In 2003, we further strengthened our branding efforts by producing AFLAC Duck commercials specifically for the Japanese market.

Because AFLAC’s name recognition in Japan already exceeds 90%, the AFLAC Duck commercials in Japan focus on promoting specific products rather than building name awareness. One of the commercials promoted the EVER product, while another supported the sales of Rider MAX. A third commercial, featuring a well-known Japanese celebrity, was produced to let consumers know that AFLAC became Japan’s number one life insurance company in terms of individual insurance policies in force in 2003.