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In recognition of our company’s enormous growth over the last several years, we decided to divide the responsibilities for U.S. sales and marketing into two positions. We promoted Brad Jones to the newly created position of senior vice president and director of U.S. sales. Brad joined AFLAC as a sales associate in 1984 and has excelled at every level of sales force management. Most recently he was vice president, territory director of the Northeast Territory, which had produced strong growth for the last four years under Brad’s leadership.
At the same time, Joe Kuechenmeister will continue to play a valuable role as senior vice president and director of marketing. Joe has been with AFLAC since 1970 and has made significant contributions to our business in his more than 13 years as director of sales and marketing. We believe the experience and enthusiasm of Brad and Joe together will enhance the fundamentals of our distribution system – expanding our coordinator base, opening up new accounts, recruiting and training.
Splitting the marketing and sales director functions was just one of the many actions we took last year to improve future sales growth. We also increased the number of our sales territories from five to seven, and throughout the year, we added to our number of state, regional and district coordinators. By expanding our marketing and sales force management, we believe we will be able to more effectively recruit and train new sales associates. That, in turn, should help us better penetrate the vast U.S. market.
Just as we expanded our sales management team, we also continued broadening our product line. In 2003, we introduced a new generation of accident, short-term disability and cancer products. Combined, the accident/disability category and cancer expense products accounted for approximately 70% of our annual sales. We view the continual process of revising and enhancing our products as a vital aspect of our leading market position.
One constant in the last several years has been the popularity of our advertising campaign featuring the AFLAC Duck. Our new annualized premium sales have doubled since 1999, the year before the AFLAC Duck began appearing in our commercials. We don’t think that’s a coincidence. The AFLAC Duck has steadily propelled our name recognition and brand awareness to new heights. We are convinced that our recruiting and sales have benefited in the last four years from the improved awareness of AFLAC. And we intend to protect our brand.
In looking at the U.S. market, we believe there is great opportunity for growth. AFLAC products are well-suited, both in quality and price, for the needs of U.S. consumers. Furthermore, the market for our products remains significant and underpenetrated. We also believe that our continued focus on product broadening and sales force expansion will enable us to further tap into that market.
As we look to 2004, we expect to see improved sales growth at AFLAC U.S., compared with last year. We are optimistic that the changes we made to our sales force infrastructure will improve recruiting and training, and ultimately, new sales. In Japan, we believe our leading cancer life and medical products will continue to serve as the two pillars of our product line. We know there is a large potential customer base remaining in the Japanese and U.S. insurance markets. And we believe we are well-positioned to tap into that potential.
AFLAC has flourished over the years even though the economies in both the United States and Japan have been volatile. We believe our ability to improve profitability and generate strong growth regardless of the economic environment reflects the underlying strength and resilience of our business. And that strength comes from a carefully constructed business strategy that has provided us with an edge in the marketplace. By continually honing that edge, we believe we will continue to provide valued products and service to our customers, and solid growth for our shareholders.
Daniel P. Amos
Chairman and Chief Executive Officer
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