2003 was a year of aggressive action at AFLAC U.S. We made significant changes in our sales infrastructure. We enhanced our product line and unveiled new technology that is improving service to our customers and sales associates. We also introduced new commercials featuring the popular AFLAC Duck.
We combined these efforts with discipline and a determination to achieve one major goal – providing the best products with the best service at the best price. We have always believed that our intense focus on developing valuable products provided us with an edge over our competition. And we believe that our efforts in the product, distribution, technology and branding areas have helped us hone that edge. Below are some highlights for the year.
Total new annualized premium sales increased 5.4% to more than $1.1 billion, compared with slightly less than $1.1 billion in 2002.
Premium income rose 16.8% to $2.6 billion, up from $2.2 billion in 2002.
Total revenues were up 15.8% to $3.0 billion, increasing from $2.6 billion in 2002.
Pretax operating earnings increased 12.0% to $451 million, compared with $402 million in 2002.
Even though AFLAC U.S. produced record sales, the growth of new annualized premium sales in 2003 did not meet our initial expectation of a 15% increase. We concluded that our tremendous growth over the last several years had stressed our sales management infrastructure. To improve future sales growth, we embarked on an aggressive initiative to expand our sales force infrastructure, thereby enhancing our recruiting and training capacity.
Experience tells us that expanding our coordinator base ultimately leads to better recruiting and sales. And that was certainly the case in the Northeast. Our Northeast Territory had a strong year in terms of coordinator expansion, and it led the company with a sales increase of more than 21%.
In May 2003, we increased the number of sales territories from five to seven. In turn, we increased the number of state coordinators from 63 at year-end 2002 to 85 at the start of 2004. We also increased the number of regional coordinators, who are primarily responsible for recruiting, by 10.9%. At the same time, we increased the number of district coordinators, who have training responsibilities for new sales associates, by 12.9%.
We recognize that it takes time for newly promoted sales coordinators to adjust to their new responsibilities and territories. And with our intense focus on building the sales coordinator base, recruiting slowed in the year, increasing by 2.2% over 2002. However, the growth in the average number of monthly producing sales associates for the year was 8.3%. Furthermore, as sales coordinators concentrate on building their sales teams, we believe recruiting and sales will pick up.
AFLAC’s products are designed to provide consumers with cash as quickly as possible following an illness, accident or other health-related problem. Our products provide fixed-benefit amounts rather than open-ended payments. Policyholders can use that money to help offset deductibles and copayments, other medical expenses, and nonmedical expenses such as travel, lodging and lost wages.
In 2003 we improved our product line by introducing new versions of our accident, short-term disability, and cancer products. These products were already our best sellers, but we made them even better in 2003 by upgrading or expanding benefits. Accident/disability was again our top-selling product category for the year, accounting for 51% of sales.
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