Even with our slower sales growth in 2003, we still do not believe there is anything to suggest that the AFLAC business model is broken. In addition to tremendous sales success in previous years, many states produced strong sales growth last year, which we believe illustrates that our model is still effective.
Also, we have not seen any changes in the U.S. marketplace that would cause us to alter our strategy. In a recent study conducted by the Washington Business Group on Health, which represents nearly 200 major employers in the United States, 57% of employers said they plan to increase copayments in 2004. And according to the Kaiser Family Foundation, a nonpartisan group that tracks health care spending, health care costs rank among Americans’ top concerns. The study found that 36% of Americans said they were very worried that the amount they pay for health care services or health insurance would increase. That was more than twice the percentage of people who were very worried about not being able to pay their mortgages, losing money in the stock market, or losing their jobs. In short, health care costs for businesses and consumers are still rising and should lead to an even greater need for our products.
Against this backdrop of consumer concern about health care costs, we believe AFLAC products are perfectly suited for the U.S. market because they offer a measure of financial security. Also, despite our strong growth over the past 10 years, there remains a vast, untapped market of potential payroll accounts. Our 288,100 payroll accounts at year-end represent only about 5% of the roughly 5.6 million small businesses in the United States. Given the need for our products and their low penetration in the marketplace, we anticipate stronger sales in the coming years. To accomplish that, we will focus on achieving the following objectives.
Enhance our product line: We will continue to concentrate on offering the best products with the best service at the best price. This means developing new products and revising existing ones, even those that are the most popular.
Expand our distribution system: The expansion of our coordinator base is critical to our success and will continue in future years. This expansion should improve recruiting and training of new AFLAC sales associates.
Continue strengthening brand awareness: Our new AFLAC Duck television commercials in 2004 will continue strengthening our brand awareness. We believe our advertising campaign is an important way for us to demonstrate to consumers how our products can provide them an extra measure of financial security.
Improve efficiency through technology: We will continue to employ technology to control operating expenses. New technological initiatives will enable us to efficiently handle an ever-growing business while maintaining superior service levels to our customers and sales associates.
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