WE ARE AFLACinvestors.aflac.com/~/media/Files/A/Aflac-IR/.../aflac-2017.pdf · For more than 63...

2 0 1 7 Y E A R I N R E V I E W

W E A R E A F L A C

For more than 63 years, Aflac has had the extraordinary privilege and opportunity to help

provide financial protection and peace of mind to now more than 50 million people. We make

good on this commitment by delivering on our promise to be there for our policyholders

when an illness, health event or life situation occurs – at precisely the time they need us most.

This promise lies at that heart of what we do, but Aflac is much more than the promise we

sell each day. Aflac is committed to helping provide financial protection and peace of mind

for our policyholders. We are committed to empowering people to pursue their dreams

through a team of employees, independent sales agents and sales distribution networks.

We’re committed to our decades-long track record of creating value and rewarding our

shareholders for their investment and the trust they place in us. We are devoted to the cause

of the child battling cancer. Simply put, this is who we are – we are Aflac.

COVER STORY

We are Aflac. We believe that the very nature of who we are as a company is reflected

in the ways we help those with whom we do business. Who we are drives us to help our

policyholders focus on their recovery rather than financial worries, so they can get back to

the activities that make them who they are. In the case of Aflac policyholder Satoru Kasuya,

that has meant empowering him to focus on his personal journey of recovery, returning to

the joy of running, and inspiring others to do the same. Read more on page 10.

W E A R E A F L A C

PAGE

24

PAGE

27PAGE

10

PAGE

4

PAGE

33

TABLE OF CONTENTS

4 Message from Management

6 A Conversation with

Aflac Chairman and CEO Dan Amos

8 The Impact of

Foreign Currency on Aflac

10 Aflac Japan

24 Aflac U.S.

36 Aflac Corporate Ventures

37 Aflac Global Investments

38 Selected Financial Data

40 Investor Facts

42 Board of Directors and Executive Management

44 Glossary of Selected Terms

AFLAC INCORPORATED YEAR IN REVIEW 2017 | 1

A F L A C ’ S G O A L

To provide customers with

the best value in voluntary

insurance products in the

United States and Japan

Aflac’s voluntary insurance products pay cash benefits directly to the policyholder to help protect against income and asset loss when a specific health event or life situation presents financial challenges. Aflac is the number one provider of voluntary insurance at the worksite in the United States* and insures one in four households** in Japan, providing financial protection to more than 50 million people.

*Source: Eastbridge Consulting Group, Inc. U.S. Worksite/Voluntary Sales Report. Carrier Results for 2016. Avon, CT: April 2017**Based on the 2017 number of households published by Japan’s Ministry of Internal Affairs and Communications

2

RELEVANT PRODUCTS

PROTECTING AGAINST:

RISING OUT-OF-POCKET MEDICAL EXPENSES,

COPAYS AND DEDUCTIBLES

EXPANDED DISTRIBUTION

REACHING CUSTOMERS:

AT THE WORKSITE

THROUGH AGENTS

AND BROKERS

THROUGH PARTNERSHIPS

NEW ACCOUNTS AND CUSTOMERS

INSURING:

MORE THAN 50 MILLION PEOPLE

O U R L O N G – T E R M G R O W T H S T R A T E G Y

yieldssold through


year and generating solid financial results while also actively investing in our platform. We remain enthusiastic about opportunities for longer-term sales.

STRONG CAPITAL PROFILE SUPPORTS OUR PROMISE Our strong capital position reinforces what I believe is the most important promise an insurance company makes to its policyholders – to protect them when they need us most by paying claims fairly and promptly. We believe the financial strength of our company is important to our business. Our robust capital ratios and balance sheet demonstrate our commitment to maintaining strong capital levels and flexibility on behalf of our policyholders, bondholders and shareholders. We regularly assess our capital adequacy to ensure these levels remain strong, even against extreme economic scenarios. As a result, we hold among the highest financial strength ratings in the industry.

We’re proud that rating agencies continue to recognize the strength of our balance sheet. Our financial strength ratings, which reflect our ability to pay claims, are A+ (Superior) by A.M. Best, Aa3 by Moody’s, A+ by Standard & Poor’s (S&P), A+ by Fitch and AA- by Rating & Investment Information Inc. (R&I).

While policyholders are always top of mind, we also strive to enhance shareholder value through capital deployment. In 2017, we repurchased $1.35 billion, or 17.8 million of our common shares. Our Board of Directors approved a 4.7% increase in the quarterly cash dividend to shareholders in 2017, marking the 35th consecutive year of dividend increases. This increase in the dividend placed us among a very elite category of companies, including recognition on the S&P 500 Dividend Aristocrat listing. On top of that, the Board increased the dividend by 15.6% in the first quarter of 2018, reflecting overall strength in the company’s capital position and an outlook for stable growth in earnings and deployable capital generation. This accelerated resetting of the dividend demonstrates our commitment to rewarding our shareholders. Including dividends and share repur-chase, we returned more than $2.0 billion to our share-holders in 2017. I am pleased with these actions, as well as with the Aflac Incorporated Board of Directors’ decision to declare a two-for-one stock split facilitated through a stock dividend.

We Are Aflac

We Are Aflac. It is our privilege to deliver peace of mind and help provide financial protection to more than 50 million people in Japan and the United States.

Our product is intangible: We sell a promise to be there for our policyholders and insureds when they need us most by paying claims fairly and promptly. Living up to that promise is what really counts in delivering a positive consumer experience and building a strong brand. It’s part of what we call The Aflac Way, which embodies who we are and what we do.

2017 was another year in which Aflac extended our record of success. Both Aflac Japan and Aflac U.S. honed several points of leverage over the last several decades:

• Industry-leading market share and scale

• Innovative products and high-quality, customized service

• Recognized and powerful brand

• Diverse and productive distribution channels

In focusing on these strategic points of leverage, we achieved our 2017 operating earnings per diluted share objective, excluding the impact of foreign currency,* which grew 6.3%. This metric is one of the principal financial measures used to evaluate management’s performance, and we believe it continues to be a key driver of share-holder value.

AFLAC JAPANIn Japan, where we are proud to insure one in four house-holds, we worked to strengthen relationships with our sales channels and enhance our product line to ensure we’re continuing to meet the needs of consumers. In 2017, these actions were again instrumental in maintaining our status as the leading provider of both medical and cancer insurance in Japan. As a result we met our third sector sales objectives, increasing third sector sales 4.1% for the year and generating solid financial results.

AFLAC U.S. In the United States, Aflac again earned the distinction of being the number one provider of voluntary insurance at the worksite.** In 2017, Aflac U.S. met our new annualized premium sales objectives, increasing sales 4.7% for the full

MESSAGE FROM MANAGEMENT

DANIEL P. AMOS, CHAIRMAN AND CEO

4

Aflac is committed to making business decisions that balance the needs of our many constituencies, including our policyholders, employees, distribution network and shareholders, while recognizing the obligation we have to the global community. We are dedicated to the health and well-being of the people we serve and also to the health and well-being of the environment. As such, we strive to balance effective and efficient management of our opera-tions with responsible environmental stewardship. We don’t seek recognition for the sake of recognition, but when we receive accolades, it lets us know we’re doing the right things. As just a few examples of the recognition Aflac has received with respect to sustainability, in 2017:

• Aflac became the first U.S. insurance company to become ISO 50001: Energy Management Systems registered and the 10th data center in the U.S. to become Energy Star certified

• Newsweek Magazine named Aflac as #33 on its U.S. Green Ranking list, which evaluates the 500 largest publicly traded companies

• Aflac was included for the 7th consecutive year on the Dow Jones Sustainability Index (DJSI) for North America

At Aflac, we have always managed our business for the long term while focusing on meeting our financial objec-tives. As we reflect on 2017 and look to the future, deliv-ering on our promise has been and will remain our top priority. After all, that is not only what sets Aflac apart, it’s who we are.

*Operating earnings per diluted share excluding the impact of foreign currency is a non-GAAP financial measure. See page 44 for a definition of this measure and a reconciliation to the most directly comparable

**Source: Eastbridge Consulting Group, Inc. U.S. Worksite/Voluntary Sales Report. Carrier Results for 2016. Avon, CT: April 2017

Daniel P. Amos Chairman and CEO, Aflac and Aflac Incorporated


Q: What do you see as your most important responsibilities as CEO?

A: Delivering on our promise to policyholders, being transparent, and protecting the Aflac brand are among my most central responsibilities. With our products being intangible, we have to work harder to show their value, and we show that value by delivering on our promise to be there when policyholders need us most. Additionally, we work hard each day to be as straightforward and transparent as possible so that the financial community and all stakeholders understand what our objectives are, how we are going to achieve them, and what challenges we face. Finally, protecting the Aflac brand is always on my mind, because our brand is everything to us. Our brand is more than just our commercials – it is those who represent our business: our sales force, our employees and our culture. It is who we are. On the advertising side of the brand, with technology that allows consumers to bypass commercials, I believe businesses just starting out and trying to develop a new brand from scratch with the name recognition like ours face huge challenges, including tremendous costs.

Q: What do you see as Aflac’s role in the local and global community?

A: Our businesses in the United States and Japan are closely tied to their surrounding communities. So, from a practical standpoint, it also makes sense to give back to the community. And keep in mind, performing for shareholders and being a responsible corporate citizen are not mutually exclusive. A passion for fighting childhood cancer and supporting cancer research took hold in 1995 when we began our partnership with the Aflac Cancer and Blood Disorders Center of Children’s Healthcare of Atlanta and has never let up. Since that time, our treasured partnership has grown larger and more meaningful than I could have ever imagined. Not only has this passion literally become ingrained in our corporate culture and been embraced by every level of our sales force and employees, but it has also spanned the globe and has been embraced by Aflac Japan. In 2009, Aflac Japan opened the third Parents House, which is a home away from home for parents of children receiving cancer treatment. I believe that by being a strong corporate citizen, you ultimately have the opportunity to attract a high caliber of people who complement Aflac’s culture and, in turn, make your company that much stronger.

Q: Having achieved long-term success, how do you continue to foster growth?

A: In 2017, we achieved another year in which we delivered on our financial growth objectives, and we will continue to focus on our core fundamentals. At any given time, one aspect of the business may be a little stronger, and one might prove a little more challenging. But in managing the business from a long-term perspective, we understand that these challenges are inherent in business cycles.

A CONVERSATION WITH AFLAC CHAIRMAN AND CEO DAN AMOS

6

Q: Can Aflac continue its strong rate of growth?

A: Success can be a double-edged sword. It can create difficult comparisons for the future. Having said that, our size is beneficial to us because of the financial stability it provides and the administrative efficiency that allows us to offer low-cost products, both of which give us a competitive edge. Simply put, we see enormous potential in both of our markets. With rising copayments, deductibles and other out-of-pocket expenses in the United States and Japan, there is still great opportunity ahead. We stick to what we do best, which is a strategy that has helped us achieve our earnings targets. It’s also one we believe will extend our record of growth over the long term.

Q: What are your thoughts on Aflac’s competition in Japan and the United States?

A: In the United States, we are the leading provider of voluntary insurance at the worksite. While other companies are getting into the voluntary space, I do want to emphasize one major difference between Aflac and all the other competing U.S. companies: For Aflac, voluntary insurance sold at the worksite represents our primary focus, whereas our competitors tend to offer voluntary products as a peripheral line of business. We believe this discipline and focus give us an edge that has contributed to our market-leading position. In Japan, Aflac has been the number one seller of cancer insurance since we entered the Japan market in 1974 and the leading seller of medical insurance since we introduced EVER, our base medical policy, in 2002. In 2017, Aflac Japan remained the leading provider of cancer and medical insurance policies in Japan, insuring one in four households, and that demonstrates that we are seizing the sales opportunities out there!

Q: As chairman and CEO, you obviously focus an enormous amount of your time on work. When you have some free time, what do you like to do?

A: One of the many things I enjoy doing is spending time at my farm. Whether fishing, horseback riding, or spending time with my family and friends, it’s a peaceful place where I can unwind, recharge, and come back to work with fresh ideas. The farm is also a place where I do a lot of entertaining, including agent groups from Japan. I find this setting helps people get to know each other on a more personal level. I believe this interaction helps us to become a more cohesive team when we get back to the office.


8

The company believes that it is important to understand the impact of translating yen into dollars on our financial statements. A significant portion of Aflac’s business is in Japan, where the functional currency is the yen. For financial reporting purposes, we translate Aflac Japan’s results in yen into U.S. dollars.

THE IMPACT OF FOREIGN CURRENCY ON AFLAC

IMPACT OF FOREIGN CURRENCY ON THE INCOME STATEMENTAflac’s income statement is translated at the average exchange rate for the period. In years when the yen strengthens, translating yen into dollars causes more dollars to be reported. In years when the yen weakens, translating yen into dollars causes fewer dollars to be reported. As you can see below, the yen strengthens and weakens periodically. In 2017, the average yen/dollar exchange rate weakened 3.1% from 108.70 yen to the dollar to 112.16 yen to the dollar, which suppressed Aflac’s income statement in dollar terms. We believe that viewing our results excluding the impact of foreign currency is the most meaningful way to evaluate our financial performance. Japan pretax segment operating earnings for the full year of 2017 were $3.05 billion. Excluding the impact from the weaker yen, Japan pretax segment operating earnings were $3.12 billion.

*

Weighted-Average Yen/Dollar Exchange Rates

2011 2012 2013 2014 2015 2016 2017

Yen/DollarExchange Rate (Average)

90

100

80

70

110

120

¥130YEN

WEAKENING

Source: Internally calculated weighted-average yen/dollar exchange rates.

* Amount excluding current period foreign currency impact (a non-GAAP measure) was computed using the average yen/dollar exchange rate for the comparable prior-year period, which eliminates dollar-based fluctuations driven solely from currency rate changes.

2011 2012 2013 2014 2015 2016 2017

Japan

U.S.

SEGMENTS

0

.5

1.0

1.5

2.0

2.5

3.0

3.5

$4.0

2011 2012 2013 2014 2015 2016 2017

Japan

U.S.

SEGMENTS

0

.5

1.0

1.5

2.0

2.5

3.0

3.5

$4.0

2017 2017

$3.05 $3.12

As Reported

Excluding Foreign Currency Impact

JAPAN SEGMENT

Pretax Segment Operating Earnings(Dollars, In Billions)

YEN STRENGTHENING


IMPACT OF CURRENCY ON THE BALANCE SHEETAflac primarily holds yen-denominated assets to support the large amount of yen-denominated liabilities in Japan. Except for certain transactions, Aflac does not convert yen into dollars. Aflac Japan’s balance sheet is translated using the exchange rate at the end of the period. Given the recent strengthening of the yen, Aflac’s balance sheet was likewise only slightly magnified in dollar terms. The year-end exchange rate for 2017 strengthened 3.1% from the prior year to 113.00 yen to the dollar. Aflac Japan’s total segment assets at the end of December 2017 were $114.4 billion. Excluding the impact from the yen at year end, total segment assets were $111.0 billion.

It’s noteworthy that Aflac’s currency exposure is primarily translation-related as opposed to currency transac-tions. Due to the significant contribution of Aflac Japan’s operations to overall earnings, a weaker yen suppresses Aflac Japan’s results as reported in dollars. The weighted average yen strengthened in 2016 and weakened in 2017.

*

YEN WEAKENING

YEN STRENGTHENING

Source: Bloomberg ©

2011 2012 2013 2014 2015 2016 2017

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Yen/DollarExchange Rate (Year End)

90

100

80

70

110

120

¥130

Year-End Yen/Dollar Exchange Rates

* Amount excluding current period foreign currency impact (a non-GAAP measure) was computed using the year-end spot yen/dollar exchange rate for the prior-year period, which eliminates dollar-based fluctuations driven solely from currency rate changes.

$111.0$114.4

2017 2017

As Reported

Excluding Yen Impact

JAPAN SEGMENT

Japan

U.S. 2011 2012 2013 2014 2015 2016 2017

0

20.0

40.0

60.0

80.0

100.0

$120.0

SEGMENTS

Segment Assets (Dollars, In Billions)

17Satoru Kasuya’s story of determination and grit has been so compelling that he was featured in one of Aflac Japan’s television commercials to inspire others battling cancer and to share how Aflac policies provide financial protection.

20Aflac Japan

10


Satoru Kasuya, long-distance runner and member of the Toyota Boshoku corporate running team, has been an Aflac cancer insurance policyholder since the age of 22 when his father purchased a policy for him. He has often thought that the best part of having cancer insurance is not needing to use it. A glimpse into Kasuya-san’s life reveals personal dedication to fitness, endurance, speed and excellence. An athlete since the age of 13, he finds great joy from running. One would never know that only four short years ago, after feeling under the weather, he was diagnosed with malignant lymphoma – and was thrust into one of the most harrowing competitions of his life. He found it particularly difficult to break the news of his

diagnosis to his family, especially because another family member had also recently been diagnosed. Fortunately, it wouldn’t be long before his innate discipline and dedication to overcoming obstacles would prove key to charting an exhaustive but successful road to recovery. Throughout his sickness, his Aflac policy gave him peace of mind and benefits that helped him focus on his recovery rather than concerns about the cost of treatment. Throughout his treatment, Kasuya-san longed to get back to running not just for his own personal joy, but to get the message out that one can thrive post-cancer. With dogged determination, he set his sights on returning to his pre-cancer fitness level and beyond! He has again hit his stride and has high aspirations for the future.

Daiki Ota, insurance salesperson at Gifu Kita Post Office, frequently accommodates customers who prefer to discuss their insurance needs from home by visiting their place of residence by motorcycle. Following a consultative interview to help gain a thorough understanding of the needs of each customer, he has the information he needs to provide customized product recommendations to meet their individual needs. Aflac’s cancer DAYS

“insurance for daily living” is one such product that many post office customers need.

Historically, Japanese consumers have trusted postal outlets in Japan with many important services, including traditional postal products and delivery as well as deposit and insurance products. In 2008, a small portion of postal outlets began offering cancer insurance products of Aflac and now the number of outlets offering them expanded to more than 20,000. Aflac Japan is the only provider of cancer insurance distributed through this extensive network of post offices across Japan. With Gifu Castle atop Mt. Kinka in the background, Mr. Motohiko Tsuchiya (center), postmaster of Gifu Kita Post Office, is pictured with several employees involved in the many activities of the post office, including insurance sales.

12

“VISION 2024” is Aflac Japan’s mid- to long-term strategy that guides Aflac Japan’s operations

toward its 50th anniversary, under the leadership of Masatoshi Koide, who was promoted

to president and chief operating officer of Aflac Japan in 2017. VISION 2024 is based on Aflac

Japan’s core capabilities, values and principles. These include our commitment to be there

for policyholders in their time of need, our founding principle to relieve the economic burden

of cancer and brand promise to support policyholders in “creating living in your own way.”

As part of VISION 2024, the concept of Aflac insurance is just as relevant today as it was in 1974 when Aflac Japan was founded and became the pioneer of cancer insurance in Japan. At that time, cancer was the second-leading cause of death in Japan and would become the number one cause of death in 1981. Our cancer insurance product addressed a significant need in Japan. By offering a product that helped Japanese citizens cope with the expenses that arise when battling cancer, Aflac Japan has been there to help provide Japanese citizens with options to protect their finances when a health event or life situation presents challenges.

Since its founding, Aflac Japan has navigated various challenges for more than 40 years, which more recently have included a declining birthrate and aging population, low-interest-rate environment and increased competition in the marketplace. Such conditions have put the national health care system under increasing financial strain, and consumers have faced higher out-of-pocket health care expenses. We believe this provides a natural catalyst for future growth. Through it all, one aspect of our business has remained unwavering: our commitment to keep the promises we make to our policyholders.

2017 AFLAC JAPAN FINANCIAL HIGHLIGHTS

IN YEN• Direct premium** decreased 2.7% to ¥1.5 trillion.

• Total revenues decreased 2.5% to ¥1.69 trillion.

• Pretax segment operating earnings increased 0.6% to ¥343.6 billion.

IN DOLLARS* • Direct premium** decreased 5.9% to $13.3 billion.

• Total revenues decreased 5.8% to $15.0 billion.

• Pretax segment operating earnings decreased 3.0% to $3.1 billion.

*Dollar amount reflects impact of foreign currency. **Direct premium represents amount excluding reinsurance.

Aflac Japan: We Are Aflac!


AFLAC JAPAN INSURANCE PRODUCTS

THIRD SECTOR INSURANCE FIRST SECTOR INSURANCE

• Cancer

• Medical

• Income Support

Life insurance products, including:

Protection type

• Term life

• Whole life

• GIFT

Savings type

• WAYS

• Child Endowment

CANCER INSURANCEIn 1974, Aflac pioneered the cancer product in Japan, and we remain the number one provider of cancer insurance today.

MEDICAL INSURANCEIn early 2002, we first introduced EVER, a stand-alone, whole-life medical product, as a solution to help Japanese citizens with rising copayments related to Japan’s universal health care coverage. Within one year of the introduction of EVER, Aflac became the leading seller of medical insurance in Japan.

INCOME SUPPORT INSURANCEIn July 2016, we launched a new third sector product, Income Support Insurance, designed to provide cash benefits when insureds are unable to work due to illness or injury. These benefits complement coverage within the social security system, including the disability pension provided by the Japanese government.

TERM LIFE AND WHOLE LIFEAflac first introduced term-life and whole-life insurance products in 1996. These products have smaller face amounts and provide death benefits. They are available as stand-alone policies and riders.

WAYS In 2006, WAYS was introduced. WAYS can be converted to a fixed annuity, medical coverage or nursing care benefits when the policyholder reaches a predetermined age.

CHILD ENDOWMENTIn 2009, Aflac introduced a child endowment product that pays a lump-sum benefit at the time of a child’s entry into high school and an educational annuity for each of the four years of college.

GIFTIn February 2017, we introduced a revised version. Upon the death of the insured, this product provides beneficiaries, typically family members, with a monthly benefit until the insured would have reached a predetermined age.

14

As part of the new employee orientation process, workers just joining Aflac visit one of the two Aflac Parents House locations in Tokyo. Hitoshi Akita, house manager at the Aflac Parents House, is pictured as he leads Aflac’s new class of employees through a tour and seminar about the Aflac Parents House. This allows new Aflac employees to learn about how they work for a company that is passionately involved in fighting pediatric cancer, which helps give them a sense of Aflac Japan’s compassionate culture of helping others. Having seen many families stay during a child’s treatment, Akita-san said, “One of the most important things we can do for the families of the children battling serious diseases is to keep life as normal as possible during a difficult and anxiety-ridden time that is anything but normal.”

We are Aflac – a compassionate company that cares about the communities in which

we operate. When a child is diagnosed with cancer or other serious medical condition, he

or she often must travel to Tokyo or Osaka from other parts of Japan to receive ongoing treatment

in their arduous journey back to health. Aflac Japan established the first Aflac Parents House in 2001 as a home-away-from-home where pediatric patients and their families can live together temporarily in cheerful, spacious accommodations while they support their child’s fight of a lifetime: battling cancer or numerous other serious diseases. Through generous donations from Aflac Japan’s sales agents, employees, and officers, three Parents House locations – two in Tokyo and one in Osaka – have helped a sum total of more than 130,000 people, including children battling serious diseases as well as the families that support them.


Several times each year, Aflac Japan employees organize gaito bokin, or street fundraising. Pictured, Aflac Japan employees gather to raise money for scholarships that go to child cancer survivors, children who have lost a parent to cancer, and to activities that highlight the importance of cancer screenings.

Aflac’s adaptability and resilience over time have been signif-icant factors in expanding our business through a diversified distribution network to reach people with products they need. Each initiative we undertake is designed to fulfill our promise of being there for our policyholders, with a focus on paying claims accurately and promptly. We also have successfully leveraged our brand and fine-tuned our knowledge and experience in the market to become an innovator.

We are driven each day to remain dedicated stewards of the trust that our Japanese policyholders have placed in us over these last four decades. It is the trust we’ve established that has been a driver for Aflac to grow into the leading provider of medical and cancer insurance in Japan today, where we are proud to provide insurance protection to one in four households. In recent years, Aflac Japan’s annual sales objective has focused on third sector products, including cancer and medical insurance.

16 16

These policies are more profitable and less interest rate sensitive than life insurance or savings-type products such as WAYS or child endowment. This is especially important given the ongoing low-interest-rate environment in Japan.

We also expanded our portfolio of third sector offerings in 2016 to include our innovative Income Support Insurance, designed for those unable to work due to illness or injury. It works by paying a fixed amount of monthly benefits to help cover lost income when the insured experiences a covered disability for the length of time an insured experiences this disability.

DISTRIBUTION THAT REACHES JAPANESE CONSUMERSWe know how important it is to have a presence where people want to make insurance-buying decisions. To support this goal to be where people want to buy, we believe Aflac’s multifaceted distribution platform remains one of the strongest in Japan. While Aflac insurance policies already protect one in four Japanese households, we believe there are opportunities to reach even more consumers through our product innovation and leveraging our broad distribution. Our traditional channels, which include individual agencies, independent corporate agencies and affiliated corporate agencies, remain key to our success, representing a significant portion of our sales in 2017. One of our strategic partnerships unites Japan Post Group – the largest nationwide distribution network in Japan – with Aflac Japan, the industry leader in cancer insurance. Aflac Japan is the only provider of cancer insurance distributed through post offices nationwide in Japan, and our cancer insurance is offered through more than 20,000 postal outlets. Additionally, Japan Post Insurance Co., Ltd. (Kampo), the subsidiary of Japan Post Holdings Co., Ltd. that sells life insurance, distributes Aflac Japan’s cancer insurance products at Kampo’s 76 sales offices. Aflac Japan and Japan Post Group will continue to provide training and support that not only ensure the success of our alliance, but more importantly, the best experience for customers throughout Japan.

AFLAC JAPAN DISTRIBUTION CHANNELS

TRADITIONAL SALES CHANNEL*

• Aflac Japan was represented by approximately 11,000 sales agencies at the end of 2017, equating to more than 109,000 licensed sales associates employed by those agencies, including individual agencies.

STR

ATEG

IC A

LLIA

NCE

S DAI-ICHI LIFE• Our alliance with Dai-ichi Life was launched in 2001, and nearly 40,000 Dai-ichi Life representatives offer Aflac’s

cancer products.

BANKS• Aflac Japan was represented by 374 banks at the end of 2017, or approximately 90% of the total number of banks

in Japan.

JAPAN POST GROUP

• In 2017, the number of post offices selling Aflac’s cancer product totaled more than 20,000. Kampo (Japan Post Insurance Co., Ltd.) offers Aflac cancer products through its 76 branches.

DAIDO LIFE• In September 2013, Aflac Japan and Daido Life Insurance entered into an agreement for Daido to sell Aflac’s cancer

insurance products specifically to the Hojinkai market, which is an association of small businesses.

* Includes independent agencies, independent corporate agencies and affiliated corporate agencies


Founded in 1925, Kita Osaka Shinkin Bank focuses on building relationships with customers by providing friendly, effective service to their customers. As part of the insurance sales process, the bank’s life value advisors listen intently to customer needs to ensure themselves to offer relevant services and products among the portfolio of products the bank offers, including Aflac policies, that are specifically geared to each person. Typically, customer consultations take place at branches of the bank; sometimes a customer’s home becomes a place for consultation, where life value advisors from Kita Osaka Shinkin Bank visit via bicycle.

Opportunities to Continue Offering Valued Products that Respond to Consumers’ Needs

Japanese citizens are covered by a national health care insurance system that provides a standardized level of medical insurance. Amid decades of an aging population and declining birthrate, consumers have experienced the financial strain of growing health care costs. This means that over the years, Japanese citizens have had to assume more financial responsibility for their medical care, including out-of-pocket health care expenses. To help cover these costs, most Japanese consumers turn to private insurance. Aflac’s trusted brand and valued products provide solutions to help. The foundation of our product portfolio has been, and continues to be, third sector Aflac products such as cancer and medical insurance (see chart on page 14. Over the last four decades, we’ve customized our products to take into account the evolving needs of Japanese consumers as well as advances in medical treatments and modifications to Japan’s national health care system. While we also offer several life products that are part of Japan’s first sector insurance category, our focus remains on selling third sector products that are less interest rate sensitive.

18

From left to right, Kita Osaka Shinkin Bank life value advisors Manami Hasegawa, Minami Yasumatsu, Maiko Hirai, Asuka Shibano take a moment from their busy day to visit with Kitashin-kun, the bank’s cheerful mascot. A fast friend of the Aflac Duck, Kitashin-kun was created as part of the 90th anniversary project of the bank. His horns, ears and hands are meant to look like the Chinese character “kita,” which means “north.” “Shin” refers to the shinkin bank, and “kun” is a more casual polite reference to a male.

We will continue to build and grow sales of our first sector protection-type products and have been aggressive in pulling savings-type first sector products from select channels.

To ensure we remain in step with Japanese consumers and our distribution channels, Aflac Japan continually enhances its portfolio of products. Aflac Japan has a history of developing and revising innovative products to help relieve financial burdens related to changes in the national health care coverage and remaining in step with consumer wants and needs. To accomplish this while also delivering sustainable growth, we will continue to introduce new and updated products to the third sector insurance market.


Hiromi Hatta (right), who runs an Aflac individual sales agency, has been selling Aflac policies for more than 20 years in Kagoshima, a seaside city on Japan’s Kyushu Island. To reach customers and potential policyholders, Hatta-san frequently visits the remote islands off the coast by ferry. The consistent and frequent trips by boat, which are as long as one-and-a-half hours by boat, have helped build trust with the island residents, who know she cares about them and is looking out for their best interests. In April 2017, her son, Suguru Tokiyoshi (left), who had worked as an English teacher in a neighboring prefecture, moved to Kagoshima and joined Hatta-san’s sales agency, and he is eagerly learning the business. His wife, who had been diagnosed with breast cancer, wanted to live closer to family. Through his experience with his wife’s battle, he quickly understood the harrowing reality of what it takes to fight cancer, which has made him an even more empathetic Aflac sales agent.

For example, in February 2017, Aflac Japan revised its EVER medical insurance product in response to customer needs. Under the revised EVER insurance product, policyholders receive a one-time payment for hospitalization in addition to per-day payments. The new EVER strengthens outpatient coverage and also includes a rider for surgical procedures specific to women.

In July 2016, we launched a new third sector product, Income Support Insurance, which is designed to provide cash benefits to policyholders who are unable to work due to illness or injury. These benefits complement coverage within the social security system, including the disability pension provided by the Japanese government, and can be used to cover income loss and other financial challenges.

20

Kagoshima is well-known for Sakurajima, the active volcano that faces Kinko Bay. As a single mother of three grown children, Hatta-san was struggling in 1997 to find a job that would allow her to earn money while maintaining the flexibility needed to raise three children. Before joining Aflac, she’d spent two years as chauffer, but the hours required that she work late into the night, leaving her little time to spend with her kids. Upon learning about the opportunity to sell Aflac insurance while also helping people, she jumped at the opportunity and hasn’t looked back since. She said that Aflac’s excellent reputation and powerful brand helped propel her success, and she enjoys the satisfaction of being a part of a company that helps people when they need it most.

This established a new category in the third sector market, which we believe has the potential to increasingly contribute to third sector sales over the longer term. As we look to 2018, we will continue to develop and drive product refinements in keeping with our customers’ evolving needs.

We revised our first sector protection-type product, “GIFT”, in February 2017. Upon the death of the insured, this product provides beneficiaries, typically family members, with a monthly benefit until the insured would have reached a predetermined age.


AFLAC JAPAN – KEY SALES METRICS

TOTAL POLICIES AND RIDERS IN FORCE*

ANNUALIZED PREMIUMS

IN FORCE**

NEW ANNUALIZED

PREMIUMS**

2017 39,717 ¥1,552,170 ¥94,851

2016 39,059 1,606,110 113,721

2015 38,115 1,617,691 120,855

2014 37,028 1,594,433 114,513

2013 36,117 1,567,112 149,308

2012 34,880 1,492,451 210,620

2011 33,372 1,343,663 161,033

2010 31,665 1,255,600 135,813

2009 29,934 1,200,437 122,345

2008 29,020 1,161,662 114,692

* In thousands** In millions

WE ARE AFLAC: BUILDING A BRAND – AND A STRONG REPUTATIONAflac has established a strong, trusted brand in Japan, and we continually seek opportunities to leverage our highly regarded reputation through innovative and unique advertising to drive sales. In 2003, Aflac Japan began using the Aflac Duck, and its popularity continues to connect with consumers today. On an ongoing basis, Aflac Japan has seized opportunities to create separate and unique offshoot characters related to the Aflac Duck to market specific products and help drive sales. By leveraging the popularity of the Aflac Duck through different characters over the years, about nine out of ten people now recognize the Aflac brand. We will continue to connect with consumers through innovative marketing campaigns for our product line as new opportunities arise.

TECHNOLOGY AND DIGITAL INVESTMENTS DRIVE PRODUCTIVITY, SERVICE AND VALUEDelivering on our promise to serve our customers accurately and promptly, especially related to the payment of claims, is our highest priority. Our long-term dedication in this regard, which is the cornerstone of our business, has further enhanced the relationship of trust we’ve built with our customers over the decades. We continually strive to improve our administrative efficiency and enhance the customer experience using innovation and technology. In 2017, we expanded the digital service capabilities of our website and mobile device applications; implemented voice recognition in our call centers; and utilized artificial intelligence enhanced optical character recognition (AIOCR) in our operations. The efficiencies we’ve gained have not only continued to drive strong margins and profitability, but also enhanced the value and experience we provide customers daily.

22

LOOKING AHEADAs we assess our past accomplishments and design our plans for the future, we believe Aflac products will continue to provide valuable insurance options for Japanese consumers. The competitive strengths that have made Aflac the leading provider of medical and cancer insurance are as relevant as they’ve ever been, and we have a framework in place that incorporates inclusiveness and transparency into everything we do.

This is accomplished by bringing new and varied perspectives to the table. Over the last several years, the introduction of an initiative in Japan known as “Womenomics” by Prime Minister Shinzo Abe highlights what Aflac has done for decades – celebrating and promoting women in the workforce. Aflac Japan’s Women’s Leadership Program began in 2014 and has successfully helped raise the percentage of women in leadership positions from 17.5% in 2014, to 26.2% as of July 2017. Our goal is to have women occupy 30% of Aflac Japan’s leadership positions by 2020. Aflac Japan was the first life insurer to be awarded the highest grade of “Eruboshi,” which is the Ministry of Health, Labour and Welfare’s certification for a company’s promotional efforts for women’s advancement in the workplace.

We have also made great progress in advancing our plan to convert Aflac Japan, which has operated as a branch since its founding in 1974, to a subsidiary, on time and on budget without disrupting our day-to-day operations. We anticipate that this could be completed as early as April 2, 2018, which is the first business day of Japan’s fiscal year. We are pleased with this new regulatory structure that both aligns Aflac with global regulatory standards and lays a foundation for continued long-term success in Japan.

We believe our innovative product development strategies and enhancements to current product offerings will benefit customers now and in the future, supporting our commitment to deliver on our promises just as we have for more than four decades.


24

17The Aflac Duck wears his heart on his chest, demonstrating Aflac’s legacy of being a compassionate company. Here, he takes a ride down Sixth Avenue in the 2017 Macy’s Thanksgiving Day Parade in New York City. Aflac is proud to be the leading provider of voluntary insurance at the worksite in the United States, where approximately 97% of our products are sold on a payroll deduction basis.*

*Source: Eastbridge Consulting Group, Inc. U.S. Worksite/Voluntary Sales Report.Carrier Results for 2016. Avon, CT: April 2017.

20Aflac U.S.


In 2017, the marketplace continued to experience shifts in demographics, including

an increasing prevalence of the next generation consumer in the workforce.

As the number of baby boomers in the workforce declines, the presence of both

millennials and Generation Z within the workforce is growing.

As such, while we continue to execute our strategies for expanding and improving our distribution system, creating innovative products and owning our customer experience, the over-arching goal of Aflac U.S. is to be where consumers – all consumers

– want to make their insurance-purchasing decisions, when they want to make them… at the traditional worksite and beyond.

Through this lens, we have expanded our longtime goal of being the number one distributor at the U.S. worksite, refocusing our strategic efforts to position Aflac as the number one distributor of benefits solutions supporting the U.S. workforce.

In 2017, new annualized premium sales for Aflac U.S. were $1.6 billion, representing an increase of 4.7% over sales in 2016.

Aflac U.S.: We Are Aflac!

2017 AFLAC U.S. FINANCIAL HIGHLIGHTS

• Direct premium* increased 2.0% to $5.6 billion.

*Direct premium represents amount excluding reinsurance.

• Total revenues increased 2.0% to $6.3 billion.

• Pretax segment operating earnings increased 3.1% to $1.2 billion.

26

Mitchell Andrews, partner, The Plexus Groupe LLC, brings two decades of leadership experience and expertise in the insurance industry to Aflac’s partnership with Plexus. For more than 20 years, Plexus has worked with its clients to implement consumer-driven medical plans, partnering with Aflac to help fill the financial gaps not covered by most major medical plans. Aflac helps to fill in those gaps by providing an extra layer of protection against income and asset loss, allowing employees to receive immediate benefits to pay their bills. Aflac’s career agents have partnered with Plexus to meet one-on-one with tens of thousands of employees across the country in an effort to simplify the otherwise complicated world of insurance so employees can make good decisions for themselves and their families. “Aflac provides our clients with the assurance that they will be treated with respect and prompt payment, which is how longstanding relationships are built.” – Mitchell Andrews, The Plexus Groupe LLC.


INNOVATIVE PRODUCTS PROVIDE FINANCIAL PROTECTION Aflac’s insurance policies pay cash benefits directly to the policyholder, now faster than ever with our industry-leading One Day PaySM initiative. These benefits can be used to help policyholders cope with unexpected out-of-pocket medical expenses such as medication, copays and household expenses. They also help to provide a layer of protection against income and asset loss associated with an illness or medical event. Our broad portfolio of both individual and group voluntary products is designed to provide our policyholders with outstanding value and enable businesses of all sizes to offer their employees an affordable and comprehensive array of voluntary benefits solutions. In 2017, Aflac continued to partner with reinsurers to expand its group product offerings with the launch of a new Term Life and Whole Life product to further enhance our group life insurance portfolio. Along with the introduction of Aflac’s Universal Life offering that took place in 2016, the addition of these customizable, innovative life insurance options allowed Aflac to offer a more robust suite of product solutions than ever before. Aflac also released a new group accident product, completing the re-development of the company’s core lines of group business that began in 2015. Finally, Aflac enhanced its benefits offerings through the launch of our BenExtend product. As the first release in an evolving life stages coverage line, BenExtend is a group insurance product that combines accident, hospital indemnity and critical illness benefits into one simple plan design, delivering an innovative alternative to the marketplace for employers seeking more creative solutions to manage health care costs while also trying to help employees manage out-of-pocket expenses. A new hospital indemnity product was launched in January 2017, which provided consumers more choice and flexibility in selecting benefit options to meet their individual insurance needs. We are also excited to offer an array of value added services to include fraud and identity theft protection, telemedicine, accidental death and dismemberment, health advocacy, financial and legal fitness and personal wellness programs.

AFLAC U.S. PRODUCTS

• Cancer

• Accident

• Short-Term Disability

• Critical Illness

• Hospital Indemnity

• Dental

• Vision

• Life (Term, Whole, Universal)

28

In 1960, Marta Sastre fled Cuba for the United States with her parents and siblings. Years later, in December 1977, Marta’s father, Luis Sastre, an entrepreneur and businessman, became an independent Aflac sales agent. In March 1978, he introduced Marta to Aflac as a company that shared the same family values they believed in. At a time when few women were insurance agents, Aflac provided Marta with the opportunity to break through the “glass ceiling” as she led the way and set the standard of excellence for the south Florida market. She is now a regional sales coordinator (RSC) for Aflac. Many of Marta’s children, and now even her grandchildren, have joined the “Aflac Nation,” becoming the fourth generation of Aflac independent sales agents in her family. On top of that, many family members and friends have joined Aflac and experienced great success as well. About her four decades representing Aflac, Marta says, “I consider myself blessed for having had the privilege to represent this company and the opportunity to live the American Dream.”


AFLAC U.S. – KEY OPERATIONAL METRICSPOLICIES AND CERTIFICATES

IN FORCE*

ANNUALIZED PREMIUMS IN FORCE**

TOTAL NEW ANNUALIZED PREMIUM**

2017 12,971 $6,052 $1,5522016 12,692 5,896 1,482

2015 12,498 5,760 1,487

2014 12,407 5,668 1,433

2013 12,310 5,570 1,424

2012 12,232 5,451 1,488

2011 11,732 5,188 1,476

2010 11,436 4,973 1,382

2009 11,688 4,956 1,453

2008 11,437 4,789 1,551* In thousands** In millions

EXPANDING AND DEVELOPING OUR DISTRIBUTION As the dynamics of the workforce shift and evolve, we believe the need for Aflac’s products will continue to grow. To that end, we actively search for additional opportunities to leverage our strong brand and support product growth in this ever-evolving landscape. In expanding our distri-bution and reach, we continue to navigate various avenues to increase sales through our traditional field force of independent agents. Additionally, we continue to establish and nurture relationships with our broker sales team on local, regional and broader national levels to improve our access to businesses employing more than 100 workers. We are focusing our efforts on maintaining a streamlined and multifaceted approach that positions us to meet consumers when, where and how they prefer to be reached to purchase Aflac’s products. We continually refine our approach to support sales efforts and accommodate customers’ specific voluntary insurance needs with about 8,800 average weekly producers. Looking ahead, we continue to see promising opportunities for expanded distri-bution and sales through our fully aligned distribution team of independent agents and brokerage sales professionals, and believe that Aflac will further enhance the value we deliver to our policyholders and shareholders as we reach more consumers.

30

OWNING OUR CUSTOMER EXPERIENCE BY LEVERAGING THE AFLAC BRAND Through leveraging the popularity of the Aflac Duck, nine out of ten Americans recognize the Aflac brand. Over the last two decades, Aflac has aired more than 90 commercials that have placed our rambunctious feathered friend in one comical situation after another. Since the beloved Aflac Duck made his debut, he’s been the star of one of the most successful advertising campaigns ever. These days, he’s also the Spokesduck for the Aflac Cancer and Blood Disorders Center of Children’s Healthcare of Atlanta, shining the spotlight on this most worthwhile cause. The Aflac Duck was very busy in 2017, making high-profile appearances at the GRAMMYs, the Macy’s Thanksgiving Day parade and the Super Bowl, to name a few. The Aflac Duck is working very hard not only to emphasize our commitment to fighting pediatric cancer, but also to illustrate the exceptional value and protection that Aflac’s policies provide, demonstrating our ongoing commitment to putting cash in the hands of our policyholders when they need it most.


MY SPECIAL AFLAC DUCKEarly this year, Aflac introduced My Special Aflac Duck, just one element of our 22-year, $120 million philanthropic commitment to children fighting cancer. My Special Aflac DuckTM is a smart comforting companion that helps children feel less alone by using interactive technology during their cancer treatment. A compatible web-based app enables children to mirror their care routines, including medical play, feeding and bathing. In addition to this interactive, supportive tool, Aflac is dedicated to funding childhood cancer research and treatment. Through the Aflac Childhood Cancer Campaign, Aflac Cancer Center and #Duckprints, our team aims to give support, hope, time and resources to children who face cancer.

Illustrating Aflac’s commitment to paying claims faster than ever, in 2017 we paid 2.1 million claims through One Day PaySM, our industry-leading initiative that allows us to process, approve and pay eligible claims in just one day. We estimate that nearly 80% of our policyholders can use One Day PaySM for their claims, and in 2017, we once again maintained our One Day PaySM commitment for claims that met the One Day PaySM criteria.

TECHNOLOGY DRIVES OPPORTUNITIES FOR IMPROVEMENTS AND EFFICIENCYOnce again, our disciplined risk management and emphasis on improving operating efficiency helped us drive strong profitability in 2017. We continued to make broad-based investments in our U.S. platform, which has seen tremendous growth. Our platform investments are paying dividends in the form of improved persistency and high customer satisfaction levels. We’ve also increased our agents’ adoption of our EverwellSM enrollment platform, which is now being used by more than 162,000 businesses across the country.

32

AFLAC CANCER AND BLOOD DISORDERS CENTER Since its doors first opened in 1995, the Aflac Cancer and Blood Disorders Center of Children’s Healthcare of Atlanta has become nationally renowned as one of the leading childhood cancer, hematology, and blood and marrow transplant programs in the United States. With innovative research programs and cutting-edge treatment options, the five-year survival rate for childhood cancer has improved dramatically, from 20% in 1965 to greater than 80% today. This worthwhile cause is very near and dear to the heart of the Aflac family, including the Aflac Foundation, our executives, employees and the field force, whose generous contributions help to provide a steady flow of funding for research. In total, Aflac’s contributions to the Aflac Cancer Center exceeded the $120 million mark in 2017. This generosity has greatly contributed to the Aflac Cancer Center’s success and distinction in research, which has earned the Aflac Cancer Center recognition as one of the top pediatric cancer programs in the United States by U.S. News and World Report.

Left to right: Nevaeh Williams, age 9; Douglas Graham, M.D., Ph.D., Director & Daniel P. Amos Children’s Chair of the Aflac Cancer and Blood Disorders Center; Jesse Sampley, age 10; and Kayla Parker, age 8.


Aflac’s call center in Omaha, Nebraska celebrated the 15th anniversary of is establishment in October 2017. Sue Leeson, administrative assistant, has worked at Aflac’s Omaha call center location since the day it opened its doors. Having been involved from day one, Sue has seen the number of Aflac’s Omaha employees grow from 20 to more than 100. Sue exemplifies the Aflac Way by going above and beyond to provide support in the operations of the Omaha call center, helping Aflac deliver on its promise to be there for its policyholders when they need it most. Sue also knows firsthand the value of Aflac’s insurance policies, having battled cancer herself seven years ago. Sue says, “I know if I hadn’t worked for Aflac this journey would have been harder on me and my family. It will always be close to my heart that my Aflac family was there supporting me all the way.”

34

LOOKING TO THE FUTURE We believe the strengths that have positioned Aflac as the leading provider of voluntary insurance products at the worksite are firmly established and will help us expand our footprint beyond the traditional worksite to position Aflac as the leading provider of voluntary insurance in the workforce as a whole. As businesses and consumers continue to seek valuable, practical and affordable solutions to the challenging health care market the United States faces, we believe the desire for the type of valuable and affordable benefits solutions Aflac provides will only increase. Though many things have changed over the course of our six plus decades, Aflac’s commitment – to be there for our policyholders and deliver on our promise to them when they need us most – remains unwavering.


One such example is Empowered. Aflac purchased Empowered Benefits in 2015, and in 2017 expanded and renovated its headquarters in Charlotte, NC. Empowered Benefits was also rebranded as

“Empowered” to highlight the wide range of services the company provides to clients in this increasingly digital environment. As benefits enrollment and adminis-tration become more and more complex, Empowered provides a streamlined cloud-based benefits administration solution and cutting-edge enrollment software, including Aflac’s Everwell platform. Empowered’s volume of business has more than tripled since Aflac purchased the company in 2015.

Additionally, Aflac Japan is continually exploring new business opportu-nities. In the context of rapidly changing social and individual needs, we plan to leverage Aflac’s market-leading position and extensive experience to identify new third sector fields and explore new business opportunities consistent with Aflac’s core capabilities and values. For example, in 2017 Aflac invested in dynamic companies including Medical Note, a provider of online and tele-medical advice services, and MRSO, which provides online health checkup reservation services.

AFLAC CORPORATE VENTURESAs part of our ongoing initiatives to drive operational efficiencies and technological advancement, Aflac is pursuing investment opportunities by targeting early-stage companies that have a mission that’s relevant to Aflac’s core business. Designed to help Aflac enhance its strategic and innovative focus in both the U.S. and Japan, Aflac Corporate Ventures partners with technology accelerators to create the agility required to quickly identify and invest in early-stage companies, helping them accelerate innovation across the insurance value chain, including digital solutions that enhance the customer experience.

Empowered employees and guests and Aflac executive and senior management attend the ribbon cutting for Empowered, the newly rebranded and expanded digital innovation center in Charlotte.

From left to right, Nadeem Khan, president of Aflac Corporate Ventures and Fred Crawford, executive vice president and chief financial officer of Aflac Incorporated.

36

Members of the Aflac Global Investments management team: Teresa McTague, Eric Kirsch, Chip Stevens; second row: John Shalhoub, Barbara Friedman, and John Linnehan. Brad Dyslin is pictured in bottom left photo, second from right.

Aflac Global Investments celebrated the five-year anniversary of its establishment in 2017.

AFLAC GLOBAL INVESTMENTSThe Global Investments team now has more than 100 investment and support professionals in New York and Tokyo who work to find investment opportunities around the globe to ensure diversity and safety of the general account. The investment strategy for Aflac’s $120 billion portfolio is carefully designed around our liabilities and protecting the promise we make to our policyholders.

Our portfolio is highly diversified by asset class, sector and region, with strict risk limits in place to ensure it is managed to achieve a high overall asset quality while earning a competitive rate of income. Aflac’s risk management discipline ensures we navigate through the volatility of investment markets, including risks related to interest rates, credit quality and foreign exchange to help ensure our portfolio

performs well through market cycles.

We are also pleased to announce that effective January 1, 2018, Aflac Global Investments in New York and Japan were converted into Asset Management Subsidiaries, further demonstrating our commitment to a world class investment team and the continual pursuit of excellent investment performance.

Members of management attend ribbon-cutting ceremonies for Aflac Global Investments’ new office spaces in New York and Tokyo.


For the Year (In millions, except for share and per-share amounts) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Revenues: Net premiums, principally supplemental health insurance $ 18,531 $ 19,225 $ 17,570 $ 19,072 $ 20,135 $ 22,148 $ 20,362 $ 18,073 $ 16,621 $ 14,947 $ 12,973 Net investment income 3,220 3,278 3,135 3,319 3,293 3,473 3,280 3,007 2,765 2,578 2,333 Realized investment gains (losses)2 (151) (14) 106 282 426 (349) (1,552) (422) (1,212) (1,007) 28 Other income 67 70 61 55 85 92 81 74 80 36 59 Total revenues 21,667 22,559 20,872 22,728 23,939 25,364 22,171 20,732 18,254 16,554 15,393Benefits and expenses: Benefits and claims, net 12,181 12,919 11,746 12,937 13,813 15,330 13,749 12,106 11,308 10,499 9,285 Expenses 5,468 5,573 5,264 5,300 5,310 5,732 5,472 5,065 4,711 4,141 3,609 Total benefits and expenses 17,649 18,492 17,010 18,237 19,123 21,062 19,221 17,171 16,019 14,640 12,894

Pretax earnings 4,018 4,067 3,862 4,491 4,816 4,302 2,950 3,561 2,235 1,914 2,499Income taxes (586) 1,408 1,329 1,540 1,658 1,436 1,013 1,233 738 660 865 Net earnings $ 4,604 $ 2,659 $ 2,533 $ 2,951 $ 3,158 $ 2,866 $ 1,937 $ 2,328 $ 1,497 $ 1,254 $ 1,634

Share and Per-Share AmountsNet earnings (basic) $ 11.63 $ 6.46 $ 5.88 $ 6.54 $ 6.80 $ 6.14 $ 4.15 $ 4.96 $ 3.21 $ 2.65 $ 3.35Net earnings (diluted) 11.54 6.42 5.85 6.50 6.76 6.11 4.12 4.92 3.19 2.62 3.31

Items impacting net earnings:3

Realized investment (gains) losses: Securities transactions and impairments $ 0.02 $ (0.13) $ (0.33) $ (0.44) $ (0.13) $ 1.07 $ 1.81 $ 0.58 $ 1.67 $ 1.37 $ (0.04) Certain derivative and foreign currency (gains) losses4,5 (0.02) (0.08) 0.12 (0.16) (0.81) (0.34) 0.34 – – – – Other and non-recurring (income) loss1, 4 0.17 0.33 0.53 – – 0.01 – – (0.01) – – Income tax (benefit) expense on items excluded from operating earnings (0.06) (0.04) (0.11) 0.21 0.33 (0.26) – – – – – Tax reform adjustment (4.85) – – – – – – – – – –Cash dividends paid $ 1.74 $ 1.66 $ 1.58 $ 1.50 $ 1.42 $ 1.34 $ 1.23 $ 1.14 $ 1.12 $ .96 $ .80Shareholders’ equity 63.00 50.47 41.73 41.47 31.82 34.16 27.76 22.44 17.96 14.23 18.08Weighted-average common shares used to calculate basic EPS 396,021 411,471 430,654 451,204 464,502 466,868 466,519 469,038 466,552 473,405 487,869(In thousands)Weighted-average common shares used to calculate diluted EPS 398,930 413,921 433,172 454,000 467,408 469,287 469,370 473,085 469,063 478,815 493,971(In thousands)

At Year-endAssets: Investments and cash $ 123,659 $ 116,361 $ 105,897 $ 107,341 $ 108,459 $ 118,219 $ 103,462 $ 88,230 $ 73,192 $ 68,550 $ 57,056 Other5 13,558 13,458 12,359 12,386 12,809 12,838 12,757 12,013 10,914 10,781 8,749 Total assets $ 137,217 $ 129,819 $ 118,256 $ 119,727 $ 121,268 $ 131,057 $ 116,219 $ 100,243 $ 84,106 $ 79,331 $ 65,805

Liabilities and shareholders’ equity: Policy liabilities $ 99,147 $ 93,726 $ 87,631 $ 83,933 $ 89,402 $ 97,720 $ 94,239 $ 82,310 $ 69,245 $ 66,219 $ 50,676 Income taxes 4,745 5,387 4,340 5,293 3,718 3,858 2,308 1,689 1,653 1,201 2,531 Notes payable6 5,289 5,360 4,971 5,242 4,858 4,315 3,267 3,038 2,599 1,721 1,465 Other liabilities 3,438 4,864 3,606 6,912 8,670 9,186 3,459 2,666 2,192 3,551 2,338 Shareholders’ equity 24,598 20,482 17,708 18,347 14,620 15,978 12,946 10,540 8,417 6,639 8,795 Total liabilities and shareholders’ equity $ 137,217 $ 129,819 $ 118,256 $ 119,727 $ 121,268 $ 131,057 $ 116,219 $ 100,243 $ 84,106 $ 79,331 $ 65,805

Supplemental DataStock price range: High $ 89.81 $ 74.50 $ 66.53 $ 66.69 $ 67.62 $ 54.93 $ 59.54 $ 58.31 $ 47.75 $ 68.81 $ 63.91 Low 66.50 54.57 51.41 54.99 48.17 38.14 31.25 39.91 10.83 29.68 45.18 Close 88.23 69.60 59.90 61.09 66.80 53.12 43.26 56.43 46.25 45.84 62.63Yen/dollar exchange rate at year-end (yen) ¥ 113.00 ¥ 116.49 ¥ 120.61 ¥ 120.55 ¥ 105.39 ¥ 86.58 ¥ 77.74 ¥ 81.49 ¥ 92.10 ¥ 91.03 ¥ 114.15Weighted-average yen/dollar exchange rate (yen) 112.16 108.70 120.99 105.46 97.54 79.81 79.75 87.73 93.49 103.46 117.93 Amounts in 2009 and prior years have not been adjusted for retrospective adoption of revised accounting guidance related to deferral of policy acquisition costs effective January 1, 2012.1 Includes impact from ASC 815 for all years presented prior to 20112 Amounts in 2012 and prior have not been adjusted for the reclassification related to foreign currency gains (losses) from other income to realized investment gains (losses).3 Amounts in 2011 and prior are shown net of tax.4 Amounts in 2011 and prior have not been reclassified to reflect the change in methodology of calculating the hedge costs related to foreign currency investments. 5 Adjusted for reclassification of amortized hedge costs for consistency with current period presentation. 6 Amounts in 2010 and prior have not been adjusted for the adoption of accounting guidance on January 1, 2016 related to debt issuance costs.

SELECTED FINANCIAL DATA

38

Aflac Incorporated and Subsidiaries

For the Year (In millions, except for share and per-share amounts) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Revenues: Net premiums, principally supplemental health insurance $ 18,531 $ 19,225 $ 17,570 $ 19,072 $ 20,135 $ 22,148 $ 20,362 $ 18,073 $ 16,621 $ 14,947 $ 12,973 Net investment income 3,220 3,278 3,135 3,319 3,293 3,473 3,280 3,007 2,765 2,578 2,333 Realized investment gains (losses)2 (151) (14) 106 282 426 (349) (1,552) (422) (1,212) (1,007) 28 Other income 67 70 61 55 85 92 81 74 80 36 59 Total revenues 21,667 22,559 20,872 22,728 23,939 25,364 22,171 20,732 18,254 16,554 15,393Benefits and expenses: Benefits and claims, net 12,181 12,919 11,746 12,937 13,813 15,330 13,749 12,106 11,308 10,499 9,285 Expenses 5,468 5,573 5,264 5,300 5,310 5,732 5,472 5,065 4,711 4,141 3,609 Total benefits and expenses 17,649 18,492 17,010 18,237 19,123 21,062 19,221 17,171 16,019 14,640 12,894

Pretax earnings 4,018 4,067 3,862 4,491 4,816 4,302 2,950 3,561 2,235 1,914 2,499Income taxes (586) 1,408 1,329 1,540 1,658 1,436 1,013 1,233 738 660 865 Net earnings $ 4,604 $ 2,659 $ 2,533 $ 2,951 $ 3,158 $ 2,866 $ 1,937 $ 2,328 $ 1,497 $ 1,254 $ 1,634

Share and Per-Share AmountsNet earnings (basic) $ 11.63 $ 6.46 $ 5.88 $ 6.54 $ 6.80 $ 6.14 $ 4.15 $ 4.96 $ 3.21 $ 2.65 $ 3.35Net earnings (diluted) 11.54 6.42 5.85 6.50 6.76 6.11 4.12 4.92 3.19 2.62 3.31

Items impacting net earnings:3

Realized investment (gains) losses: Securities transactions and impairments $ 0.02 $ (0.13) $ (0.33) $ (0.44) $ (0.13) $ 1.07 $ 1.81 $ 0.58 $ 1.67 $ 1.37 $ (0.04) Certain derivative and foreign currency (gains) losses4,5 (0.02) (0.08) 0.12 (0.16) (0.81) (0.34) 0.34 – – – – Other and non-recurring (income) loss1, 4 0.17 0.33 0.53 – – 0.01 – – (0.01) – – Income tax (benefit) expense on items excluded from operating earnings (0.06) (0.04) (0.11) 0.21 0.33 (0.26) – – – – – Tax reform adjustment (4.85) – – – – – – – – – –Cash dividends paid $ 1.74 $ 1.66 $ 1.58 $ 1.50 $ 1.42 $ 1.34 $ 1.23 $ 1.14 $ 1.12 $ .96 $ .80Shareholders’ equity 63.00 50.47 41.73 41.47 31.82 34.16 27.76 22.44 17.96 14.23 18.08Weighted-average common shares used to calculate basic EPS 396,021 411,471 430,654 451,204 464,502 466,868 466,519 469,038 466,552 473,405 487,869(In thousands)Weighted-average common shares used to calculate diluted EPS 398,930 413,921 433,172 454,000 467,408 469,287 469,370 473,085 469,063 478,815 493,971(In thousands)

At Year-endAssets: Investments and cash $ 123,659 $ 116,361 $ 105,897 $ 107,341 $ 108,459 $ 118,219 $ 103,462 $ 88,230 $ 73,192 $ 68,550 $ 57,056 Other5 13,558 13,458 12,359 12,386 12,809 12,838 12,757 12,013 10,914 10,781 8,749 Total assets $ 137,217 $ 129,819 $ 118,256 $ 119,727 $ 121,268 $ 131,057 $ 116,219 $ 100,243 $ 84,106 $ 79,331 $ 65,805

Liabilities and shareholders’ equity: Policy liabilities $ 99,147 $ 93,726 $ 87,631 $ 83,933 $ 89,402 $ 97,720 $ 94,239 $ 82,310 $ 69,245 $ 66,219 $ 50,676 Income taxes 4,745 5,387 4,340 5,293 3,718 3,858 2,308 1,689 1,653 1,201 2,531 Notes payable6 5,289 5,360 4,971 5,242 4,858 4,315 3,267 3,038 2,599 1,721 1,465 Other liabilities 3,438 4,864 3,606 6,912 8,670 9,186 3,459 2,666 2,192 3,551 2,338 Shareholders’ equity 24,598 20,482 17,708 18,347 14,620 15,978 12,946 10,540 8,417 6,639 8,795 Total liabilities and shareholders’ equity $ 137,217 $ 129,819 $ 118,256 $ 119,727 $ 121,268 $ 131,057 $ 116,219 $ 100,243 $ 84,106 $ 79,331 $ 65,805

Supplemental DataStock price range: High $ 89.81 $ 74.50 $ 66.53 $ 66.69 $ 67.62 $ 54.93 $ 59.54 $ 58.31 $ 47.75 $ 68.81 $ 63.91 Low 66.50 54.57 51.41 54.99 48.17 38.14 31.25 39.91 10.83 29.68 45.18 Close 88.23 69.60 59.90 61.09 66.80 53.12 43.26 56.43 46.25 45.84 62.63Yen/dollar exchange rate at year-end (yen) ¥ 113.00 ¥ 116.49 ¥ 120.61 ¥ 120.55 ¥ 105.39 ¥ 86.58 ¥ 77.74 ¥ 81.49 ¥ 92.10 ¥ 91.03 ¥ 114.15Weighted-average yen/dollar exchange rate (yen) 112.16 108.70 120.99 105.46 97.54 79.81 79.75 87.73 93.49 103.46 117.93 Amounts in 2009 and prior years have not been adjusted for retrospective adoption of revised accounting guidance related to deferral of policy acquisition costs effective January 1, 2012.1 Includes impact from ASC 815 for all years presented prior to 20112 Amounts in 2012 and prior have not been adjusted for the reclassification related to foreign currency gains (losses) from other income to realized investment gains (losses).3 Amounts in 2011 and prior are shown net of tax.4 Amounts in 2011 and prior have not been reclassified to reflect the change in methodology of calculating the hedge costs related to foreign currency investments. 5 Adjusted for reclassification of amortized hedge costs for consistency with current period presentation. 6 Amounts in 2010 and prior have not been adjusted for the adoption of accounting guidance on January 1, 2016 related to debt issuance costs.


AFLAC’S TOTAL RETURN TO SHAREHOLDERS2017 marked the 35th consecutive year Aflac Incorporated increased its annual dividend. Including reinvested cash dividends, Aflac’s total shareholder return increased 28.9% in 2017. This compares with a total shareholder return of 16.4% for the S&P Life & Health Index, 21.8% for the S&P 500 and 28.1% for the Dow Jones Industrial Average.

For many years, we have managed our business with a long-term view in mind. As a result:

Over the last five years, Aflac’s total shareholder return, including reinvested dividends, was 86.3%.

Over the last 10 years, Aflac’s total shareholder return, including reinvested dividends, was 80.2%.

AFL SHAREHOLDER MIX*Number of registered shareholders . . . . . . . . . . . . . . . . . . . . . . . . 85,056

Percentage of outstanding AFL shares owned by institutional investors . . . . . . . 72%

Percentage of outstanding AFL shares owned by individual investors . . . . . . . . 28%*Approximate as of 12/31/17

FIRST SHAREHOLDERSCost of 100 shares purchased in 1955 when Aflac was founded . . . . . . . . . $1,110

Number of shares those 100 shares grew into

(after 28 stock dividends and splits) . . . . . . . . . . . . . . . . . . . 187,980 shares

Value at 12/31/17 (excluding reinvested dividends) . . . . . . . . . . . . . $16.5 million

Dividends paid in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $327,085

AFLAC FINANCIAL STRENGTH*Standard & Poor’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A+

Moody’s Investors Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa3

A.M. Best . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A+

Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A+

Rating & Investment Information Inc. (R&I) . . . . . . . . . . . . . . . . . . . . . . . AA-*Ratings as of 3/1/18

Visit aflac.com and click on Investors to access:

Your AFL shareholder account through aflinc® Aflac’s financial information A calendar of events Dividend reinvestment plan (DRIP) information

INVESTOR FACTS

Annual Cash Dividends Paid Per Share

Aflac has increased its annual dividend for 35 consecutive years. Total cash dividends paid in 2017 were 4.8% higher than in 2016.

07 08 09 10 11 12 13 14 15 16 17

.80

1.12 1.141.23

1.341.42

1.501.58

1.66$1.74

.96

40

*$100 invested on December 31, 2007, in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright © 2018 Standard & Poor’s, a division of S&P Global, Inc. All rights reserved.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

100.00 74.52 77.83 97.20 76.49 96.65 124.60 116.77 117.37 139.80 180.34

100.00 63.00 79.67 91.67 93.61 108.59 143.76 163.44 165.70 185.52 226.03

100.00 51.68 59.73 74.82 59.32 67.98 111.13 113.29 106.14 132.53 154.30

S&P 500

Aflac Incorporated

S&P Life & Health Insurance

0

50

100

150

200

$250

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

100.00 74.52 77.83 97.20 76.49 96.65 124.60 116.77 117.37 139.80 180.34

100.00 63.00 79.67 91.67 93.61 108.59 143.76 163.44 165.70 185.52 226.03

100.00 51.68 59.73 74.82 59.32 67.98 111.13 113.29 106.14 132.53 154.30

S&P 500

Aflac Incorporated


0

50

100

150

200

$250

Among Aflac Incorporated, the S&P 500 Index and the S&P Life & Health Insurance Index

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

100.00 74.52 77.83 97.20 76.49 96.65 124.60 116.77 117.37 139.80 180.34

100.00 63.00 79.67 91.67 93.61 108.59 143.76 163.44 165.70 185.52 226.03

100.00 51.68 59.73 74.82 59.32 67.98 111.13 113.29 106.14 132.53 154.30

S&P 500

Aflac Incorporated


0

50

100

150

200

$250

Among Aflac Incorporated, the S&P 500 Index and the S&P Life & Health Insurance Index

Comparison of Ten-Year Cumulative Total Shareholder Return*

*$100 invested on December 31, 2012, in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright © 2018 Standard & Poor’s, a division of S&P Global. All rights reserved.

Comparison of Five-Year Cumulative Total Shareholder Return*

2012 2013 2014 2015 2016 2017

100.00 128.91 120.81 121.44 144.65 186.59

100.00 132.39 150.51 152.59 170.84 208.14

100.00 163.48 166.66 156.14 194.96 226.98

S&P 500

Aflac Incorporated


0

50

100

150

200

$250


BOARD OF DIRECTORS

Daniel P. Amos, 66, chairman and chief executive officer of Aflac and Aflac Incorporated, has been with the company full time since 1973. He was named president of Aflac in 1983 and chief operating officer in 1987. He became chief executive officer of Aflac Incorporated in 1990 and was named chairman in 2001. He joined Aflac Incorporated’s board in 1983.

W. Paul Bowers, 61, is chairman, president and chief executive officer of Georgia Power. Previously, he was chief financial officer of Southern Company. He has held senior executive leadership positions across Southern Company as CEO of Southern Power, president of Generation and chairman, president and CEO of the company’s former United Kingdom subsidiary. He is currently on the board of the Nuclear Electric Insurance Limited (chairman) and serves as a regent for the University System of Georgia. In addition, he has received the National Human Relations Award from the American Jewish Committee. He joined Aflac Incorporated’s board in 2013.

Toshihiko Fukuzawa, 61, is president and chief executive officer of Yushu Tatemono Co., Ltd., a prominent real estate leasing company in Japan. Prior to this, he served in various positions, including managing executive officer of Mizuho Bank Ltd. and deputy president & executive officer of Mizuho Trust & Banking Co., Ltd. Over his 36-year career as a banker in Japan, he has gained extensive business and IT knowledge and experience with a wide range of Japanese financial services. He joined Aflac Incorporated’s board in 2016.

Elizabeth J. Hudson, 68, retired from her position as chief communications officer for the National Geographic Society in 2015, having previously held similar positions with iVillage, the Reader’s Digest Association and NBC. She was also previously a director in Spencer Stuart’s Media & Communication Practice. Hudson co-chairs the Washington Chapter of Women Corporate Directors, and joined Aflac Incorporated’s board in 1990.

Douglas W. Johnson, 74, is a certified public accountant and retired Ernst & Young audit partner. He has spent the majority of his career working with companies in the life and health segments of the insurance industry. He joined Aflac Incorporated’s board in 2003.

Robert B. Johnson, 73, retired from his position at Porter Novelli in 2014, at which he had been senior advisor since 2003. He was formerly chairman and CEO of the One America Foundation (an organization that promotes dialogue and solidarity among Americans of all races). He also previously served in President Clinton’s White House as an assistant to the president and director of the president’s initiative for One America. He joined Aflac Incorporated’s board in 2002.

Thomas J. Kenny, 54, was named chairman of the TIAA-CREF Fund’s board in 2017, where he had served as a trustee since December 2011. He previously served as the chair of the TIAA-CREF Fund’s Investment Committee. Prior to his role at TIAA-CREF, he held a variety of leadership positions at Goldman Sachs and the Franklin Templeton Group of Funds over a 25-year career. He joined Aflac Incorporated’s board in 2015.

Charles B. Knapp, 71, is president emeritus of the University of Georgia. Earlier in his career, he served as U.S. deputy assistant secretary of labor in the Carter Administration. He also served as executive vice president and chief financial officer of Tulane University. He joined Aflac Incorporated’s board in 1990.

Karole F. Lloyd, 59, is a certified public accountant and recently retired vice chair and managing partner for Ernst & Young, LLP. With more than 37 years of experience and leadership, she has extensive experience with large financial services, insurance and health care companies in both the United States and Canada, as well as additional experience with leadership and consulting related to financial reporting, board governance and legal matters, regulatory compliance, internal audit and risk management. She joined Aflac Incorporated’s board in 2017.

Joseph L. Moskowitz, 64, retired as executive vice president of Primerica, Inc. after more than 25 years of service. He led the Product Economics and Financial Analysis Group after previously serving as chief actuary, among various other positions of increasing responsibility. Prior to joining Primerica, he was vice president of Sun Life Insurance Company of America and also worked for KPMG. He is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries. He joined Aflac Incorporated’s board in 2015.

Barbara K. Rimer, DrPH, 69, has been dean and alumni distinguished professor at the University of North Carolina at Chapel Hill Gillings School of Global Public Health for more than 10 years, and was previously director of the Division of Cancer Control and Population Sciences at the National Cancer Institute. She was elected to the Institute of Medicine in 2008 and was appointed chair of the President’s Cancer Panel in 2011. She joined Aflac Incorporated’s board in 1995.

Katherine T. Rohrer, 64, serves on the Emory University Board of Trustees. She is vice provost emeritus at Princeton University, having served as vice provost for academic programs from 2001 until 2015. Prior to assuming this role, Dr. Rohrer held several academic leadership positions at Princeton starting in 1988, including associate dean of the faculty and assistant dean of the college. At Columbia University, she was as an assistant professor from 1982 to 1988. She joined Aflac Incorporated’s board in 2017.

Melvin T. Stith, 71, dean emeritus of the Martin J. Whitman School of Management at Syracuse University, was also previously dean and Jim Moran Professor of Business Administration at Florida State University, where he remains dean emeritus. Before retiring in 2015, Dr. Stith maintained his role as professor of marketing and business for more than 35 years, after previously serving in the U.S. Military Intelligence Command and achieving the rank of captain. In January 2018, Dr. Stith became the Interim President at Norfolk State University, Norfolk, Va. He joined Aflac Incorporated’s board in 2012.

42

EXECUTIVE MANAGEMENTDaniel P. Amos (see facing page)

Frederick J. Crawford, 54, joined Aflac in June 2015 as executive vice president and chief financial officer of Aflac Incorporated, responsible for overseeing the financial management of company operations. Before joining Aflac, he served as executive vice president and chief financial officer of CNO Financial Group, after spending more than a decade at the Lincoln Financial Group in roles of increasing responsibility, including executive vice president and chief financial officer. Prior to that, he held leadership positions at Bank One Corporation.

Charles D. Lake II, 56, president, Aflac International; chairman, Aflac Japan, joined Aflac International in February 1999 and Aflac Japan in June 1999. Prior to his current position, he served as vice chairman and president of Aflac Japan. Before joining Aflac, he was director of Japan Affairs at the office of the U.S. Trade Representative in the executive office of the president, and practiced law in Washington, D.C.

Teresa L. White, 51, president, Aflac U.S., joined Aflac in 1998 and has served in various leadership roles including senior vice president, director of Sales Support and Administration; executive vice president, Internal Operations; chief administrative officer; and chief operating officer of Aflac U.S. She was promoted to her current role in 2014, where she is responsible for strategy and oversight of the company’s IT program, marketing, corporate communications, sales and distribution. She is an alumna of Leadership Columbus; a Fellow of the Life Management Institute; and a member of Delta Sigma Theta.

J. Todd Daniels, 47, executive vice president; global chief risk officer and chief actuary, joined Aflac in 2002. He was promoted to vice president, Financial Planning and Analysis in 2011 and to senior vice president; deputy corporate actuary in 2012. He was named global chief risk officer in January 2014 and chief actuary in December 2015. Todd oversees all actuarial functions and global risk management programs for the company. He is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries.

Eric M. Kirsch, 57, executive vice president and global chief investment officer of Aflac Incorporated; president, Aflac Global Investments, joined Aflac in 2011 and is responsible for overseeing the company’s investment efforts, including Aflac’s investment portfolio and investment team. He is a chartered financial analyst and former chairman of the Stable Value Investment Association. Eric is also a trustee of the Jersey Shore University Medical Center Foundation and serves on the board for the Baruch College Fund.

Virgil R. Miller, 49, executive vice president and chief operating officer, Aflac U.S.; president, Aflac Group Insurance, joined Aflac in 2004. He previously served as vice president of Client Services, Customer Assurance and Aflac’s Transformation Office. In 2015, Virgil was promoted to senior vice president of Internal Operations and later named chief administrative officer, head of Aflac Group. He was promoted to his current position in January 2018. He serves on the board of trustees for Claflin University, the 2017 Group Insurance Executive Council, the Palmetto Health Foundation Board and the Columbia Urban League.

Audrey Boone Tillman, 53, executive vice president and general counsel, joined Aflac in 1996. She was promoted to vice president; senior associate counsel, Legal, in 2000; to senior vice president; director, Human Resources in 2008; and to executive vice president, Corporate Services in 2011. She was promoted to her current role in May 2014, where she oversees Aflac’s Legal division, Compliance, State Government Relations, Federal Relations, Global Cyber Security and the office of the Corporate Secretary. Audrey’s responsibilities also include oversight of the General Counsel and Compliance offices at Aflac Japan.

Richard L. Williams Jr., 46, joined Aflac in 2017 as executive vice president and chief distribution officer. Rich is responsible for U.S. growth, which includes leading Aflac’s fully aligned distribution team of independent career agents and brokerage professionals as well as the company’s Product and Enrollment divisions. Prior to joining Aflac, he was senior vice president and general manager, Stop Loss, at Unum, U.S. and senior vice president, Growth Markets at Colonial Life and Accident Insurance Company. He is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries.

Masatoshi Koide, 57, president and chief operating officer, Aflac Japan, originally joined Aflac in November 1998 and stayed with Aflac until March 2006. He worked for Nikko Asset Management before he joined Aflac again in December 2008 as vice president. He was promoted to senior vice president in January 2012 and to first senior vice president in July 2013. He was promoted to executive vice president, Planning and Research, Risk Management, Investment, Compliance and General Affairs in January 2015 and to his current position in July 2017. He is a member of the New York State Bar.

Koji Ariyoshi, 64, executive vice president; director of Sales and Marketing, Aflac Japan, joined Aflac as senior vice president responsible for sales planning in 2008. Since then, he has managed various departments, including Retail Marketing, Alliance Management and Hojinkai Promotion. He was promoted to his current position in January 2012. Before joining Aflac, he worked for Alico Japan as vice president and for AXA Life Insurance as senior vice president.

John A. Moorefield, 56, executive vice president; chief transformation officer, IT, Policy Services, Information Security, Aflac Japan, joined Aflac in 2005 and has held several key positions, including chief information officer of Aflac Japan. Prior to joining Aflac, he served as a principal in ApproxiCom, LLC and held executive leadership positions at Cap Gemini Ernst & Young LLP, Fidelity Investments and NationsBank. He was promoted to his current position in January 2017.

Jun Isonaka, 60, first senior vice president, sales, Aflac Japan, joined Aflac in 1980 and served as general manager in various marketing and sales departments from 1999 through 2001. He was promoted to vice president in 2002 and to senior vice president in January 2007. He became chief administrative officer in January 2010 and was promoted to his current position in January 2012.


Affiliated Corporate Agency – Agency in Japan directly affiliated with a specific corporation that sells insurance policies primarily to its employees

Direct Premium – Premiums earned before the impact of reinsurance

Earnings Per Basic Share – Net earnings divided by the weighted-average number of shares outstanding for the period

Earnings Per Diluted Share – Net earnings divided by the weighted-average number of shares outstanding for the period plus the weighted-average shares for the dilutive effect of share-based awards outstanding

Group Insurance – Insurance issued to a group, such as an employer or trade association, that covers employees or association members and their dependents through certificates of coverage

Individual Insurance – Insurance issued to an individual with the policy designed to cover that person and his or her dependents

In-force Policies – A count of policies that are active contracts at the end of a period

Net Investment Income – The income derived from interest and dividends on investment securities, after deducting investment expenses

New Annualized Premium Sales – Annual premiums, on policies sold and incremental increases from policy conversions, collected over a 12-month period, assuming the policies remain in force

Operating Earnings Per Diluted Share Excluding the Impact of Foreign Currency – The profits derived from operations, including interest cash flows associated with notes payable and amortized hedge costs related to foreign currency denominated investments, but excluding certain items that cannot be predicted or that are outside of management’s control, such as realized investment gains and losses from securities transactions, impairments, change in loan loss reserves and certain derivative and foreign currency activities; nonrecurring items; and other non-operating income (loss) from net earnings. Nonrecurring and other non-operating items consist of infrequent events and activity not associated with the normal course of the Company’s insurance operations and do not reflect Aflac’s underlying business performance. This metric is then adjusted using the average yen/dollar exchange rate for the comparable prior year period, which eliminates dollar based fluctuations driven solely from currency rate changes, and then divided by the weighted average outstanding diluted shares for the period presented

Persistency – Percentage of premiums remaining in force at the end of a period, usually one year. For example, 95% persistency would mean that 95% of the premiums in force at the beginning of the period were still in force at the end of the period

Premium Income – Revenues that an insurer receives as premiums paid by its customers for insurance products

Risk-based Capital (RBC) Ratio – Statutory adjusted capital divided by statutory required capital. This insurance ratio is based on rules prescribed by the National Association of Insurance Commissioners (NAIC) and provides an indication of the amount of statutory capital the insurance company maintains, relative to the inherent risks in the insurer’s operations

Solvency Margin Ratio (SMR) – Solvency margin total divided by one half of the risk total. This insurance ratio is prescribed by the Japan Financial Services Agency (FSA) and is used for all life insurance companies in Japan to measure the adequacy of the company’s ability to pay policyholder claims in the event actual risks exceed expected levels

Total Return to Shareholders – Appreciation of a shareholder’s investment over a period of time, including reinvested cash dividends paid during that time

GLOSSARY OF SELECTED TERMS

RECONCILIATION OF NET EARNINGS TO OPERATING EARNINGS PER DILUTED SHARE1

TWELVE MONTHS ENDED DECEMBER 31, 2017 2016 % ChangeNet earnings per diluted share $ 11.54 $ 6.42 79.8%Items impacting net earnings: Realized investment (gains) losses: Securities transactions and impairments 0.02 (0.13) Certain derivative and foreign currency (gains) losses2, 3 (0.02) (0.08) Other and non-recurring (income) loss3 0.17 0.33 Income tax (benefit) expense on items excluded from operating earnings2 (0.06) (0.04)

Tax reform adjustment4 (4.85) N/A

Operating earnings per diluted share 6.81 6.50 4.8%Current period foreign currency impact5 0.10 N/AOperating earnings per diluted share excluding current period foreign currency impact6 $ 6.91 $ 6.50 6.3%

1 Amounts may not foot due to rounding.2 To conform to current year presentation, prior-year amounts have been revised to reflect the change in methodology of classifying the amortized hedge costs

related to foreign currency denominated investments as a component of operating earnings.3 Foreign currency gains (losses) for all periods have been reclassified from other income (loss) to derivative and foreign currency gains (losses) for consistency with

current period presentation.4 This estimated impact of Tax Reform may be adjusted for the current and future periods, possibly materially, due to, among other things, further refinement of the

company’s calculations, changes in interpretations and assumptions the company has made, tax guidance that may be issued and actions the company may take as a result of Tax Reform.

5 Prior period foreign currency impact reflected as “N/A” to isolate change for current period only.6 Amounts excluding current period foreign currency impact are computed using the average yen/dollar exchange rate for the comparable prior-year period, which

eliminates dollar-based fluctuations.

44

Aflac Worldwide Headquarters1932 Wynnton Rd.Columbus, GA 31999

tel: 706.323.3431 aflac.com

Shareholders in the U.S. with questions about individual stock accounts

Shareholder Servicestel: 706.596.3581 or 800.227.4756 Email: [email protected]

Institutional debt and equity investors with questions about the company

David A. Young Vice President,Investor and Rating Agency Relationstel: 706.596.3264 or 800.235.2667

Rating agencies with questions about the company

Delia H. Moore Director, Investor and Rating Agency Relationstel: 706.596.3264 or 800.235.2667

Individual/retail shareholders with questions about the company

Daniel A. BellwareSenior Manager, Investor and Rating Agency Relationstel: 706.596.3264 or 800.235.2667

Information requests such as Form 10-K, quarterly earnings releases and other financial materials

Investor and Rating Agency Relationstel: 706.596.3264 or 800.235.2667

Policyholders/claimants tel: 800.992.3522(en Español, tel: 800.742.3522)

Aflac JapanShinjuku Mitsui Building2-1-1, NishishinjukuShinjuku-ku, Tokyo163-0456, Japan

Yoshihiro Aoyama Manager, Aflac Japan Investor Relations Support Officetel: 011.81.3.3344.0481

aflac.co.jp

CONTACT INFORMATION

This 2017 Year in Review contains forward-looking statements based on expectations, estimates and projections as of the date of this report. These cautionary statements by their nature are subject to risks, uncertainties and assumptions, and are influenced by various factors. As a consequence, actual results may differ materially from those expressed in the forward-looking statements. Aflac undertakes no obligation to update such forward-looking statements. For more information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Information” in Aflac’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission.

Communicorp, Aflac’s printing and communications subsidiary, has received Forest Stewardship Council® (FSC ®) certification. This chain-of-custody certification is part of a not-for-profit organization program that brings people together to find solutions and reward good forest management.

© 2018 Aflac Incorporated. All rights reserved.

Aflac® is a registered trademark of American Family Life Assurance Company of Columbus.

One Day Pay SM and everwellSM are service marks of American Family Life Assurance Company of Columbus.

aflac.com 706.596.3264 or 800.235.2667

Aflac Incorporated | 1932 Wynnton Road Columbus, Georgia 31999

Date post:	14-May-2018
Category:	Documents
Upload:	nguyenxuyen
View:	213 times
Download:	1 times

WE ARE AFLACinvestors.aflac.com/~/media/Files/A/Aflac-IR/.../aflac-2017.pdf · For more than 63...

Documents