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Aflac Inc AFL
Q4 2011 Earnings Call Transcript

Transcript Call Date 02/01/2012

Operator: Welcome to the Aflac Fourth Quarter Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session. Please be advised today's conference is being recorded.

I would now like to turn the call over to Ms. Robin Wilkey, Senior Vice President of Aflac Investor and Rating Agency Relations.

Robin Y. Wilkey - SVP, IR: Good morning, and welcome to our fourth quarter call. Joining me this morning is Dan Amos, Chairman and CEO; Kriss Cloninger, President and CFO; Paul Amos, President of Aflac and COO of our U.S. Operations; Ken Janke, Executive Vice President and Deputy CFO; Eric Kirsch, First Senior Vice President and Global Chief Investment Officer; Toru Tonoike, President and COO of Aflac Japan, who's joining us from Tokyo.

Before we start, let me remind you that some statements in the teleconference are forward-looking within the meaning of Federal Securities Laws. Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they're prospective in nature. Actual results could differ materially from those we discuss today. We encourage you to look at quarterly release for some of the various risk factors that can materially impact our results.

Now I'm going to turn the program over to Dan, who'll begin this morning with some comments about the quarter and our operations in both Japan and the U.S. Dan?

Daniel P. Amos - Chairman and CEO: Thank you Robin. Good morning and thank you for joining us. I'm pleased that we met and in many cases significantly exceeded our financial and operational performance for the fourth quarter and the year. I'll briefly review the quarter and the year, starting with the operations in Japan and the U.S. Let me begin with Aflac Japan, our largest earning contributor that generated a strong result throughout 2011. We were again pleased with Aflac Japan's financial performance and particularly the tremendous sales momentum they produced. New annualized premium sales rose 31% to 48.6 billion yen for the quarter, which significantly exceeded our expectations and set all-time quarterly record. Aflac Japan outstanding sales results are especially remarkable considering 2011 was the year Japan was hit by the most devastating natural disaster in its history. For the year, total new annualized premium sales rose 18.6%. Though suppressed by the strong yen, revenue growth in yen rose 6% the quarter and 4.5% for the year. Pre-tax earnings rose 8% for the quarter and 6.8% the year.

Bank channel sales significantly exceeded our expectations generating 16.5 billion yen in new annualized premium sales produced and accounted for 33.9% of total Aflac Japan sales. This represents an increase of 135% over the fourth quarter of 2010. Banks have been very successful in selling products, especially with WAYS, our unique hybrid whole-life product. In the fourth quarter, the bank channel produced 323% increase in the sale of WAYS over the fourth quarter of 2010.

Looking at the bank channel sales, we anticipate sales comparisons in 2012 will be especially difficult, especially in the second half of the year following the record 2011 results. Keep in mind, we anticipated the momentum of WAYS sales through banks to carry over into the first quarter of 2012. In fact, we believe first quarter sales of Aflac products through banks will be up more than 150%. This is in large part because we expect an intense product first quarter push from banks to finish their fiscal year very strong.

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