Aflac 2021 Business & Sustainability Report: Message From Dan Amos, Aflac Incorporated Chairman and CEO

Apr 20, 2022 9:00 AM ET
Article

At Aflac Incorporated, we believe that strong ethics, good corporate citizenship, and financial success go hand in hand. We have elevated doing the right thing to priority status for as long as I can remember. Even before the concept of corporate social responsibility or the focus on environmental, social and governance (ESG) had specific names, it was how we did business and part of who we are. It is The Aflac Way.

The Aflac Way is engrained in our culture, daily operations, and interactions with the communities we serve and in which we live. All things being equal, we believe most people prefer doing business with a company that is also a good corporate citizen. Whether it is being there for our policyholders when they need us most, helping families facing childhood cancer, providing opportunities for our diverse workforce and distribution channels, being mindful of our impact on the environment, or being good stewards of the resources of shareholders, we believe that our approach is not only the right thing to do but also makes good business sense.

"All things being equal, we believe most people prefer doing business with a company that is also a good corporate citizen."

As we reflect on 2021, adaptable, purposeful and resilient are three adjectives that first come to mind. I don’t think it’s coincidental that Aflac has achieved success while being purposeful about doing the right thing. In fact, I believe they go hand in hand.

I’m proud of what we have accomplished by delivering solid earnings and in terms of our social purpose. I want to emphasize a very important point: although we at Aflac were certainly impacted by the COVID-19 pandemic, we have not remained idle waiting for it to disappear. We have continued to invest strategically in our business and our brand.

Through sound risk management, agile planning and acting swiftly, Aflac was well positioned to respond in order to safeguard the health and well-being of our workforce, policyholders and communities in both Japan and the U.S. After all, our greatest commitment to our policyholders lies in our promise to be there for them in their time of need.

In the face of the ongoing pandemic, in 2021 we reported net earnings per diluted share of $6.39 and adjusted earnings per diluted share of $6.00, excluding the impact of foreign currency.* This latter measure of profitability is one of the principal financial measures used to evaluate management’s performance and allows us to continue fulfilling our purpose as a socially responsible corporation that benefits shareholders and stakeholders alike over the long term. We are continually working on our foundation of sustainable growth, especially related to leveraging these particular strategic areas of focus:

  • Diverse and productive distribution.

  • Recognized, trusted and powerful brand.

  • Product innovation and customized, high-quality service.

  • Strong capital position marked by stable earnings and strong cash flows.

  • Industry-leading market share and scale in Japan and the U.S.

We are pleased to share one remarkable achievement in 2021 — our 39th consecutive year of increasing our dividend. We are proud to be able to continue that long track record even amid the backdrop of a global pandemic.

The world continues to change in ways that surprise us. But what hasn’t changed is the fact that, pandemic or no pandemic, people still face the same illnesses, accidents, and  health conditions every day. We remain committed to being there for them in their time of need. Despite uncertainty, we have maintained our focus on controlling the things that we have the power to control. We will continue to build our business and take care of those who depend on us: our policyholders, shareholders, customers, employees, distribution channels and communities in which we operate.

Throughout this report, you will read about some of our many achievements in our environmental, social and governance initiatives, as well as Aflac Incorporated’s financial performance. So much has occurred over the last 30-plus years. Through it all, I continue to believe that our compassionate approach and the trust we build with those who depend upon us results in a stronger brand that consumers, employees and all our stakeholders want to associate with. This approach ultimately helps us generate long-term value for shareholders. We hope that you will enjoy what you find on the pages of this report, as well as future updates.

Dan Amos
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Download the Aflac 2021 Business & Sustainability Report here

*Adjusted earnings are adjusted revenues less benefits and adjusted expenses. Adjusted earnings per share (basic or diluted) are the adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The adjustments to both revenues and expenses account for certain items that cannot be predicted or that are outside management’s control. Adjusted revenues are U.S. GAAP total revenues excluding adjusted net investment gains and losses. Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest cash flows from derivatives associated with notes payable but excluding
any nonrecurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company’s underlying business performance. Management uses adjusted earnings and adjusted earnings per diluted share to evaluate the financial performance of the Company’s insurance operations on a consolidated basis and believes that a presentation of these financial measures is vitally important to an understanding of the underlying profitability drivers and trends of the Company’s insurance business. The most comparable U.S. GAAP financial measures for adjusted earnings and adjusted earnings per share (basic or diluted) are net earnings and net earnings per share, respectively. Adjusted earnings excluding current period foreign currency impact are computed using the average foreign currency exchange rate for the comparable prior-year period, which eliminates fluctuations driven solely by foreign currency exchange rate changes. Adjusted earnings per diluted share excluding current period foreign currency impact is adjusted earnings excluding current period foreign currency impact divided by the weighted average outstanding diluted shares for the period presented. The Company considers adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact important because a significant portion of the Company’s business is conducted in Japan and foreign exchange rates are outside management’s control; therefore, the Company believes it is important to understand the impact of translating foreign currency (primarily Japanese yen) into U.S. dollars. The most comparable U.S. GAAP financial measures for adjusted earnings excluding current period foreign currency impact and adjusted earnings per diluted share excluding current period foreign currency impact are net earnings and net earnings per share, respectively. Adjusted earnings of $6.00 per share excludes per share adjusted net investment gains of $0.68, other and non-recurring losses of $0.11, income tax expense on items excluded from adjusted earnings of $0.12, and foreign currency impact of $0.06.

In this document, we may refer to Aflac Incorporated’s businesses collectively as “Aflac” or the “Company,” the Company’s U.S. businesses as “Aflac U.S.” and the Company’s Japan businesses as “Aflac Japan.”