AFLAC Incorporated

Ladies and gentlemen, thank you for standing by and welcome to the AFLAC fourth quarter 2020 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, David Young, Vice President, Investor, and Rating Agency Relations. Please go ahead, Mr. Young.

Thank you, Carol. And good morning and welcome to Aflac Incorporated's fourth quarter earnings call. As always, we have posted our earnings release and financial supplement to investors.aflac.com. This morning, we will be hearing remarks about the quarter and the year related to our operations in Japan and the United States amid the ongoing COVID-19 pandemic. Dan Amos, Chairman and CEO of Aflac Incorporated, will begin with an overview of our operations in Japan and the U.S. Fred Crawford, President and COO of Aflac Incorporated, We'll then touch briefly on conditions in the fourth quarter and discuss key initiatives, including how we are navigating the pandemic. Max Brodin, Executive Vice President and CFO of Aflac Incorporated, will conclude our prepared remarks with a summary of fourth quarter financial results and current capital and liquidity. Members of our U.S. Executive Management team joining us for the Q&A segment of the call are Theresa White, President of Aflac U.S. Virgil Miller, President of Individual Benefits. Rich Williams, President of Group Benefits. Eric Kirsch, Global Chief Investment Officer and President of Aflac Global Investments. Al Ruggieri, Global Chief Risk Officer and Chief Actuary. June Howard, Chief Accounting Officer and Steve Fever, CFO of Aflac U.S. We are also joined by members of our executive management team in Tokyo at Aflac Life Insurance Japan. Charles Lake, Chairman and Representative Director, President of Aflac International. Masatoshi Kuire, President and Representative Director. Todd Daniels, Director and CFO. And Koji Ariyoshi, Director and Head of Sales and Marketing. Before we begin, some statements in this 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 are prospective in nature. Actual results could differ materially from those we discussed today. We encourage you to look at our annual report on Form 10-K for some of the various risk factors that could materially impact our results. As I mentioned earlier, The earnings release is available on investors.aflac.com and includes reconciliations of certain non-U.S. GAAP measures. I'll now hand the call over to Dan.

Dan? Thank you. Good morning, and thank you for joining us. At this time last year, it would have been very difficult to foresee the gravity of what was soon to unfold for society and for the company today. due to COVID-19. I'm proud of our employees, our sales distribution, and board of directors for their decisive people-first initiatives we spearheaded early on in both the United States and Japan to protect our workforce and to be here for our policyholders throughout this trying time. we were able to reinforce our financial strength in operations, as well as our distribution franchise with digital and virtual investments to the position of our company for the future growth. Adjusted earnings per diluted share, excluding the impact of foreign exchange, increased 10.8% in 2020. While benefiting from a lower effective tax rate, we were pleased with the results when you consider the pandemic pressure on revenues, accelerated investment in our core technological platforms, and the initiatives to drive future earned premium growth and efficiency. Investing in growth and innovation will continue to be critical strategic focus this year. There is one central message that I've been emphasizing with our management team. It is imperative that we control the factors we have the ability to control. And what we don't have control over, we must monitor continually to be ready to adapt. Despite the fact that sales in both U.S. and Japan have been suppressed considerably due to the constraints of face-to-face opportunities, We did not sit still. We maintained forward motion as we absorbed accelerated investment in our platform while continuing strong earning performance. In 2020, Aflac Japan generated solid overall financial results with a stable profit margin of 21.2%. and extremely strong premium persistency of 95.1%. The relaunch of our new cancer rider drove a sequential improvement in both cancer insurance and total sales in the fourth quarter. As a result, total sales were down 22.2% for the quarter and 36.2% for the year. In Japan, we introduced our new medical product in January, and even up against difficult comparisons of last January that were pre-COVID sales, it is a positive launch exceeding our expectations. We are encouraged by the reception of both the consumers and our sales force. While these sales results represent sequential improvements, relative to last quarter, the effective reduced face-to-face activity are evident, and we continue to promote virtual sales. Our goal in Japan is to be the leading company for living in your own way. This is a declaration of how we tailor our products to fit the needs of customers during the different stages of their lives and reach them where they want to buy through agencies, strategic alliance, and banks. Now, turning to Aflac US, we saw a stable profit margin of 19.3% amid a year of intense investments in the future of our business and the global pandemic conditions. However, this backdrop continues to noticeably impact our sales results in this segment as well, largely due to reduced face-to-face activity. As expected, we saw modest sequential sales improvement in the quarter, with a decrease of 27.2 percent for the quarter and 30.3 for the year. In the U.S., we continue to feel the impact of limited access at the work site, especially among our career agents who have historically relied upon face-to-face meetings to engage small business owners and their employees. However, we remain cautiously optimistic for continued modest sequential sales improvement, contingent upon the pace of the economic recovery And as a result, expect to see a brighter second half of 2021. Fred is responsible for acquisitions, and he will cover that shortly. But while these acquisitions may not have an immediate effect on the top line, they better position Aflac for future long-term sales in the United States. As part of the Vision 2025 in the U.S., we seek to further develop a world where people are better prepared for unexpected health expenses. The need for the products we offer is as strong or stronger than ever has been. At the same time, we know consumer habits and buying preferences have been evolving, and we are looking to reach them in ways other than the traditional media and outside the worksite. This is part of the strategy to increase access, penetration, and retention. Even while working remotely for the greater part of the year, we remain true to our culture and identity as a socially responsible company. We stepped up our engagement with our employees through virtual town meetings and weekly touch base letters. Additionally, diversity continues to play an important role at Aflac, as it has for decades. I have always believed that in order to accomplish our goals and serve the community where we have a presence, we must surround ourselves with a group of people who bring different perspectives to the table. We have done that for years. At the end of 2020, nearly 50% of Aflac's U.S. employees were minorities. 66% were women. 23% of our U.S. senior officers were minorities, and 30% were women. And then when you think of AFLAC's board of directors, 36% were minorities and 36% were women. Diversity has always played an important role within ESG, and I've cast Fred with executive oversight of our ESG efforts. He will provide greater detail on our 2021 key objectives. I've always said that the true test of strength is how one handles adversity. While pandemic conditions are ongoing, I'm pleased that 2020 confirmed what we knew all along, and that is that AFLAC is strong, adaptable, and resilient. We strive to be where people want to purchase insurance that applies to both Japan and the United States. In the past, this has meant meeting face to face with individuals to understand their situation, propose a solution and close the sale. However, the pandemic clearly demonstrates the need for virtual means. In other words, non face to face sales. to reach potential customers and provide them with the protection that they need. Therefore, we have accelerated investments to enhance the tools available for our distribution in both countries. Related to capital deployment, we place significant importance on continuing to achieve strong capital ratios in the United States and Japan on behalf of our policyholders and shareholders. When it comes to capital deployment, we pursue value creation through a balance of actions, including growth investments, stable dividend growth, and disciplined tactical stock repurchase. It goes without saying that we treasure our record of dividend growth. The fourth quarter's declaration marked the 38th consecutive year of dividend increases. Additionally, the board approved a first quarter dividend increase of 17.9%. Our dividend track record is supported by the strength of our capital and cash flows. At the same time, we remain tactical in our approach to share repurchase, buying back $1.5 billion of our shares in 2020. We have also focused on integrating the growth investments we have made in our platform. As always, we are working to achieve our earnings per share objectives, while also ensuring we deliver on our promise to our policyholders. By doing so, we look to emerge from this period in a continued position of strength and leadership. I don't think it's coincidental that we've achieved our success while focusing on doing the right things for our policyholders, shareholders, employees, distribution channel, business partners, and communities. In fact, I believe they go hand in hand. I'm proud of what we have accomplished in terms of both our social purpose and financial results, which have ultimately translated into strong long-term shareholder return. Now let me turn the program over to Fred. Fred?