AFLAC Incorporated

Good morning and welcome to the AFLAC Incorporated First Quarter 2022 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Young, Vice President of Investor and Ratings Agency Relations and ESG. Please go ahead.

Thank you, Andrea. And good morning. Welcome all to Aflac Incorporated's first quarter earnings call. This morning we will be hearing remarks about the quarter related to our operations in Japan and the United States from Dan Amos, Chairman and CEO of Aflac Incorporated. Fred Crawford, President and COO of Aflac Incorporated, will then touch briefly on conditions in the quarter and discuss key initiatives. Yesterday, after the close, we posted our earnings release and financial supplement to investors.aflac.com, along with a video with Max Brodin, Executive Vice President and CFO of Aflac Incorporated, who provided an update on our quarterly financial results and current capital and liquidity. Max will be joining us for the Q&A segment of the call, along with other members of our U.S. Executive Management, Teresa White, President of Aflac U.S., Virgil Miller, Deputy President of Aflac U.S., Eric Kirsch, Global Chief Investment Officer and President of Aflac Global Investments, Brad Dislin, Deputy Global Chief Investment Officer, Al Ruggieri, Global Chief Risk Officer and Chief Actuary, June Howard, Chief Accounting Officer, and Steve Beaver, CFO of Aflac U.S. We are also joined by members of our Executive Management Team at Aflac Life Insurance Japan. Charles Lake, Chairman and Representative Director, President of Aflac International. Masatoshi Koide, President and Representative Director. Todd Daniels, Director and CFO. Koichiro Yoshizumi, Director, Deputy President and Director, 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-US GAAP measures. I'll now hand the call over to Dan. Dan?

Thank you, David, and good morning. Thank you for joining us. As I reflect on the first quarter of 2022, I'm thankful for the dedication, compassion, and hard work of our committed Aflac team in the United States and Japan. Our management team, employees, sales force have continued to work tirelessly to be there for the policyholders when they need us most, just as we promised. As Max highlighted in his video update, Aflac Incorporated reported first quarter net earnings per diluted share of $1.58 in the first quarter of 2022. Adjusted earnings per diluted share were solid at $1.42 in the first quarter, supported in part by the continuation of a low benefit ratio associated with the pandemic conditions. Also contributed were better-than-expected returns from alternative investments, despite the weakening of the yen. We remain cautiously optimistic as we continue to navigate the pandemic. Looking at the operations in Japan in the first quarter, Applied Japan generated strong overall financial results with a profit margin of 25.3%. This was above the outlook range that we provided at the November 2021 financial analyst briefing. Persistency remained strong. However, sales were constrained as the quasi-states of emergency remained in place through mid-March. This impacted our ability to meet face-to-face with customers. Also contributing to the decline in the quarter were comparisons of the first quarter of 2021 when our new medical product was launched. Applike Japan has continued to offer support to Japan Post Group as it gears up for the start of the new fiscal year of April of 2022. This included the transfer of approximately 10,000 Japan Post company sales employees to Japan Post Insurance. These sales employees will focus solely on selling Japan Post Insurance products and Aflac's Japan's cancer insurance products. Since it may take some time for these employees to ramp up sales activities under the new framework, we anticipate sales momentum picking up in the second half of the year. On that note, as part of the ongoing collaboration and governance framework of the Strategic Alliance, I'm excited to be traveling to Japan toward the end of June to meet with Mr. Masuda Japan Post Holdings CEO, along with the president of Japan Post Postal, and insurance companies. Given this, we expect stronger overall sales in the second half of the year, assuming that the pandemic conditions do not escalate, that we execute on our product introductions and refreshment plans, and the sales productivity continues to improve at Japan Post Group. Turning to Aflac US, we saw a solid profit margin of 19.8%. This result was also above the outlook range that we provided at the financial analyst briefing. I am pleased that our US sales momentum has continued from the fourth quarter with a 19% annual sales increase in the first quarter. This reflects continued improvements in the pandemic conditions, growth in our core products, and investment in the build-out of growth initiatives. While Athlete Dental and Vision and Group Premier Life, Absent Management and Disability Solutions, which we call PLADS, are a relatively small part of our sales, we are very pleased with how they're contributing to our growth. Our growth initiatives modestly impacted the top line in the short term. but also tend to be accompanied by the sale of our core supplemental health products, as Fred will explain in a moment. In combination with our core products, they also better position Aflac US for future long-term success. The need for the products we offer is as strong or stronger than ever before. At the same time, we know that consumers' habits and buying preferences have been evolving. We remain focused on being able to sell and service customers, whether in person or virtually. This is part of our ongoing strategy to increase access, penetration, and retention. Turning 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, a disciplined and tactical stock repurchase. It goes without saying that we treasure our record of dividend growth. The fourth quarter's declaration marked our 39th consecutive year of dividend increases. This is a record we seek to extend demonstrated by our 21.2% increase in the first quarter cash dividend. 2020 will remain in the market purchasing shares with a tactical approach. In the first quarter, Aflac Incorporated deployed $500 million in capital to repurchase $8 million of its common shares. With this approach, we look to emerge from this period in a continued position of strength and leadership. Keep in mind, in addition, we have among the highest return on capital and lowest cost of capital in the industry. We have also focused on integrating the growth investments we've made. I don't think it's a coincidence that we've achieved success while focusing on doing the right things for our policyholders, shareholders, employees, sales distribution, business partners, and communities. I'm proud of what we've accomplished in terms of both our social purpose and financial results, which have ultimately translated into strong long-term shareholder return. We also believe in the underlying strength of our business and our potential for continued growth in the US and Japan, the two of the largest life insurance markets in the world. Thank you for joining us this morning, and now I'll turn the program over to Fred. Fred?