Aflac Incorporated : 2021 Financial Analyst Briefing

2021 Financial Analysts Briefing

About This Book

This book primarily contains slides and excerpts from Aflac Incorporated's 2021 Financial Analysts Briefing held on November 19, 2021 at Aflac's Worldwide Headquarters in Columbus, Ga., along with additional information. All information is intended to provide a comprehensive discussion and analysis of Aflac Incorporated's operations. The information contained in this book was based on conditions that existed at the end of the third quarter of 2021. Circumstances may have changed materially since these presentations were made. The company undertakes no obligation to update the presentations. This information was prepared as a supplement to the company's annual and quarterly releases, 10-Ks and 10-Qs. This book does not include footnotes to the financial statements or certain items that appear in reports or registration statements filed with the Securities and Exchange Commission. We believe the information presented in this book was accurate at the time of the presentations, but its accuracy cannot be guaranteed. A webcast of this event's presentations is available for one year following the event at investors.aflac.com.

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. The company desires to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as "expect," "anticipate," "believe," "goal," "objective," "may," "should," "estimate," "intends," "projects," "will," "assumes," "potential," "target," "outlook" or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward- looking statements.

The company cautions readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements:

• difficult conditions in global capital markets and the economy, including those caused by COVID-19
• defaults and credit downgrades of investments
• exposure to significant interest rate risk
• concentration of business in Japan
• limited availability of acceptable yen-denominated investments
• foreign currency fluctuations in the yen/dollar exchange rate
• differing judgments applied to investment valuations
• significant valuation judgments in determination of expected credit losses recorded on the Company's investments
• decreases in the Company's financial strength or debt ratings
• decline in creditworthiness of other financial institutions
• concentration of the Company's investments in any particular single-issuer or sector
• the effects of COVID-19 and its variants (both known and emerging), and any resulting economic effects and government interventions, on the Company's business and financial results
• ability to attract and retain qualified sales associates, brokers, employees, and distribution partners
• deviations in actual experience from pricing and reserving assumptions
• ability to continue to develop and implement improvements in information technology systems
• interruption in telecommunication, information technology

and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems

• subsidiaries' ability to pay dividends to the Parent Company
• inherent limitations to risk management policies and procedures
• the level of sales of Aflac Japan products in the Japan Post channel
• tax rates applicable to the Company may change
• failure to comply with restrictions on policyholder privacy and information security
• extensive regulation and changes in law or regulation by governmental authorities
• competitive environment and ability to anticipate and respond to market trends
• catastrophic events, including, but not limited to, as a result of climate change, epidemics, pandemics (such as the coronavirus COVID-19), tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, terrorism or other acts of violence, and damage incidental to such events
• ability to protect the Aflac brand and the Company's reputation
• ability to effectively manage key executive succession
• changes in accounting standards
• level and outcome of litigation
• allegations or determinations of worker misclassification in the United States

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2021

Non-U.S. GAAP Financial Measures and Reconciliations

This document includes references to the Company's financial performance measures which are not calculated in accordance with United States generally accepted accounting principles (U.S. GAAP) (non-U.S. GAAP). The financial measures exclude items that the Company believes may obscure the underlying fundamentals and trends in insurance operations because they tend to be driven by general economic conditions and events or related to infrequent activities not directly associated with insurance operations.

Definitions of the Company's non-U.S. GAAP financial measures and applicable reconciliations to the most comparable U.S. GAAP measures are provided as appropriate.

Due to the size of Aflac Japan, where the functional currency is the Japanese yen, fluctuations in the yen/dollar exchange rate can have a significant effect on reported results. In periods when the yen weakens, translating yen into dollars results in fewer dollars being reported. When the yen strengthens, translating yen into dollars results in more dollars being reported. Consequently, yen weakening has the effect of suppressing current period results in relation to the comparable prior period, while yen strengthening has the effect of magnifying current period results in relation to the comparable prior period. A significant portion of the Company's business is conducted in yen and never converted into dollars but translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings, cash flows and book value on a U.S. GAAP basis. Management evaluates the Company's financial performance both including and excluding the impact of foreign currency translation to monitor, respectively, cumulative currency impacts on book value and the currency neutral operating performance over time. The average yen/dollar exchange rate is based on the published MUFG Bank, Ltd. telegraphic transfer middle rate (TTM).

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Table of Contents
Aflac Incorporated Strategic Overview...............................................................	Daniel P. Amos....................................	4
Aflac Incorporated Strategic Execution..............................................................	Frederick J. Crawford..........................	6
Aflac U.S. Strategic Overview............................................................................	Teresa L. White...................................	8
Aflac U.S. Growth and Operations.....................................................................	Virgil R. Miller....................................	10
Aflac U.S. Payroll Product Line...................................................................................................................................	12
Overview of Japan's Political Economy..............................................................	Charles D. Lake II..............................	16
Aflac Japan Strategic Overview and Outlook.....................................................	Masatoshi Koide................................	21
Aflac Japan Sales Strategy................................................................................	Koichiro Yoshizumi ...........................	24
Aflac Japan's Product Line.........................................................................................................................................	26
Corporations Supporting Japan.................................................................................................................................	28
Actuarial and Risk Discussion............................................................................	Albert A. Riggieri...............................	29
Aflac Global Investments...................................................................................	Eric M. Kirsch....................................	37
Financial Focus and Outlook.............................................................................	Max K. Brodén..................................	41
Appendix...................................................................................................................................................................	46
Aflac's Historical Highlights in the United States..........................................................................................................	52
Aflac's Historical Highlights in Japan...........................................................................................................................	53
Executive Bios............................................................................................................................................................	54

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Aflac Incorporated Strategic Overview

Daniel P. Amos

Chairman and Chief Executive Officer, Aflac Incorporated

As we near the end of 2021, we find ourselves looking forward to a time when we can again meet face to face. While we are seeing some signs of improving pandemic conditions, uncertainty lingers as the world races to vaccinate populations while fending off any potential surges in cases that are variant in nature. I want to make one important point very clear: although we at Aflac were certainly impacted by the pandemic, we have not remained idle, waiting for the pandemic to diminish. We have taken decisive action steps by continuing to efficiently invest in our business and our brand. You'll hear more about the actions we've taken today from the leaders who initiated them.

The Right People in the Right Places

•	Fred Crawford - COO	•	Eric Kirsch and Brad Dyslin -
	Platform and product growth;		Aflac Global Investments
	efficiency; longer term strategy		Refreshed strategic asset
			allocation; responsible
•	Teresa White and Virgil Miller -		investing and strategic
	Aflac U.S.		alliances
	$1.8 billion in new sales by 2025
		•	Max Brodén - CFO
•	Masatoshi Koide and Koichiro		Tactical capital deployment
	Yoshizumi - Aflac Japan

Five-year outlook of ¥80 billion in annual sales

Developing strong leaders - the foundation for growth

2021 marks the 39th consecutive year that we've increased the dividend to our shareholders. Today also marks 32nd year speaking at this conference as CEO. I don't know where the time went. I am still enjoying what I do, building and cultivating growth for the company. As you've heard me say many times before, I believe that one of my key roles, in conjunction with the board, is developing our leaders to lay the groundwork for strong succession planning. We place a high priority on ensuring we have the right people in the right places at the right time. In doing so, we have continued our focus on building a strong, deep bench of leaders preparing to take on more responsibility, many of whom will be presenting today.

This environment has been challenging for all, and Fred has been busy executing an enterprise strategy for growth that he laid out at our briefing last year. This strategy not only focused on navigating the pandemic, but also on building out our platforms for growth while also targeting efficiencies. To place Aflac in a position of strength, we know that we must balance the growth investments with an eye toward reducing expenses in the long run. Fred will update you on our progress before handing the program over to Teresa White and Virgil Miller.

While many of you know Teresa, Virgil is president of our Aflac U.S. Group and Individual Benefits Divisions. Like Teresa, he is also a prime example of a leader cultivated from within our ranks. Virgil has been with Aflac since 2004 in various operational leadership roles. Along with Teresa, Virgil will provide a more detailed overview and update on growth strategies for Aflac U.S., including our goal of $1.8 billion in annual new sales by 2025. Masatoshi Koide, who many of you know, will cover "VISION 2024," Aflac Japan's medium-term plan, and our near-term strategic growth plans.

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. We have worked hard to be where they want to buy insurance through agencies, strategic alliances, and banks. As I mentioned earlier, we have also significantly enhanced our ability to connect with consumers and sell to them through virtual means. As you can imagine, our recovery in japan is largely contingent upon the resumption of face-to-face interaction and the timing of a japan post recovery. Koide-san will be joined by Koichiro Yoshizumi, deputy president and director of sales and marketing, who joined Aflac Japan in early 2021. Yoshizumi-san brings a tremendous wealth of experience within Japan's life insurance industry. I believe that we have the right person who can help us achieve a recovery to the 2019 pre-pandemic sales level of 80 billion yen by 2025.

After a strategic, operational and sales-focused Q&A, we will turn to the investment and financial portions of our briefing. Eric Kirsch will provide an update on our recently refreshed strategic asset business, as well as responsible investing and strategic alliances. Our portfolio has generated strong returns, while experiencing low loss levels and demonstrating the effectiveness of our disciplined investment process, risk management and strategic asset allocation. Later, Eric will be joined during the Q&A by Brad Dyslin, senior managing director, deputy global chief investment officer. Brad was the fourth employee at Aflac Global Investments back in 2012. Along with Eric, Brad provides senior leadership across the spectrum of investment initiatives.

Tactical Capital Deployment

$1.80				Annual Cash Dividend per Share
$1.60									$1.601
		Over 21% increase in quarterly dividend payable in 1Q22
$1.40
$1.20		2021 marked the 39th consecutive year of increasing the dividend
$1.00			Repurchased more than $1.6 billion in 2021
$0.80
$0.60
$0.40
$0.20
$0.00
1983	1988	1993	1998	2003	2008	2013	2018	2022

1Annualized first quarter dividend

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