Presentation Notes for the Aflac 2019 Financial Analysts Briefing September 25, 2019 For more information contact: Investor and Rating Agency Relations 706.596.3264 800.235.2667 Aflacir@Aflac.com aflac.com Aflac Worldwide Headquarters 1932 Wynnton Road Columbus, GA 31999
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 • tax rates applicable to the Company may change • exposure to significant interest rate risk • defaults and credit downgrades of investments • concentration of business in Japan • decline in creditworthiness of other financial institutions • foreign currency fluctuations in the yen/dollar exchange rate • significant valuation judgments in determination of amount of impairments taken on the Company's investments • limited availability of acceptable yen-denominated investments • U.S. tax audit risk related to conversion of the Japan branch to • subsidiaries' ability to pay dividends to the Parent Company a subsidiary • decreases in the Company's financial strength or debt ratings • deviations in actual experience from pricing and reserving • inherent limitations to risk management policies and procedures assumptions • ability to continue to develop and implement improvements in • concentration of the Company's investments in any particular information technology systems single-issuer or sector • competitive environment and ability to anticipate and respond • differing judgments applied to investment valuations to market trends • ability to effectively manage key executive succession • ability to protect the Aflac brand and the Company's reputation • catastrophic events including, but not necessarily limited to, • ability to attract and retain qualified sales associates, brokers, epidemics, pandemics, tornadoes, hurricanes, earthquakes, employees, and distribution partners tsunamis, war or other military action, terrorism or other acts of • interruption in telecommunication, information technology and violence, and damage incidental to such events other operational systems, or a failure to maintain the security, • changes in accounting standards confidentiality or privacy of sensitive data residing on such • increased expenses and reduced profitability resulting from systems changes in assumptions for pension and other postretirement • failure to comply with restrictions on patient privacy and benefit plans information security • level and outcome of litigation • extensive regulation and changes in law or regulation by • allegations or determinations of worker misclassification in the governmental authorities United States
Strategic Overview of Aflac Incorporated Dan Amos Chairman and Chief Executive Officer, Aflac and Aflac Incorporated 2 1
The Need for Aflac’s Products Rising health care costs in both the U.S. and Japan, continue to drive greater out-of-pocket expenses Financial Focus • Strong and stable pretax margins • Robust capital position • High-quality, diversified investments • Leading return on capital paired with an extremely low cost of capital Address the challenge of top-line growth 2
Generating Growth With a Measured Approach Defending the Core Product Development – Distribution Productivity – Digitizing Platforms Expanding the Core Tactical Development Evolving the Core Innovating – Venturing – Incubating Leverage core with a measured approach 3
My Special Aflac Duck 4
Overview of Aflac Japan Masatoshi Koide President and Representative Director, Aflac Life Insurance Japan Ltd. 9 Roadmap I. Japan Insurance Market: Third Sector II. Aflac Japan’s Competitive Advantages III. Aflac Japan’s Vision and Strategy for Growth 10 5
Market Catalysts Third sector market dynamics support further expansion, including : Aging Population and Low Birthrate Projected Social Security Benefits Changing Consumer Needs 11 Opportunities for the Growing Third Sector (Cancer & Medical, FSA Basis, Stand-alone, Life Industry Only) Policies in Millions Market more than doubled in 15 years 65 60 55 50 45 40 35 30 25 20 15 10 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 As of March 31 12 Source: Life Insurance Association of Japan 6
Cancer Insurance Market Penetration (Product Penetration, Individual Basis, Three-year Interval Data) % 100 81.5 81.0 79.9 79.2 77.9 77.7 80 74.0 73.0 72.3 72.1 71.3 69.3 60 37.8 37.3 40 33.1 31.2 25.3 21.2 20 0 2001 2004 2007 2010 2013 2016 Life insurance Medical insurance Cancer insurance Life insurance does not include annuity insurance or child endowment 13 Source: Japan Institute of Life Insurance Aflac Japan VISION 2024 Being the leading company Vision “Creating Living in Your Own Way” Through VISION 2024 Aflac Japan will: • Strengthen Aflac’s position as the leading company in the third sector • Expand into new frontiers consistent with our core capabilities and values • Cultivate an innovation-driven corporate culture 14 7
Leveraging Our Strengths as a Market Leader As the pioneer of cancer insurance in Japan with 44+ years of experience, Aflac has developed scale, efficiencies and deep expertise Innovative Broad Trusted Brand Products Distribution Aflac Japan is the leading company for cancer and medical insurance in Japan 15 Competitive Advantage: Innovative Products Provide Latest Coverage Based on Customers’ Different Life Stages Coverage at Different Life Stages Post-retirement Life Coverage Income Support Coverage Nursing Care/ Dementia Care Coverage Death Coverage Post-mortem Expense Coverage Medical Insurance Cancer Insurance 30s 40s 50s 100 20s Life Stage of Customers ・ January 2019: Introduced mid-term, lump-sum rider addition system Medical Insurance ・ June 2019: Introduced special premium rate for medical insurance 16 8
Competitive Advantage: Broad Distribution Core Traditional Channel Affiliated Corporate 1,300+ agencies, including 200+ Aflac-exclusive agencies Agencies Independent Corporate 4,000+ agencies, including 1,000+ Aflac-exclusive agencies Individual 3,900+ agencies, including 3,500+ Aflac-exclusive agencies • 20,000+ post offices nationwide selling Aflac cancer insurance Japan Post • 76 branches of Japan Post Insurance Co., Ltd. • Announced strategic alliance with a capital relationship in December 2018 • Nearly 40,000 Dai-Ichi Life sales representatives offer Aflac cancer insurance Strategic Dai-ichi Life Partners • 19 years of consistent, robust sales results under Business Alliance Channel Daido Life • Selling cancer insurance products in SME association market Banks • Aflac Japan represented at 360+ banks 17 Competitive Advantage: Trusted Brand Aflac’s brand recognition is over 91% • Attractive to consumers and business partners • Communicates high-quality products and services for “insurance for daily living” 18 9
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