Table of Contents. Section III - Aflac U.S. Overview of Aflac U.S...Teresa L. White...49

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1 Financial Analysts Briefing 2015

2 About This Book This book primarily contains information about Aflac, most of which was given at the company s 2015 Financial Analysts Briefing held on May 21, 2015, at the Mandarin Oriental Hotel in New York, New York. All information is intended to provide a comprehensive discussion and analysis of Aflac s operations. The information contained in this book was based on conditions that existed at the end of the first quarter Circumstances may have changed materially since those 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. 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. We desire 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 or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forwardlooking statements. We caution 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; governmental actions for the purpose of stabilizing the financial markets; defaults and credit downgrades of securities in our investment portfolio; exposure to significant financial and capital markets risk; fluctuations in foreign currency exchange rates; significant changes in investment yield rates; credit and other risks associated with Aflac s investment in perpetual securities; differing judgments applied to investment valuations; significant valuation judgments in determination of amount of impairments taken on our investments; limited availability of acceptable yen-denominated investments; concentration of our investments in any particular single-issuer or sector concentration of business in Japan; decline in creditworthiness of other financial institutions; deviations in actual experience from pricing and reserving assumptions; subsidiaries ability to pay dividends to Aflac Incorporated; ineffective risk management policies and procedures; changes in law or regulation by governmental authorities; ability to attract and retain qualified sales associates and employees; decreases in our financial strength or debt ratings; 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; changes in U.S. and/or Japanese accounting standards; failure to comply with restrictions on patient privacy and information security; level and outcome of litigation; ability to effectively manage key executive succession; catastrophic events including, but not necessarily limited to, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, acts of terrorism and damage incidental to such events; ongoing changes in our industry; events that damage our reputation; increased expenses for pension and other postretirement plans; and failure of internal controls or corporate governance policies and procedures. Table of Contents Section I - Aflac Incorporated Strategic Overview of Aflac...Daniel P. Amos...2 Financial Outlook and Capital Management...Kriss Cloninger III...4 Aflac Investments...Eric M. Kirsch...13 Product Pricing and Reserving...Susan R. Blanck...17 International Public Policy and Regulatory Developments...Charles D. Lake II...27 Section II - Aflac Japan Japan Macro Environment and Market Overview...Paul S. Amos II...37 Aflac Japan and its Growth Strategy...Hiroshi Yamauchi...42 Section III - Aflac U.S. Overview of Aflac U.S....Teresa L. White...49 Section IV - Other Information Historical Highlights in the United States...58 Historical Highlights in Japan...59 The Management Team...60 Index of Tables and Charts July 2015

3 Section I Aflac Incorporated Strategic Overview of Aflac Daniel P. Amos Chairman; Chief Executive Officer, Aflac and Aflac Incorporated This year marks our 60 th anniversary in the United States and last November, we celebrated our 40 th anniversary in Japan. This presentation will cover my thoughts on Aflac today and what I see for the longer term. We have developed a product line that is focused, yet flexible enough to accommodate diverse consumer preferences in Japan and the United States, thanks, in part, to an advertising campaign featuring the Aflac Duck. The Aflac Duck phenomenon has catapulted our brand awareness and more than nine out of 10 people in both countries recognize the Aflac brand. Our focus on the supplemental voluntary segment of the insurance industry reflects the need and opportunities we see for our products. We continue to believe that we operate in the best markets for our products where welldefined and consistent health care delivery is available, yet affordability is an ever-growing concern. Japan is a prime example of a combination of an aging population and strained health care system, making our products even more attractive to consumers. Paul will cover this in his presentation. Of course, as people age, the incidence of sickness and disease increases, but our products are priced to accommodate that expected trend. So, while the demographic trends enhance the need for our products, Aflac is not exposed to significant claims risk. Our goal remains to be the number one provider of cancer and medical insurance in Japan, and I m sure we re going to be able to achieve that. Yamauchi-san covers this in his presentation. Our distribution system has been expanding in Japan. Our alliance with Japan Post combines the largest distribution network in Japan with the industry leader of cancer insurance. I believe the relationship between Aflac Japan and Japan Post continues to be mutually beneficial as we make cancer insurance available to more and more Japanese consumers. We believe the value proposition of our products will only be enhanced as Japan Post moves toward privatization. I am also excited by the strong growth in sales of our cancer products across all distribution channels. Our goal is to have a presence in all the outlets where consumers want to make their insurance purchase decisions. While Japan has seen many changes to the health care environment in the last few years, the U.S. has also had its share of changes, particularly in the U.S. health care system with the Affordable Care Act. According to an April 2015 Kaiser Family Foundation study: When it comes to public support of the health care reform law, the passage of time and favorable developments can make a big difference. The study indicates that the public s view of the ACA is gradually improving, thanks to the duration of time Americans have had to consider the changes. We believe that as public perception continues to become more favorable and consumers become more familiar with what is covered by the ACA and what is not covered the need for Aflac products will become more and more evident. We also believe Aflac products provide excellent solutions at a very affordable premium. With that in mind, we are very excited about the innovative products we are exploring that will benefit consumers. We know from past experience that new products tend to stimulate sales. We think the product enhancements coming in the second half of the year in the U.S. will do just that. Aflac U.S. has evolved from a one-channel model of career agents to a model that now also includes insurance brokers. Our career sales agents focus on the smaller accounts, which have, and will continue to, be our bread and butter. We are also concentrating on the broker market and are expecting to see strong growth, as it represents the mid- to large-case accounts. As we continue to grow with this two-channel distribution model, I believe that it will prove to be the right approach that leverages our strengths and brand. Aflac s established brand has served as an effective door-opener and catalyst for many consumers and payroll accounts to be more receptive in hearing how Aflac products can help them. At the same time, our wellknown brand has increased expectations for servicing our payroll accounts, distribution channels, policyholders and consumers. While we have a phenomenal brand, it is important that we differentiate our company from our competitors is through innovation. We ve recently launched an initiative that no one in the insurance industry has ever attempted, no less done. This new initiative is called One Day Pay SM and allows us to process, approve and pay a claim in just one day. Now, I ve been asked, Does it really matter if we pay a claim in 1 day or 4 days? My answer is, No, it doesn t 2

4 matter that is, unless you actually need the money. There is no doubt that American consumers need cash quickly, and paying claims fast and fairly helps set us apart from the competition. Teresa White covers this and other new initiatives in more detail in her presentation. The bottom line is that I believe we will continue to dominate the supplemental voluntary insurance market and be the best at what we do. And although I m not satisfied with our U.S. sales growth in recent years, we are putting more premium on the books than our next three competitors combined that sell our type of products. But that is very little consolation for what I believe is a big potential market. I believe the changes we have made in our sales infrastructure will have a long-term impact on our business, but it never moves as fast as I would like. However, I am not going to be satisfied until I see a minimum of 5% compound growth over the next several years. I am happy with the consistent and predictable profitability of our products. So now we just have to get the sales increases, and I believe we will do it. Having covered our operations, let me now turn to a topic I know is on your mind, and that is our capital deployment. I know how important capital deployment is to you, our shareholders, and our three-year capital plan has been top of mind for Kriss and for me. Over the next few years, executing on this capital plan is a top priority that will increase the available capital we can deliver to enhance shareholder value. Kriss and I are confident that this is reasonable and achievable, and we have both the capacity and the desire to accomplish that. Historically, as we ve weighed our capital deployment options, we ve primarily considered projects for enhancing organic growth, acquisitions, dividends and share repurchase. While the scales have always been tipped toward dividends and share repurchase, we will continue to explore other options. We are, and will continue to be, very disciplined when evaluating these opportunities. And while we re not going to rule anything out, I can tell you that before we would pursue an option, we must first demonstrate to ourselves that it would be the best use of our capital and would provide a better return than buying our shares back. If we can t do that, we won t pursue it. I ve been in this business for 40 years, and as I have matured in this position, I am as excited today about the future of the company. 3

5 Financial Outlook and Capital Management Kriss Cloninger III President; Aflac Incorporated My presentation covers the framework we are using to develop our capital management plans, the business modeling assumptions that form the foundation for those plans and our current expectations regarding capital deployment over the next three years. First let me review our operating structure and give you some recent history. Aflac s Principal Operating Units Aflac Incorporated (Georgia corporation) to Aflac U.S. Aflac Japan also pays a management fee directly to the parent company. Aflac U.S. remits allocated expenses and management fees to the parent, and may pay dividends to the parent within the limitations imposed by Nebraska, our domicile state. Typically, we declare a dividend from Aflac to Aflac Incorporated each quarter to fund the shareholder dividend. In 2014, we increased the dividends to the parent company by about 54%. Aflac Incorporated Cash Outflows Overview Aflac Incorporated American Family Life Assurance Company (Aflac) Nebraska life insurance co. Aflac Japan (branch) Aflac Columbus Capital support CAIC (Aflac Group) Operating expenses Interest expense Debt repayment Counterparties Aflac New York (New York life insurance co.) Continental American Insurance Company (Aflac Group) (South Carolina life insurance co.) Cash dividend Share repurchase Aflac Incorporated s principal subsidiary is American Family Life Assurance Company of Columbus, or Aflac. On a U.S. GAAP basis, we report two operating segments Aflac U.S. and Aflac Japan. For financial reporting purposes, the Aflac U.S. segment includes Aflac Columbus and Aflac New York, which is a subsidiary of Aflac. Aflac New York is subject to the insurance laws of that state. The Aflac U.S. segment also includes Continental American Insurance Company, or CAIC. CAIC, branded Aflac Group Insurance, is a subsidiary of Aflac Incorporated. Aflac Incorporated Cash Inflows Overview Borrowings Dividends Management fees Allocated expenses Aflac U.S. Aflac Incorporated Management fees Shareholders Aflac Incorporated s cash outflows can vary quite a bit year by year, primarily as a result of share repurchase activities and maturing debt obligations. Interest expense has increased over time largely due to our increased borrowings, although it will decline this year due to our make-whole transaction we recently completed. Aflac Incorporated s cash outflows are primarily to counterparties for operating expenses, interest expense and debt repayments. In addition, Aflac Incorporated may supply capital support to Aflac Group if needed to fund its growth. Historically, the parent company has used capital that is not needed to support the insurance operations to provide for a cash dividend to our shareholders and for the repurchase of our shares. We have steadily increased the shareholder dividend for the last 32 consecutive years. Operating Revenue and Pretax Earnings by Segment (March 31, 2015) Operating Revenue Pretax Earnings Profit repatriation Allocated expenses Aflac Japan 29% 26% Although Aflac Incorporated can receive cash from borrowings, its principal source of liquidity is from the operating units. Aflac Japan remits a portion of its FSAbased after-tax net earnings as well as allocated expenses 4 71% Japan U.S 74%

6 Aflac Japan remains the primary contributor to our overall operations. In the first quarter of 2015, Aflac Japan represented approximately 74% of pretax operating earnings, down slightly from recent years primarily reflecting a weaker yen to the dollar. Aflac Japan s operating earnings benefit from its large block of inforce business. In fact, we estimate that 94% of Aflac Japan s premium income will be derived from renewal premiums this year, with the balance coming from new sales. In the first quarter of 2015, our other reportable segment, Aflac U.S., represented approximately 26% of pretax operating earnings. Aflac U.S. revenue growth is largely driven by the rate of premium income growth. Premium income has grown at an average of 3.2% over the last five years, reflecting the weaker sales. That has been somewhat offset by a generally improving persistency. In addition I would note that from a currency perspective, combining Aflac Japan s dollar-denominated net investment income with the operating profits from Aflac U.S., approximately 48% of our consolidated earnings are dollar-denominated. Aflac Japan 2014 Results by Product Category vs. Outlook (As % of Revenue) Projected 3-year average ratios for Core Health/Other* Ordinary Life Total Benefit ratio 53-55% 82-84% 62-64% Expense ratio Profit margin Actual results for 2014 Benefit ratio 52.4% 81.9% 60.9% Expense ratio Profit margin *Other includes Dementia, Super Care, Rider Wide, Annuity and Injury Last year, I showed you Aflac Japan s expected benefit ratios, expense ratios and profit margins compared to total revenues for the years 2014 through The benefit ratio in 2014 fell below our expected three-year range. This was due to favorable claims trends from our medical and cancer business. In addition, the impact of reinsurance, and the effect of the weaker yen on dollar-denominated investment income also contributed to the decline. Expense ratios were within the estimated ranges. The pretax profit margin was just above the top end of the range for core health/other due to the lower benefit ratios while ordinary life block was within the range we predicted. In total, the pretax profit margin was within the expected range. Aflac Japan Outlook Assumptions /2017 Sales growth 3 rd sector 1% to 5% 2% to 8% 1 st sector -25% to -40% 0% to 5% New money yield 1.6% to 2.0% 1.6% to 2.0% Persistency Stable Stable As in previous years, I would again like to emphasize that what I am about to cover simply presents you with modeling assumptions, and does not, and I repeat does not, represent official sales guidance. As we discussed earlier this year, it is our expectation that third sector sales in Japan will be very strong through the first nine months of this year. Consistent with our sales guidance, we are assuming third sector sales growth will be down sharply in the fourth quarter, with the sales themselves expected to be about the same. Again, for projection purposes only, we are modeling a 2% to 8% increase in third sector sales growth for 2016 and For the first sector, we are modeling a sales decline of 25% to 40% for 2015, which is comparable to levels seen prior to For 2016 and beyond, we are modeling first sector sales to stay around the level of You will note our projections assume new money yields will be slightly lower than last year as a result of the continued low interest rate environment. We have modeled them to be in the range of 1.6% to 2.0% for the three years and we believe these to be conservative projections. We also assume that persistency in Japan will be stable. Before I briefly share our expectations of the operating ratios for the next three years, let me first show you the impact that the reinsurance and limited pay products will have on Aflac Japan. To gain additional historical perspective on our operating ratios, you can review the latest statistical supplement that we publish quarterly. Effect of Reinsurance on Aflac Japan* (GAAP Basis, In Billions) Year Impact on Earned Premium Impact on Benefits 2013 (7.6) (6.8) (.8) 2014 (33.1) (29.3) (3.8) 2015 (58.6) (53.5) (5.1) 2016 (61.2) (55.8) (5.3) 2017 (58.3) (53.0) (5.4) *Includes reinsurance in effect as of March 31, 2015 Impact on Profit Our reinsurance program impacts the premiums, benefits and profits of Aflac Japan. This slide shows the historical and projected future impact of reinsurance on Aflac Japan s premiums, benefits and earnings. Reinsurance also impacts our operating ratios. In 2013, reinsurance reduced our benefit ratio by about 12 basis points versus what we would have seen without reinsurance. This impact grew to 51 basis points in 2014 as we saw a full year s impact of Tranche 1 of the reinsurance and a partial year impact of Tranche 2. For 2015, 2016 and 2017, we anticipate the benefit ratio will be reduced by approximately 100 basis points in each year as a result of the three reinsurance tranches we ve executed so far. While we don t see a direct impact on expense amounts due to the reinsurance, we do see an impact on the expense ratio resulting from the reduction in premium income. The expense ratio was not materially impacted in 2013, but the impact in 2014 was an increase of 34 basis 5

7 points. For 2015, 2016 and 2017, we expect the expense ratios will be 60 to 65 basis points higher in each year than they would have been without the reinsurance. Additionally, the profit margin was not materially impacted in 2013, but in 2014, we saw an increase in the profit margin of 18 basis points due to reinsurance. For 2015, 2016 and 2017, we anticipate an increase of 35 to 40 basis points as a result of reinsurance activities to date. As I will discuss later, the retrocession program has reduced the profit impact on a consolidated basis. Effect of Limited Pay Products on Aflac Japan (In Billions) Aflac U.S Results vs. Outlook (As % of Revenue) Projected 3-year average ratios for Total Benefit ratio 50-52% Expense ratio Profit margin Actual results for 2014 Total Benefit ratio 48.7% Expense ratio 33.0 Profit margin 18.3 Limited Pay AP at Year End Limited Pay Earned Premium Limited Pay Profit * * * In force as of March 31, 2015; does not assume future sales *Estimate As this slide indicates, premium growth will be suppressed in future years by limited pay products as they reach paid-up status. After reaching paid-up status, these policies will no longer contribute to our premium income. However, because we accrued a deferred profit liability during the premium-paying period as accounting policy requires, profits will continue to emerge fairly evenly over the life of the policy as the deferred profit liability is released, so no impact on profits, but a reduction in revenues. Aflac Japan Outlook by Product Category (As % of Revenue) Projected 3-year average ratios for Core Health/Other* Ordinary Life Total Benefit ratio 52-54% 82-84% 61-63% Expense ratio Profit margin *Other includes Dementia, Super Care, Rider Wide, Annuity and Injury These projected ratios represent what we expect the average ratios to be in 2015 through 2017, including the impact of the limited pay policies and the three tranches of reinsurance that have already been executed. These ratios are substantially the same as those projected for the 2014 to 2016 period. Like Aflac Japan, we projected ranges for the threeyear average benefit, expense and profit ratios from 2014 through 2016 on the Aflac U.S. business at last year s analyst meeting. We do not break out product categories for the U.S. segment as we do in Japan because most of our U.S. products sold have similar financial characteristics. In 2014 the actual benefit ratio fell below our anticipated range due to better-than-expected claims experience. The expense ratio was slightly above the range we had established. As discussed in our earnings release, expenses were higher in 2014 due to our sales management reorganization, and these additional expenses will continue to impact us through The final 2014 profit margin came in slightly above the high end of our projected range. Aflac U.S. Outlook Assumptions /2017 Sales growth 3% to 7% 3% to 7% New money yield 3.0% to 4.0% 3.0% to 4.0% Persistency Stable Stable Now, let me address the assumptions we are using for modeling the U.S. business. Again, I would emphasize that these are simply modeling and sensitivity testing assumptions. For the years 2015 through 2017, we are modeling sales growth of 3% to 7%. In terms of new money yields, we have modeled investment yields in the 3% to 4% range for the three-year period. These new money yield assumptions reflect current interest rates, current credit spreads and investment durations. We anticipate persistency will remain fairly stable throughout the outlook period. Aflac U.S. Outlook (As % of Revenue) Projected 3-year average ratios for Total Benefit ratio 50-52% Expense ratio Profit margin

8 This slide shows the anticipated three-year average ratios over the period 2015 to 2017 for Aflac U.S. We are estimating that benefit ratios will be a bit higher than they have been for the last few years. Due to the changes made to the sales force compensation model last year, we expect the expense ratio to also be slightly higher than in the recent past. As a result, margins should be in the 16% to 18% range, similar to what we have experienced in recent years; a few moving parts, but no major change on a net basis. Next, I d like to briefly discuss our risk management activities associated with what we believe to be the top enterprise-wide risks Aflac faces. We have been very focused on enhancing key strategic global risk management programs and policies for the company. We ve made progress addressing the required risk measures and activities associated with the ORSA framework. This includes developing a risk appetite statement as well as enhancing and enriching our risk identification process and capital modeling capabilities. Risk Management Top Issues Additionally, we have raised employee awareness of cyber security through conducting training exercises in both Japan and the United States. Regarding currency risk, we view it from two perspectives. The first is translation risk, which affects us primarily from a financial reporting standpoint. The second is transaction risk, which has an economic impact on Aflac. The Impact of Currency Translation Average Exchange Rate Annual Operating EPS % Growth Over 2014 % Yen Impact 100 $ $ * (2.4) (.28) (6.3) - (1.5) (.52) (9.7) - (4.9) (.73) *Actual 2014 weighted-average exchange rate Financial market risk Brand risk IT infrastructure risk Cybersecurity risk Currency risk The first risk I ll cover is financial market risk. As you know, our regulatory capital levels in Japan, and to a lesser extent in the United States, are exposed to market risks. These risks, including interest rates, currency rates and credit spreads, impact our capital ratios and therefore our ability to repatriate capital to the United States and ultimately up to the parent company. I ll cover this in more detail in this presentation. Second, we face brand risk. The well-known Aflac brand can be put at risk by a variety of factors. However, we are particularly sensitive to risk arising from compliance issues, regulatory oversight, or changes in our financial strength and debt ratings. To mitigate these risks, we have a very strong compliance effort both in the United States and in Japan and we regularly meet with regulators, including at the annual supervisory college, which includes representatives both from our domicile state of Nebraska and the regulators from the FSA in Japan. Third, we are exposed to IT infrastructure risk from a technology perspective. We depend on our systems for interacting with employers, policyholders, sales associates and brokers. Some of our systems are legacy systems that rely on older, less efficient software. However, we are continually upgrading systems and retiring older platforms where appropriate. In light of continued threats to government and corporate information systems, cybersecurity is a high priority. To better address this risk, we have engaged prominent cybersecurity advisors to assist our chief information security officer. Our Global Information Security Council has a global cyber response plan in place. As we have discussed in the past, our earnings sensitivity to currency translation has varied over time. In 2013, for every one-yen move on the average annual exchange rate, our earnings per diluted share were impacted by 4.3 cents per share. In 2014, the impact declined to 3.2 cents per diluted share. For 2015, we estimate our sensitivity to the yen will further decrease to a range of 2.7 to 2.9 cents per share for the full year. This decline in currency sensitivity is driven by two factors. First, the increase in dollar-denominated assets held in the Aflac Japan s investment portfolio reduces the sensitivity to the yen/dollar exchange rate changes. Second, the weakening of the yen means we report fewer dollars from our yen-based earnings as translated. Hedging Economic Currency Risk Parent company notes payable» Cross-currency swaps» $3.7 billion of notional hedged into yen as of 3/31/15» Weighted-average interest rate of 1.55% in yen Repatriation» Foreign currency hedges» 170 billion yet to be received in 2015, 15 billion of which is earmarked for yen debt repayment 123 billion of 2015 has been hedged» 60 billion of 2016 has been hedged» Weighted-average yen/dollar exchange rate of for 2015 We hedge a portion of the dollar assets held by Aflac Japan to accomplish currency-matching with our yendenominated Japanese liabilities. In addition, we hedge a portion of parent company notes payable from dollars into yen. At the end of the first quarter, $3.7 billion of our dollar-denominated debt obligations were swapped into yen. These swaps are held through the maturity of the debt 7

9 instrument. Additionally, 40.8 billion of debt securities were issued in yen and today held in yen. We are also holding $2 billion in dollar-denominated debt that hasn t been swapped. Maintaining our debt obligations in yen helps us hedge a portion of the currency risk, while at the same time we pay a significantly lower interest rate. In addition, we actively hedge cash flows that are remitted in yen from Aflac Japan to Aflac U.S. For 2015, we expect to receive an additional 170 billion of profit repatriation, 15 billion of which is earmarked for yen debt repayment later this year. Of the remaining 155 billion, we have hedged 123 billion into dollars at an average exchange rate of about 116 yen to the dollar. We have also hedged 60 billion of our expected repatriation in 2016 and a small portion in I d like to turn to our capital plan. As we ve communicated previously, we ve been very focused on developing a multi-year strategy related to capital generation and deployment. I ll start this discussion by outlining our views on the importance of capital adequacy. Capital Plan Objectives and Considerations Produce strong financial profile:» Minimum RBC ratio of 500% to 600%» Minimum SMR in Japan of 500% to 600% Maintain debt-to-total-capitalization ratio up to 25% Support financial strength and debt ratings Deploy capital to enhance shareholder value» Cash dividends and share repurchase» Other opportunities First, we want to demonstrate a strong financial profile as measured by our risk-based capital, or RBC ratio, and solvency margin ratio, or SMR, in Japan. It is our objective to maintain a minimum range of 500% to 600% for both the RBC and SMR capital measures. Additionally, we are comfortable with a debt-to-total capital ratio of around 25%. It is also important for us to maintain appropriate capital levels to support our current financial strength and debt ratings. Achieving these objectives will allow us to continue to deploy capital in the form of shareholder dividends or share repurchase. Alternatively, it may allow us to consider other opportunities to deploy capital to enhance shareholder value, which I will cover in more detail. Capital Adequacy Ratios RBC (December 31) RBC Sensitivities (December 31, Change in Points from Base) RBC 630% 786% 945% Yen strengthens +10 yen Credit migration* (75) (97) (114) *15% securities downgraded by one NAIC rating; excludes U.S. Treasury securities Aflac s RBC ratio is impacted by changes in the yen/ dollar exchange rate due to the relative size of Aflac Japan s business. A significant portion of our statutory capital is dollar-denominated. Therefore, total adjusted capital, or TAC, which is the numerator of that ratio, is only slightly influenced by currency fluctuations. Historically, the company action level, which is the denominator, is more sensitive to changes in the exchange rate. Therefore, when the yen weakens, yen-denominated assets and liabilities are translated into fewer dollars. When risk factors are applied to those lower dollar amounts, the result is a decrease in the denominator, which leads to an increase in the RBC ratio. The relationship of foreign currency to the RBC ratio has changed significantly since we began the hedged dollar investment program for Aflac Japan in Prior to 2012, our RBC declined as the yen strengthened. Since that time, we are less sensitive to foreign currency changes for two reasons. First, required capital is not as sensitive to currency changes as it was in prior periods due to the yen weakening. Second, total adjusted capital is affected by the hedged dollar program because it includes unrealized gains and losses on derivative contracts used to hedge dollar-denominated principal amounts. At year-end 2014, the total adjusted capital was in a net yen liability position. As you can see in the chart, a strengthening yen has very little impact to RBC ratios at the present time. This chart also shows the impact on the RBC ratio from credit migration Our analysis shows that a one-notch downgrade on 15% of our investment holdings, excluding U.S. Treasuries, would result in a decline of 114 points in the 2014 RBC ratio. Capital Adequacy Ratios SMR (December 31) SMR 669% 777% 857% RBC 630% 786% 945% Our RBC ratio encompasses both our Columbus-based U.S. operations and our branch operation in Japan. Aflac s RBC ratio improved 159 points in 2014 to 945%. The increase between 2013 and 2014 was largely due to growth in surplus from earnings. 8 Japan s SMR is similar to the RBC concept. Unlike the RBC ratio, the capital component of Japan s SMR includes unrealized gains and losses on investments that are classified as available for sale. As a result, the SMR is exposed to market risks that we must thoroughly assess when contemplating the appropriate level for the ratio itself and the amount of capital we might repatriate to the United

10 States. Over the last two years, Aflac Japan s SMR has improved significantly to 857% at year-end 2014, primarily due to reinsurance transactions, increased unrealized investment gains, and a weaker yen to the dollar. Solvency Margin Sensitivities (December 31, Change in Points from Base) *** 2014 SMR 669% 777% 857% As you can see, all four of the SMR sensitivities improved in I would note that the improvement was largely due to the significant unrealized gains in our portfolio that have resulted from lower interest rates. Because of the impact on the core margin, these sensitivities would increase if the net unrealized gain in our available for sale portfolio declined and would be further magnified if the available for sale portfolio deteriorated into a net unrealized loss position. Capital Plan SMR Management (Based on Estimated March 31, 2015 SMR) Yen rates +1%* (198) (95) (58) Dollar rates +1%** (98) (112) (66) Yen strengthens +10 yen (54) (45) (20) Credit spreads +1% (203) (236) (122) *Change in 10-year Japanese government bond yield **Change in 10-year U.S. Treasury bond yield ***Revision 7/15 Framework Minimum SMR Levels 600% Framework Minimum 500% Company Minimum 100% 300% As this chart suggests, we routinely stress-test our SMR by exposing it to various changes in interest rates, exchange rates and credit spreads. It s important to note that the impact from changes in these variables on the SMR is not linear due to the effect of unrealized gains and losses on the solvency margin capital amount, which is the numerator in the SMR formula. Unrealized gains benefit the numerator by 90% of their value. However, unrealized losses reduce the capital amount by 100% of their value. In addition, a value called the core margin is impacted by unrealized losses net of taxes, which further reduces the solvency margin capital amount. The core margin is not increased when assets are in an unrealized gain position. This core margin concept was introduced in 2012 into the SMR computation, and creates a ceiling for taking credit for policy reserves in excess of the Zillmer regulatory reserves in the FSA financials or cash surrender value. Over time, our SMR has become less sensitive to yen interest rates as measured by changes in yields of 10-year JGBs. Our use of the policy reserve matching, or PRM classification, has reduced the volatility associated with changes in Japanese interest rates. The growth of Aflac Japan s investments in U.S. dollar securities, which are classified as available for sale, caused the SMR to become more sensitive to changes in U.S. interest rates. Aflac Japan s SMR is also exposed to foreign currency risk. Non-yen assets we hold in our portfolio affect SMR in two ways. First, they carry a higher capital requirement than yen-denominated assets. The capital requirement is significantly less for non-yen assets that are hedged into yen. Second, the exchange rate influences our reported surplus position in yen when we translate unhedged, dollar-denominated assets. A stronger yen would negatively impact surplus as the dollar assets would translate into a lower value in yen terms, but increase surplus when the yen weakens. Finally, the SMR is influenced by credit spread risk. As spreads widen, the solvency margin gross amount is negatively impacted. However, there tends to be a negative correlation between credit spreads and risk-free rates, which tends to mitigate the net effect of the changes in asset value. 200% Regulatory Minimum 200% In managing Aflac Japan s capital position, we consider several factors. First, the regulatory minimum for SMR is 200%. Second, we want to ensure we allocate sufficient capital to meet minimum SMR levels and reinforce our commitment to our policyholders by maintaining a floor SMR of 500% in accordance with our risk appetite statement and as part of Aflac Japan s governance process. The framework minimum level of 600% is chosen at management s discretion to allow time to mitigate adverse changes in the SMR value so that we are not likely to pierce the 500% floor. Capital Plan SMR Management (Based on Estimated March 31, 2015 SMR) 898% Current SMR 600% Framework Minimum 500% Company Minimum 200% Regulatory Minimum 298% Market Volatility Provision (Unrealized Gains of 210%) 100% 300% 200% We then evaluate the overall volatility of our SMR using probabilistic, stochastic and deterministic modeling to determine the overall buffer that is necessary to withstand anticipated market volatility. We believe that in current market conditions, our March 31, 2015 SMR, which we estimate at 898% is appropriate given our unrealized gain position and potential market volatility. As of March 31, 2015, unrealized gains account for approximately 210 SMR points. As I have mentioned before, we do not consider unrealized gains as available for capital deployment, so we hold them in SMR as we judge appropriate. 9

11 Reinsurance Transaction Impact on Deployable Capital (March 31, 2015, In Billions) Reinsurance Transactions and Future Potential (In Billions) 130 Reserve release (40) Japan taxes 90 (30) Addition to repatriation in Anticipated future capital deployment Executed Transactions Product Transaction Dates FSA Reserves Released % Retroceded EVER 3Q none 4Q % Rider MAX 1Q % As part of our capital management plan, we entered into a reinsurance transaction on March 31, 2015, which released 130 billion of FSA reserves. This resulted in about 90 billion of FSA net after-tax earnings, 30 billion of which was used to increase our repatriation anticipation for The remaining 60 billion is earmarked as future deployable capital, and was excluded from our March 2015 SMR calculation. While this transaction results in cash outflow due to the payment of taxes, it provides a cost effective way to position us to achieve our capital deployment plans. Finally, I d like to emphasize that we have various tools available as part of our capital planning in the event we need to quickly enhance SMR. These include the established reinsurance program we put in place over the last few years as well as a line of credit that is multi-currency and can be used by either Aflac or Aflac Incorporated. If we need to increase our regulatory capital quickly, the credit line would be an effective short-term tool to utilize. Aflac Japan Reinsurance Program Proven interest among reinsurers Regulatory hurdles identified Cost effective Retrocession capability Enhances capital management flexibility Now, I would like to continue our discussion of capital by recapping our reinsurance program. In 2013, Aflac Japan began our reinsurance program by ceding a portion of the EVER block of medical business. Since that first transaction, we have secured additional reinsurance of portions of our EVER and Rider MAX blocks. In addition, some of the reinsured business was retroceded from the reinsurer to Aflac Incorporated s subsidiary, CAIC. By passing the risks of the reinsured block to the reinsurer, we accelerate recognition of FSA profits inherent in the reinsured block and enhance our capital management capability in a cost-effective manner. Potential for Future Reinsurance Transactions Additional amounts EVER and Rider MAX Other products This slide provides details of the reinsurance transactions we have completed through first quarter To date, the program has resulted in a release of nearly 300 billion of FSA reserves. We believe we have significant capacity for additional transactions. However, as I have mentioned previously, we will be deliberate in determining the appropriate size and timing of transactions. We consider both current business opportunities and capital planning scenarios to evaluate our immediate and mid-term needs. As we have previously communicated, the purpose of the first reinsurance transaction completed in 2013 was to enhance our SMR. That transaction added approximately 111 points to our SMR in The transaction we completed in 2014 was smaller, but it marked our first use of a retrocession arrangement. The retrocession agreement between the reinsurer and CAIC ceded half of our 2014 reinsurance transaction to CAIC. Although relatively small in size, the retrocession effectively lowered the cost of the capital-raising technique. As I just discussed, we completed a sizeable transaction at the end of the first quarter on a portion of our Rider MAX block of business. You ll note that a significant portion of the risk, or about 90%, was retroceded to CAIC, which substantially reduced the cost. The retrocession transactions will flow through our GAAP financials in the Parent company, other operations section of our summary of operating results in the statistical supplement. Retrocession reduces the cost of the reinsurance program on a consolidated basis. For 2015, 2016 and 2017, we anticipate a benefit of roughly 1 billion annually from retrocession. We estimate that reinsurance programs completed to date will have reduced operating earnings per share by $.01 in 2013, $.05 in 2014, and we expect a per share net cost of $.05 to $.06 for 2015 through 2017, so really no material change compared to

12 Profit Repatriation (Calendar Year, In Billions) est. Japan portfolio and growth assets to effectively utilize capital to support our investment activity in order to enhance our investment results. Most importantly, cash dividends and our share repurchase program continue to be an essential part of our strategy for returning capital to shareholders. As we continue to evaluate alternative uses of capital, share repurchase will continue to be the base against which all other opportunities will be measured. Now, let me turn to how we evaluate opportunities for the uses of capital. Capital Plan Evaluating Uses of Capital This slide shows our profit repatriation for the last five years as well as our anticipated repatriation for As a result of a significant decrease in realized investment losses as well as the benefits of our reinsurance program, profit repatriation has continued to improve over that period. We anticipate repatriating 200 billion in Based on our forecast for 2016 and excluding any future reinsurance agreements, we anticipate 2016 repatriation will be in a range of 120 billion to 150 billion of the FSA after-tax earnings. Additionally, the 60 billion of deployable capital from our last reinsurance transaction might be utilized for repatriation depending on our capital position and our evaluation of opportunities. This demonstrates how we are using our reinsurance program to support both capital adequacy for our Aflac Japan policyholders as well as to support capital flexibility needs of the corporation. Opportunities for Capital Uses Organic growth Acquisitions Debt buyback Increased investment flexibility Dividends Share repurchase Earnings impact Revenue impact ROE impact Risk evaluation Business compatibility As a part of our capital plan, we consider financial and qualitative factors we believe are important when evaluating capital uses. On the financial side, we look at the impact on revenue, earnings per share and return on equity measures with a short-, mid- and long-term perspective. Following the financial evaluation, we look at other characteristics of the deployment. These include evaluating the impact on our risk profile including execution risk. Finally, we assess the overall compatibility with our business model, including possible brand impact as well as potential synergies to our business model. $ 2,500 2,000 1,500 Capital Plan Returning Capital to Shareholders (In Millions) $1,924 Dividends Share Repurchase $1,474 $1,880 Deployable Capital $2,200 $2,100 $2,000 The other key aspect of our capital plan is the evaluation of opportunities for capital usage. First, we have opportunities to drive organic growth. This can include items internal to Aflac such as new product opportunities or other costs related to growing the business. Additionally, it might also include targeted acquisitions for organic or inorganic growth within the insurance space. Capital deployment could also include debt buyback similar to the transaction we executed in March We expect operating EPS accretion of $.07 per diluted share in 2015 and $.10 per share in 2016 from reduced interest expense as a result of this transaction. We also deploy capital to increase our investment flexibility. Examples of this include the hedged U.S. dollar corporate bond program for the Aflac Japan investment portfolio as well as bank loans and high-yield asset categories Eric covered. As Eric s presentation indicates, we continue to evaluate additional ways, such as the possible expansion of unhedged dollar exposure in the 1, $979 $534 $656 $ e 2016e 2017e % Payout* It s clear that for many years, our preference has been to use excess capital to fund cash dividends to shareholders and the repurchase of our shares. As you can see, we were very conservative when it came to deploying capital during, and immediately following, the financial crisis. During that time, our payout ratio averaged only about 25% of operating earnings, and that was primarily driven by our desire to continue our record of increasing the annual cash dividend to shareholders. Much of our earnings were used to cover the investment losses we realized as a result of the financial crisis. However, as these losses diminished, cash flows available to shareholders 11 $745 *Dividends and share repurchase as percentage of GAAP operating earnings

13 increased. This chart assumes that we are increasing the cash dividend generally in line with earnings growth before the impact of foreign currency in It also assumes we repurchase $1.3 billion of our shares this year, which is our previous guidance. For 2016 and 2017, it is our current plan to increase capital deployed for the benefit of our shareholders to $2.1 and $2.2 billion, respectively. Capital Deployment History and Outlook (In Millions) $ 8,000 6,000 4,000 2,000 0 Capital Contribution M&A Dividends Repurchase Deployable Capital $2,254 $4,154 Projected $6,300 - $7, Let s take a quick look at Aflac s capital deployment history. From 2009 through 2011, we deployed $2.2 billion, the majority of which was cash dividends to shareholders. From 2012 through 2014, we deployed about $4.1 billion, with more than half used for share repurchases. While we are always primarily focused on protecting our policyholders, for 2015 through 2017, we still believe there will be opportunities to deploy approximately $6.3 to $7.5 billion of capital. We will also continue to evaluate all options when it comes to deploying capital and growing the business Aflac Management Goals Increase operating earnings per diluted share 2% to 7%, excluding the impact of foreign currency Produce operating returns on equity of 20% to 25%, excluding the impact of foreign currency Maintain RBC and SMR ratios in line with management objectives Enhance returns to shareholders through increased cash dividends and share repurchase, as well as other attractive deployment opportunities As we approach mid-year, we are focused on several priorities. We are committed to achieving our operating earnings-per-share growth target of 2% to 7% before the effect of the yen. We are also focused on maintaining our operating return on shareholders equity in the range of 20% to 25% before the impact of foreign currency. As always, delivering on our promise to policyholders remains a top priority. Therefore, we want to produce risk-based capital and solvency margin ratios that are consistent with the management objectives that we have set. We also want to enhance shareholder value through increased dividends, share repurchase and other attractive capital deployment opportunities. I hope that this presentation gives you a better sense of the framework we are using to develop our capital management plans, the business modeling assumptions that form the foundation for those plans and our current expectations regarding capital deployment over the next three years. I also hope you have a strong sense of our commitment to thorough and transparent disclosure. 12

14 Aflac Investments Eric M. Kirsch Executive Vice President; Global Chief Investment Officer Asset Allocation Focus Aflac Japan Portfolio $84.2 billion book value as of March 31, 2015 Strategic Asset Allocation (SAA) Provides longer-term asset allocation targets and medium-term guideposts based on:» Asset / liability analysis» Risk / return considerations» Capital market / asset class expectations» Corporate risk appetites and tolerances Tactical Asset Allocation (TAA) Manage key risk factors:» Under- or overweighting asset classes» Risk budgeting for interest rate, credit and FX exposures Implement hedging strategies Meeting risk adjusted performance goals JGBs 44% Yen PP and RDCs (1) 30% Other (2) 3% Hedged Dollar Bonds 16% Unhedged Dollar Bonds 7% Total Dollar Program: 23% Market Risk Exposure Yen Interest Rate Dollar Interest Rate Credit Earn return above risk-free benchmark Achieve portfolio diversification I would like to focus on 2015 investment themes. Like our peers, Aflac currently faces challenging global macro conditions, including historically low yields, tight spreads, and volatile exchange rates. However, our investment goal is to achieve superior returns over market cycles by making tactical asset allocations within a strategic asset allocation framework. While some asset classes may outperform others during market cycles, we believe our asset allocation process will make positive contributions to performance over the long term. Aflac is unique, however, in that 88% of our assets back yen liabilities in Japan, a debt market that is predominantly made up of Japanese government bonds, or JGBs. As such, long-dated JGBs serve as a natural benchmark relative to our yen liabilities when performing a strategic asset allocation analysis. Given this unique aspect of our business, I will focus on the Japan portfolio, which is also the main driver of our consolidated investment results, and factors impacting its performance. (1) 21% Yen Private Placement assets and 9% RDCs (2) 1% USD VIE collateral bonds and 2% Public Yen assets As you can see, the Aflac Japan portfolio has a 44% allocation to JGBs and approximately 90% of the assets are yen-denominated, when you include the private placements and hedged-dollar bonds. This reflects our emphasis on matching assets and liabilities. At the same time, the portfolio reflects our efforts to generate additional income and to diversify the portfolio by taking on risk beyond JGBs in the form of credit risk, foreign interest rate risk and currency risk. Most notable among our diversification efforts has been the increase of our allocation to dollar bonds, which we initiated in 2012 and now represents 23% of the portfolio. Aflac Japan Dollar Portfolio: Key Metrics (As of March 31, 2015) Key Metrics Book Value (in USD millions) Investment grade corporate bonds $18,192 Bank loans 1,150 High yield corporate bonds 373 Total USD exposure $19,715 Total number of bonds 1,061 Average book yield 4.00% Average market yield* 3.62% Modified duration (years)* 9.26 Average credit quality: BBB+ FX hedge ratio** 60% GAAP Rating Distribution (in %) AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B Source: Aflac Global Investments *Includes estimated bank loan data **Hedge ratio calculated as FX forward notional as a percentage of dollar program market value Now, I ll give you a closer look at the $19.7 billion in the Aflac Japan dollar portfolio. As you can see from the chart, the dollar portfolio is primarily invested in investment grade corporate bonds, as well as bank loans and highyield bonds. The portfolio has an average book yield of 4% 13

15 and an average credit quality of BBB+, which reflects a very recent allocation to high-yield bonds and an increase in our bank loan allocation, which I will address in this presentation. We currently hedge 60% of the currency risk associated with these dollar assets. However, an important aspect of the dollar portfolio has been its contribution to net investment income. Aflac Japan Net Investment Income Trend and Impact of Yen Depreciation (Yen in Billions) You can see that from the first quarter of 2012 through year-end 2014, our Japan new money yield outperformed 20-year JGBs on average by 77 basis points, which is reflected in operating earnings. Further, if you adjust the new money yield for hedging cost activity, which is reflected in net earnings, we outperformed 20-year JGBs by 65 basis points. A large part of this outperformance was the contribution of the U.S. dollar program. As we look prospectively at investment opportunities, we will underweight any JGB purchases due to current market conditions of extremely low yields, continue to expand into dollar asset classes, and build our growth asset portfolio (FX) 5-7 (FX) (FX) (FX) (FX) 271 Full Year NII (incl. FX / Translation) FX Loss FX Gain Full Year NII (excl. FX / Translation) It should be noted that cash flows associated with the first quarter new money yield of 1.13% were invested entirely into JGBs but only represented about 5% of expected investable cash flows for the year. As such, both the new money yield and the JGB investment are not representative of our planned asset allocation for the year (FX) +4 (FX) Hedged-Dollar Program: Performance Cumulative (Dollars in Millions) NII Growth (excl. FX / Translation) Q14 1Q15 3.8% 3.0% 6.0% 4.7% 4.8% 6.9% 1.3% % of Dollar Income (1) in Aflac Japan NII 32.9% 33.0% 33.2% 43.6% 46.4% 45.5% 47.9% Average FX Rate (1)Includes income from dollar bonds and RDCs As this slide shows, Aflac Japan s dollar-denominated interest income, which includes dollar coupons from the reverse dual-currency bonds, has grown with the dollar program. Prior to the ramp-up of this program in 2012, dollar assets accounted for 33% of Aflac Japan s net investment income; today, it represents 48%. When this interest income is converted to yen, which has been weakening relative to the dollar, we have experienced a significant boost in GAAP net investment income in yen terms, and hence FSA earnings. In addition, the dollardenominated income is a natural hedge for our GAAP earnings stream in dollar terms since we convert this income back to dollars, thus reducing translation impact, as compared to a portfolio of all yen income. As you can see, our net investment income excluding translation has also continued to grow. Our Diversified Investment Strategy Has Outperformed JGB Yields 2.76% 2.73% 3.03% 3.02% (1) Aflac Japan NMY Quarterly Average 20 Yr. JGB Yield 2.58% 2.47% 2.03% 2.00% 1.97% 1.99% 1.91% 1.52% 1.75% 1.68% 1.62% 1.68% 1.68% 1.57% 1.68% 1.50% 1.23% 1.13% 1.48% 1.46% 1.38% 1.10% Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Our Japan New Money Yield has outperformed JGBs by 77bps (2) (1) Gross of hedging cost activity of ~12bps (which is reflected in net earnings) (2) Cash flow weighted (3) Only invested in JGBs in 1Q15, representing ~5% of expected investable cash flows for the year; not representative of planned asset allocation for the year When we started the hedged dollar program in 2012, three- to twelve-month forward hedging costs on an annualized basis were approximately 45 to 60 basis points but declined significantly to a low of 17 to 26 basis points during 2014 as the differential between U.S. and Japan short-term interest rates narrowed. Currently, forward hedging costs are running at approximately 45 to 80 basis points on an annualized basis, and these costs are reflected in net earnings. Since inception, this hedgeddollar bond program has significantly outperformed a comparable 20-year JGB portfolio by cumulatively adding over $629 million in operating earnings compared to a JGB portfolio. When you adjust that number for hedging costs, the outperformance was $550 million in net earnings. Further adjusting for the opportunity cost to income from cash settlements on our hedges, we outperformed by $447 million from the program s inception in July 2012 through March 31, Since the inception of the hedged-dollar program, we have expected higher hedging costs, as well as higher U.S. interest rates. However, we believe our comprehensive investment and hedging strategy will allow us to mitigate some of the impact of increasing hedge costs and still earn an attractive spread to JGBs. 14

16 Dollar Program: Investment and Hedging Strategy Generate superior risk-adjusted returns vs. JGBs Asset Allocation IG Corporates High Yield Bank Loans Commercial Mortgage Loans Structured Assets Emerging Markets Other Dollar Assets Hedge Ratio % of Dollar Program Hedged Hedging Strategy Forwards Collars Options Our strategy for mitigating the effects of increasing hedging costs and rising interest rates has three components. First, while we believe that strategic asset allocation plays a large role in generating superior risk-adjusted returns, we also believe that we can opportunistically make tactical allocations to higher returning assets when relative value presents itself. Therefore, we anticipate investments in assets like commercial mortgage loans, middle market loans, emerging market debt, equity, and structured assets like collateralized loan obligations, to name a few. We also see opportunities to increase the earnings from Aflac s asset pool through asset rotation and duration management. The second component of our strategy is managing currency exposure, as measured by the dollar hedge ratio. With our dollar program backing yen liabilities, we have explicitly taken on currency exposure, and we can proactively manage this market exposure by adjusting the hedge ratio associated with those dollar assets. Our neutral hedge ratio is primarily based on having enough dollar assets to hedge Aflac Incorporated s equity in Aflac Japan. Our current risk guidelines allow us to adjust that ratio up to approximately another $2.5 billion of dollar exposure. This is examined regularly by our management and adjusted based on a number of variables around GAAP equity volatility. Our decision to take more dollar risk, and therefore adjust the hedge ratio, will incorporate our market views on currencies, as well as the impact on asset rotation opportunities, hedging costs and overall return forecasts. Our proprietary tools allow us to model various market scenarios and consider the potential model portfolio s tradeoffs between currency exposure, asset allocations and performance of the program against a JGB portfolio, including potential impacts to capital, taxes and gains and losses. Finally, we are strategic in our choice of hedging vehicles. We use a combination of liquid forwards and customized options structures, such as collars. Generally, our hedges are short term and typically have maturities from three months to a year. This allows us to manage our hedging cost and activity in the most capital-efficient manner. Dollar Portfolio Strategy Considerations Asset Allocation Hedge Ratio Hedging Strategy Rotated $1 billion of investment grade bonds into bank loans and high yield bonds» Increased book yield of rotated amount by ~1.9% to ~4.5%; USD ~19mm of incremental annualized investment income» Reduced duration by >3 years Capture relative value opportunities Strong dollar versus yen for the next months Marginal increase in dollar exposure Benefit of lower hedge costs and FX gains Increase use of FX collars Dynamic management of hedge costs and efficient use of capital Base Macro View: US diverging monetary policy; rising hedge costs Dollar continues to strengthen vs. yen Market disruptions present asset rotation opportunities Let me provide an example of our investment process at work. This past December, we found an attractive relative value opportunity as credit spreads in the high-yield market increased by as much as 200 bps relative to the lows in July. To take advantage of this opportunity, which we felt was driven by market liquidity issues as opposed to a decline in credit quality, we sold $1 billion of existing investment grade holdings and subsequently allocated roughly half of the proceeds to bank loans and half to high yield BB credits. This asset rotation resulted in incremental annualized investment income of approximately $19 million per annum and reduced our duration by over three years. Had the book yield generated by this asset rotation been included in the new money yield calculation, it would have been 4.04% for the first quarter, rather than the reported 1.13% We currently hold a view that the dollar will remain strong against the yen for the next twelve to twenty-four months. We plan to increase our dollar exposure and reduce the hedge ratio. Though there is no guarantee of always being right in our views, we will benefit by having lowered notional hedges and reduced hedging costs. Finally, we are increasing our collar structures. We believe they are a more capital-efficient tool to reflect any increased dollar exposure, while providing tail risk protection in the event the yen should strengthen. The dollar program is reviewed regularly, and our strategy adjusted accordingly. While we saw great relative value in the program these past few years, this may not continue. If we were to enter an environment where yen assets were expected to outperform dollars, we can reduce the size of the dollar program as well. A reduced program allocation would also mitigate rising hedging costs. While we anticipate the net earnings of the program to contract in the near future based on diverging monetary policy, we do expect that our active investment decisions will allow us to outperform the JGB benchmark over market cycles and provide diversification to our overall asset pool. 15

17 Allocation to Growth Assets Growth assets include public equity, private equity, real estate and other assets» Currently exploring infrastructure, public equity, REITs and private equity Target allocation of up to 4% to be reached over the course of the next few years Consider relative value, vintage, market opportunities As you know, we completed a review of our strategic asset allocation at the end of 2014, which identified an allocation of up to 4% of the consolidated portfolio to growth assets, such as public and private equity, real estate and infrastructure, just to name a few. We believe growth assets will provide both diversification and longterm returns above fixed income assets. I must stress that we will be selective and opportunistic in building this portion of the portfolio over the next few years by buying when relative value exists. In addition, we intend to average into attractive market opportunities, which can provide exposure to different vintage years. Therefore, we expect a full allocation of up to 4% to growth assets could take us three to five years, depending on market opportunities and available cash flow. We also committed to increase outsourcing of core and growth asset classes. Last year, we funded a small, active equity mandate, added to our bank loan mandates and initiated a middle market lending program. Over these next few years, we will gradually build a strong growth portfolio, which will be a solid complement to an already diverse portfolio. In closing, despite the enormous challenges emerging from the financial crisis, our transformation program has set the stage for us to continue to generate strong riskadjusted returns. I am confident we will continue to find attractive investment opportunities in the face of strong market challenges. 16

18 Product Pricing and Reserving Susan R. Blanck Executive Vice President; Aflac Japan This presentation contains information regarding product pricing and reserving, as well as claim experience trends. It also includes information that illustrates profit emergence under GAAP analysis of the profitability of our inforce block of business and information regarding differences between FSA and U.S. Statutory reserving and profit emergence. Aflac Japan s Product Mix In-Force AP (In Billions) 1,600 1,400 1,200 1, /14 3/15 *Includes term- and whole-life ordinary policies and annuities **Includes stand-alone medical, Rider MAX and other medical riders Before addressing the profit emergence and profitability of Aflac Japan s business, it is important to remember how the shift in new sales in recent years has impacted the composition of our in-force premium. Our in-force AP has grown nearly 150% from 1998 to June In 2009, our cancer insurance accounted for 50% in-force premium, while medical accounted for 30% of total in-force premium and WAYS represented just 2%. As of March 2015, cancer, medical and WAYS accounted for 37%, 26% and 14% of total in-force premium, respectively. This represents a significant change in our in-force block of business in a short period of time. It should also be noted that the proportion of WAYS in our in-force AP is anticipated to decline as WAYS policies reach paid-up status. This is because once a policy becomes paid-up, it is not counted in the in-force AP number. I will provide more information on limited pay policies later. Pricing Assumptions for Aflac Japan and Aflac U.S. Other WAYS Child Endowment Medical** Cancer include provisions for adverse deviation, or PAD. These may be greater than those used for GAAP. No explicit margin for profit is added. Instead, profit margins arise from the pricing PAD. The interest rate assumption for product pricing is established by each company and must be justified to the FSA. The rate may vary depending on the type of product. For example, we use a lower interest rate for pricing first sector products than for third sector products. Other pricing assumptions, such as morbidity and persistency, are also reviewed and approved by the FSA. These assumptions may be developed based on Aflac experience, industry experience, national statistics or a blend of this data. The persistency assumptions are generally higher than our actual persistency. For products with cash values, we generally assume no voluntary lapses. When the cash values are not present in the product, we use a low level of voluntary lapse in each year. The expense assumptions reflect our actual operational costs. Aflac Japan s cost structure per policy is favorable when compared to other life insurance companies in Japan. Reflecting the efficiency of our operations in our product pricing allows us to maintain a competitive edge in our premium rates. For Aflac U.S., we tend to base pricing assumptions on our own experience, including some provisions for adverse deviation. In addition, it is our practice to target an explicit profit margin, expressed as a percentage of premium. Because most of our products do not consume significant amounts of statutory capital for a long period of time, we do not price on a return-on-invested-capital basis. We do, however, monitor invested capital patterns on a regulatory basis and may include an invested surplus charge if necessary. FSA Reserve Assumptions (Aflac Japan) Net level method Interest Rate 1.00% Lapse Rate lower than or equal to pricing basis Mortality standard mortality table Morbidity pricing basis with stress testing Morbidity Mortality Persistency Expenses Investment returns Product pricing includes assumptions for morbidity, mortality, persistency, expenses and investment returns. In Japan, the product pricing assumptions are approved by the FSA. Premiums are calculated using assumptions that 17 In Japan, we are required to use specific reserving methods, as well as certain minimum assumptions for our FSA reporting. The net level premium reserving approach required by the FSA is similar to what we use for GAAP reporting. Benefit reserves begin building from the first policy year. However, unlike GAAP reporting, where we are allowed to defer certain costs of acquiring business, FSA reporting doesn t make any allowance for the first-year profit strain of issuing a policy. In addition, the interest rates, lapse assumptions, mortality tables and morbidity rates required

19 for the reserve calculation generally result in reserves that are larger than those calculated using the pricing assumptions. The Japan standard interest rate is the rate required for determining FSA basis reserve. The standard interest rate is based on average 10-year JGB rates over a period ending in September of the prior year using the smaller of the three year average and ten year average. FSA Standard Reserving Rate Once the premium rates are established, we determine appropriate assumptions to use in calculating GAAP reserves. The calculation of GAAP reserves requires assumptions for morbidity, mortality, persistency, expenses and investment returns. Aflac Japan Investment Return Assumptions March 1996 & Prior Equivalent to Pricing April % April % GAAP Pricing FSA Life/Health 1.25% % 1.25% % 1.00% Annuity 1.15% 1.15% 1.00% April % April % Note: From 1996 to 2001, changes only apply to 1 st sector products. July 2001 and forward changes apply to 1 st and 3 rd sector products. The standard interest rate was lowered to 1.0% for business issued from April Our re-pricing for first sector business in April 2013 took this into account. For third sector business, we have been lowering our assumed interest rate for pricing as part of our product development cycle. Aflac U.S. Statutory Reserve Assumptions 1- or 2-year preliminary term for health Interest rate generally lower than pricing Lapse rate prescribed, generally lower than pricing basis Mortality pricing basis or lower for health Morbidity pricing basis with load and some prescribed tables In the United States, premium rates are filed with each state s Department of Insurance. We must demonstrate that premiums are reasonable in relation to the benefits provided by the policy. Many states also require that we demonstrate the product experience will meet or exceed a minimum loss ratio requirement. For most of our U.S. health products, we use a two-year preliminary term method for calculating statutory benefit reserves. With this method, benefit reserves begin building from the third policy year. This feature helps mitigate the surplus strain caused by new business. Statutory reporting prescribes the maximum interest rates that can be used in the reserve calculation. The lapse assumptions, mortality tables and morbidity rates are generally based on our pricing assumptions with an added margin for conservatism. GAAP Reserve Assumptions Morbidity Mortality Persistency Expenses Investment returns Our GAAP reserve assumptions generally use higher investment return rates than the pricing for FSA reserving assumptions. GAAP assumptions generally use claim and persistency assumptions that are derived from our actual experience, or from assumptions used in the product pricing when we don t have enough of our own credible experience. In April 2013, we implemented repricing of our ordinary product line to accommodate the low-interestrate environment. In addition, we have adjusted the GAAP interest assumption applied for new issues down for most product lines to reflect the current low interest rate environment. Third Sector Model 1 Year of Sales* (Anticipated Earnings Pattern, In Millions) 40,000 20,000 0 (20,000) (40,000) (60,000) (80,000) (100,000) (120,000) Policy Year *Assumes sales of 100 mm in year one GAAP The differences in FSA and GAAP reserving drive differences in profit emergence. We will now show you several demonstrations illustrating profit emergence characteristics under GAAP and FSA reporting bases for some of our products. In these demonstrations, we will show details for one year s sales as well as layered sales. Our demonstrations illustrate that we expect GAAP profits to exceed FSA profits in early years. There are two primary reasons for this. First, as we have mentioned, the assumptions we are required to use for FSA reserving typically result in higher reserves on an FSA basis versus a GAAP basis. Second, under GAAP reporting some of the acquisition costs are deferred whereas none are deferrable under FSA. This drives the very large difference in FSA and GAAP profits in the first policy year. FSA 18

20 For our recent third sector products, we typically break even in year three on a GAAP basis and year six or seven on an FSA basis. We typically see the crossover year, which is the year FSA profits for the year exceed GAAP profits, occur around year 10. A large driver of this is the fact that many of our policies are issued using commissions that are payable through year 10. Since FSA reporting doesn t allow deferral of commission expense, there is an increase in FSA profits when the commission paying period ends. Third Sector Model Layered Sales* (Anticipated Earnings Pattern, In Millions) 400,000 First Sector Model Layered Sales* (Anticipated Earnings Pattern, In Millions) 140, , ,000 80,000 60,000 40,000 20,000 0 (20,000) (40,000) GAAP FSA (60,000) Policy Year *Assumes sales of 100 mm in each model year 300, , ,000 0 GAAP FSA Next, we show layered sales for first sector products and the resulting profit emergence. The graph shows that profits turn positive almost immediately on a GAAP basis and between year 15 and 20 on an FSA basis. The crossover year happens just before year 30. (100,000) (200,000) Policy Year *Assumes sales of 100 mm in each model year All Business Model 1 Year of Sales* (Anticipated Earnings Pattern, In Millions) 20,000 Next, we show layered sales and the resulting profit emergence. For the layered sales demonstrations, we assume new sales in each year holding the level of sales constant in each year. The graph shows that profits turn positive in year 3 for GAAP and year 9 for FSA. The crossover year, where FSA profits exceed GAAP profits, happens around year ,000 0 (10,000) (20,000) (30,000) (40,000) (50,000) (60,000) GAAP FSA First Sector Model 1 Year of Sales* (Anticipated Earnings Pattern, In Millions) (70,000) (80,000) Policy Year *Assumes sales of 100 mm in year one 20,000 10,000 0 (10,000) (20,000) (30,000) (40,000) (50,000) GAAP FSA Now let s look at both types of products together. When we look at one cohort of combined first sector and third sector business, we expect to breakeven in year 2 on a GAAP basis and between years 10 and 15 on an FSA basis. The crossover year occurs around year 10. All Business Model Layered Sales* (Anticipated Earnings Pattern, In Millions) (60,000) Policy Year *Assumes sales of 100 mm in year one For our first sector products, we break even almost immediately on a GAAP basis and in year 15 to 20 on an FSA basis. The crossover year is around year 10 which is similar to what we see for third sector. Again, this is largely driven by the commission structures we use. We would like to point out that first sector results are more sensitive to our investment returns than third sector products. If we assume 25 basis points of additional lifetime net investment yield, the FSA breakeven year is reduced by around 3 years. 300, , , , ,000 50, ,000 GAAP FSA -100,000 Policy Year *Assumes sales of 100 mm in each model year 19

21 With layered sales for all products, profits turn positive almost immediately on a GAAP basis and between year 10 and 15 on an FSA basis. The crossover year happens right around year 30. Inforce Distribution* (Anticipated Earnings Pattern, In Millions) Aflac U.S. Investment Return Assumptions GAAP Pricing Statutory Life/Health 3.75% 3.50% % 3.50% 120, ,000 80,000 60,000 40,000 GAAP FSA In the United States, all of our currently issued products use a 3.75% investment return for GAAP reserves. That is generally in line with our pricing assumptions. We have been monitoring interest rates very closely and lowered the Aflac U.S. investment return assumption for products issued in It is likely that we will stay at the current level if rates stay at a low level. For statutory accounting purposes, we use a 3.5% interest assumption for all new business. 20,000 0 Policy Year *Assumes 100 mm of GAAP earnings in year one Finally, we illustrate how we anticipate profits to emerge under FSA and GAAP reporting bases for our inforce block of business as of March 31, For the inforce block, we expect FSA profits to exceed GAAP profits in 6 to 7 years. We hope that these demonstrations help illustrate various characteristics of GAAP and FSA profit emergence. Expected Benefit Ratios by Product Traditional cancer life 63% - 73% 21st Century Cancer life 50% - 60% Cancer Forte 48% - 60% Cancer DAYS 47% - 52% EVER and Gentle EVER 50% - 65% Riders to cancer and medical 40% - 53% Other ordinary life products 60% - 75% WAYS 65% - 82% Child endowment 85% - 95% Now, I would like to review the expected benefit ratios for our major products. The traditional cancer life product that we were selling through the 1990s had a full cash surrender value, or CSV. To offset some of the effect of the 1999 premium rate increase on newly issued cancer life policies, which was caused by a lower assumed interest rate, we elected to reduce cash surrender values. Reducing CSVs kept the premium level attractive to consumers. It also lowered the benefit ratio. Our traditional cancer insurance policies had a benefit ratio range of 63% to 73%. Our current cancer insurance products have benefit ratios that range from 47% to 52%. GAAP Reporting Benefit reserve uses net level premium method Certain acquisition costs are capitalized and put into a deferred policy acquisition cost asset The deferred policy acquisition cost asset is amortized over the premium paying period of a policy Requires a provision for adverse deviation (PAD) in the benefit reserve calculation For several years now, we have walked you through GAAP reserving and illustrated how favorable claim experience emerges under GAAP accounting rules. Understanding this is an important element in understanding Aflac s current and future outlook as we have experienced favorable claim experience and claim trend on our core health lines. GAAP reserves are computed using the net level premium method. Under this approach, benefit reserves begin to build in the first policy year. Certain expenses associated with the cost of acquiring new business are capitalized and amortized over the premium paying period of a policy. The combination of the net level premium reserve methodology and the capitalization of acquisition costs results in an expected profit emergence pattern that is fairly level over time. However, there are various acquisition costs we are not allowed to defer, so the expected profit in the first policy year is usually much lower than in other policy years. 160% 140% 120% 100% Claims vs. Reserves Premium Incurred claims Deduct from reserves The benefit ratios of our medical products are 50% to 65%, including our substandard product, Gentle EVER. The riders to our cancer and medical products range from 40% to 53%. Ordinary life insurance products, including WAYS, have expected benefit ratios from 65% to 82%. Our child endowment product has a higher benefit ratio ranging from 85% to 95% % 60% 40% 20% Add to reserves Incurred claims 0% Policy Years Premium

22 This simplified schematic shows why benefit reserves are provided and illustrates the relationship between incurred claims and benefit reserves. The policyholder pays a level premium each year. In early years, incurred claims are lower than the premium. The difference between the premium paid and claims incurred is added to the benefit reserve. In later years, incurred claims exceed the premium and the benefit reserves are released to accommodate the higher claims. would generally be the same 60% in each year, which is the expected lifetime loss ratio for the product. GAAP Experience Emergence with PAD (Ratios to Earned Premium) 100% Expected incurred claims ratio In theory, GAAP benefit reserves are derived in such a way that gross profits would emerge in a fairly level pattern over time. However, GAAP benefit reserves are required to include a provision for adverse deviation, or PAD, which suppresses the profit somewhat in the early years of a policy and magnifies the profit in later years. 80% 60% 40% 20% Expected total benefit ratio with PAD GAAP Experience Emergence Parameters Assumes representative health plan where claim costs are expected to increase by policy year The expected lifetime loss ratio for the representative plan is 60% All ratios shown are to earned premium The margins shown are gross margins Demonstration excludes required interest To demonstrate this, we have developed some illustrations using a representative health product where claim costs are expected to increase by policy year. This representative product has an expected lifetime loss ratio of 60% as measured using the present values of future claims and future premiums. All ratios shown in these slides are tied to earned premium. And the margins that are illustrated are gross margins. The gross margin is the percentage of premium in each year that is available for expenses and profit. Required interest is excluded for this demonstration. 0% Years This next chart shows the same expected incurred claims ratios. But this time, the GAAP benefit reserves have been calculated with the required PAD. As this chart demonstrates, the expected total benefit ratio is no longer flat and is higher than the expected lifetime loss ratio of 60% in early policy years. The margins are captured in the GAAP benefit reserve in early policy years when the reserve is building and incurred claims ratios are low. They are released over time as reserves are used to fund the higher level of incurred claims anticipated in later policy years. Again, this chart assumes that the actual experience emerges exactly as expected. GAAP Experience Emergence (Ratios to Earned Premium, 90% Actual-to-Expected Claims) GAAP Experience Emergence without PAD (Ratios to Earned Premium) 100% Expected incurred claims ratio 80% 60% 40% 20% Expected total benefit ratio without PAD 0% Years The first chart shows the expected incurred claims ratios and expected total benefit ratios assuming that the GAAP benefit reserves are calculated without the required provision for adverse deviation. This chart demonstrates that if actual experience exactly matches expected experience in all years, the total benefit ratio Now, we move on to a demonstration where the actual experience emergence differs from what was expected. This chart includes the original expected total benefit ratios with PAD and incurred claims ratios, but also illustrates the patterns if the actual claim costs emerge at 90% of expected. While the incurred claims ratios are 90% of the original expected incurred claims ratios in each policy year, the total benefit ratios decline slightly in the early policy years, and by an increasing amount in later years when provisions for adverse deviations are released and the incurred claims are a larger portion of the total benefit ratio. 21

23 GAAP Experience Emergence (Ratios to Earned Premium, 90% Actual-to-Expected Claims) Finally, let s look at how gross margins emerge under each scenario. While the gross margins under each scenario have relatively small differences in early years, the difference expands with each policy year as provisions for adverse deviation are released and the difference between actual and expected total benefits grows larger. Now, let me take that theoretical discussion and apply it to our operations in Japan. Aflac Japan Actual vs. Tabular Claims (Tabular = 100%) 100% Cancer 80% Ordinary Here, I ve added a line showing the ratio of the total benefit ratios under the 90% actual to expected claim emergence to the original expected total benefit ratios. In early policy years, the ratio is between 90% and 100%. However, in later policy years, the ratio is less than 90%. As discussed previously, this demonstrates the build-up of margins in early policy years followed by the release of those margins in later policy years. GAAP Experience Emergence (Ratios to Earned Premium, 80% Actual-to-Expected Claims) 60% 40% Rider MAX EVER /13 9/14 The characteristics of GAAP reserving that I just described are reflected in the trend of our total benefit ratio in Japan. As Kriss presentation indicates, we have experienced favorable claim trends for our core health products in Japan. Actual cancer life claims as a percentage of tabular claims have declined since 1993 and were about 69% as of September EVER claims have also been lower than our original expectation since that product s introduction in Next, I ll show the same presentation but with claims at 80% actual to expected. As the chart illustrates, the difference in profit emergence in early years versus later years is even more pronounced, with a ratio between 85% and 95% in early years, falling well below 75% in later years. 100% 80% 60% 40% 20% GAAP Gross Margin Scenarios Gross margin at 90% A/E Gross margin at 100% A/E Gross margin at 80% A/E 0% Years 22 The ordinary product line also shows favorable ratios. However, favorable claim ratios for ordinary products have a smaller impact on profits than favorable claim ratios in third sector products. This is because cash values make up a large part of the benefit ratio. As we have shown you previously, our experience in Japan related to the average length of stay in the hospital for cancer treatment has declined steadily for some time now. As Japan s medical finances are strapped, the Health, Labour and Welfare Ministry is taking various steps to reduce medical costs. Among those steps, shortening of hospitalization has been a key measure. Specifically, since 2003, the ministry has adopted a diagnosis procedure combination (DPC) method for its public health insurance system, which is a medical fee payment system similar to the U.S. diagnosis-related groups/protective payment system (DRG/PPS), thereby aiming to shorten hospitalization days. The DPC method is a system to provide hospitals with incentives for shortening hospitalization by leveling the daily hospitalization medical fees, which is a fee paid to hospitals depending on disease name or medical act, at a fixed amount, so that a higher amount can be paid for short-term hospitalization. As a medical fee payment system for ordinary hospitals offering treatment during acute stage, a performancebased payment system is also available, apart from the DPC methodology. But each hospital has to choose either

24 one of the two. The number of hospitals adopting the DPC methodology is gradually increasing, and the total figure of beds owned by DPC-adopted hospitals reached 484,081, by April 2015, which is more than 50% of the total 893,536 beds for the same period. Benefit claims filed with Aflac are mostly for cancer, myocardial infarction, or stroke and these diseases are cured at DPC-adopted hospitals in most cases. For this reason, Aflac s incidence rate is expected to improve due to the effect of shortened hospitalization. Also, the numbers of Japan s hospitals and beds per population used to be both higher than those of Europe and the U.S., but the figure of hospitals is now dropping as the central government has implemented measures to diversify functions among hospitals, thereby reducing the number of such hospitals focused on long-term hospitalization mainly to offer nursing care to the elderly suffering chronic diseases. As a result, the total number of hospitals is down to 8,485 in 2014 from more than 10,000 in With either of the measures, Aflac s incidence rate is expected to improve. Aflac Japan Trends in Sickness Hospitalization (Average Length of Stay) 100 % EVER Rider MAX We have seen the effect of these actions in our actual experience. For example, with the sickness hospitalization benefit, we have seen a generally downward trend in the average length of hospital stays for Rider MAX and EVER. The next slide shows the hospitalization trends for cancer. Aflac Japan Trends in Cancer Hospitalization (Cancer Only, 24-Month Runoff) clinical exams. Follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay. In short, more people are surviving cancer, and those who continue in treatment are generally living longer. While the average length of stay per hospitalization has declined, the number of hospital stays per claimant has generally been increasing. However, in our analysis this year, we saw the stays per claimant decline slightly. Our analysis of claims data shows that the total number of days hospitalized per claimant is declining, but at a slower rate than the average length of stay per hospitalization. We anticipate that the trend toward more hospital stays of shorter durations will continue going forward. Aflac U.S. Trends in Cancer Hospitalization (Cancer Only, 24-Month Runoff) 110% 100% 90% 80% 70% 60% 50% In the United States, we are seeing a trend toward greater use of outpatient treatments for cancer. The average days per hospital stay for cancer treatment has leveled off in the last few years. The average number of hospital stays per claimant and the total hospitalization days per claimant declined considerably in recent years. However, we saw some leveling off this year. 100% 95% Stays per claimant Days per claimant Days per stay Aflac U.S. Trends in Hospitalization (Average Length of Stay) 150% 120% 90% Stays per claimant Days per claimant 90% 85% 80% Hospital Indemnity 60% 75% % 0% Days per stay Cancer treatment patterns in Japan are being influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than 23 Finally, we look at our hospital indemnity products in the U.S. For the past several years, we have seen a generally downward trend in the average length of stay per hospitalization. While we generally do not project future improvements in claim trends in our pricing, the impact of lower-than-expected claim costs over time and the emergence of the profit from the better-than- expected

25 experience has a strong impact on our projections and our outlook for Aflac s future profit growth. 30% 25% 20% 15% 10% Aflac Japan Gross Premium Valuation Net Position by Reporting Basis (% of Present Value of Premium) As with last year, we wanted to show you the impact of low portfolio rates and low new money assumptions in the future. Our analysis shows that our 2014 net margin on a GAAP basis would be 3.3% higher if we discounted our future cash flows using our 2009 portfolio rates and 2009 new money assumption. In 2009, the year started with the portfolio at 3.52% new money was at 2.70%. In 2014, the year started with the portfolio at 2.44% and an ultimate of 2.41%. Had the product mix stayed constant from 2009 to 2014, the net margin would have been an additional 0.8% higher. However, it should be noted that the 2014 net margin benefited by 1.0% due to downward claim trend on our cancer product line versus I would also point out that we have not assumed continued improvement in cancer claims in our projection of future cancer claims. 5% 0% GAAP Stat FSA 30% Aflac U.S. Gross Premium Valuation (% of Present Value of Premium) Each year, we evaluate the net position of our in-force block using a gross premium valuation. This analysis projects financial elements of our in-force block of business through time and determines the expected margin for that block of business. The expected margin is expressed as ratio of the future profits to the present value of future premiums. The future profits are determined by taking the current reserve for each reporting basis and adding in the present value of the net future cash flows, or premiums less claims and expenses. The present values are determined by discounting cash flows using our projected portfolio rates and by reflecting anticipated future new money rates. It should be noted that this is an actuarial calculation and is generally constructed with some conservatism in the underlying assumptions. Since our reserving basis is different for GAAP, FSA and statutory, the expected future profit emergence will be different for each basis. Statutory and FSA results were fairly similar in the early 2000s, with projected net margins of 14.2% and 15.7%, respectively, compared with a GAAP result of 10.8%. Since that time, the conservatism of FSA reserves has grown, which results in the FSA net margin diverging from statutory. The FSA net margin continues to grow and reached its highest level in 2014 at 28.8.%. For U.S. Statutory and GAAP, the 2014 net margins were 22.4% and 18.5%, respectively. The Impact of Mix Change and Rates on Aflac Japan Gross Premium Valuation (GAAP Basis, % of Present Value of Premium) 25% 20% 15% 10% 5% 0% GAAP Aflac U.S. gross premium valuation results have been very stable at 15% to 16% for most years on a GAAP basis. For 2014, the margin grew to 17.3% on a U.S. GAAP basis. Improvements in the U.S. GAAP margins largely reflect overall, long-term improvement in claims experience. Stat Limited Pay Accounting (SFAS 97) Similarities to SFAS 60 Premiums recognized as revenue over scheduled premium paying period Reserves include provision for adverse deviation Lock-in principle DAC amortized over premium paying period 25% 20% 15% 10% 22.6% 20.9% 21.5% % 18.2% 18.4% Actual Product Mix Interest Rates Now, I would like to provide information regarding our limited pay products in Japan. First, I will review the accounting practices for our ordinary life products. Most of our products, where premiums are paid over the life of the contract, are accounted for under GAAP using SFAS 60. For policies where the scheduled premium period is shorter than the benefit period, we are required to use SFAS 97. Let me review the most significant similarities and differences between these two accounting methods. First, premium income is recognized over the scheduled premium paying period under both methods. For example, for a 10-pay product, premium income is recognized for 10 years. 24

26 For the more traditional whole-life product, premiums are recognized over the life of the contract. Second, under both methods, reserves are established based on similar interest and morbidity assumptions including a provision for adverse deviation. These assumptions are locked in from the issuance of the contract and cannot be modified in future periods. Third, DAC is established at issue and amortized over the premium-paying period under both methods. Limited Pay Policy Accounting (SFAS 97) Differences with SFAS 60 allowing profits to be recognized over the remaining life of the limited pay contracts even though no premium revenue is being recognized. The net result is that profit recognition for both the lifetime pay and the limited pay contracts will be similar in relation to policies in force. 7,500 FSA vs. U.S. Statutory Reserves* (In Billions) 10,000 U.S. Statutory Reserve FSA Reserve Deferred Profit Liability (DPL)» Established to recognize profits over life of policy Profits emerge as a level percentage of inforce 5,000 2,500 In the case of limited pay policies, SFAS 97 requires that a deferred profit liability, or DPL, be established during the premium paying period. The DPL grows during the premium payment period and is released through benefits over the remaining life of the policy after the contract becomes paid-up. The changes in the DPL flow through policy benefits along with changes in other benefit reserves. In this way, profits emerge fairly evenly over the life of the policy. Limited Pay Policy Accounting (SFAS 97) 5-Pay Example* Policy Year Earned Premium Claims & Expenses Net Cashflow Net Liab (NBR-DAC) 1 2,000 3,500-1,500-1, , , , , , ,500 2, , ,500 3, , , , *Assumes 10-year policy with a 5-pay option in yen The next slide is a simplified numerical example demonstrating a single policy under SFAS 97. This shows how profits would be recognized with and without the changes in the DPL for a policy with 10 years of benefit coverage paying premiums for five years. For simplicity, we are assuming annual premium of 2,000, a discount rate of zero, no terminations due to mortality or voluntary lapses, and that all acquisition expenses are deferrable. With the DPL, profits are reduced during the premium period and recognized over the remainder of the contract s life as the DPL is released. This accounting treatment is important to understand as you will see a significant impact from limited pay products in our future financials. Premium income will decline as policies reach paid-up status. The benefit ratio will also decline as the DPL is released, DPL Profit Recognition With DPL This slide provides information on our FSA basis and U.S. statutory basis policy reserves we hold on our business in Japan. To explain further, FSA accounting generally utilizes more conservative assumptions than U.S. statutory accounting, particularly in the interest rate assumption. FSA reserves are computed on a net level basis. This reserving method requires benefit reserves to build from the first policy year. The combination of the net level reserve method and the requirement to expense acquisition costs as incurred has a large negative impact on earnings in the year the business is written. In contrast, U.S. statutory accounting provides some relief through the use of the preliminary term reserve method. Under a preliminary term method, no benefit reserve accrual is required for the first one or two years of the policy life. This technique helps reduce the strain associated with the immediate expensing of acquisition costs on new business. While the difference in the reserving method goes away over the life of the contract, the early year FSA reserves are substantially higher than the U.S. statutory reserves. As this slide demonstrates, the reserves Aflac holds under both FSA and U.S. statutory bases have increased over time as our business has grown. However, focusing on the change and difference between the balance in these two reserves that is what impacts earnings. The difference in FSA versus U.S. statutory reserve grew from 509 billion in 2009 to 788 billion as of December That equates to an average annual growth in the difference of the reserves balances of just under 90 billion, or almost $900 million. In 2011 and 2012, we experienced higher than average growth in the difference between the reserves due to the high level of new annualized premium sales. In 2013 and 2014, we saw the difference in the two reserve amounts decline primarily as a result of the impact of the recent reinsurance transactions. As Kriss mentioned at FAB, we have released nearly 300 billion of FSA reserves as a result of entering into reinsurance on our Aflac Japan business. This release of reserve increased our FSA Difference Change in difference (16) *Total reserve including premium accrual items (4) 2015 Proj. 759 (9) 25

27 earnings by approximately 200 billion yen on an after-tax basis. Without the reinsurance agreements, we project that it would take more than 25 years before cumulative FSA profits without reinsurance exceed cumulative FSA profits with reinsurance. In fact, for the blocks of business that we have reinsured, the economic reserve is negative. This means that we have no transfer of assets at inception of the coinsurance. In addition, the reinsurer pays Aflac a commission to reimburse us for expenses and future profits for the block of business. Our cash flow testing and gross premium valuation analyses indicate that the U.S. statutory reserves on our Japanese business are more than adequate from an economic point of view. I hope that this information provides useful information in understanding our pricing methodologies, profit emergence and FSA and US Stat reserve and profit emergence differences as well as understanding items that will impact our future financial results. 26

28 International Public Policy and Regulatory Developments Charles D. Lake II President, Aflac International Incorporated; Chairman, Representative in Japan, Aflac Japan The purpose of this presentation is to provide an overview of the international financial regulatory trends affecting the insurance sector in Japan and the United States and to provide an update on Japan s political, macroeconomic, and public policy environments. Framework for Development of International Financial Standards These developments require close coordination between companies, regulators, and standard-setting bodies, such as the IAIS and FSB, and I will discuss each of these items in turn. FSB and IAIS Address Systemic Risk in Insurance Sector November 2014: Financial Stability Board (FSB) updates list of global systemically important insurers (G-SIIs); initial nine designated insurers remain FSB G-SII designations include three U.S. companies Aflac does not meet G-SII criteria In the wake of the global financial crisis, countries have been working in international settings to develop financial standards with the aim of strengthening the global financial system and ensuring financial stability. Led by the G20 and the Financial Stability Board (FSB), work is underway to develop a policy framework to address risks associated with systemically important financial institutions, or SIFIs, and in particular global SIFIs. In its November 2014 letter to the G20 on progress in financial reform, the FSB stated, The job of agreeing to measures to fix the fault lines that caused the crisis is now substantially complete... [A]s we enter the next phase of financial reform, the FSB will adjust focus toward addressing new and constantly evolving risks and vulnerabilities. The International Association of Insurance Supervisors (IAIS) is tasked with setting, implementing, and assessing international standards in the insurance industry and promoting coordination among supervisors. In the context of a rapidly changing global financial regulatory environment, the IAIS is currently developing a set of policy measures to apply to designated global systemically important insurers, or G-SIIs. It is also in the process of completing a common framework for the supervision of internationally active insurance groups (ComFrame). IAIS is also developing a risk-based global insurance capital standard. Both the United States and Japan have been working to make sure their respective domestic financial regulations are in line with current international standards and to play a constructive role in the development of the global financial regulatory regime. In the context of the lessons learned from the global financial crisis, the FSB and IAIS have taken coordinated action to address systemic risk in the insurance sectors. In July 2013, for example, the FSB, in consultation with the IAIS, culminated years of work with the designation of nine global insurance companies as G-SIIs; or companies the IAIS describes as those whose distress or disorderly failure, because of their size, complexity and interconnectedness, would cause significant disruption to the global financial system and economic activity. More specifically, the IAIS uses the following criteria to designate G-SIIs: Size, global activity, interconnectedness, nontraditional and non-insurance activities, and substitutability. Under these criteria, in 2014, the FSB designated the following nine insurance companies, including three U.S. companies, as G-SII: Allianz SE, American International Group, Inc., Assicurazioni Generali S.p.A., Aviva plc, Axa S.A., MetLife, Inc., Ping An Insurance (Group) Company of China, Ltd., Prudential Financial, Inc., and Prudential plc. Aflac was not designated as a G-SII. Policy Measures for G-SIIs International Association of Insurance Supervisors (IAIS) publishes key policy measures for G-SIIs, consistent with the FSB policy framework endorsed by G20 Policy measures applied to G-SIIs:» Enhanced group-wide supervision» Basic Capital Requirement (BCR)» Interim measures for Higher Loss Absorbency (HLA) capabilities (i.e., requirement to hold higher capital)» Recovery and resolution plans (living wills) The IAIS has published key policy measures, consistent with the FSB policy framework endorsed by the G20, for application to G-SIIs to address global systemic risks. 27

29 These policy measures include, among other things, enhanced group-wide supervision, a Basic Capital Requirement (BCR), interim measures for Higher Loss Absorbency (HLA) capabilities (i.e., requirement to hold additional capital), and the requirement to develop recovery and resolution plans ( living wills ). As part of efforts to develop measures to address systemic concerns raised by G-SIIs as well as to have a consistent international capital standard, the IAIS is developing the Basic Capital Requirements (BCR) as the first step of a long-term project to develop risk-based, group-wide global insurance capital standards. The second step is the development of Higher Loss Absorbency (HLA), a requirement that would apply to G-SIIs, due to be completed by the end of The final step is the development of a risk-based groupwide global insurance capital standards, or ICS, due to be completed by the end of 2016 and applied to internationally active insurance groups (IAIGs), from ComFrame ComFrame IAIG Criteria Comprehensive framework for supervision of internationally active insurance groups (IAIGs)» Framework for supervisors to efficiently and effectively cooperate and coordinate IAIG Criteria 1. International activity criterion:» Premiums written in three or more jurisdictions; and» Percentage of gross premiums written outside home jurisdiction at least 10% of the group s total gross written premium. 2. Size criterion (based on rolling three-year average):» Total assets at least $50 billion; or» Gross written premiums at least $10 billion. The second criterion is size based on a rolling threeyear average; namely that total assets are at least 50 billion U.S. dollars; or gross written premiums are at least 10 billion U.S. dollars. In the context of the state-based insurance regulatory system in the United States, the National Association of Insurance Commissioners (NAIC) has responded to developments at IAIS by amending its Model Holding Company Act in December 2014 to clarify state regulator authority over the entire insurance group, including language that a single group-wide supervisor will be identified for an IAIG. Aflac does not meet the proposed criteria for an Internationally Active Insurance Group. In July 2013 the FSB directed IAIS to build a work plan to develop a quantitative capital standard, which the IAIS is developing under ComFrame. The IAIS has also committed to developing a risk-based Global Insurance Capital Standard (ICS) for IAIGs, intended to provide among other things an objective group-wide measure of capital adequacy for IAIGs that is comparable across jurisdictions. Domestic Insurance Capital Standard Development: Process and Criteria Dodd Frank Insurance Standard Clarification Act of 2014 Empower the Federal Reserve to develop an insurance-centric approach for federally regulated insurance organizations U.S. domestic SIFI criteria and process FSOC has designated three U.S. insurance companies to be domestic SIFIs Aflac does not meet IAIG designation criteria Aflac does not meet the domestic SIFI designation criteria The comprehensive framework for supervision of internationally active insurance groups, or ComFrame, is built and expands upon the high level requirements and guidance currently set out in the IAIS Insurance Core Principles (ICPs), and is a framework for supervisors to efficiently and effectively cooperate and coordinate. The ICPs are the globally accepted requirements for the supervision of the insurance sector and are used by regulators and standard-setting bodies such as the International Monetary Fund (IMF) to evaluate entire insurance regulatory systems. ComFrame is being developed to provide Internationally Active Insurance Groups, or IAIGs, with more tailored and coordinated supervision across jurisdictions due to their complexity and international activity. As depicted on this slide, the IAIS has identified two primary criteria necessary for Internationally Active Insurance Group designation. The first criterion is international activity. In other words, where premiums are written in three or more jurisdictions and the percentage of gross premiums written outside the home jurisdiction is at least 10% of the group s total gross written premium. As the FSB and IAIS pursue the agenda described above, the Federal Reserve, the NAIC, and the Treasury Department s Federal Insurance Office (FIO) are working together closely as Team USA to form a consensus regarding the development of ICS. In relation to this effort, it is important to note that on December 18, 2014, the Insurance Capital Standards Clarification Act was signed into law, which changes Section 171 of Dodd Frank (the Collins Amendment) to empower the Federal Reserve to develop an insurance-centric approach for industry solvency standards that equates to capital requirements for banks for federally regulated insurance organizations, more specifically the insurance companies subject to Federal Reserve supervision i.e., those designated as Systemically Importance Financial Institutions (SIFIs) and insurance holding companies that own depository institutions. This legal clarification should enhance Team USA s ability to develop a coherent U.S. position in the international standards setting process by first ensuring that the domestic process to develop capital standards for federally regulated insurance companies is consistent with the U.S. state-based regulatory regime. 28

30 It is interesting to note that the companies designated as G-SIIs were also designated as domestic SIFIs in the United States as policymakers have taken steps in a domestic context to address systemic risk in the insurance sector. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law. The Act, among other things, created a Financial Stability Oversight Council (FSOC). In April 2012, the Council released a final rule describing the general process it will follow in determining whether to designate a nonbank financial company for supervision by the Board of Governors of the U.S. Federal Reserve System (the Federal Reserve). FSOC may designate by a two-thirds vote whether certain nonbank financial companies, including certain insurance companies and insurance holding companies, could pose a threat to the financial stability of the United States looking at criteria similar to the FSB framework, including the nature, scope, size, scale, concentration, interconnectedness, or mix of activities. Designated companies become subject to prudential regulation by the Federal Reserve. Prudential regulation by the Federal Reserve includes supervision of capital requirements, leverage limits, liquidity requirements and examinations. So far, FSOC has designated three insurance companies AIG, Prudential Financial, and MetLife. Aflac does not meet the domestic SIFI designation criteria. NAIC-FSA Regulatory Cooperation On April 6, 2015, the FSA and members of the NAIC (the Authorities) reinforced the importance of building trust among regulators and ongoing supervisory cooperation and collaboration between insurance regulators from the two largest national insurance markets in the world... With regard to the development of ICS, the Authorities reaffirmed the importance of considering the cost/benefit of any proposed standards, their impact on insurance product availability and affordability or other market impacts, and the compatibility of the proposed standards with the respective insurance regulatory systems. Joint National Association of Insurance Commissioners (NAIC) Financial Services Agency of Japan (FSA) Statement, Apr. 6, Since March 2014, the NAIC and the FSA have held a regular bilateral dialogue in an effort to deepen understanding of one another s supervisory approaches. The most recent meeting was held in Tokyo in April 2015 with discussions centering on the development of global capital standards, effective group supervision, and the activities of the IAIS. Following the meeting, the NAIC and FSA issued a joint statement reaffirming their commitment to work together to enhance cooperation on global capital and other international regulatory issues where NAIC and FSA interests align. The next meeting is scheduled to be held in the U.S. in the fall. Supervisory Colleges Increased focus on supervisory colleges in international financial regulatory arena» Under IAIS s Insurance Core Principles, use of supervisory colleges viewed as best practices in global regulation» Facilitates information exchange and supervisory cooperation Aflac Supervisory College» Nebraska Department of Insurance chaired first Aflac Supervisory College September 2013; Japan s Financial Services Agency attended» Aflac executive management from U.S. and Japan fully participated» Aflac Supervisory College expected to take place annually In the international financial regulatory arena, there is an increasing emphasis on the need to foster cooperation and enhance coordination between supervisors. This has led to an increased focus on the effectiveness of supervisory colleges, the key elements of which are set forth in IAIS s Insurance Core Principles, and viewed as best practices in global regulation. Aflac has welcomed this trend and has participated in Aflac s Supervisory College since it was launched in The Nebraska Department of Insurance chairs the meetings of the Aflac Supervisory College, which include the attendance of Japan s Financial Services Agency. Perhaps unique among U.S. companies with significant operations in Japan, executive management from U.S. headquarters and Japan have also participated and cooperated closely with both regulators. The Company welcomes the opportunity to engage in discussions to enhance our regulators understanding of Aflac s global governance and risk management. The third Aflac Supervisory College will be held in Nebraska in September We expect the Supervisory College to take place annually. Given the rapidly changing regulatory environment around the world, Aflac continues to take proactive steps to develop and implement strategies to address initiatives in international and domestic regulatory arena, particularly in response to global standards-setting entities such as the IAIS and the FSB, but also in response to the monetary, fiscal, and structural reform policies of relevant governments, especially the United States and Japan. Although Aflac does not meet the G-SII or the IAIG criteria, the Company has actively embraced the best practices coming out of the ongoing global financial regulatory debate. Aflac is also taking proactive steps to enhance our regulators understanding of the Company and the annual Aflac Supervisory College is a key mechanism to further bolster such understanding. 29

31 Progress in Financial Regulatory Reform MOF FSA Pre-1998 Convoy system June 2007 Rules-based approach July Better Regulation policy (Best mix of principles-based regulation and rules-based regulation) July New Financial Monitoring Policy (Integration of on-site and off-site monitoring) Japan s financial system has changed dramatically in the past two decades. The old Ministry of Finance emphasized maximum control, industry protection, and the use of informal administrative guidance based on its convoy system philosophy. The Financial Services Agency (FSA) replaced this philosophy with a rules-based regulatory approach when it was established, which relies on transparency and the notion of self-responsibility by financial institutions. Starting in 2007, the FSA has taken further steps to achieve the best mix of principles- and rules-based regulation, calling this the Better Regulation initiative. Along with the Better Regulation initiative, the FSA maintains a proactive approach and continues its role in helping to maintain financial system stability, improve consumer protection and convenience, and establish fair, transparent and vibrant markets. In light of the lessons learned from the global financial crisis, while the FSA has maintained its Better Regulation initiative, it has become more proactive, especially in enterprise risk management for instance. The FSA has been paying particularly close attention to such issues as investment risk management, protection of personal information, claims payments, and management of customer complaints. New FSA leadership appointed in July 2014, who have extensive international experience, are leading efforts to more actively adopt global best practices in FSA supervisory policies and practices. Against this backdrop, the FSA is engaged in a major overhaul to its approach to regulation under its new financial monitoring policy. This new policy, grounded in the basic policies of overcoming deflation to build a positive economic cycle and maintaining financial stability, shifts the regulatory focus from strict compliance with minimum standards to adoption of global best practices and the integration of on-site and off-site monitoring. As part of this effort, under the new framework, the FSA is now conducting horizontal reviews to actively supervise multiple companies simultaneously within an industry regarding key cross-sectorial themes including corporate governance and risk management. It should be noted that the nature of horizontal reviews differs substantially from the regular inspections that characterized previous policy. For example, the FSA selects themes for horizontal reviews dynamically from a forward-looking perspective based on the conditions of each insurance company, which it learns by analyzing company data as well as interviews with relevant business units when necessary. In addition, in horizontal reviews the FSA avoids applying the results mechanically and uniformly, taking into account the different strategies of each company or group. In principle, horizontal reviews are conducted off-site combined with on-site monitoring as necessary. By implementing this new financial monitoring policy and encouraging adoption of global best practices, the FSA is making efforts to engage in constructive dialogue with insurance companies and other financial institutions and foster competition to improve quality of service to customers. The summary results of the FSA s monitoring and analysis will be published in the form of financial monitoring reports and more specific feedback will be provided to individual companies as part of ongoing supervisory dialogue. The Life Insurance Policyholder Protection Corporation of Japan (LIPPC) was established in 1998 to protect life insurance policyholders and maintain the stability of the life insurance business in the event of a collapse of a life insurance company. All life insurance companies operating in Japan contribute, and each company pays an annual contribution according to a formula based on the company s liabilities, premium income, and other factors. The overall annual contributions by LIPPC members in fiscal 2015 amounted to 33 billion yen. This amount was reduced from 40 billion yen starting this fiscal year to reflect improved financial footing in the life insurance industry. In addition, to ensure that markets keep functioning even during a major crisis, the Japanese government put in place a post-funded orderly resolution regime for all financial institutions effective March 6, If deemed necessary to avoid significant market disruption, the prime minister has the authority to authorize emergency measures (provision of liquidity, funding, etc.) following deliberation at the Financial Crisis Response Council. Insurance industry contribution to this regime would be risk-associated and is anticipated to be a minor portion of potential contributions that might be required. The Japanese Government Constitutional monarchy with parliamentary government Bicameral parliament» House of Representatives (Lower House)» House of Councillors (Upper House) Executive power vested in a cabinet composed of a prime minister and ministers of state (all civilians) Prime minister must be member of parliament and is chosen by peers Japan is a constitutional monarchy with a parliamentary government. Sovereignty is vested in the Japanese people, with the Emperor defined as the symbol of the state. Japan s government is a parliamentary democracy, with a House of Representatives, or Lower House, and a House of Councillors, or Upper House. Executive power 30

32 is vested in a cabinet composed of a prime minister and ministers of state, all of whom must be civilians. The prime minister must be a member of parliament, which is known as the National Diet in Japan, and is chosen by his or her colleagues. The prime minister has the power to appoint and remove ministers, a majority of whom must be Diet members. DPJ 72 House of Representatives (Lower House) Komeito 35 LDP 291 Komeito Democratic Party of Japan Party for Future Generations People's Life Party Independents 475 members elected for four-year terms The Prime Minister can dissolve the Lower House and call for an election at any time Can override Upper House decisions with a 2/3 majority vote Liberal Democratic Party Japan Innovation Party Japanese Communist Party Social Democratic Party The Lower House has 475 members elected for fouryear terms. The Lower House can be dissolved and an election called at any time by the prime minister, which means that its election schedule is not fixed. The last Lower House election in December 2014 was a snapelection called by the prime minister to seek public support for delaying a planned increase in the consumption tax. It resulted in the Liberal Democratic Party (LDP) maintaining its wide majority and the Prime Minister re-affirming his mandate to move forward with his economic reform agenda, or Abenomics, which I will address below. The next Lower House election must be held no later than December House of Councillors (Upper House) July 2013 in which the LDP-led coalition won 76 seats to gain a strong majority in the Upper House with a total of 135 seats out of 242 seats. The next Upper House election will be held in the summer of Control of the Government The Lower House is the key to gaining control of Japan s government. A bill passed by the Lower House, but voted down by the Upper House, can be overridden by the Lower House with a two-thirds vote. In the case of disagreements over treaties, the budget, and the selection of the prime minister, the Lower House decision becomes the will of the Diet. The leader of the majority party generally serves as prime minister. The Lower House has several powers not given to the Upper House that make it the key to gaining control of Japan s government. For example, if a bill is passed by the Lower House, but voted down by the Upper House, the Lower House can override the decision by a two-thirds vote. In the case of treaties, the budget, and the selection of the prime minister, however, if the two houses reach different decisions that cannot be resolved, the decision of the Lower House becomes the will of the Diet. As a result, the party that controls a majority of seats in the Lower House holds the reins of power. And the leader of that party generally serves as prime minister. With control over both chambers of the Diet since July 2013, the LDP-led coalition has been able to pass key pieces of legislation with little difficulty. Political Parties and Coalitions Japan s political parties often form partnerships, or coalitions, with other parties. The Liberal Democratic Party (LDP) currently has a coalition with Komeito. LDP President, Shinzo Abe, serves as Japan s Prime Minister DPJ 58 Komeito members elected for six-year terms Elections held every three years, for 1/2 of seats LDP 114 Next election due Summer 2016 Liberal Democratic Party Komeito Democratic Party of Japan Japan s political parties include: Japan Innovation Party People s Life Party Japanese Communist Party Social Democratic Party Party for Future Generations Komeito Democratic Party of Japan Assembly to Energize Japan Japanese Communist Party Social Democratic Party New Renaissance Party Liberal Democratic Party Japan Innovation Party Party for Future Generations People's Life Party Independents Independents Club The LDP, which is currently in power, has been the dominant political party since 1955, losing power only twice, between and There are a number of other political parties that vary in size and influence, including, Komeito, Democratic Party of Japan, Japan Innovation Party, and the Communist Party of Japan. The Upper House has 242 members elected for six-year terms. Upper House elections are held every three years, during which one-half, or 121, of the Upper House seats are contested. The last Upper House election was held in 31 Political parties in Japan s parliamentary system often form partnerships, or coalitions, including in cases when they need to gain a majority in one or both houses of the Diet for the purposes of passing legislation. The ruling LDP currently is in a coalition with Komeito.

33 Liberal Democratic Party (LDP) Demonstrates Effectiveness in Governance The LDP has focused on what matters most to voters revitalizing the Japanese economy. Growth strategy announced in June 2013 and revised the following year; Prime Minister Abe quickly moved forward with the implementation phase.» Growth Strategy Diet: All growth strategy-related bills passed» Diet to realize a virtuous cycle: 30+ bills submitted several policy challenges loom on the horizon, including national security legislation, structural reforms, and the question of whether to restart currently dormant nuclear reactors. The decision to move forward with the consumption tax hike without the statutory escape clause greatly increases pressure on the administration over the next two years to successfully implement the Abenomics platform, which I will turn to now. Abenomics: Three-Arrow Strategy to Economic Revitalization» Diet to carry out reforms: Landmark legislation including Womenomics, historic agricultural reform Fragmented opposition provides no clear political alternative to the ruling LDP-Komeito coalition. Arrow One: Bold Monetary Policy Since regaining power in late 2012, the LDP, led by Prime Minister Shinzo Abe, has skillfully executed policies related to what matters most to voters revitalizing the Japanese economy. Accordingly, the Abe administration has been moving steadily to implement its economic agenda, starting with announcement of a comprehensive growth strategy in June 2013, which was updated in The Diet sessions that followed have resulted in enactment of dozens of reform bills. For example, in the autumn 2013 Growth Strategy Diet, the government passed all growth strategy-related measures it submitted, including measures to enhance Japan s industrial competitiveness, a program of National Strategic Special Zones to implement structural reforms in designated areas, and liberalization of the retail electricity market. In the spring 2014 Diet session, dubbed the Diet to realize a Virtuous Cycle, the government put forward over 30 bills related to its growth strategy including reform of Japan s labor market and corporate governance rules. And in the current Diet session known as the Diet to Carry Out Reforms, the administration has submitted landmark legislation including historic agricultural reform and measures to promote women s active participation in society, as discussed below. In this context, the Abe administration has been leveraging its position to encourage companies to increase wages, leading to successive increases in both base and seniority pay each year since Prime Minister Abe has been in office for fiscal 2015, for example, the Japan Business Federation reports that large companies are on track to increase wages by 2.59% this year, following the 2.28% last year. Arrow Two: Flexible Fiscal Policy Arrow Three: Growth Strategy Implementing Prime Minister Shinzo Abe s three-arrow economic strategy Abenomics remains a top priority and the administration continues to make strides to deliver on the three arrows, specifically: 1) bold monetary policy; 2) flexible fiscal policy; and 3) growth strategy. I will address each arrow below. The first arrow, bold monetary policy, has entailed an open-ended policy of monetary easing by the Bank of Japan to overcome Japan s persistent deflation and achieve economic growth. Since January 2013, meaningful policy coordination between the Government and Bank of Japan resulted in the central bank changing its inflation benchmark from 1% to a real target of 2%. To achieve this goal, Bank of Japan Governor Haruhiko Kuroda embarked on a policy of quantitative and qualitative easing. Under this policy the bank changed its monetary policy framework to focus on boosting the monetary base cash in circulation plus banks deposits with the Bank of Japan. Amid weak economic growth following the April 2014 consumption tax hike to 8%, the prime minister announced on November 19, 2014, his decision to dissolve the Diet s lower house and hold a general election on December 14, 2014, in order to obtain the political mandate necessary to implement, among other things, a delay of the planned consumption tax hike, along with a statutorily enacted commitment to raise the consumption tax effective April 2017 without an escape clause that would have allowed the government to once again delay the increase if certain economic performance targets were not met. As indicated above, this election resulted in a landslide victory for the LDP-Komeito coalition and allowed the prime minister to strengthen his government s hand to implement the economic reform agenda at a time when 32 As a result, as measured by Japan s Consumer Price Index, or CPI, Japan consistently remained in an inflationary environment between October 2013 and February 2015, even after excluding further the effects of energy prices. However, various factors, including weakened domestic demand following the April 2014 consumption tax hike as well as the dramatic decrease in oil prices that began in mid-2014, have placed significant downward pressure on consumer prices. In response to these and other developments, on October 31, 2014, the Bank of Japan announced additional measures to expand its ultraeasy policy, including lifting the target for increasing the monetary base and increasing asset purchases. Despite this, in February 2015 the inflation rate slowed to zero,

34 and has remained sluggish since. However, it is important to note that in an April 19 speech, Governor Kuroda noted that because of the central bank s easing policies, the likelihood that long-term inflation will be 2% is now perceived to be higher. The second arrow, flexible fiscal policy, includes fiscal measures to end deflation and achieve fiscal consolidation. Recognizing that robust economic growth is essential for Japan to manage its national debt while maintaining the country s social security system, Prime Minister Abe s stated goal is to strike a right balance between fiscal consolidation and enhancing growth. For that reason, the second arrow has included two stimulus packages a 10 trillion yen package for emergency measures issued in January 2013 and a 5.5 trillion yen package to counter the impact of the April 2014 consumption tax hike. This second stimulus package was announced in December In December 2014, the cabinet approved measures in response to the prime minister s decision to delay raising the consumption tax to 10% until April These included a review of various measures that had been approved assuming the consumption tax increase would go forward as scheduled. Some were delayed over funding concerns, while others that would help lift the economy moved forward as scheduled. In addition, the prime minister has set a fiscal consolidation target that includes reducing by half the government deficit as a percentage of GDP by fiscal 2015, excluding debt servicing costs, and achieving a surplus by fiscal Measures to reach the 2020 goal are likely to become a major area of focus for the government in the coming months and years, as I will discuss later in this presentation. The third arrow growth strategy was released in June 2013 and updated in June The growth strategy has begun to produce tangible results and several initiatives have potential to deliver meaningful reform to Japan s economy. I will highlight four below. Promoting Capital Efficiency and Productivity JPX-Nikkei 400 GPIF Reform Stewardship Code Corporate Governance Code Government Pension Investment Fund (GPIF), each of which I will discuss below. The 2013 growth strategy called for the creation of a new stock market index to showcase high-profile companies in terms of profitability and management. In response, in January 2014, Japan Exchange Group (the holding company that comprises Tokyo Stock Exchange (TSE) and Osaka Securities Exchange) and Nikkei, Inc. (publisher of Japan s largest business daily and a major provider of market data) began publishing a new stock index, the JPX-Nikkei 400, composed of 400 companies that meet the requirements of global investment standards such as efficient use of capital and investor-focused management perspectives. The components are reviewed annually based on both quantitative (e.g., three-year average return on equity, three-year cumulative operating profit) and qualitative factors, such as the use of two or more independent, external directors on the board. In the most recent review, which took place in August 2014, 31 firms were replaced. This was followed in February 2014 by the introduction of Japan s Stewardship Code, a set of principles for Japanese institutional investors, including banks, asset management firms, and insurance companies, to fulfill their fiduciary responsibilities and promote sustainable growth in the companies in which they invest. Code principles encourage Japanese institutional investors to, among other things, properly manage conflicts of interest, have a clear policy to disclose proxy voting activity, and maintain the skills and resources necessary to engage with investee companies. The FSA, as Japan s integrated financial regulator, maintains a publicly available list of firms that have adopted the code, which it updates quarterly. Another key growth strategy initiative has been the development of Japan s Corporate Governance Code, a collaborative initiative of the FSA and TSE. The code was formulated by the Government s Council of Experts Concerning the Corporate Governance Code (with FSA and Tokyo Stock Exchange serving as joint secretariat) released an exposure draft of Japan s Corporate Governance Code, based on the Organization for Economic Cooperation and Development (OECD) Principles of Corporate Governance. It adopts a principlesbased approach to achieve corporate governance in accordance with each company s particular situation and provides detailed guidance to ensure that companies secure the rights and equal treatment of shareholders, appropriately cooperate with stakeholders other than shareholders, and ensure appropriate information disclosure and transparency. It also delineates responsibilities of Boards of Directors and provides guidelines for dialogue with shareholders. The code will not be compulsory, but starting in June 2015 the TSE will require listed firms to either comply with each principle or, if not, explain why not. First, the Government of Japan, working with market players, has moved forward with a series of measures aimed at improving capital efficiency and productivity. These measures include creation of a new stock market index, introduction of a Stewardship Code, development of a Corporate Governance Code, and reform of the 33 Further, ongoing reforms to the GPIF and other public pension funds, including changes to investment policies in favor of greater equity holdings, have the potential to contribute to capital efficiency and productivity while ensuring the sustainability of social security programs. These funds can also be a source of investment in the Japanese economy and globally. In conjunction with the investment policy changes, the government is also

35 implementing governance reforms to strengthen and restructure the GPIF s risk management systems, including the appointment of full-time members to the investment committee and recruiting highly skilled investment professionals. The GPIF reforms will take effect gradually and with a view to achieve comprehensive reform in the mid- to longterm period. By encouraging both investors and companies to encourage and practice growth-oriented governance, these complementary measures work to establish a framework that will foster the enhanced productivity and capital efficiency for Japan to achieve sustained economic growth. Historic Agricultural Reform established a farmland bank along with tax incentives and subsidies to facilitate the consolidation of farmland, shifting from small farms with fragmented ownership to large, and in many cases corporation-run, farms operated by the next generation of farmers. Womenomics and Labor Reform Core element of growth strategy Large companies to be required to devise and disclose action plans regarding their activities to promote women s active participation Policy guidelines also targeting men s participation in childrearing Labor reform: A new wage system to make workers that meet certain conditions exempt from overtime First major attempt at reform in sixty years Central organization JA Zenchu to be stripped of audit authority Regulations on agricultural production corporations to be relaxed Second, agricultural reform has also been a key component of Abenomics with the goal of making Japan s agricultural sector a competitive, attractive industry to play a role in driving regional economies autonomous development. It is important to note that the proposed agricultural reforms represent the first major attempt at such reform in sixty years. As described below, the government is taking several key steps to reform the sector, which will require amending more than 50 existing laws. Under the Abe administration s proposal, the Central Union of Agricultural Cooperatives, or JA Zenchu, will, among other things, be stripped of its audit authority with the aim of enhancing the independence and efficiency of local cooperatives. This is significant because historically, JA Zenchu, has exercised extensive influence over the production activities of local farming communities through its statutorily granted exclusive authority to audit and supervise local cooperatives. The government also plans to pass legislation in the current Diet session ending as late as this July that will relax the requirements for agricultural production corporations, for example by increasing the maximum equity stake that non-agricultural investors can own from 25% to 50% and reducing the number of board members that must be engaged in agricultural from half to just one. And to help ensure that agricultural committees (established in municipalities with authority to, among other things, approve the sale and lease of farmland) are more active in promoting the use of farmland in their regions, the government also intends to change the law in the current Diet session to give local mayors the authority to select committee members. These fresh initiatives will supplement policies already enacted under Abenomics. The government has decided to terminate the so-called Gentan policy, a comprehensive price maintenance and production control program that has been in force for half a century. Japan has also Third, as Paul has mentioned, Japan faces a shrinking and aging population, and one of the biggest challenges facing the country is how to stem the decline in the labor force and achieve economic growth. To address that challenge, another key area of the third arrow is labor reform, with several measures currently under consideration to reform Japan s working practices. Increasing female participation in the workforce (or Womenomics as the strategy has been termed) is a primary tool that the government is deploying to limit the decline in the labor force and has gained attention by economic experts. For example, Peterson Institute of International Economics President Adam Posen has noted that growth in Japanese female labor force participation has accelerated enormously since Abenomics began... [and] constitutes a positive structural shift on the order of 1.5% of the total workforce. Christine Lagarde, Managing Director of the International Monetary Fund, has stated that measures to close the gender gap in employment can really pay off adding ¼ percent to growth each year if implemented aggressively. Accordingly, Japanese government has made promoting the active participation of women a core element of its growth strategy. In addition to the target of increasing the proportion of women in leadership positions to 30% by 2020 as Paul mentioned, the government has also set a goal of boosting the boost the employment rate of women aged to 73% by Listed companies are now required to disclose the number of women in executive positions, and legislation currently pending in the Diet would require large companies to devise and disclose action plans regarding their activities to promote women s active participation. Reforms under Womenomics are also targeting men s participation in child-rearing. On March 20, the Cabinet approved a set of policy guidelines urging companies to establish internal systems for granting childcare leave, with targets to be reached by fiscal 2020 including raising the percentage of men taking childcare leave to 13% (versus 2% in fiscal 2013), having 80% of men take childcare leave after their spouses give birth, and raising the percentage of women who return to the workforce by the time their first child turns one to 55% (from 38% in 2010). 34

36 Another key reform is to develop a new wage system based on evaluating output and skill rather than hours worked. For workers that meet certain conditions such as having an annual salary of million yen or more, clearly defined work responsibilities and high skill levels, employers will be exempt from needing to pay overtime. Trans-Pacific Partnership Agreement (TPP) as Breakthrough Structural Reform costs) by FY2020 and has committed to announcing a concrete fiscal consolidation plan this summer. Integrated Social Security and Tax Reform A policy A policy priority under Abenomics Fine Fine details of of the the reform still being decided Consumption tax tax hike to to be one funding mechanism 8% 10% 5% Previously April 1, 2014 October 2015 Finally, Japanese policymakers recognize that another important way for Japan to secure greater productivity and growth is through greater economic engagement with the rest of the world. To this end, the Japanese government has been actively pursuing bilateral and regional trade agreements. Of the regional initiatives, the Trans-Pacific Partnership Agreement (TPP) is currently in the spotlight. The TPP is a comprehensive, high-standard agreement among 12 countries including the United States to liberalize trade and investment and address 21st-century issues such as cross-border supply chains and intellectual property. Prime Minister Abe made a decision in early 2013 to officially enter negotiations, and Japan formally joined the talks with eleven other countries in July In the TPP and other key trade initiatives, the United States and Japan have a common interest in many areas, and Japan has been a strategic partner in developing 21st-century rules, particularly in areas such as state-owned enterprises, investment, and intellectual property rights. A major impetus for Abenomics is the need to secure sustainable economic growth as Japan faces a declining birthrate and aging population, which are among the most difficult challenges that Japan faces on the path to sustained growth and prosperity. As these trends progress, Japan s publicly funded social insurance programs will continue to come under ever-increasing financial pressure. In response, alongside measures to secure growth, the Japanese government is currently moving forward with a comprehensive overhaul of the social security system. In December 2013, the Diet passed a law that creates a Social Security System Reform Promotion Headquarters consisting of related cabinet officials and lays out a timetable for the Government to discuss and implement the reform measures suggested in a National Council on Social Security System Reform 2013 report. The Promotion Headquarters met for the first time in February 2014 and is moving forward with discussions on issues including raising the out-of-pocket health care rate for elderly (ages 70-74) who fall under the income threshold from 10% to 20%. This measure took effect in April 2014 and will be phased in over five years. Response to Abenomics Nikkei Stock Average reaches 15-year high (monthly close; pts.) TPP is a critical element driving third arrow reforms. Chief Cabinet Secretary Yoshihide Suga has called TPP the largest component of the third arrow, and the Prime Minister Abe has stated that completing TPP is among the most urgent task we face, because Japan s economy needs powerful external catalysts to spur change in how we compete at home and for export markets. Japanese government debt is nearly double the country s gross domestic product as expenditures continue to increase for reasons including an aging population and the government responses to the global financial crisis and the Great East Japan Earthquake. Mindful of this challenge, the administration is expected to increasingly focus on implementing plans to achieve fiscal consolidation in the near-to mid-term. To that end, the government maintains the aforementioned fiscal consolidation target of achieving a primary balance surplus (i.e., a fiscal surplus excluding debt servicing 35 25,000 20,000 15,000 10,000 5, Source: Nikkei As you can see from the graphs, since December 2012, the Nikkei Stock Average has risen to levels not seen since Unemployment has fallen to levels not seen since And in this spring s wage negotiations, large firms

37 are likely to agree to the most significant wage increases in 17 years. This demonstrates that the Abenomics strategy to revitalize the Japanese economy and achieve sustainable economic growth is having a concrete effect on economic conditions on the ground Japan s Unemployment Rate Source: Ministry of Health, Labour and Welfare, Monthly Labour Survey. Increase in Wages at Large Japanese Firms Lowest levels since 1997 (%) Wages have grown at fastest pace in 17 years (y/y %) The Abe Cabinet has maintained high public support since the LDP regained power in This high support rate is widely seen to be linked with Prime Minister Abe s commitment to economic reform. Furthermore, cabinet support under Abe has remained above 50% for the majority of his time in office, steadier than it was under former Prime Minister Junichiro Koizumi, one of the most popular leaders Japan has had in recent years. It is evident that the Abe Cabinet enjoys historically high and stable public support. This is particularly notable considering that Prime Minister Abe has made a number of difficult political decisions on reform, including: pushing forward with agricultural reform; implementing the April 2014 consumption tax hike from 5 to 8 percent; and committing Japan to joining the Trans-Pacific Partnership agreement negotiations immediately before the critical Upper House July 2013 elections, which the LDP later went on to decisively win. In closing, Aflac continues to closely interact with our public policy stakeholders in Japan, the United States, and globally to anticipate change and advocate for constructive solutions. To this end, Aflac is well-positioned to take advantage of the opportunities presented in the market place based on its strategic understanding of developments in the public policy and regulatory arena Source: Japan Business Federation; 2015 figures reflect interim estimate. 36

38 Section II Aflac Japan Japan Macro Environment and Market Overview Paul S. Amos II President, Aflac Last year Aflac celebrated 40 years in Japan. This important milestone was a reminder of the trust policyholders have placed in us to be there when they need us most. As in the past, we plan to build on our position as the leading provider of cancer and medical insurance in Japan, strengthen our relationships with key stakeholders, and provide value to our investors. My presentation will begin with an update on Japan s macroeconomic environment. I will then address Aflac Japan s standing in the market and our strategy in Japan moving forward. General Economic Environment Three-Arrow Strategy Abenomics: A Three-Arrow Strategy to Revitalize the Economy Third arrow: Growth strategy Third arrow measures include: Agricultural reform Women s empowerment Labor flexibility Corporate governance Wages Japan faces the unprecedented challenges of keeping its economy running against the backdrop of a population that is shrinking in size and where the number of elderly is rising as a percent of the total population. At the same time, Japan must also support a growing number of retirees, without allowing its public debt to balloon. Japan s Prime Minister Shinzo Abe is attempting to address these challenges through a range of reforms, including his three arrow strategy dubbed Abenomics, and has set goals to exit deflation, shore up Japan s economy, and reign in public debt, which is currently highest in the developed world. Since we met last year, there has been a headwind to the economic recovery due in part to the larger-thanexpected impact of the consumption tax increase in 2014, which I will discuss later. Accordingly, Prime Minister Abe has had to intensify his economic reform efforts, and the expectations are especially high for the Prime Minister s third arrow growth strategy. In fact, in his policy speech to the Diet in February 2015, Prime Minister Abe vowed to take the most drastic reforms in the postwar era, and the markets have responded positively. The benchmark Nikkei Stock Average, for example, has climbed 29% from its October 2014 low and in April, topped 20,000 for the first time in 15 years. Similarly, consumer spending has risen since May 2014 and the government has reduced the effective corporate tax rate by 4.9% since April 2014 to 30.8%, with plans for further reduction with details yet to be determined. Although it remains uncertain whether Abenomics will ultimately be successful, we are beginning to see meaningful change on the ground from the economic reform measures. The government is for example, beginning to focus on some of Japan s more sensitive areas including agriculture, women s empowerment, and labor flexibility. Of particular note, the Japanese government has implemented a Stewardship Code based on principles for institutional investors to fulfill their fiduciary responsibilities and promote sustainable growth in companies in which they invest. In addition, the Japanese government will soon finalize a Corporate Governance Code aimed at fostering growth-oriented management to be adopted this summer, and the prime minister is using his public visibility to encourage companies to raise wages. Taken in its entirety, we are beginning to see a change in the way businesses operate in Japan. Womenomics Changing the Way Japan Works Aflac Japan launches Women s Empowerment Program Government targets 30% women in leadership by 2020 Aflac Japan awarded Diversity Management Selection

39 Womenomics, or the increased participation of women in the workforce, is a primary way the government is attempting to address challenges of a shrinking workforce. In fact, last year the government set a target to increase the proportion of women in leadership positions to 30% by the year Additionally, they have focused on reforms to encourage more flexible work arrangements for both women and men. At Aflac Japan, diversity management is an integral part of our overall management strategy, and we have implemented a number of measures to promote greater diversity. For example, last year we established a comprehensive leadership program called the Women s Empowerment Program and are working to raise the percentage of leadership positions occupied by women from the current 17.6% to 30% by the year Furthermore, in October 2014, Aflac Japan established a Diversity Promotion Committee and a Diversity Promotion Office to help drive these and other diversity initiatives. I am proud to report that on March 18, 2015, Aflac Japan was presented with the Diversity Management Selection 100 award in recognition of our diversity efforts. This award, launched in 2012 by Japan s Ministry of Economy, Trade, and Industry, recognizes leading companies that have created new value through diversity management. We are honored to have been included on this list. Japan s Aging Population and Declining Birthrate (In Millions) Projected Social Security Benefits (In Trillions) Other Child-raising Elderly Care Medical Pension With fewer workers supporting Japan s aging population, the publicly funded social security program is under increasing pressure to meet its financial obligations. Accordingly, the Japanese government is proceeding with a comprehensive overhaul of the social security system, including both health care and tax reform, aimed at securing stable revenues to finance social security. Raising the consumption tax is seen as one of the primary funding mechanisms for Japan s social security costs. Consumption Tax Rate FY 2014 FY 2015 FY 2020 FY 2025 Source: Ministry of Health, Labor and Welfare, 3/12 10% 140 Actual Estimate 8% 120 5% 100 3% Introduced 1989 April 1997 April 2014 April Juvenile (0-14) Productive (15-64) Retirement (65+) Source: National Institute of Population and Social Security Research, Future Estimated Population of Japan, 1/12 Japan s population is projected to continue to shrink as a result of a declining birthrate and rapidly aging population. Currently, one in four Japanese citizens is over age 65, and by 2050, nearly 40% of Japan s population will be age 65 and over. Today, approximately 60% of Japan s household assets are held by these senior citizens and this percentage is only expected to increase over time. In April 2014, the Japanese government raised the consumption tax from 5% to 8% in an effort to increase tax revenues. As I covered earlier, the consumption tax increase had a larger-than-expected impact on Japan s economy. Japan s GDP fell 7.3% in the second quarter and 1.6% in the third quarter, pulling Japan into a technical recession. In November 2014, Prime Minister Abe announced his decision to delay by 18 months implementation of a planned second consumption tax increase from 8% to 10%. This next increase will go into effect April 2017 without an escape clause. In his announcement, the Prime 38

40 Minister made it clear that the focus on tackling deflation does not mean lowering the flag of fiscal reconstruction. Having pledged to maintain its fiscal consolidation target of achieving a primary surplus by fiscal year 2020, the Japanese government will have to implement mid- to longterm fiscal measures including reigning in social security costs and moving forward with social security reforms, including looking toward the private sector to cover the gaps. Japan s Universal Health Care Insurance System Compulsory, public health care system Costs covered by:» Premiums (split between insured, employers)» Insured copayments» Taxes System under great financial strain Copayments (as of April 1, 2015) Under 70 30% Ages % 75 and older 10% High income, regardless of age 30% Next, let me turn to Japan s public health care insurance system. Japan has a compulsory and universal public health care insurance system, and its costs are covered by premiums paid by the insured and their employers in addition to taxes and copayments paid by citizens. Over the years, the system has been under great financial strain due to Japan s aging population, declining birthrate, and increasing medical expenses. Copayments have risen, and this trend is expected to continue. Currently, copayment rates for people under 70 and those with high incomes irrespective of age, is 30%. For people aged 70-74, the rate is 20%, and for people aged 75 and older the rate is 10%. As copayments continue to edge up, we anticipate the need for supplemental insurance will also increase. Government Mid- to Long-Term Reform Plan Health insurance reform legislation submitted to the current Diet session as part of comprehensive overhaul of the national health insurance system A series of reforms will be implemented starting fiscal year 2015 including: As I noted earlier, the Japanese government is moving forward with a comprehensive overhaul of its national health insurance system. In January 2015, the government approved an outline of the planned health insurance reform legislation with the aim of securing long-term fiscal sustainability. Related legislation was submitted to the current Diet session in March 2015 and is currently under deliberation. Once passed, a series of reforms will be implemented from fiscal year 2015 to fiscal year 2018 and will include changing the responsibility for operating the national health insurance programs from municipal to prefectural governments. In addition, the Japanese government plans to remove the current special discounts on health insurance premiums for people aged 75 and older in fiscal year Daily Out-of-Pocket Hospitalization Expenses More than 20,000 15,000 to 20,000 10,000 to 15,000 7,000 to 10,000 5,000 to 7,000 Less than 5, Source: Japan Institute of Life Insurance Over the years, Japanese citizens have gradually been required to assume more responsibility for their medical expenses. These expenses can include items such as extra charges for private or semi-private rooms, special medical treatments or medications not covered by the national health care system. As always, the insured also remains responsible for other out-of-pocket expenses such as transportation costs for family members traveling to the hospital and daily necessities while in the hospital. According to the most recent survey by the Japan Institute of Life Insurance, roughly one-third of patients had more than 21,000 yen of daily out-of-pocket expenses incurred by the patient and family during hospitalization, which is up by 30% from just three years ago The Public s View on the National Health Care System Adequate Don't know Inadequate 51.9% Delegating main responsibility for operating national health insurance program from municipal to prefectural governments Removing current special discounts on health insurance premiums for people 75 and older in fiscal year % 44.4% Source: Japan Institute of Life Insurance,

41 In the current environment, nearly 52% of Japanese citizens feel the national health care system is inadequate. We believe consumers are not only worried about the current situation, but also of a future that could include increases in copayments and reductions in the scope of government coverage. In this context, we believe the need for supplemental insurance will only continue to grow and become more pronounced. Our goal is to ensure Aflac s products will be positioned to meet the changing and increasing needs of the consumer. Let me share with you some data to underscore my point Life Insurance Policies in Force (FSA Basis, In Millions) First sector Third sector /08 3/09 3/10 3/11 3/12 3/13 3/14 12/14 Source: Life Insurance Association of Japan As of March 2015, Japan had a total of 35 competitors selling stand-alone medical products and 25 selling stand-alone cancer products, including both life and non-life companies. While this shows that the number of competitors has decreased, product competitiveness is on the rise with an increasing variety of products with shorter life cycles. The market is expected to continue to grow as consumer demand increases for third sector products that supplement the public social security system. Since many insurance companies see growth opportunities in this market, as Yamauchi-san s presentation explains, competition continues to intensify. Despite this situation, Aflac is determined to maintain and further expand its position as the leading insurance company in Japan s third sector market. Aflac s Share of In-Force Business: Cancer (FSA Basis, Stand-alone, Life Industry Only) Policies in Millions Market Growth 100 % Market Share As you can see, Japan s life insurance market is expanding, with the number of life insurance policies in force increasing. As of the end of December 2014, the total number of policies in force for all life insurance companies in Japan was million, of which 57.6 million were from the third sector. Aflac remains disciplined when it comes to profit margins and risk appetite, particularly in this low-interestrate environment. Let me reassure you, we are actively managing our first sector business. However, it is important to note we allow a limited portion of these products to be sold as an accommodation to certain distribution channels Competitors in the Third Sector (Number of Life and Non-Life Insurance Companies) /10 3/11 3/12 3/13 3/14 12/14 Source: Insurance Research Institute, Life Insurance Association of Japan Let me now turn to a discussion on cancer and medical insurance from a life insurance industry-wide perspective. I am pleased to say that in September 2014, Aflac Japan introduced the latest revision to our cancer product line, New Cancer DAYS. This offering also included an exclusive product sold through Japan Post and, as Yamauchi-san s presentation explains, sales surged following the release. I am proud of what the team has accomplished with New Cancer DAYS. The graph on the left shows the movement of the total number of policies in force for stand-alone type cancer insurance in Japan. The figures have been steadily growing year by year, and reached 21.7 million policies as of December The graph on the right shows Aflac Japan s market share of the in-force cancer insurance policies. As of December 2014, the share is at 67.6%. Though the competition continues to intensify, our leadership position remains unchanged. 0 3/10 3/11 3/12 3/13 3/14 12/14 Aflac Others 0 12/01 12/02 12/03 12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 12/13 3/14 3/15 Stand-alone medical Stand-alone cancer Reflects results of company mergers and companies that have discontinued sales Source: websites of each company 40

42 Aflac s Share of In-Force Business: Medical (FSA Basis, Stand-alone, Life Industry Only) Policies in Millions Market Growth 16 3/10 3/11 3/12 3/13 3/14 12/ % Market Share 3/10 3/11 3/12 3/13 3/14 12/14 That said, Aflac remains at the top with Nippon Life in terms of the total number of policies in force. Accordingly, Aflac Japan maintains a top-tier position within the industry. Aflac s Strategy for Growth Aflac s strategy for growth over the decades has been simple: Relevant Voluntary Products Expanded Distribution Channels New Accounts and Customers Source: Insurance Research Institute, Life Insurance Association of Japan Aflac Others As shown on the graph to the left, the total number of policies in force for stand-alone type medical insurance products in Japan has grown every year. As of December 2014, there were 31.5 million policies in force, representing a 5% increase when compared to the end of March As the graph on the right illustrates, Aflac Japan s market share of all medical policies in force was 17.8% as of the end of December When we entered the market in 2002 with the launch of our EVER stand-alone medical product, we quickly rose to become the market leader in new sales. Key Metrics Selected Life Insurers (FSA Basis, As of 12/31/2014) Policies in Force (in millions) Total Assets (yen in billions) Premium Income (yen in billions) Aflac MetLife Nippon Dai-ichi ,797 1, ,882 1,340 Meiji Yasuda Sumitomo ,364 36,561 35,952 27,720 3,683 2,317 2,566 1,883 This slide compares our key indicators with that of MetLife and the four largest domestic life insurers, namely Nippon Life, Dai-ichi Life, Meiji Yasuda Life and Sumitomo Life. Given that the majority of Aflac Japan s total assets and premium income are generated by third sector products with low unit prices, the gap remains wide between Aflac and the four major domestic insurers in terms of total assets and premium income. At Aflac, our strategy for growth over the decades has been simple: offer relevant voluntary products sold through expanded distribution channels to yield new accounts and customers. Yamauchi-san s presentation goes into greater detail about Aflac Japan s growth strategy, but let me take a moment to provide you with an overview of what we have planned for the remainder of On the product side, this June Aflac Japan will enhance the current EVER medical insurance product with riders related to critical illnesses. On the distribution side, our traditional agencies and alliance partners have been, and will remain, key to our success. We will also continue to gradually expand the number of post offices selling Aflac products and partner with Kampo to train Japan Post employees. In the coming year, Aflac Japan will be working closely with all distribution channels to continue to ensure mid-to long-term sales growth. Finally, building relationships with existing customers will continue to be a priority for Aflac Japan, while at the same time we want to appeal to consumers that are not yet Aflac policyholders. We will look for ways to enhance value and introduce new products that address the changing needs of Japan s aging population. As I covered earlier, this group currently accounts for approximately 60% of Japan s household assets, and Aflac Japan will continue to explore ways to deepen our relationship with policyholders in this important and growing segment. Let me reiterate that I am excited by what the future has in store for Aflac Japan. After almost two years of living in Japan, I have gained an even deeper understanding of the country, and I am convinced that with change comes opportunity. 41

43 Aflac Japan and its Growth Strategy Hiroshi Yamauchi President and Chief Operating Officer, Aflac Japan I would like to provide you with an overview of Aflac Japan s strategy for growth. Forty years ago, we pioneered cancer insurance in Japan. Immediately, people saw the need for the product, and our sales of cancer insurance grew quickly. Since then, we have focused our efforts on creating a variety of insurance products that help lift the financial burden and provide support when consumers need it most Aflac Japan Management Slogan Before addressing strategic topics, I d like to cover our business results for Total New Annualized Premium Sales (In Billions) Third sector First sector 150 創造 Creation 100 協働 Collaboration 50 挑戦 Challenge % Inc (29.1) (23.3) Aflac Japan s 2015 management slogan is Creation, Collaboration and Challenge. This slogan emphasizes our objective to expand our business as the leading company of third sector insurance market. The current business environment surrounding Aflac Japan is more diverse and complex. Changes are coming more rapidly, and businesses can no longer grow by simply maintaining the status quo. In this dynamic and competitive environment, we are managing our business with that in mind. Even under such times, however, our basic business principle remains unchanged; we will keep on working together with business partners such as our sales associates to meet the challenge of creating products and services that add value to the lives of people in Japan. Over 40 years, we believe Aflac has gained the trust of our customers and society at large, and our strong reputation and trusted brand continues to be important to our future growth. As you may recall, in 2013, we refocused our efforts on the sales of our two pillar products, cancer and medical, which are part of the third sector. These products are more profitable when compared to ordinary life and annuity products. This is particularly true in the current environment of extremely low interest rates because third sector products are much less interest sensitive than first sector products. As planned, first sector sales declined significantly in 2014, and Aflac Japan s total new annualized premium sales decreased by 23.3% last year. Keep in mind, first sector products have significantly higher premiums than third sector products. Additionally, the majority of premium from our largest-selling first sector product, WAYS, was generated from consumers who used the discounted advanced premium, or DAP, payment method. Under this payment method, all premiums are paid up front when the product is initially purchased. As a result, the reduction of first sector sales and the DAP payment method have significantly reduced cash flows to investments. 42

44 90 Thousands Third Sector New Annualized Premium Sales (In Billions) Medical Cancer As Paul mentioned in his speech, competition in the medical market has intensified with competitors continually developing products designed to differentiate their offerings. This requires us to stay in tune with the changing needs of the market and enhance our medical products more frequently in order to maintain our competitive edge and number one position. We are continually looking for new ways to improve our products and introduce them to the market in a timely manner. Medical Insurance Product Enhancement % Inc. (4.7) (11.5) (4.6) Following a 4% increase in third sector sales in 2013, our 2014 sales target was to increase sales of cancer and medical products in the range of 2% to 7%. We were pleased that we achieved a 6.1% increase, which was at the high end of our annual sales target. I would like to draw your attention to the sales results of our newly revised cancer product from the fourth quarter of Following the late September launch of New Cancer DAYS, cancer insurance sales through all distribution outlets were up an outstanding 176% in the fourth quarter. Cancer insurance sales were up 36.6% for the full year This success further solidified our position as the leading provider of cancer insurance. The significant increase in cancer sales also played a major role in Aflac Japan achieving sales results at the upper end of our annual target. Product Strategy Develop competitive products centering on the third sector Cancer Medical Product revisions every few years More frequent product revisions and enhancements For 40 years, Aflac Japan has been, and will continue, to develop innovative products in response to ever-changing customer needs and medical advancements. Our focus remains on the third sector. In the cancer space, Aflac has a dominant number one position, which results in product revisions taking place every two to three years. August 2013 Strengthened outpatient benefit Basic Coverage Hospitalization benefit + Surgery benefit June 2015 Three new riders» Lump-sum benefits» Premium waiver» Enhanced hospitalization Implement supplemental services for policyholders Let me now provide you with an example of how we are responding to the changing needs of consumers and distributors through the June 2015 introduction of our enhanced medical product. Traditionally, medical products were characterized as insurance to cover hospitalization and surgery. We, on the other hand, introduced a new medical product in August 2013 with additional benefits that reflect changes to the medical environment, including shortened hospital stays and increases in use of outpatient treatments. Our core medical insurance product remains unchanged. However, today there is demand from customers and sales agents for protection that addresses critical diseases like cancer, heart attack and stroke, which are the leading causes of death in Japan. In response, we will enhance our medical product with three new riders. The first rider pays a lump-sum benefit for multiple occurrences upon diagnosis of these critical diseases. The second rider provides premium payment waivers upon diagnosis of any of these critical diseases. The third rider includes unlimited hospitalization coverage related to the number of days stayed upon diagnosis of cancer, heart attack and stroke and also expands hospitalization coverage for all other diseases. In addition, we will provide supplemental services such as specialist referrals and second-opinion services to help policyholders select between treatment methods for serious diseases. By providing the most comprehensive medical product in the industry, I am confident that Aflac will remain the number one choice for medical coverage in Japan. 43

45 Having covered third sector sales, I will now provide some information about first sector products. As Paul mentioned, we are actively managing our first sector business. However, it is important to note we allow a limited portion of these products to be sold as an accommodation for certain distribution channels, particularly our exclusive agencies. This helps our distribution channels provide comprehensive life and health protection to our consumers. Distribution Strategy 1. Expansion of post offices selling Aflac cancer products 2. Sales of cancer products at Kampo 3. Exclusive product for Japan Post Japan Post The current number of post offices selling Aflac cancer products is approx. 10,000 Increase number of post offices carrying Aflac cancer insurance products to approx. 20,000 locations across Japan At Kampo locations, sales representatives began selling cancer products mainly to corporations in July 2014 Created exclusive product for JP Group introduced in October 2014 Traditional Channel Japan Post Large Non-exclusive Agencies Banks Sustain growth of the new cancer insurance product Strong promotion of the enhanced medical insurance product Japan Post intends to increase the number of post offices selling Aflac cancer products to approximately 20,000 by March 31, 2016 Introduce enhanced medical product Allocate sales promotion employees to large non-exclusive agencies Promote third sector products Now, I d like to review the progress of Aflac Japan s key strategic themes related to Japan Post. The number of post offices carrying Aflac cancer products increased by approximately 7,000 in October 2014, bringing the current total to about 10,000 postal outlets. Going forward, we will continue to enhance preparation in anticipation for the sales of our cancer products at 20,000 post offices across Japan. Regarding the second strategic theme, Kampo started selling our cancer product in July 2014 and currently has 76 branches with representatives selling our cancer products, primarily to the corporate market. In addition to our innovative products, having a wide array of sales channels also gives us an edge among competitors. At Aflac Japan, we ve enhanced and expanded our distribution network to give us more opportunities to be where customers want to purchase insurance products. This approach has produced great results. The traditional agency channel has been, and remains, key to our success and accounted for a considerable portion of our sales in This was especially evident during the fourth quarter of 2014 when sales by our traditional agency channel grew significantly as a result of the introduction of the new cancer product. As a result of careful preparation and a great working relationship, we continue to make progress with our sales through Japan Post. You ll recall we also created an exclusive cancer product for Japan Post. Since October 2014, sales results have been very good with both the Japan Post exclusive cancer product and the regular cancer product. Our strategic alliance with Japan Post Group is a mutually beneficial initiative and further enhancement of the strategic alliance is the initiative s key focus. Promotion of Medical Products Promotion Strategy "Hajimete Duck" Used for Promotion of Both Cancer and Medical Promotion of Cancer Products I ll provide some detail about Japan Post in the next slide, but now I ll cover sales through large-scale nonexclusive agencies and banks. Let me start first with the large-scale non-exclusive agencies. We are pleased with the progress we ve made through this channel in selling our third sector products. Additionally, we believe sales of Aflac products through large-scale non-exclusive agencies will increase with the enhancement of our medical product in June. As a result of our renewed focus on third sector products which started in April 2013, third sector sales through the bank channel have shown steady growth. Going forward, we will further strengthen promotional efforts for third sector products sold through banks. Although first sector products have historically sold well through banks, it is important to note that sales of third sector products have increased for three consecutive years. Through the years, our brand has been enhanced through innovative advertising campaigns. Since introducing the Aflac Duck in Japan in 2003, various unique characters associated with the Aflac Duck have been introduced, and consumer response to these characters, including the Aflac Duck, has been tremendous. Last year, we introduced a new character, the Hajimete Duck. The meaning of Hajimete is pioneer, 44

46 and the intent behind the name is to remind consumers that we are the pioneer of cancer insurance in Japan. By taking a two-pronged approach to marketing, we simultaneously launched an advertisement campaign that features the Hajimete Duck and a separate productoriented advertisement campaign which focuses on product features, the consumer s intent to consider purchasing our cancer policy increased sharply. In response to the positive results, we are going to use the Hajimete Duck for medical products in addition to cancer products. Hajimete Duck will continue to represent Aflac as the pioneer of Japan s cancer insurance. It will also draw attention to our number one status in the medical insurance market. The Hajimete Duck promotes the fact that we have been the leading company in terms of the number of medical policies sold for 12 straight years. In addition, for product oriented advertisement campaigns that focus on the specifics of a product, the Aflac Duck remains a feature in cancer advertisements and the Black Swan remains the arch nemesis of the Aflac duck in medical product advertisements. Aflac Japan Commercial (In Billions) Enhancement of Payment Structure for Claims/Benefits Actual Benefit Payment Progression Medical/Rider MAX Cancer Source: Aflac internal data No. of Policies with Claims Paid Policies in Thousands Incidents 1,200 1,400 1, The graph on the left shows the amount and number of policies related to the payment for cancer and medical products from 2008 through In 2014, we made more than one million claims payments, with 320 billion paid in claims for cancer and 119 billion paid in claims for medical. By delivering on our promise to policyholders, we are able to maintain a strong company brand and win over the trust of our customers through the millions of claims payments we ve made over the past 40 years. 1,200 1, Number of Underpayments (Fiscal Year: April - March) As you may know, Japan s Financial Services Agency, or FSA, instructed all life insurance companies to thoroughly re-examine the status of benefit and claim payments in February Since then, strengthening the claims payment framework has been an ongoing focus for Aflac. As a result, we have drastically reduced the number of underpayments. In fiscal 2013, our occurrence rate dropped to 0.005%, which is the lowest when compared against the four major domestic insurers. Making accurate and prompt payments is a fundamental and important part of our business. We believe we have been able to strengthen the trust relationship with our customers through long-term initiatives that have led to claims being paid promptly and accurately. Additionally, our newest advertisement which uses the Hajimete Duck also features Aflac s founders, the three Amos brothers. Customer Service Strategy Customer Service Strategy Enhance payment structure for claims/benefits Strengthen ties with customers Enhance payment structure for claims/benefits Strengthen ties with customers Building and gaining trust is essential to forging strong relationships with our customers, thus increasing our opportunities to achieve sustainable mid- to long-term sales growth. We will strive to gain unwavering trust from our customers by strengthening relationships with them through continued efforts to enhance the quality of our customer service. In order to maintain the trust our customers have in us, it is very important to ensure accurate and efficient payment of benefits and claims. 45 In addition, in order to maintain the trust from our customers, it is necessary for us to enable our customers to complete all procedures in a timely manner. With Japan s aging society expected to accelerate, special and cordial measures are needed for elderly people, as life becomes more challenging in later years of life. At Aflac Japan, strengthening relationships with our customers, including senior customers, is one of the top prioritized managerial issues. We will look to establish a business structure that allows us to periodically and continuously stay in touch with customers while also making it possible to go through all the necessary procedures in a timely manner.

47 It is especially important for Aflac Japan to strengthen our customer base, which consists of 23 million policies in force. As we increase efforts to strengthen relationships with our customers, sales of other products will be actively promoted. 1st Quarter 2015 Sales Results (New Annualized Premium Sales) 2015 First Nine Months Outlook We We expect expect third third sector sector sales sales to to grow by 15% on average over the first three quarters of % on average over the first three quarters of 2015 Product Distribution Promotion Change Third sector products 21.3 % First sector products (29.8) Total sales (2.2)% Let me conclude my presentation by covering our sales expectations for the year. Third sector sales for the first quarter of 2015 increased by 21.3% compared to the year before. This is a result of continued third sector product promotional efforts that center on the new cancer product. As anticipated, the sale of first sector products in the quarter decreased by 29.8%. This is due to limits we ve placed on the sale of savings-type products, particularly given the low-interest-rate environment. Overall sales were down 2.2% for the quarter. I m now going to cover the outlook for third sector sales for the first nine months of We expect third sector sales to grow by 15% on average. However, we believe sales in the fourth quarter could be down significantly compared to the final quarter of 2014 due to the outstanding results. As always, we will be working to find ways to minimize that year-by-year decline. At the end of the second quarter, when we have more insight, we will give additional guidance for our expectation of full year sales. For 40 years since its foundation in Japan, we have continually created new values as the leading company of the third sector market, and won over the trust of countless customers. From here on as well, we will aim to become a company that can live up to the expectations from society and consumers and respond to customer needs by leveraging our leadership position. 46

48 New DAYS Cancer (No CSV) Benefits: Sample Premium (Monthly Group Rate): First occurrence 1,000,000 $ 10, year-old male 2,840 $ Hospitalization/day 10, year-old male 4, Surgical 200,000 2, year-old male 6, Outpatient/day 10, Radiation therapy 200,000 2,000 Anticancer drug treatment per month 50,000 or 100, or 1,000 EVER* (Stand-alone whole life medical) Benefits: Sample Premium (Monthly Group Rate): Sickness or accident hospitalization/day 10,000* $ year-old male 3,570 $ Surgical 50,000 to 400, to 4, year-old male 4, Radiation therapy 100,000 1, year-old male 7, Outpatient benefit 6, *Covers overnight hospital stay. Maximum days per hospital stay is 60. Maximum lifetime days is 1,095. *When hospitalization day is 5 days or shorter, 50,000 will be paid uniformly. More Gentle EVER Benefits*: Sample Premium (Monthly Group Rate): Sickness or accident hospitalization/day 10,000** $ year-old male 7,214 $ Surgical 50,000 to 100, to 1, year-old male 8, Radiation therapy 100,000 1, year-old male 10, Sickness or accident outpatient/day 6, *Cut in half for occurrences within one year after issue date. **Covers overnight hospital stay. Maximum days per hospital stay is 60. Maximum lifetime days is 1,095. GIFT Benefits: Sample Premium (Monthly Group Rate): Payment through age ,000 $ 2, year-old male 6,440 $ year-old male 6, year-old male 7, Upon death of the policyholder, 200,000 of monthly annuity shall be paid to the beneficiary until the end of payment period. WAYS Benefits: Sample Premium (Monthly Group Rate): Payment through age 60 5,000,000 $ 50, year-old male 9,050 $ Whole-life policy that can be converted to: 40-year-old male 14, Fixed annuity 50-year-old male 34, Medical coverage Nursing care Ordinary Life (Basic Plan) Whole Life Sample Premium (Monthly Group Rate): Payment through age 60 5,000,000 $ 50, year-old male 11,435 $ year-old male 17, year-old male 35, Child Endowment Benefits: Sample Premium** (Monthly Direct Rate): Lump-sum education 500,000 $ 5, year-old male 13,190 $ Education annuities* 2,500,000 25, year-old male 13, year-old male 13, *Paid over four years **Payment through age 18 of the child Note: Premiums in dollars reflect exchange rate of 100=$1. Aflac Japan s Product Line (as of 4/30/15) 47

49 Construction # Taisei Corporation # Kajima Corporation # Takenaka Corp. * Shimizu Corp. # Obayashi Corp. # Tokyu Construction Co. Ltd. s s Foods # Sapporo Holdings, Ltd. # Kirin Holdings Co., Ltd. # Coca-Cola Japan Company, Ltd. # Ajinomoto Co., Inc. # Nissin Foods Holdings Co., Ltd. # Megmilk Snow Brand Co., Ltd. * Asahi Group Holdings, Ltd. * Nichirei Corp. # Yamazaki Baking Co., Ltd. # Fujiya Co., Ltd. * Kikkoman Corp. Textiles # Toyobo Co., Ltd. # Renown Inc. # The Japan Wool Textile Co., Ltd. # Wacoal Holdings Corp. # Teijin Ltd. # Kuraray Co., Ltd. Paper & Pulp # Oji Holdings Corporation # Nippon Paper Industries Co., Ltd. # Mitsubishi Paper Mills Ltd. Chemicals # Mitsui Chemicals Inc. # Showa Denko K.K. # Sumitomo Chemical Co., Ltd. # Ube Industries, Ltd. * Kao Corporation # Daiichi Sankyo Co., Ltd. # Takeda Pharmaceutical Co., Ltd. # Shionogi & Co., Ltd. * Astellas Pharma Inc. # Shiseido Co., Ltd. # Otsuka Pharmaceutical Co., Ltd. # Mitsubishi Chemical Holdings Corp. # Daicel Corporation # Sekisui Chemical Co., Ltd. # Asahi Kasei Corp. Oil & Coal Products # Cosmo Oil Co., Ltd. # JX Holdings, Inc. # Showa Shell Sekiyu K.K. Rubber Goods # Bridgestone Corp. Glass & Chemicals # Asahi Glass Co., Ltd. # Nippon Sheet Glass Co., Ltd. Corporations Supporting Aflac Japan s s (as of 4/30/15) Iron & Steel # Nippon Steel & Sumitomo Metal Corp. # JFE Holdings, Inc. # Kobe Steel, Ltd. Non-ferrous Metals # Mitsubishi Materials Corporation Machinery # Komatsu Ltd. # Sumitomo Heavy Industries, Ltd. # Kubota Corp. # Tsubakimoto Chain Co. # Ebara Corp. # Brother Industries, Ltd. Electric Appliances # Hitachi, Ltd. # Toshiba Corporation # Mitsubishi Electric Corporation # Fuji Electric Co., Ltd. # Fujitsu Ltd. # Panasonic Corporation # Sharp Corporation # Sony Corporation # Pioneer Corporation # JVC KENWOOD Corporation # NEC Corporation * Ikegami Tsushinki Co., Ltd. # IBM Japan Ltd. * TDK Corp. Transport Equipment # Denso Corporation # Mitsui Engineering & Shipbuilding Co., Ltd. # Hitachi Zosen Corporation # Mitsubishi Heavy Industries, Ltd. # Kawasaki Heavy Industries, Ltd. # IHI Corporation # Nissan Motor Co., Ltd. # Toyota Motor Corp. # Mazda Motor Corp. # Yamaha Motor Co., Ltd. * Honda Motor Co., Ltd. # Isuzu Motors Ltd. Precision Machinery # Canon, Inc. # Konica Minolta, Inc. # Nikon Corp. # Citizen Holdings Co., Ltd. * Seiko Holdings Corp. # Ricoh Co. Ltd. Miscellaneous Mfg. # Yamaha Corp. # Dai Nippon Printing Co., Ltd. # Toppan Printing Co., Ltd. * ASICS Corp. # YKK Corp. Commerce # Mitsui & Co., Ltd. # Itochu Corporation s s s ss s s s s # Marubeni Corporation # Toyota Tsusho Corporation # Sumitomo Corporation # Mitsubishi Corporation # Isetan Mitsukoshi Holdings Ltd. # J.Front Retailing Co., Ltd. # The Daiei, Inc. # AEON Co., Ltd. # Takashimaya Co., Ltd. # Tokyu Department Store Co., Ltd. Banks * Shinsei Bank, Ltd. # Mizuho Financial Group, Inc. # Mitsubishi UFJ Financial Group, Inc. # Sumitomo Mitsui Financial Group, Inc. # Resona Holdings, Inc. Securities, Non-life Insurance # Daiwa Securities Group Inc. # SMBC Nikko Securities Inc. # Nomura Holdings, Inc. # MS&AD Insurance Group Holdings, Inc. # Sompo Japan Nipponkoa Insurance Inc. Transportation # Nippon Yusen K.K. # Japan Airlines Co., Ltd. # Ana Holdings Inc. # Tobu Railway Co., Ltd. # Tokyu Corp. # East Japan Railway Co. # Odakyu Electric Railway Co., Ltd. # Seibu Holdings, Inc. Communications # Nikkei Inc. # The Asahi Shimbun Co. # Dentsu Incorporated # Hakuhodo DY Holdings Incorporated # The Yomiuri Shimbun Holdings # The Mainichi Newspapers # Nippon Telegraph and Telephone Corp. Electricity & Gas # Tokyo Electric Power Company, Inc. # The Kansai Electric Power Co., Inc. # Chubu Electric Power Co., Inc. Life Insurance # The Dai-ichi Life Insurance Co., Ltd. # Nippon Life Insurance Co. * Asahi Mutual Life Insurance Co. # Corporate agent and payroll group * Payroll group Not listed on Tokyo Stock Exchange s Legend 48

50 Section III Aflac U.S. Overview of Aflac U.S. Teresa L. White President, Aflac U.S. I will provide an update of our strategy and business operations in the voluntary worksite market in the U.S. Let me begin with the overall market backdrop and the outlook for our products. U.S. Voluntary Market (In Billions) U.S. Macro Environment Economy» Small business optimism» Employment levels Health Care Environment» Stabilization» Standardization of major medical coverage Although the U.S. economic environment has been challenging in recent years, especially in the small business market, macroeconomic data suggests a continuing recovery that is expected to carry through General optimism has been growing among small business, but has leveled off since reaching a high point in December The unemployment rate continues to decline, and the consumer price index has shown slight improvement, with continued growth projected for Overall, these conditions point to a better general business environment than we have operated in for the last several years. We are also beginning to see some stabilization regarding health care reform. While some employers hesitated to make health care decisions in the short run, we believe the new health care environment has resulted in more standardization of coverage that more clearly defines the need for the products we offer. As the gaps in coverage become more evident, we believe health care reform will amplify the need for voluntary products. As you can see here, the market is expected to grow at a rate of about 5% annually for the next four years, with sales through the broker channel expected to grow at a faster pace. Opportunities in the U.S. Payroll Market Size of Firm Number of Firms (000) Number of Employees (Millions) % of Total Employees <100 Workers 5, % 100-1,000 Workers >1,000 Workers Total 5, % Source: U.S. Census Bureau Tabulations by Enterprise Size,

51 We continue to believe the opportunities in the United States market are vast. Based on the most recent U.S. census data, there are approximately 5.6 million firms with fewer than 100 employees in the United States, employing more than 39 million people. The mid-sized market is made up of more than 90,000 businesses employing approximately 22 million workers. The large-case market includes a relatively small number of firms; however, that market accounts for more than 46% of employees in total, offering us the potential access to more than 53 million workers. With sales expected to grow at a faster pace, we believe we can be very successful in the mid- to large-case market in the future. Channel Career Agent Broker Aflac U.S. Distribution Channels Career Agent Employee Market Segment Product <100 Individual 100-1,000 >1,000 Individual / Group (standard) Group (custom) Enrollment Conditions Face to face Self service Agent assisted Self service Call center Agent assisted Self service Call center Primary Platform SNG everwell SNG 3rd party 3rd party Focus Recruiting Account management Compensation Go-to-market strategy Client need assessment Education, enrollment tools and products for voluntary market The key to our success is to meet the unique needs of each of these markets. With this in mind, we reevaluated our sales strategy last year. As a result, we realigned our distribution and sales infrastructure to better take advantage of opportunities in each of these markets. As I mentioned earlier, the small case market continues to provide great opportunity for Aflac. Approximately 90% of all Aflac accounts are currently in this segment. As part of our new strategy, we provided additional incentives for our career sales force to focus primarily on the small case market. This presents a great opportunity for our independent career agents, who typically drive sales of our individually-issued products through employers in the small-case market. These career agents have been, and continue to be, a critical part of our success in marketing to smaller employer groups as they engage employees on a face-to-face basis to enroll them as policyholders. In this segment, employers are starting to send their employees to the exchange or offering major medical coverage. As employees in this segment obtain major medical coverage, they are looking to fill the gaps associated with high deductible health plans. This creates a great opportunity for our career agents to provide options to cover those gaps. Having the opportunity to explain the need for our products greatly improves the participation rate. However, as voluntary benefits continue to become a more essential offering with employers shifting risk to employees, and the implementation of mandated health care, we also offer a more holistic solution for enrollment through our proprietary exchange, everwell TM. This new system, which was rolled out throughout 2014, allows our career agents to enroll customers in voluntary insurance products along with other core benefits like network vision and dental as well as major medical. Additionally, this system links to subsidy eligible plans through connectivity to the public exchange. Our goal is to provide our career sales agents with easy-to-use technology that helps them to offer clients a full range of benefit plans and options that fit their needs. These tools also provide the opportunity for increased account penetration and increased policies per policyholder. While many agents still use our SNG enrollment tool, we expect to incent our sales force to convert to using everwell for more enrollments, as it enables the agent to provide more of a comprehensive solution to health care needs. Although our experience with everwell is still somewhat limited, our results so far have demonstrated increased account penetration and increased policies per policyholder. Career Channel Focus Recruiting Improved account management Field force compensation» Increased renewal compensation for sales to employers with less than 100 workers» Aligned compensation for new Market Directors with Aflac U.S. goals We view our career sales force as the core of our distribution and we will continue to cultivate this channel this year with an intense focus on three elements that help drive sales in the small-case market. Recruiting is one of the most important areas of focus for our career sales force. As you may know, the recruited agents metric includes both career agent recruits and broker recruits. As I mentioned in our first quarter conference call, we did expect some disruption in this number, primarily due to the changes that we made to the distribution system. However, we have initiated activities to increase recruiting levels and have seen positive results in some markets. We are analyzing results in markets where we don t see success, and developing customized tactics and campaigns to increase recruiting in those areas. Make no mistake we will continue to focus on our recruiting, and must show marked improvement longer term, as this is an important driver of our sales growth. Many of the needs of the small-case market are best met with an agent who has a one-on-one relationship with the employer. The second area of focus for the new sales strategy is to ensure consistency in how we approach account management in our field operations. Our Market Directors are driving best practices and overall accountability to better serve our valued clients. 50

52 Through this initiative, our Market Directors have increased annual premium in our existing traditional accounts by 4.5%. The small-case market, which represents about 90% of our accounts, has always been Aflac s bread and butter. As such, ensuring strong persistency at these smaller accounts is a priority. And finally, we know that compensation is the most effective means of changing the activities of a sales force. We have modified our career distribution model to better align compensation with sales growth. Last year, we introduced a small market renewal incentive for our career agents so that their compensation is more closely tied to their performance in the less than 100 market. We also made key changes to our field leadership compensation. This change was prompted by our conclusion that the old compensation model was not properly aligned with sales growth and success of Aflac U.S. Pay for Performance (In Millions, Excluding Renewals) Aflac U.S. Distribution Channels Broker Channel Career Agent Broker Employee Market Segment Product <100 Individual 100-1,000 >1,000 Individual / Group (standard) Group (custom) Enrollment Conditions Face to face Self service Agent assisted Self service Call center Agent assisted Self service Call center Primary Platform SNG everwell SNG 3rd party 3rd party Focus Recruiting Account management Compensation Go-to-market strategy Client need assessment Education, enrollment tools and products for voluntary market While our career agents focus on the smaller-case market, brokers provide access primarily to the markets with greater than 100 employees. The product needs of these market segments vary, ranging from products that are individually underwritten to group products that are fully customized. With respect to enrolling employees, businesses in these segments utilize agent-assisted enrollments as well as alternative enrollment tools such as third-party call centers or self-service technologies. $2.0 $1.5 SSC Total Earnings (2012-3Q 2014) $0.6 $0.4 MKD Total Projected Quarterly Earnings (4Q Q 2015) As you may recall from last year s financial analysts briefing, we discussed two separate broker channels: one which we referred to as core for the mid-sized market, and the other, which was primarily focused on the large case market. $1.0 $0.5 $0.0 ($4) $0 $4 $8 YOY Absolute Growth 2012 Total Earnings 2013 Total Earnings Q1-Q Total Earnings ρ=0.11 $0.0 ($2) $0 $2 $4 $6 YOY Absolute Growth We believe some results have indicated our compensation strategy has improved. We began tracking the correlation of compensation to sales growth in The chart on the left has over two-and-a-half years of data, while the chart on the right shows the two quarters since our sales changes were implemented. It s noteworthy that the correlation between year-overyear sales growth and compensation has increased from 0.11 for eleven quarters under the old model to 0.82 for the two quarters under the new model. The strong correlation reflects the change to the salaried Market Director position. We are seeing momentum as our sales force is adapting to our new sales distribution model. Obviously some organizations are further along than others, but the bottom line is that we are better off today than we were prior to making these changes, as more of our leading indicators are showing better results. $0.2 ρ=0.82 Q Total Earnings Q Total Earnings Our research showed that brokers wanted an easyto-understand model, a single point of contact, and a great brand. Therefore, it made more sense for Aflac to consolidate these two broker channels into one. This new model positions Aflac to deliver a consistent customer experience and enhanced operations. Our new broker sales model also addresses brokers needs by providing them with specific points of contact assigned to particular brokers with whom they do business. These assignments are extremely important, in that the broker sales professional s role is to understand their assigned broker s go-to-market strategy. Additionally, these professionals gain insight into the client base and plans offered in order to provide recommendations as to how Aflac products might fit into their overall portfolio. We ve made headway in recruiting broker sales professionals, many of whom have come from broker or group backgrounds. These sales professionals are wholesale in that they are compensated based on the sales that they drive through their broker partners. Additionally, we ve created educational materials, white papers and other tools to assist brokers in understanding the voluntary market and how our products can complement the major medical plans they offer to their clients. Since our broker channel consolidation in the first quarter of 2015, initial responses from the broker community have been positive. 51

53 For the remainder of 2015, we will spend time automating our processes and pressure-testing our new career and broker models. This has not been an easy task, and I m extremely proud of the leadership teams on both the career and broker sides as they collaborate to reduce channel conflict and ensure that the needs of accounts and customers are the priority. Product Innovation Driven by customer needs» Affordability for medical out-of-pocket expenses is an issue for Americans 52% of workers say they can t afford $1,000 in out-of-pocket medical expenses Guaranteed-issue products available for group and individual products The second of our strategies is a focus on product innovation. Innovation in the insurance industry comes from understanding and adapting to what customers want and need. It s our objective to provide needed products at the right time through the right distribution channels, and at appropriate price points. Understanding the customer s needs has driven, and will continue to drive, our focus on product innovation. For instance: we understand that the average major medical deductible for a bronze level plan is more than $5,000, and most Americans aren t prepared financially for this expense. Recent independent survey data shows that 52% of workers say they can t afford $1,000 in out-ofpocket medical expenses. Additionally, last year s Aflac WorkForces Report revealed that more than half of workers would have to use extraordinary means, such as borrowing from their 401(k) or using a credit card, just to cover costs associated with an unexpected serious illness or accident. Because we understand the financial strains consumers face, we introduced a critical care rider in This unique rider provides benefits for specified situations where out-of-pocket expenses are expected to exceed deductibles. This rider can be attached to any of our three most popular stand-alone products, which are cancer insurance, accident insurance, and short-term disability insurance. We also understand the needs of employers to have benefit enrollments conducted as efficiently as possible. For this reason, we have developed a full suite of guaranteed-issue policies for both individual and group products. This means valuable coverage is available with very little time spent answering medical history questions, which speeds up enrollment. Currently, Aflac offers the lowest individual guaranteed-issue requirements in the market. With the introduction of our first guaranteedissue payroll life product in early 2014, Aflac cemented its leadership position in the individual market by completing our portfolio of guaranteed-issue product offerings. And finally, we understand that associates and brokers need products that will fit different types of total benefits solutions. For this reason, HSA-compatible options are available on all products. In addition, we believe the breadth and depth of our group product portfolio is industry-leading, which gives us maximum flexibility for all size employer groups and the ability to customize the best plan to meet the needs of their employees. As the leading provider in the United States in our core product lines, we will continue to focus our product innovation on understanding and meeting previously unmet needs. We continue to believe product innovation has placed Aflac in the forefront of market leadership and that we will remain there. Brand Differentiation Industry-leading initiative 70% of policyholders have policies eligible for One Day Pay 25% of eligible claims submitted in 1st QT used SmartClaim process One of the hallmarks of Aflac s customer service is the speed and fairness we demonstrate when paying claims. We know that it s important that our customers have immediate access to the claims payments due to them. We continue to look for ways to differentiate Aflac in the market. For years, our claims have been paid in an average of four days. In 2015, we took it one step further by focusing on reducing our claims payment turnaround to process, approve and pay our claims in just one day. The One Day Pay SM initiative launched with the nationwide announcement during Dan Amos interview on CNBC in January and the following day at the Grammys. One Day Pay is an industry-first initiative that allows us to process, approve and pay eligible claims in just one day, getting cash in the hands of policyholders quickly. We estimate that 70% of our policyholders have policies eligible for One Day Pay. So far we ve received great feedback from claimants and we re encouraged by the initial usage of this industryleading claims practice. In the first quarter of this year, 25% of eligible claims were submitted through our SmartClaim process, which facilitates one day payments. Our goal for 2015 is to process nearly two million claims via One Day Pay. I hope you ve had an opportunity to see some of our recent commercials that feature One Day Pay. Building a brand is generally accomplished by entertaining people while getting a message across. 52

54 Aflac U.S. Commercial the expenses associated with running our day-to-day operations. This will involve new work processes and solutions, new technologies and the elimination of nonessential processes. Minimizing our routine expenses will also free up resources for key initiatives. In order to meet our overall corporate objectives, we must balance our key tenet of customer experience with our four tenets of operational management, which include: expense control, operational efficiency, risk management and people development. In our most recent commercial, which aired on May 19th during the season finale of Dancing with the Stars, the Aflac Duck shows that while he isn t good at certain things, he is good at paying claims in one day. One Day Pay Our customers demand a seamless customer experience regardless of the strategic decisions we make. With the majority of expenses allocated to personnel, balancing our customers needs and wants with our expense control objectives can be particularly challenging. We continually employ alternative solutions such as utilization of a non-traditional workforce, resourcesharing, reallocation of staff or elimination of non-essential processes. It is this balance that allows us to continue to maintain strategic operational agility. We have also effectively utilized Strategic Sourcing and Procurement within Aflac to ensure that we are getting the best value with vendor contracts. During the last two years, operational areas reduced their expenses by $17 million. We have been able to redirect these savings to other areas, primarily to support our distribution model and our cybersecurity initiative. These low cost efforts also aided in offsetting some of the expenses related to our new sales strategy. In the first quarter of this year, the added expense from the changes we made to our field force structure was approximately $19.5 million net of capitalization, which was a bit below what we anticipated. And we expect it to run around $20 million to $22 million as a run rate for the four quarters of this year. Additionally, to illustrate the compassion and dedication our employees have to paying claims fast, we ve asked some employees from our Claims Department to share, in their own words, what it means to help our policyholders and we ve posted these videos online. Strengthening the Low-Cost Model Operational Areas» Non-traditional workforce, resource-sharing, and reallocation of staff» Reduced non-essential expenses and redirect to broker channel and cybersecurity Strategic Sourcing and Procurement» Vendor contracts Finally, we continue to strengthen our low-cost model. We expect the U.S. market to become increasingly competitive. That means it is essential that we minimize Aflac U.S. Performance 2013 Results 2014 Results 3/31/15 Results New sales (4.3)%.7% (.5)% Total revenues Benefit ratio Expense ratio Pretax profit margin Premium persistency I believe our efforts to drive sales and control operating expenses will pay off for Aflac. Sales results for the first quarter of the year were essentially flat; however that follows a fourth quarter 2014 increase of 14%. It is important to note that as we build out our sales operation, specifically the broker channel, more of our sales will skew toward the fourth quarter: this has somewhat magnified the seasonal pattern of our sales. 53

55 We also expect to see higher operating expense ratios in the next two quarters directly attributable to changes we made in our sales force model. Even with these higher expenses, we expect to achieve relatively stable profit margins for the year. We believe maintaining a disciplined approach to total company expenses and focusing expenditures on key areas will enhance revenue growth in the future. Our Vision To be the number one multi-channel distributor of supplemental products to employers, while enjoying industry leading growth and profitability Our vision is simple: to be the number one multi-channel distributor of supplemental products to employers, while enjoying industry leading growth and profitability. I believe that s a realistic vision, and I remain very excited about the opportunities to grow Aflac U.S. 54

56 Aflac U.S. Payroll Product Line (as of 4/30/15) Benefit Amounts Monthly Premium Rates (Payroll) Individual/Family Accident Indemnity* $ $58.24 Accident emergency treatment $75 - $120/accident Initial accident hospitalization $500 - $2,000/period of hospital confinement/year Accidental death $5,000 - $150,000 ($1,500 - $25,000 for dependent children) Accident specific-sum injuries $20 - $12,500 Accident hospital confinement $150 - $250/day Rehabilitation unit $75 - $150/day (up to 30 days/period of hospital confinement / up to a calendar year maximum of 60 days) Intensive care unit confinement $300 - $400/day (up to 15 days per covered accident) Wellness $40 - $60/year Major diagnostic exams $100 - $200/year Accident follow-up treatment $25 - $35/day (maximum of 6 treatments per accident) Physical therapy $25 - $35/treatment/day (up to 10 treatments per accident) Appliances $50 - $125/accident Prosthesis $250 - $750/accident Blood/plasma/platelets $100 - $200/accident Ambulance $120 - $200 ground / $800 - $1,500 air Transportation $200 - $600 round trip (50+ miles / up to 3 times per year per covered person) Family lodging $75 - $125/night (50+ miles / one motel/hotel room / up to 30 days per accident) Accidental-dismemberment $1,000 - $40,000 ($400 - $12,500 for dependent children) (depending upon loss) X-ray $20 - $25/accident Epidural pain management $100/accident (no more than twice per covered accident) Miscellaneous surgery with general anesthesia $190 - $300/per 24-hour period Other miscellaneous surgery with conscious sedation $80 - $120/per 24-hour period Lump Sum Critical Illness* $ $ Covers: heart attack, stroke, end-stage renal failure, coma, paralysis, major human organ transplant Major critical illness event $10,000 - $100,000 (payable once per covered person, per lifetime) Subsequent critical illness event $5,000 Coronary artery bypass graft surgery $3,000 (payable once per covered person, per lifetime) Sudden cardiac arrest $10,000 (payable once per covered person, per lifetime) HSA (Health Savings Account) option available Benefits are paid for a covered spouse and dependent children at 50% of the primary insured s benefit amount. All benefits reduce by 50% for losses incurred on or after a covered person s 75 th birthday. Cancer* $ $79.95 Wellness benefit $25 - $100/year Bone marrow donor screening $40 Initial diagnosis benefit $500 - $6,000 ($1,000 - $12,000 for dependent children) Hospital confinement $100 - $600/day ($125 - $750 for dependent children) Radiation $175 - $500/week Injected chemotherapy $300 - $900/week Non-hormonal oral chemotherapy $405 - $1,200/month Hormonal oral chemotherapy $405 - $1,200/month Topical chemotherapy $405 - $1,200/month National cancer institute (evaluation/consultation) $500 - $1,000 Immunotherapy $175 - $500/month ($875 - $2,500 lifetime max, per person) Medical imaging $75 - $200/two a year Experimental treatment $175 - $500/calendar week if charged; $75 - $125/calendar week if no charge Anti-nausea $50 - $150/month Stem cell transplantation benefit $3,500 - $10,000/covered person Nursing services $50 -$150/day Surgery and anesthesia $50 - $5,000 Outpatient hospital surgery $100 - $300 Skin cancer surgery $20 - $600 Surgical prosthesis $1,000 - $3,000 Prosthesis nonsurgical $90 - $250 Reconstructive surgery $110 - $3,000 Blood and plasma $85 - $250/day Additional surgical opinion $100 - $300/opinion/day Ambulance $250 ground, $2,000 air Transportation $ $0.50/mile Lodging $50 - $80/day Bone marrow transplant $3,500 - $10,000, donor $500 - $1,000 Extended-care facility $75 - $150/day Hospice $1,000 day one, $50/day thereafter Home health care $50 - $150/day Egg harvesting and storage $500 - $1,500/oocytes extracted; $175 - $500 storage Lump Sum Cancer $ $54.86 Internal cancer $10,000 - $100,000 (same for children) Carcinoma in situ $2,000 Cancer related death $5,000 Benefits above are payable once per person, per lifetime 55

57 Benefit Amounts Monthly Premium Rates (Payroll) Individual/Family Specified Health Event $ $ Covers: heart attack, stroke, coronary artery bypass graft surgery, coma, paralysis, major third-degree burns, end-stage renal failure, major human organ transplant, persistent vegetative state, sudden cardiac arrest First occurrence $7,500 ($10,000 children) (payable once per person, per lifetime) Subsequent specified health event $3,500 Coronary angioplasty $1,000 (Option 1 & Option 2) (payable once per person, per lifetime) Hospital confinement benefit $300/day Hospital intensive care unit benefit $800 per day 1-7 days (Option 2 & Option 3) $1300 per day 8-15 days (Option 2 & Option 3) Step-down intensive care unit benefit $500 per day 1-15 days (Option 2 & Option 3) Continuing care $125/day Ambulance $250 ground, $2,000 air Lodging $75/day Transportation $.50/mile up to $1,500 per occurrence Subsequent tier one specified heart surgery $1,000 (Option 3) Specified heart surgery tier one $4,000 (Option 3) (payable once per person, per lifetime) Heart valve surgery Surgical treatment of abdominal aortic aneurysm Specified heart surgery tier two $2,000 (Option 3) (payable once per person, per lifetime) Coronary angioplasty Transmyocardial revascularization (TMR) Atherectomy Coronary stent implantation Cardiac catheterization Automatic implantable cardioverter defibrillator (AICD) placement Pacemaker placement Aflac U.S. Payroll Product Line (con t) (as of 4/30/15) Hospital Indemnity* $ $ Hospital confinement $500 - $3,000 once/confinement per covered person Rehabilitation $50 - $ days/confinement 30 days/year Hospital emergency room $50 - $100 2/year/policy Hospital short-stay $50 - $100 2/year/policy Physician visit $25/visit (3 visits/year individual or 6 visits/year family) Medical diagnostic imaging $150/exam/person per year Ambulance $100 ground/$1,000 air Surgical $100 - $1,000 (based on surgical schedule) Invasive diagnostic exams $100/person/day Daily hospital confinement $50 - $100/day Hospital intensive care unit confinement $100/day Six levels available that determine the benefit amount. Five options available determine which benefits are included. Option H is compatible with Health Savings Accounts (HSAs). Sickness Indemnity $ $ Physician s visit (payable for accident, sickness, or wellness) $15 - $25/visit 3-4 visits/year (individual) or 6-8 visits/year (family) The following benefits are payable for sickness only: Hospital confinement $50 - $200/day Initial hospitalization $250 Diagnostic exams $150/year Rehabilitation $50/day 15 days/confinement 30 days/year Surgical schedule $100 - $2,000/year Ambulance $100 ground/$1,000 air Dental* Dental wellness (preventive) $25 - $75/year $ Individual (Essentials) Scheduled benefits $15 - $1,800 $ Two-parent family (Level 3) Annual maximum building benefit Up to $500 per covered person Vision $ $49.90 Vision correction materials $80 - $270 Refractive error correction $130 - $480 Eye exam $45 Permanent visual impairment Up to $20,000 Specific eye diseases/disorders $1,000 Eye surgery $50 - $1,500 Short-Term Disability* $ $91.65** Disability benefits for sickness and off-the-job injury $500 - $6,000 Elimination periods days. Benefit periods 3-24 months 56

58 Aflac U.S. Payroll Product Line (con t) (as of 4/30/15) Life* $ $58.00*** Whole-life face amounts $10,000 - $500, , 20-, and 30-year term face amounts $20,000 - $500,000 Accelerated death benefit Optional waiver of premium rider Optional accidental death benefit rider Spouse and dependent coverage available Simplified-issue, Guaranteed-issue (term only, proposed insured only), rates guaranteed *Also available on a group platform. Benefits of group and individual products may vary. **Range is for the minimum of five units of coverage and a maximum of 60 units. ***10-year term-based policy only. Rates based on: age 25 - $20,000 and $500,000 face amounts; male/non-tobacco 57

59 Aflac s Historical Highlights in the United States 1955 American Family Life Insurance Company of Columbus founded and incorporated 1956 Granted a license to sell insurance Began selling life, accident and health insurance door-to-door in Georgia and Alabama 1958 Pioneered introduction of cancer insurance 1964 Began using cluster selling to groups of employees at their places of work American Family Life Insurance Company of Columbus became American Family Life Assurance Company of Columbus 1970 Expanded from 11 to 42 states 1973 American Family Corporation formed for the purpose of holding all of the capital stock of American Family Life Assurance Company of Columbus 1974 American Family Corporation (AFL) listed on the New York Stock Exchange 1987 Aflac Incorporated (AFL) listed on the Tokyo Stock Exchange 1990 Added hospital indemnity to product line 1991 Changed name of the corporation to Aflac Incorporated reflecting the insurance company s usage of the acronym Aflac Launched its first national advertising campaign to increase Aflac s name recognition 1995 Focused its national philanthropic efforts on the treatment and cure of childhood cancer, pledging $3 million to the Aflac Cancer Center at Egleston Children s Hospital. Since that time, Aflac, the company, sales associates, and employees have contributed over $98 million to what is now known as the Aflac Cancer and Blood Disorders Center of Children s Healthcare of Atlanta 1996 Introduced SmartApp technology, an online enrollment system 1999 Introduced personal short-term disability, payroll life, group short-term disability and specific event critical illness products 2000 Launched the Aflac Duck campaign 2008 Became the first publicly owned Company in the United States to give shareholders a Say on Pay advisory vote on compensation 2009 Acquired Continental American Insurance Company (CAIC), now branded as Aflac Group Insurance, as a subsidiary of Aflac Incorporated 58

60 Historical Highlights in Japan 1974 Aflac received license to sell life insurance in Japan; became second non-japanese life insurance company to gain direct access to Japan s insurance market; pioneered sales of cancer insurance in Japan 1982 First competitor entered cancer insurance market 1984 Japanese government introduced 10% copayment for all covered medical expenses for salaried workers under age Japanese government introduced 3% consumption tax 1996 Non-life insurance companies allowed to create subsidiaries for selling life insurance products Life insurance companies allowed to create subsidiaries for selling non-life insurance products 1997 Japanese government raised copayment for all covered medical expenses for salaried workers under age 70 from 10% to 20% 2000 Aflac Japan entered into strategic marketing alliance with Dai-ichi Mutual Life Insurance Company to sell Aflac s cancer insurance and for Aflac to sell Dai-ichi life insurance 2001 Aflac Japan established first Aflac Parents House in Tokyo, where pediatric patients and their families can stay together at a home away from home while receiving treatment for cancer or other serious illness Japanese government deregulated Japan s insurance market; large Japanese domestic insurance companies allowed to sell third sector insurance products 2004 Aflac Japan opened second Parents House in Tokyo 2006 Aflac Japan introduced WAYS, a unique hybrid whole-life insurance product 2007 Japanese government liberalized bank channel sales; banks permitted to sell third sector insurance products to their customers 2008 Banks began selling Aflac s WAYS product Aflac Japan established partnership with Japan Post Co., Ltd. to sell Aflac cancer insurance; sales began through 300 postal outlets 2009 Aflac s cancer insurance products available through 1,000 postal outlets 2010 Aflac Japan opened third Parents House, located in Osaka 2013 Aflac Japan signed new alliance agreement with Japan Post Holdings to expand number of outlets selling cancer insurance eventually through 20,000 postal outlets Aflac Japan formed business partnership with Daido Life Insurance Company to sell Aflac s cancer insurance products Aflac s cancer insurance products available through 1,500 postal outlets 2014 Aflac s cancer insurance products available through 10,000 postal outlets 2015 Aflac s cancer insurance products available through 20,000 postal outlets 2002 Aflac Japan introduced stand-alone, whole-life medical product EVER 2003 Aflac introduced Aflac Duck in Japan Japanese government raised copayment for all covered medical expenses for salaried workers under age 70 from 20% to 30% 59

61 Section IV The Management Team Daniel P. Amos Chairman; Chief Executive Officer, Aflac; Aflac Incorporated Dan Amos, 63, graduated from the University of Georgia with a bachelor s degree in insurance and risk management. He first joined Aflac as a sales associate while in his teens. He served as state manager of Aflac s Alabama/West Florida Territory for 10 years. Under his leadership, his sales territory was the number one producing area in 1981 and He was elected president of Aflac in 1983 and chief operating officer of Aflac in He became chief executive officer in 1990 and was named chairman in Dan is a member of the board of trustees of the House of Mercy of Columbus. He is a past recipient of the Dr. Martin Luther King Jr. Unity Award and the Anti-Defamation League s Torch of Liberty Award, and has been named by CNN as CEO of the Week. He has appeared five times on Institutional Investor magazine s lists of America s Best CEOs for the insurance category. Under Dan s leadership, Aflac has been named to the Ethisphere Institute s annual list of World s Most Ethical Companies for nine consecutive years. Dan is a former member of the board of trustees of Children s Healthcare of Atlanta and former chairman of the boards of The Japan- America Society of Georgia and the University of Georgia Foundation. Kriss Cloninger III President, Aflac Incorporated Kriss Cloninger, 67, joined Aflac Incorporated in March 1992 as senior vice president and chief financial officer. He was promoted to executive vice president in 1993 and president in May 2001, retaining the title of CFO and maintaining primary responsibility for overseeing the financial management of all company operations. He was named Best CFO in the Insurance/Life category in America by Institutional Investor magazine three times. In June 2015, Kriss full-time role shifted to president of Aflac Incorporated, with a particular emphasis on capital and strategic planning, as well as helping the company grow the business while ensuring solid profitability. He is a member of the boards of directors of Aflac Incorporated, Precept Ministries, Total Systems Services, Inc., and Tupperware Brands Corporation. He holds bachelor s and master s degrees in business administration from the University of Texas at Austin, and is a Fellow of the Society of Actuaries. Paul S. Amos II President, Aflac Paul Amos, 40, holds a bachelor s degree in economics from Duke University and a master s degree in business administration from Emory University. He also holds a juris doctor degree from Tulane University. He joined Aflac in 2002 as the state sales coordinator for the Georgia-North sales territory. Under his guidance, Georgia-North grew to become the company s No. 1 state operation. Paul was promoted to executive vice president of Aflac U.S. in January 2005 and assumed the additional responsibilities of chief operating officer in February He was promoted to his current position as president of Aflac in 2007 and assumed reporting responsibilities for Aflac Japan and Aflac s Global Investment Division in July He currently resides in Tokyo, Japan, as he oversees the operation. Prior to joining Aflac, he worked in the corporate legal division of a merger and acquisition firm in Washington, D.C. Paul serves on the boards of directors of Aflac Incorporated, the Georgia Chamber of Commerce and the Turner School of Business at Columbus State University. In addition, he is a member of the Georgia Research Alliance Board of Trustees and the Duke University Divinity School s Board of Visitors. Frederick J. Crawford Executive Vice President; Chief Financial Officer, Aflac Incorporated Fred Crawford, 51, joined Aflac in June 2015 as chief financial officer of Aflac Incorporated, responsible for overseeing the financial management of company operations. He brings nearly three decades of financial and leadership experience to Aflac. Most recently, he served as executive vice president and chief financial officer of CNO Financial Group since Prior to that, he spent more than a decade at the Lincoln Financial Group serving in roles of progressive responsibility, including as executive vice president and chief financial officer as well as leading Corporate Development and Investments. Before joining Lincoln Financial Group, he also held leadership positions at Bank One Corporation. Fred received his bachelor of arts degree from Indiana State University and a master of business administration degree from the University of Iowa, where he currently serves as an advisory board member with the Finance Department at its Tippie College of Business. 60

62 Charles D. Lake II President, Aflac International; Chairman, Aflac Japan Charles Lake, 53, received a bachelor s degree in Asian studies and political science from the University of Hawaii at Manoa in 1985 and a juris doctor degree from the George Washington University School of Law in He joined Aflac International in February 1999 and Aflac Japan in June He became deputy president in 2001, president in 2003, vice chairman in 2005, and chairman in In 2014, he also assumed the position of president, Aflac International. Before joining Aflac, he practiced law in Washington, D.C. He also served as director of Japan affairs and special counsel at the office of the U.S. Trade Representative in the Executive Office of the President. He currently serves as a director on the board of the Japan Exchange Group, Inc.; the Peterson Institute for International Economics; the Coalition of Service Industries; and the U.S.-Japan Business Council. He is also president emeritus of the American Chamber of Commerce in Japan (ACCJ). Teresa L. White President, Aflac U.S. Teresa White, 48, earned a bachelor s degree in business administration from the University of Texas at Arlington and a master s degree in management from Troy State University. She joined Aflac in 1998 as second vice president, Client Services; was promoted to vice president of Client Services in 2000; to senior vice president, director of Sales Support and Administration in October 2004; to deputy chief administrative officer in March 2007; and to executive vice president, Internal Operations; chief administrative officer in March In October 2012, she assumed the additional responsibility of the IT Division, and in July 2013 she was also named chief operating officer of Aflac Columbus. In September 2014, she was named president, Aflac U.S. where she assumes responsibility for the Aflac Group and Aflac Columbus operations. Teresa is an alumnus of Leadership Columbus and is a Fellow of the Life Management Institute. She currently serves on the board of directors for Communicorp. She s also a member of Delta Sigma Theta Sorority, Inc. Kenneth S. Janke Executive Vice President, Aflac Incorporated Ken Janke, 57, attended Michigan State University and received a bachelor s degree in political science from the University of Michigan in 1981 and a master s degree in business administration from Oakland University in He joined Aflac Incorporated in 1985 as manager of Investor Relations and was promoted to senior vice president in During his tenure in the Investor Relations department, Aflac was frequently recognized for its Investor Relations communications and activities. In 2010, Ken was promoted to executive vice president and deputy chief financial officer. In July 2013, he assumed the additional role as president of Aflac U.S., with responsibility for U.S. financial statements. Between September 2014 and June 2015, he served solely as deputy CFO. Ken currently serves as executive vice president of Aflac Incorporated. Prior to joining Aflac, he was director of Corporate Services for the National Association of Investors Corporation (NAIC) in Madison Heights, Michigan. Eric M. Kirsch Executive Vice President; Global Chief Investment Officer Eric Kirsch, 54, joined Aflac in November 2011 as first senior vice president; global chief investment officer and was promoted to executive vice president in July In his role, he is responsible for overseeing the company s investment efforts including Aflac s investment portfolio and its investment team. Prior to joining Aflac, he served as managing director and global head of insurance asset management at Goldman Sachs Asset Management. Prior to that, he spent 27 combined years at Deutsche Asset Management (DeAM) and Bankers Trust Company, most recently serving as managing director and global head of insurance asset management. Prior to this, he served as managing director and head of North America Fixed Income. He also previously served as vice president and stable value portfolio manager at Bankers Trust Company. Eric received a bachelor of business administration from Baruch College in 1984, and a master of business administration degree from Pace University in He earned his CFA designation in Eric also serves as a trustee of the Jersey Shore University Medical Center Foundation and serves on the board for the Baruch College Fund. 61

63 Daniel J. Lebish Executive Vice President; Chief Operating Officer, Aflac Group Insurance Daniel Lebish, 61, joined Aflac in August 2013 as executive vice president and chief operating officer of Aflac Group Insurance. In his role, he is responsible for the day-to-day operating activities, performance goals and strategic initiatives of Aflac Group Insurance. In September 2014, his role expanded to also include individual operations and core broker sales. Prior to Aflac, Dan was executive vice president at Highmark Blue Cross Blue Shield, serving as CEO of two of their national subsidiaries, HM Insurance Group and United Concordia Dental, as well as senior vice president of business development. Prior to his career at Highmark, he was executive vice president of medical delivery systems at Coventry Health Plans, chief financial officer at Magee-Womens Hospital and health care management consultant at Ernst & Ernst. Dan earned a bachelor s degree in finance from St. Norbert College and a master of health services administration degree from Ohio State University. Audrey Boone Tillman Executive Vice President, General Counsel Audrey Boone Tillman, 51, received a bachelor of arts degree in political science from the University of North Carolina at Chapel Hill and a juris doctor degree from the University of Georgia School of Law. She joined Aflac in 1996 and was promoted to second vice president in 1997 and to vice president in 2000, where she concentrated on employment law. Her work as legal counsel to the Human Resources division led to her promotion to senior vice president; director of Human Resources in August 2001 and ultimately to executive vice president of Corporate Services in She was promoted to her current position in May 2014 where she oversees the Legal Division, Compliance, Government Relations, Corporate Communications and the Office of the Corporate Secretary. Before joining Aflac, Audrey served as an associate professor at North Carolina Central University School of Law. Prior to this, she was an associate with the Smith, Helms, Mulliss and Moore law firm in Greensboro, N.C. She also served as a federal judicial law clerk to Judge Richard C. Erwin, U.S. District Court for North Carolina. Tillman is a member of the State Bar of Georgia, the North Carolina State Bar, the Bar of the District of Columbia, and is a past chair of the corporate law section of the National Bar Association. Catherine H. Blades Senior Vice President, Corporate Communications Catherine Blades, 47, joined Aflac in January 2014 as senior vice president, corporate communications. Catherine has more than two decades of leadership experience in communications. She most recently served as chief communications and marketing officer at Flextronics where she was responsible for several areas, including corporate communications and public affairs. Previously, Catherine also served as vice president of Communications and Public Affairs at Raytheon Company s Space and Airborne Systems business and held various other international communications-related leadership positions at Lockheed Martin Aeronautics. Catherine earned a bachelor of arts degree in mass communication from the University of Southwestern Louisiana. She is a Loyola University Environmental Communications Fellow and vice chair of Operation Homefront. She is also the co-author of three books on Marketing, Communications and Corporate Social Responsibility. J. Todd Daniels Senior Vice President; Global Chief Risk Officer Todd Daniels, 44, joined Aflac in 2002 as an actuarial assistant and has held several positions within the Actuarial Department, including second vice president; associate actuary. He was promoted to vice president, Financial Planning and Analysis in 2011 where he assumed responsibility for Aflac s financial planning and corporate modeling. In 2012, he was promoted to senior vice president; deputy corporate actuary and to his current position in January In his role, Todd is responsible for leading the development and implementation of all strategic and tactical global risk management programs and policies for the company. He also oversees the risk management functions for Aflac U.S. and Aflac Japan, including Aflac Global Investments. Prior to joining Aflac, he served as an actuarial associate for Liberty National Life. He holds a bachelor s degree in applied mathematics from Auburn University and is a Fellow of the Society of Actuaries and member of the American Academy of Actuaries. 62

64 Julia K. Davis Senior Vice President; Chief Information Officer Julia Davis, 51, joined Aflac in July 2013 as senior vice president; chief information officer. In her position, Julia oversees the day-to-day operations and the strategic initiatives of Aflac s Information Technology Division. Before joining Aflac, she most recently served as chief information officer at American Safety Insurance (ASI). Prior to her tenure at ASI, she served as chief information officer of the Equipment Finance Division for GE Capital Healthcare Financial Services and GE Capital Business Productivity Solutions. Additionally, she held IT leadership positions at GE Energy, Armstrong World Industries, Information Builders, Ogden Government Services and CRSS Services, Inc. Julia began her career in the U.S. Air Force as a software engineer and earned the rank of captain. She received a bachelor s degree in engineering physics from Lehigh University and a master s degree in system administration from St. Mary s University. Bradley E. Dyslin Managing Director; Global Head of Credit, Global Investments Brad Dyslin, 49, joined Aflac in June 2012 as managing director, global head of credit in Aflac s Investment Division. He is responsible for leading the Global Credit team, directing portfolio management, research and investment recommendations for the credit-related assets that make up the core portion of Aflac s global portfolio. He has 25 years of experience in U.S. and global investments and prior to joining Aflac served as senior vice president; head of research and portfolio manager for Hartford Investment Management. Prior to joining Hartford, he was director, U.S. Credit Research for Deutsche Asset Management in New York. Brad s other experience includes more than a decade of progressively responsible positions with the Principal Financial Group, including director, Fixed Income Research, and director, International Investment Operations. He earned a bachelor s degree in business administration and economics from Morningside College and a master s degree in business administration with an emphasis in finance from the University of Iowa. He is a CFA charterholder. Phillip J. Jack Friou Senior Vice President; Director of Governmental Relations Jack Friou, 65, graduated from the University of Georgia in 1971 with a bachelor s degree in political science and served in the Army for two years. He joined Aflac in 1973 and has served in various capacities in administration and marketing, including Agency Administration, the Policyholder Service Department and the Compliance Department. He also served as president of Aflac New York and senior vice president, Marketing and Agency Development. His current area of responsibility includes state legislative and regulatory relations. June P. Howard, CPA, CFA, CGMA Senior Vice President, Financial Services; Chief Accounting Officer June Howard, 49, graduated from the University of Alabama in Huntsville with a bachelor s degree in business administration. She joined Aflac in June 2009 and is responsible for financial reporting and control, investment accounting, corporate tax, budgeting and accounting policy. She assumed the additional role of chief accounting officer in November Before joining Aflac, she held financial reporting positions of increasing responsibility at ING and The Hartford. Additionally, she worked as an auditor with Ernst & Young for nearly 10 years. June is a member of the American Institute of Certified Public Accountants, the Alabama Society of Certified Public Accountants, the CFA Institute and the Atlanta Society of Financial Analysts. 63

65 J. Peter Kelso Managing Director; Chief Investments Technology Officer, Global Investments Pete Kelso, 48, joined Aflac in October 2012 in his current position as managing director and chief investments technology officer of Global Investments. In his role, he is primarily responsible for strategy, implementation and oversight of all aspects of information technology related to Aflac s Global Investments division. Prior to Aflac, he served as managing director; head of Application Services for Asset Management, Securities Lending, Funding, Listed Derivatives, CMBS, RMBS, Loans, Money Markets and Foreign Exchange in Deutsche Bank Group s Global Technology organization. Prior to Deutsche Bank, he held progressively responsible roles at Merrill Lynch Investment Management, Bankers Trust Asset Management division and Northern Telecom. He earned a bachelor s degree in general engineering from the University of Illinois and a Master of Business Administration with an emphasis in finance and statistics from the University of Chicago s Booth School of Business. Thomas P. McKenna Senior Vice President; Deputy General Counsel, Legal Division Tom McKenna, 49, is senior vice president, deputy general counsel of Legal. In his role, he continues to manage and direct the operations of the Aflac U.S. Legal Division. In addition, he coordinates legal functions with Compliance and Governmental Relations, Internal Operations, Marketing, Claims and IT; maintains programs designed to reduce or eliminate legal risks for company operations; and provides legal counsel to management on a broad range of topics. He joined Aflac in the Legal Department in Since then, he has assumed progressively responsible management positions, including his most recent role as vice president and deputy general counsel. He assumed his current position in January He earned a bachelor of arts degree in political science from Columbus State University and a juris doctor from the Walter F. George School of Law at Mercer University. He is a member of the State Bar of Georgia and the Association of Corporate Counsel. Teresa Q. McTague Managing Director; Chief Investment Officer, Global Investments Teresa McTague, 60, joined Aflac in May 2013 as director and chief investment officer of Aflac U.S. She assumed her current position in December 2014, with responsibility for managing and monitoring the company s U.S. investment portfolios and leading the U.S. portfolio management team. Teresa also leads the team responsible for the buildout of Aflac s global external management capabilities. Teresa has three decades of experience in portfolio management and portfolio strategy and implementation. She most recently served as client strategist/portfolio manager at General Re-New England Asset Management, where she was responsible for managing and investing unaffiliated assets for global insurance clients. Teresa also had leadership responsibility for the General Reinsurance investments team and served on the Risk Committee of General Reinsurance. She received a bachelor s degree in economics from the University of California at Berkeley and a master of business administration degree from The Wharton School at the University of Pennsylvania. Virgil R. Miller Senior Vice President, Internal Operations Virgil Miller, 46, holds a master s degree in business management from Wesleyan College and a bachelor s degree in accounting from Georgia College. He joined Aflac s management team in 2004 in the Policy Service Department after working in leadership in the property and casualty industry. He was promoted to positions of increasing responsibility, including senior manager in Client Services and in Policy Service; second vice president of Client Services, Policy Service and the Customer Service Center; and vice president of Client Services and of Customer Assurance. Virgil most recently served as the operations lead for the Accelerating Change Together (ACT) initiative and was responsible for the day-to-day management of Aflac s Transformation Office. Virgil served as a U.S. Marine and is a veteran of Operation Desert Storm. He serves on the board of directors for the American Red Cross and was a member of the United Way Board of Trustees, Leadership Macon and the Community Impact Leadership Board of Central Georgia. 64

66 Drew J. Niziak Senior Vice President, Broker Sales and Aflac Benefits Solutions Drew Niziak, 53, joined Aflac in January 2013 as senior vice president, broker sales and Aflac Benefits Solutions (ABS). In his role, Drew oversees the broker sales strategy and leads the development of national and regional marketing relationships with insurance brokers through Aflac and its broker channel. ABS provides specialized services to Aflac s broker sales division provides dedicated services and support to mid-tier and regional brokers in conjunction with Aflac s field force. Drew has over 20 years of experience in group sales in the insurance industry and, prior to Aflac, held several positions with Sun Life Financial, most recently serving as executive vice president of voluntary distribution. He earned a Bachelor of Arts degree from Johns Hopkins University and a Master of Business Administration from The Wharton School, University of Pennsylvania. Matthew D. Owenby Senior Vice President; Chief Human Resources Officer Matt Owenby, 40, joined Aflac in early 2012 as vice president of HR Business Partners, bringing with him more than a decade of HR experience at Bank of America and General Electric. He assumed his current position in May 2015 where he leads the effort to apply Aflac s global initiatives while providing strategic direction for both the Human Resources and Leadership, Learning & Development teams. Matthew earned a bachelor s degree in business administration from Georgia State University and a Master of Business Administration from Mercer University. He s a member of the Society of Human Resource Management. David L. Pringle Senior Vice President, Federal Relations David Pringle, 59, graduated from Mississippi State University, where he received a bachelor of arts degree in insurance and risk management. He has worked for Aflac for more than 35 years. For nine of those years, David worked with the Aflac sales force in Mississippi, North Carolina and West Virginia, where he worked his way from the position of associate to state sales coordinator. During his career with Aflac, David has also worked at Aflac Worldwide Headquarters as the assistant agency director for the West Territory, and director of Training, where he was responsible for helping develop the concept for Aflac s state training programs. He assumed his current position in His primary responsibility is to coordinate Aflac s government relations and lobbying efforts in Washington, D.C. He also serves as secretary and principal fundraiser for Aflac s Political Action Committee (Aflac PAC), which is one of the largest political action committees among all insurance companies. Chakravarthi Chak Raghunathan Managing Director; Global Chief Investment Risk Officer Chak Raghunathan, 47, joined Aflac in September 2014, where he is responsible for identifying and assessing investment risks in an evolving regulatory environment while developing strategies to address those risks. Prior to joining Aflac, Chak was global head of risk management and chief risk officer at Apollo Management, where he was responsible for implementing Apollo s enterprise-wide risk management framework, formulating detailed risk policies and internal guidelines for funds and providing optimal risk management solutions. Prior to his role at Apollo Management, Chak held positions of increasing responsibility at TD Bank Financial Group, most recently serving as senior vice president, global head of trading risk and quantitative analytics. He also held positions at the Office of the Superintendent of Financial Institutions Canada in the Capital Markets Division and Caisse de dépôt et placement du Québec in the Tactical Investments Group. Chak earned his bachelor s degree in pure mathematics from the University of Madras and his master s degree in applied mathematics at Concordia University. Eric B. Seldon Senior Vice President, Business Services; President and CEO, Communicorp Eric Seldon, 46, received a bachelor s degree in business administration from Madison University. Before joining Aflac in 1999, he was vice president of Card Services at Total System Services Inc. After joining Aflac, Eric served as an operations manager in Client Services before being promoted to director of New Business. Since then, he has held several leadership positions including second vice president, Support Services; vice president, Business Services & Support; and senior vice president, Business Services as well as president and vice chairman of the board for Communicorp administration and operations. In 2011, he was promoted to president and CEO of Communicorp while continuing to serve as senior vice president of Business Services where he is currently responsible for the direction of Support Services, Payment Services, Facilities and Support, and Corporate Travel, Meetings & Incentives. He has more than 25 years of leadership experience, including more than 16 years with Aflac. He is a member of the Georgia Minority Supplier Development Council and is certified by the U.S. Postal Service as a Mail Center Professional and by Mailcom for Mail Center Security Training. 65

67 Alexander W. Stephanouk Senior Vice President, Internal Audit Alex Stephanouk, 45, holds a bachelor s degree in marketing from Auburn University and a master of business administration degree from Louisiana State University. He joined Aflac in 2009 as vice president, Internal Audit, for Aflac Incorporated reporting to the Audit Committee of the Board of Directors, where he was responsible for all corporate Internal Audit activities. He was promoted to his current position in Before joining Aflac, he was managing director of Advisory Services at KPMG in Atlanta, and he also worked as manager of Business Process Risk Consulting at Arthur Andersen, LLP. He is a Certified Internal Auditor (CIA), Certified Information Systems Auditor (CISA), and Certified Risk Management Assessor (CRMA). Additionally, he is on the board of directors of the Columbus Chapter of the Institute of Internal Auditors and the Family Center, and is on the LSU Center for Internal Auditing Advisory Board. Timothy Chip Stevens Managing Director; Global Head of Macro Investment Strategy, Portfolio Solutions and Trading, Global Investments Chip Stevens, 45, joined Aflac in June 2012 as managing director; global head of trading for the Aflac Global Investments Division. In February 2014, his role expanded to global head of macro investment strategy, portfolio solutions and trading. From May 2014 through April 2015, he also served as acting chief investment officer for Aflac Japan, where he had oversight responsibility for ensuring execution of globally approved investment strategy of the Aflac Japan portfolio as well as overseeing all investment activity for Aflac Japan. In May 2015, he returned to Aflac s New York Global Investments office as to assume his prior role while also taking on greater responsibilities, including expanding international investment and currency strategies and chairing the investment strategy group. Chip has more than 22 years of investment experience in a variety of investment roles prior to joining Aflac, including serving as managing director, head of fixed income trading for the Americas for BlackRock Investment Management in both New York and San Francisco. He earned a bachelor s degree in economics from Cornell University and a Master of Business Administration from Duke University, and sits on several private company and non-profit boards in the greater New York area. Michael J. Tomlinson Senior Vice President; Director of Sales Mike Tomlinson, 57, is senior vice president; director of Sales, where he focuses on the day-to-day operations of the sales force and develops programs and initiatives to support the U.S. sales strategy. He joined Aflac in 1980 as a sales associate in Minnesota, where he earned Aflac s first-ever Triple Crown Award, which recognizes new associates outstanding sales results. Following numerous additional accolades and awards that exemplify his leadership and resultsoriented approach, he progressed through the Aflac ranks as district and regional sales coordinator. In 1989, he assumed the role of state sales coordinator for the organization that includes both North Dakota and South Dakota, Aflac s leading state organization for sales and in-force premium per capita. In 2008, he was promoted to vice president; territory director for the Central Territory. In July 2014, he was promoted to senior vice president; assistant director, Aflac U.S. Sales and assumed his current position in November Under his leadership, he has developed numerous other executives who have gone on to lead other Aflac sales organizations. Robin Y. Wilkey, CPA Senior Vice President, Investor and Rating Agency Relations Robin Wilkey, 57, graduated from the University of Georgia with a bachelor s degree in finance and went on to receive her designation as a certified public accountant. She joined Aflac in 1990 as an accountant in the Financial Department, was promoted to senior auditor in Internal Auditing and to manager of Information Systems and Payroll in the Human Resources Division. She joined the Investor Relations Department in 1998 as senior director; was promoted to second vice president in 2002; to vice president in 2003; and to senior vice president in She assumed the additional role of rating agency relations in November Prior to working at Aflac, she worked in auditing and accounting in the banking and medical industries. 66

68 David A. Young Second Vice President, Investor and Rating Agency Relations David Young, 40, earned a bachelor of arts degree in political science from Sewanee - The University of the South and a master of business administration with a concentration in finance from Georgia State University J. Mack Robinson College of Business. David joined Aflac in 2005 as an investment consultant on the credit team in the Investments Department where he assumed primary responsibility for covering banks, financial companies, and insurers. David was promoted to senior investment consultant in 2009 and to second vice president in At the beginning of 2013, David joined Aflac s U.S. Operations and assumed responsibility for the operations risk management and quality assurance teams. In September 2013, he joined Investor and Rating Agency Relations in his current role engaging investors in regard to issues ranging from corporate governance to company performance. Prior to working at Aflac, David cultivated his investment experience at Morgan Stanley and an institutional asset management subsidiary of SunTrust Bank. Delia H. Moore Director, Rating Agency and Investor Relations Delia Moore, 44, graduated from Columbus State University with a bachelor of business administration degree in accounting and earned a master s degree in accounting from Auburn University. Delia joined Aflac in 2003 as a supervisor in Policy Service and in 2005 was promoted to manager of Investor Relations. In November 2011, she was promoted to director of Rating Agency and Investor Relations, where she manages Aflac s relationships and open communications with rating agencies. In her current role, she serves as a liaison for senior management in developments, changes and potential strategic decisions as it relates to rating agencies. Prior to joining Aflac, Delia performed in various leadership capacities at major Fortune 500 companies including AT&T and Citibank. Daniel A. Bellware, CPA, CGMA Senior Manager, Investor Relations Daniel Bellware, 52, joined Aflac in 1998, and has held various roles in Financial Reporting and Financial Compliance prior to joining Investor Relations in July He holds a bachelor s degree in Accountancy and master s degree in Business Administration from the University of Central Florida. Daniel is also a member of the American Institute of Certified Public Accountants. As senior manager of Investor Relations, Daniel partners with various divisions to ensure that an overall view of corporate activity is coordinated, analyzed and integrated into the investor relations communications and strategy. In addition, he is responsible for overseeing retail investor relations activities at Aflac, including educating the individual, broker and financial advisor investment community on Aflac s financial performance. Prior to joining Aflac, Daniel held management positions in several smaller life insurance companies. 67

69 Hiroshi Yamauchi President; Chief Operating Officer, Aflac Japan Hiroshi Yamauchi, 63, graduated from Saitama University in 1976 and joined Aflac that same year. Upon joining Aflac, served in the Actuarial Department as section manager and assistant general manager. He was promoted to general manager in the Policy Maintenance Department in 1998, to vice president in 1999 and to first senior vice president in In January 2012, he was promoted to executive vice president and assumed his current position as president and chief operating officer of Aflac Japan in January Koji Ariyoshi Executive Vice President; Director of Sales and Marketing, Aflac Japan Aflac Japan Management Masatoshi Koide Executive Vice President, Planning and Research, Risk Management, Investment, Compliance, and General Affairs, Aflac Japan Masatoshi Koide, 55, graduated from Tokyo University in 1984 and from Cornell Law School in He originally joined Aflac in November 1998 and stayed with Aflac until March He worked for Nikko Asset Management before he joined Aflac again in December 2008 as vice president. He was promoted to senior vice president in January 2012 and to first senior vice president in July He assumed his current position in January He is a member of the New York State Bar. Jun Isonaka First Senior Vice President, Sales, Aflac Japan Koji Ariyoshi, 61, graduated from Ritsumeikan University in He joined Aflac as senior vice president, responsible for sales planning in October From January through March 2009, he was directly in charge of the Retail Marketing, Alliance Management and Hojinkai Promotion Departments, and from April through December 2009, he oversaw all the marketing and sales departments as deputy director of Sales and Marketing. He was promoted to first senior vice president and director of Sales and Marketing in January He was promoted to his current position in January Before joining Aflac, he worked for Alico Japan as vice president and AXA Life Insurance as senior vice president. Susan R. Blanck Executive Vice President, Aflac Japan Sue Blanck, 48, graduated from the University of Missouri-Columbia with a bachelor s degree in education. She joined Aflac s Actuarial Department in the U.S. pricing area in She was promoted to second vice president and assistant actuary in In 2000, she was promoted to vice president, and in 2002 she assumed responsibility for developing Aflac s business and financial plans. She was promoted to senior vice president and deputy corporate actuary in March 2004; to corporate actuary in January 2006; assumed the additional responsibilities of first senior vice president, Aflac Japan, in June 2008; and was promoted to executive vice president of Aflac in 2011 and Aflac Japan in In her current capacity as executive vice president of Aflac Japan, she continues to help with the oversight of Aflac Japan financials, while also taking advantage of emerging opportunities such as implementing new product offerings, enhancing distribution opportunities and developing marketing initiatives. She is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries. Jun Isonaka, 57, graduated from Kwansei Gakuin University in 1980 and joined Aflac that same year. He served as general manager of the Group Marketing and Marketing and Sales Promotion Departments from 1999 through He was promoted to vice president in 2002 and to senior vice president in January He became chief administrative officer in January 2010 and was promoted to his current position in January John A. Moorefield First Senior Vice President, Chief Transformation Officer, Aflac Japan; Strategic Management, Aflac International John Moorefield, 53, graduated from North Carolina State University. He joined Aflac in 2005 and has worked in several key positions including chief information officer of Aflac Japan. In that role, he was also responsible for the development of the short-term and long-term Aflac Japan information technology strategic plan. In his current role, John oversees Aflac Japan s information technology and transformational initiatives, as well as various global IT related governance activities. Prior to joining Aflac, John served as a Principal in ApproxiCom, LLC and held executive leadership positions at Cap Gemini Ernst & Young LLP, Fidelity Investments, and NationsBank, where he was responsible for technology strategy and delivery of information architecture and systems. 68

70 Yuji Arai, CFA Senior Vice President, Aflac Japan; President, Aflac Insurance Services Yuji Arai, 52, graduated from Keio University in 1986 and joined Aflac that same year. He became assistant general manager of the Investment Department in 2001, and he began supervising the Investment Department and the Investment Analysis Office in In January 2005, he was promoted to senior vice president and assumed his current role as president, Aflac Insurance Services in January He is a chartered financial analyst certified by the CFA Institute and a charter member of the CFA Society of Japan. Andrew J. Conrad Senior Vice President and General Counsel, Aflac Japan; Senior Vice President, Aflac International Andy Conrad, 51, holds a law degree from Harvard Law School and a master s degree from the Fletcher School of Law & Diplomacy at Tufts University. Before joining Aflac, he practiced law in Washington, D.C. He joined Aflac International in 2001 and has held progressively responsible management positions. He was promoted to his current position in January Tohru Futami Senior Vice President; Deputy Chief Transformation Officer, Aflac Japan Tohru Futami, 54, graduated from Seijo University in He joined Aflac as senior vice president in January Prior to joining Aflac, he worked for AIG as senior vice president, MetLife as senior vice president, Chief Information Officer, Mitsui Life Insurance Company as senior vice president, Chief Information Officer, as well as president of MLI Systems Inc. Tomohito Hasumoto Senior Vice President, User Services, System Development 1, System Development 2 and System Development 3; Chief Information Officer, Aflac Japan Tomohito Hasumoto, 56, graduated from Waseda University in He joined Aflac in 2012 as vice president. He has served as Chief Information Officer for Japan since January He was promoted to his current position in January Before joining Aflac, he worked for IBM Japan. He most recently served as Director of Outsourcing Services, Global Technology Services. 69 Osamu Ishii Senior Vice President, Kinki Administration and Disaster Preparedness, Aflac Japan Osamu Ishii, 58, graduated from Hitotsubashi University in Prior to joining Aflac as vice president in April 2008, he worked for Dai-ichi Kangyo Bank and also served as vice president and president at DKB Financial Products Inc. as well as general manager at Mizuho Corporate Bank. He was promoted to senior vice president of Human Resources, General Affairs and the Executive Assistant Office in January He assumed his current position in January He earned a master s degree in business administration from Massachusetts Institute of Technology in Riko Kubo Senior Vice President, Planning, Human Resources, General Affairs, Executive Assistant Office, Translation and Interpretation Office, Aflac Japan Riko Kubo, 53, graduated from Kobe College (Kobe Jogakuin University) in She originally joined Aflac in April 1984 and stayed with Aflac until October She joined Aflac again in March She served as general manager of the Internal Audit Department from 2006 and was named vice president, Internal Audit Officer in January She was promoted to her current position in January She holds the Certified Internal Auditor (CIA) designation. Joseph F. Meyer Senior Vice President, Aflac Japan Global Chief Operating Officer, Global Investments Joseph Meyer, 58, received his bachelor s degree in government and East Asian studies from Colby College in Upon graduation he was awarded a Thomas J. Watson Fellowship. Prior to joining Aflac in March 2012, he began his career in banking with Morgan Guaranty Trust Company in New York and later held various positions such as treasurer and head of finance, administration and operations at Morgan Stanley in Tokyo and Hong Kong; managing director and chief operating officer at Deutsche Securities and Deutsche Asset Management; and chief operating officer at Shinsei Bank. He founded and was representative director of Chi-X Japan Limited, and also worked as chief administrative officer of Hong Kong Exchanges and Clearing. Yoshifumi Murayama Senior Vice President, Sales, Marketing and Agency Management, Aflac Japan Yoshifumi Murayama, 56, graduated from Meiji University in 1982 and joined Aflac that same year. After serving as general manager of the Osaka Sales Department 1 in 2005 and 2006, he was named vice president in January He was promoted to his current position in January 2012.

71 Takashi Osako Senior Vice President, Government Affairs and Research, Legal, and Corporate Communications, Aflac Japan Takashi Osako, 53, graduated from Kwansei Gakuin University in 1985 and joined Aflac that same year. After serving as the head of the Office of the President, he was promoted to vice president in He was promoted to his current position in January Yukihiro Sugiyama Senior Vice President, Financial Institutions Sales Promotion and Financial Institutions Planning, Aflac Japan Yukihiro Sugiyama, 53, graduated from George Washington University with a bachelor of arts degree in Finance in 1989 and a master of business administration with a concentration in International Business Banking and Finance in August He joined Aflac in August 2013 as vice president and was promoted to his current position in January Before joining Aflac, he worked for Asahi Bank, Gibraltar Life Insurance, and Prudential Gibraltar Financial Life Insurance. Tomoya Utsude, M.D. Senior Vice President; Chief Administrative Officer, Aflac Japan Tomoya Utsude M.D., 53, graduated from the Medical School of Tokyo University in 1986 and joined Aflac in After serving as medical director, he was promoted to vice president in He was promoted to his current position in January Before joining Aflac, he was trained and had practical experience as a surgeon at the Tokyo University Hospital and as a surgical pathologist at the Cancer Institute, Japanese Foundation for Cancer Research. Hideto Yamamoto Senior Vice President; Chief Investment Officer, Aflac Japan Hideto Yamamoto, 52, joined Aflac in 2015 as senior vice president; chief investment officer of Aflac Japan where he chairs the Japan Internal Investment Committee and is responsible for leading and managing Aflac Japan s team of investment professionals, while having oversight responsibility for ensuring execution of globally approved investment strategy of the Aflac Japan portfolio. He is also a member of the Global Investment Committee and the Global Investment Executive Committee. Prior to joining Aflac, he served in roles of increasing responsibility at DIAM International, most recently serving as chief executive officer and chief investment officer in the company s London office. Prior to joining DIAM, he spent 15 years serving in roles of progressive responsibility at the Industrial Bank of Japan, which included portfolio management, and economic research. He received his bachelor of arts degree in economics from Keio University in Tokyo. 70 Kazuhiro Yamazaki Senior Vice President, Financial Accounting and Actuarial, Aflac Japan Kazuhiro Yamazaki, 60, earned bachelor s and master s degrees in commercial science from Waseda University and joined Aflac in After serving as general manager of the Financial Management and Internal Audit Departments, he was promoted to vice president in He was promoted to his current position in January He is a Certified Public Accountant, Certified Management Accountant, Certified Financial Manager, Certified Internal Auditor and Certified Financial Services Auditor. Masato Kuroda Head of Corporate Communications, Aflac Japan Masato Kuroda, 49, graduated from Kwansei Gakuin University with a bachelor of economics degree. He held progressively responsible positions at Daiwa Securities Co. Ltd., ultimately leading to his role as deputy general manager and head of Media Relations. He also served as general manager; head of Communications at AIG Holdings (Japan) as well as vice president; chief communications officer for Prudential Holdings of Japan. He most recently served as assistant vice president; Communications for MetLife Alico. He joined Aflac Japan as head of Corporate Communications in January 2014 and has more than 20 years of professional experience in corporate communications, public relations and branding. Ichiro Murakami General Manager, Investor Relations Support Office, Aflac Japan Ichiro Murakami, 58, graduated from Tokyo University in 1980 and joined Aflac in Prior to joining Aflac, he worked for the Long- Term Credit Bank of Japan, where he worked in several capacities, including investor relations for the bank. He assumed his current position in January 2011 after serving Aflac Japan as a general manager for bank sales for more than five years.

72 Section I - Aflac Incorporated 2015 Aflac Management Goals Abenomics: Three-Arrow Strategy to Economic Revitalization Aflac Incorporated Cash Inflows Overview... 4 Aflac Incorporated Cash Outflows Overview... 4 Aflac Japan 2014 Results by Product Category vs. Outlook... 5 Aflac Japan Actual vs. Tabular Claims Aflac Japan Dollar Portfolio: Key Metrics Aflac Japan Gross Premium Valuation Net Position by Reporting Basis Aflac Japan Investment Return Assumptions Aflac Japan Net Investment Income Trend and Impact of Yen Depreciation Aflac Japan Outlook Assumptions... 5 Aflac Japan Outlook by Product Category... 6 Aflac Japan Portfolio Aflac Japan Reinsurance Program Aflac Japan Trends in Cancer Hospitalization Aflac Japan Trends in Sickness Hospitalization Aflac Japan s Product Mix - In-Force AP Aflac U.S Results vs. Outlook... 6 Aflac U.S. Gross Premium Valuation Aflac U.S. Investment Return Assumptions Aflac U.S. Outlook... 6 Aflac U.S. Outlook Assumptions... 6 Aflac U.S. Statutory Reserve Assumptions Aflac U.S. Trends in Cancer Hospitalization Aflac U.S. Trends in Hospitalization Aflac s Principal Operating Units... 4 All Business - Model - 1 Year of Sales All Business - Model - Layered Sales Allocation to Growth Assets Asset Allocation Focus Capital Adequacy Ratios - RBC... 8 Capital Adequacy Ratios - SMR... 8 Capital Deployment History and Outlook Capital Plan - Evaluating Uses of Capital Capital Plan - Returning Capital to Shareholders Capital Plan - SMR Management... 9 Capital Plan Objectives and Considerations... 8 Claims vs. Reserves ComFrame IAIG Criteria Control of the Government Dollar Portfolio Strategy Considerations Dollar Program: Investment and Hedging Strategy Domestic Insurance Capital Standard Development: Process and Criteria Effect of Limited Pay Products on Aflac Japan... 6 Effect of Reinsurance on Aflac Japan... 5 Expected Benefit Ratios by Product Index of Tables and Charts 71 First Sector - Model - 1 Year of Sales First Sector - Model - Layered Sales Framework for Development of International Financial Standards FSA Reserve Assumptions FSA Standard Reserving Rate FSA vs. U.S. Statutory Reserves FSB and IAIS Address Systemic Risk in Insurance Sector GAAP Experience Emergence... 21, 22 GAAP Experience Emergence Parameters GAAP Experience Emergence with PAD GAAP Experience Emergence without PAD GAAP Gross Margin Scenarios GAAP Reporting GAAP Reserve Assumptions Hedged-Dollar Program: Performance Hedging Economic Currency Risk... 7 Historic Agricultural Reform House of Councillors (Upper House) House of Representatives (Lower House) Impact of Currency Translation... 7 Impact of Mix Change and Rates on Aflac Japan Gross Premium Valuation Inforce Distribution Integrated Social Security and Tax Reform Japanese Government Liberal Democratic Party (LDP) Demonstrates Effectiveness in Governance Limited Pay Accounting (SFAS 97) - Similarities to SFAS Limited Pay Policy Accounting (SFAS 97) - 5-Pay Example Limited Pay Policy Accounting (SFAS 97) - Differences with SFAS NAIC-FSA Regulatory Cooperation Operating Revenue and Pretax Earnings by Segment... 4 Opportunities for Capital Uses Our Diversified Investment Strategy Has Outperformed JGB Yields Policy Measures for G-SIIs Political Parties and Coalitions Pricing Assumptions for Aflac Japan and Aflac U.S Profit Repatriation Progress in Financial Regulatory Reform Promoting Capital Efficiency and Productivity RBC Sensitivities... 8 Reinsurance Transaction Impact on Deployable Capital Reinsurance Transactions and Future Potential Response to Abenomics... 35, 36 Risk Management Top Issues... 7 Solvency Margin Sensitivities... 9 Supervisory Colleges Third Sector - Model - 1 Year of Sales... 18

73 Third Sector - Model - Layered Sales Trans-Pacific Partnership Agreement (TPP) as Breakthrough Structural Reform Womenomics and Labor Reform Section II - Aflac Japan General Economic Environment - Three-Arrow Strategy st Quarter 2015 Sales Results Aflac Japan Management Slogan First Nine Months Outlook Aflac Japan Commercial Aflac Japan s Product Line Aflac s Share of In-Force Business: Cancer Aflac s Share of In-Force Business: Medical Aflac s Strategy for Growth Competitors in the Third Sector Consumption Tax Rate Corporations Supporting Aflac Japan Customer Service Strategy Daily Out-of-Pocket Hospitalization Expenses Distribution Strategy Enhancement of Payment Structure for Claims/Benefits Government Mid- to Long-Term Reform Plan Japan Post Japan s Aging Population and Declining Birthrate Japan s Universal Health Care Insurance System Key Metrics - Selected Life Insurers Life Insurance Policies in Force Medical Insurance Product Enhancement Product Strategy Projected Social Security Benefits Promotion Strategy Public s View on the National Health Care System Third Sector New Annualized Premium Sales Total New Annualized Premium Sales Womenomics - Changing the Way Japan Works Section III - Aflac U.S. U.S. Macro Environment Aflac U.S. Commercial Aflac U.S. Distribution Channels - Broker Aflac U.S. Distribution Channels - Career Agent Aflac U.S. Payroll Product Line Aflac U.S. Performance Brand Differentiation Career Channel Focus Opportunities in the U.S. Payroll Market Our Vision Pay for Performance Product Innovation Strengthening the Low-Cost Model U.S. Voluntary Market

74 Institutional investors with questions about the company may contact: Communicorp, Aflac s printing and communications subsidiary, has received Forest Stewardship Council (FSC) certification. This chain-of-custody certification is part of a not-for-profit organization program that brings people together to find solutions and reward good forest management. IN THE UNITED STATES: Robin Y. Wilkey Senior Vice President, Investor and Rating Agency Relations tel: or rwilkey@aflac.com David A. Young Second Vice President, Investor and Rating Agency Relations tel: or dyoung@aflac.com Aflac Incorporated 1932 Wynnton Road Columbus, Georgia IN JAPAN: Ichiro Murakami General Manager, Investor Relations Aflac Japan Shinjuku Mitsui Building 2-1-1, Nishishinjuku, Shinjuku-ku, Tokyo , Japan tel: Aflac Incorporated. All rights reserved.