Aflac Incorporated and its subsidiaries provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.).
The company’s principal business is supplemental health and life insurance products with the intention to provide customers the best value in supplemental insurance products in Japan and the U.S. When a policyholder or insured gets sick or hurt, the company pays cash benefits fairly and promptly for eligible claims.
The company has continued to...
Aflac Incorporated and its subsidiaries provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.).
The company’s principal business is supplemental health and life insurance products with the intention to provide customers the best value in supplemental insurance products in Japan and the U.S. When a policyholder or insured gets sick or hurt, the company pays cash benefits fairly and promptly for eligible claims.
The company has continued to develop and expand its product offerings over time. In Japan, the company is cultivating an innovation-driven culture to meet the rapidly changing customer and societal needs. In the U.S., the company continues to make broad-based investments in digital enhancements and innovation within the U.S. platform. In recent years, the company has invested in distribution opportunities through acquisitions and partnerships and pivoted to digital sales methods.
The company is authorized to conduct insurance business in all states, the District of Columbia, several U.S. territories, and Japan.
Revenue-Generating Activities
The company's strategy for growth in the U.S. and Japan has remained straightforward and consistent for many years. The company develops relevant supplemental health insurance products offering financial protection from the rising out-of-pocket expenses associated with medical events that are not covered by the insured's primary coverage. The company also offers a complement of other voluntary health and life insurance products to fit the needs of its customers. Additionally, the company intends to obtain more customers by selling where the customer prefers to purchase protection, whether through an agent or broker, a distribution partner, or directly from the company. To help promote its insurance products, the company’s marketing campaigns feature the Aflac Duck.
Segments
The company's insurance business consists of two reporting segments: Aflac Japan and Aflac U.S. The primary insurance subsidiary in the Aflac Japan segment is Aflac Life Insurance Japan Ltd. (ALIJ). Aflac U.S. includes the insurance subsidiaries American Family Life Assurance Company of Columbus (Aflac); Continental American Insurance Company (CAIC), branded as Aflac Group Insurance (AGI); American Family Life Assurance Company of New York (Aflac New York); Tier One Insurance Company (TOIC); and Aflac Benefits Solutions, Inc. (ABS), which provides a platform for Aflac Dental and Vision in the U.S.
Aflac Japan segment
Aflac Japan is the principal contributor to the company's consolidated earnings and the largest insurer in Japan in terms of cancer and medical (third sector insurance products) policies in force.
Insurance Products
Aflac Japan's third sector insurance products are supplemental products designed to help consumers pay for medical and nonmedical costs that are not reimbursed under Japan's national health insurance system. Changes in Japan's economy and an aging population have put increasing pressure on Japan's national health care system. As a result, more costs have been shifted to Japanese consumers, who, in turn, have become increasingly interested in insurance products that help them manage those costs. Aflac Japan has responded to this consumer need by enhancing existing products and developing new products. The focus at Aflac Japan remains on maintaining leadership in third sector insurance products that are less interest rate sensitive and have strong and stable margins. At the same time, Aflac Japan complements this core business with similarly profitable first sector products.
Third Sector Insurance Products
Cancer
Cancer Insurance: Aflac Japan pioneered the cancer insurance market in Japan in 1974, and remains the number one provider of cancer insurance in Japan today. Aflac Japan's cancer insurance products provide a lump-sum benefit upon initial diagnosis of cancer, and fixed daily benefits for subsequent hospitalization and outpatient treatments due to cancer, as well as cancer-related surgical and convalescent care benefits. In August 2022, Aflac Japan launched a new cancer insurance product, WINGS, which provides coverage for the latest cancer treatments and support for early detection. Additionally, in January 2023, Aflac Japan further strengthened its products and services by launching Aflac Yorisou Cancer Consultation Support, a new service that provides comprehensive support from the moment a policyholder suspects cancer through treatment and recovery.
Medical and Other Health
Medical Insurance: Aflac Japan's medical insurance products provide benefits for hospitalization, surgeries, and outpatient treatment of various illnesses, as well as lump sum benefits related to three critical illnesses: cancer, heart attack, and stroke. In September 2023, Aflac Japan launched a new medical insurance product designed to appeal to younger policyholders with basic needs and existing policyholders who desire additional or updated coverage.
Other
Nursing Care Insurance: Aflac Japan's Nursing Care Insurance provides coverage for out-of-pocket costs incurred when receiving public nursing care services.
First Sector Insurance Products
Life
Protection-Type Life Insurance
Whole Life: Aflac Japan launched Prepare Smart Whole-Life Insurance in 2018, a whole life insurance product with low cash surrender value, which offers non-smoking policyholders further discounted premiums, and it provides beneficiaries, typically a designated family member, with a pre-determined benefit payment upon the death of the insured.
GIFT: GIFT is a term life insurance product that provides a designated family member with a fixed amount of money every month upon a breadwinner’s death or serious disability as family support.
Savings-Type Life Insurance
Tsumitasu: Launched in June 2024, Tsumitasu is an insurance product designed primarily for post-retirement preparation, with asset formation features and coverage for nursing care and other benefits.
WAYS and Child Endowment: WAYS is an insurance product which has features that allow policyholders to convert a portion of their life insurance to medical, nursing care, or fixed annuity benefits at a predetermined age. Aflac Japan's child endowment insurance product offers a death benefit until a child reaches age 18. This product also pays a lump-sum at the time of the child's entry into high school, as well as an educational annuity for each of the four years during his or her college education.
Distribution Channels
Traditional Sales Channel: This distribution channel includes individual agencies, independent corporate agencies, and affiliated corporate agencies. Aflac Japan was represented by approximately 6,600 sales agencies at the end of 2024, with approximately 114,000 licensed sales associates employed by those agencies, including individual agencies.
Dai-ichi Life: Aflac Japan's alliance with Dai-ichi Life was launched in 2001, and approximately 37,000 Dai-ichi Life representatives offer Aflac's cancer products. Dai-ichi Life is included in Aflac Japan's affiliated corporate agencies distribution channel.
Japan Post Group: Aflac Japan's alliance with Japan Post Group, which is included in Aflac Japan's affiliated corporate agencies distribution channel, was launched in 2008. After the alliance strengthened in 2013, the number of postal outlets of Japan Post Co. Ltd. (Japan Post Co.) selling Aflac Japan's cancer product increased to more than 20,000. Japan Post Insurance Co., Ltd. (Japan Post Insurance) offers Aflac Japan cancer products through its various directly managed offices responsible for corporate sales and several service departments in charge of individual sales.
Daido Life: In 2013, Aflac Japan and Daido Life Insurance entered into an agreement for Daido to sell Aflac Japan's cancer insurance products specifically to the Hojinkai market, which is an association of small businesses. Daido also sells Aflac Japan's cancer insurance products to the market in the tax payment association, which is a not-for-profit association for small businesses to support tax-related matters. Daido Life is included in Aflac Japan's affiliated corporate agencies distribution channel.
Banks: Consumers in Japan rely on banks to provide not only traditional bank services, but also as one key source to provide insurance solutions and other services. As of December 31, 2024, Aflac Japan had agreements with approximately 90% of the total number of banks in Japan to sell its products.
Government Regulation
The financial and business affairs of Aflac Japan are subject to examination by Japan's Financial Services Agency (FSA).
With regard to personal information obtained from policyholders, the insured, or others, Aflac Japan is regulated in Japan by the Act on the Protection of Personal Information (APPI) and guidelines issued by the FSA and other governmental authorities.
Aflac U.S. segment
This segment designs its U.S. insurance products to provide supplemental coverage for people who already have major medical or primary insurance coverage, as Aflac U.S. insurance policies pay benefits regardless of other insurance. Aflac U.S. products are distributed in the individual and group supplemental insurance markets. Aflac's individual policies are portable, meaning that individuals may retain their full insurance coverage upon separation from employment or affiliation with a group, generally at the same premium. Individual policies are typically guaranteed-renewable for the lifetime of the policyholder (to age 75 for short-term disability policies).
Insurance Products
Accident
Accident Insurance: Aflac U.S. offers accident coverage on both an individual and group basis. These policies pay cash benefits in the event of a covered injury. The accident portion of the policy includes lump-sum benefits for accidental death, dismemberment, and specific injuries, as well as fixed benefits for hospital confinement. Additional benefits are also available for home modifications, wellness, and increased benefits for injuries related to participation in an organized sporting activity.
Disability
Disability Insurance: Aflac U.S. offers short-term disability benefits on both an individual and group basis, and long-term disability benefits on a group basis. These plans provide coverage for covered injury, illness, or mental health conditions.
Critical Care
Cancer Insurance: Aflac U.S.'s cancer insurance products provide a lump-sum benefit upon initial diagnosis of cancer, and subsequent benefits for treatment received due to cancer. Aflac U.S. offers cancer insurance on an individual basis.
Critical Illness Insurance: Aflac U.S. offers coverage for critical illness plans on both an individual and group basis. These policies are designed to pay cash benefits in the event of critical illnesses, such as heart attack, stroke, or cancer.
Hospital Indemnity
Hospital Indemnity Insurance: Aflac U.S. offers hospital indemnity coverage on both an individual and group basis. Hospital indemnity products provide policyholders fixed dollar benefits triggered by hospitalization due to accident or sickness. Indemnity benefits for inpatient and outpatient surgeries, as well as various other diagnostic events, are also available. Aflac U.S. also offers a lump sum rider for a range of critical illness events that can be added to its individual accident, short-term disability, and hospital indemnity products.
Dental and Vision
Dental and Vision Insurance: Aflac U.S. offers network dental and vision products on a group basis, as well as fixed-benefit dental coverage on an individual basis. Aflac U.S. also offers Aflac Vision Now, an individually issued policy that provides benefits for serious eye health conditions and loss of sight, as well as coverage for corrective eye materials and exam benefits.
Life
Life Insurance: Aflac U.S. offers term- and whole-life policies on both an individual and group basis.
Seasonality
In recent years, new annualized premium sales are generally higher in the fourth quarter for Aflac U.S. group business due to the timing of open enrollment for many employers. As a result, approximately half of total new annualized premium sales for Aflac U.S. group business are generated in the fourth quarter, which typically results in over one-third of total Aflac U.S. total sales being generated in the fourth quarter (year ended December 31, 2024).
Distribution Channels
Independent Associates/Career Agents: The career agent channel in Aflac U.S. focuses on marketing Aflac to the small business market, defined as employers of between three and 99 employees. Sales associates in the U.S. are independent contractors and are paid commissions and other variable compensation based on first-year and renewal premiums from their sales of insurance products.
Brokers: The broker channel of Aflac U.S. focuses on selling to the mid- and large-case market, which consists of employers with 100 or more employees, and typically an average size of 1,000 employees or more. Brokers in the U.S. are independent contractors and are paid commissions based on first-year and renewal premiums from their sales of insurance products.
In 2024, the Aflac U.S. sales force included an average of approximately 6,000 U.S. agents, including brokers, who were actively producing business on a weekly basis.
Consumer Markets: While Aflac U.S. primarily markets its insurance products at the worksite, the company is also expanding its distribution strategy to directly reach consumers outside of the traditional worksite through digital lead generation.
Government Regulation
The company and its U.S. insurance subsidiaries, Aflac, CAIC, TOIC (Nebraska-domiciled insurance companies), Aflac New York (a New York-domiciled insurance company), and ABS (a licensed third-party administrator in most U.S. jurisdictions and a pre-paid limited health service organization in Florida) are subject to state regulations in the U.S. as an insurance holding company system.
The insurance laws of Nebraska that govern the company's activities provide that the acquisition or change of ‘control’ of a domestic insurer or of any person that controls a domestic insurer cannot be consummated without the prior approval of the Nebraska Department of Insurance (NDOI). A person seeking to acquire control, directly or indirectly, of a domestic insurance company, or of any person controlling a domestic insurance company (in the case of Aflac, CAIC, and TOIC, the company) must generally file with the NDOI an application for change of control containing certain information required by statute and published regulations, and provide a copy to the company.
In 2024, the NDOI and the New York State Department of Financial Services (NYSDFS) commenced full-scope, risk-focused financial examinations on their respective state domiciled insurance entities covering the reporting period January 1, 2020 – December 31, 2023, that are currently ongoing. Additionally, in 2023, the NYSDFS commenced a routine market conduct examination on Aflac New York covering the five-year period ended on December 31, 2022, that is ongoing.
Certain federal regulations applicable to Aflac U.S. are the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA); Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) and regulations issued thereunder; and the federal Gramm-Leach-Bliley Act of 1999 (GLBA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Aflac Asset Management Japan Ltd. (AAMJ) is licensed as a discretionary asset manager under the Japan Financial Instruments and Exchange Act, and is subject to rules of the Japan Investment Advisors Association, a self-regulatory organization with mandatory membership for Japan investment managers. Aflac Asset Management LLC (AAM) is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940.
Aflac Re is a Bermuda domiciled insurer that reinsures certain policies issued by Aflac Life Insurance Japan Ltd. (ALIJ). Aflac Re is subject to regulation in Bermuda, where the Bermuda Monetary Authority (BMA) has broad administrative powers relating to granting and revoking licenses to transact reinsurance business, approval of specific reinsurance transactions, capital requirements and solvency standards, limitations on dividends to shareholders, the nature of and limitations on investments, and the filing of financial statements in accordance with prescribed or permitted accounting practices.
History
Aflac Incorporated was founded in 1955. The company was incorporated in 1973 under the laws of the state of Georgia.
