Aflac Incorporated Announces First Quarter Results, Declares Second Quarter Dividend,...

Aflac Incorporated Announces First Quarter Results, Declares Second Quarter
Dividend, Estimates RBC Ratio of 479%

COLUMBUS, Ga., April 29 /PRNewswire-FirstCall/ -- Aflac Incorporated today
reported its first quarter results.

Total revenues, which benefited from a stronger average yen/dollar exchange
rate than a year ago, rose 12.9% to $4.8 billion, compared with $4.3 billion
in the first quarter of 2008. Net earnings were $569 million, or $1.22 per
diluted share, compared with $474 million, or $.98 per share, a year ago.

Net earnings in the first quarter of 2009 included net realized investment
losses of $6 million, or $.01 per diluted share, which reflected both
after-tax realized investment gains and losses, compared with net realized
losses in the first quarter of 2008 of $4 million, or $.01 per diluted share.
Realized after-tax investment gains in the first quarter of 2009 of $146
million were generated to offset previously incurred investment losses for
federal tax purposes. Realized after-tax investment losses in the first
quarter of 2009 were $152 million.

Of the realized investment losses in the first quarter of 2009, approximately
$74 million resulted from the impairment of certain collateralized debt
obligations and $32 million was due to the impairment of the corporate bonds
of two issuers: Security Benefit Life and Ford Motor Co. The company also
realized $4 million of after-tax losses related to the impairment of certain
collateralized mortgage obligations. In addition, the company realized $42
million of impairment losses on perpetual, or so-called "hybrid," securities
of two issuers because their credit ratings were lowered to below investment
grade in the first quarter of 2009.

The company has and will continue to follow the Securities and Exchange
Commission's (SEC) guidance contained in its letter dated October 14, 2008,
regarding perpetual securities until the Financial Accounting Standards Board
(FASB) addresses the issue of whether a debt or equity method is most
appropriate when evaluating perpetual securities for
other-than-temporary-impairment charges under generally accepted accounting
principles (GAAP). In accordance with this guidance, the company evaluates
its holdings of perpetual securities using a debt impairment method unless the
security is downgraded to below investment grade, in which case the SEC
guidance requires the company to use an equity impairment method. The debt
impairment approach addresses the security issuer's ability to pay interest
and redeem principal on a timely basis, whereas the equity impairment approach
is based on an aging schedule of unrealized losses. For evaluating perpetual
securities on a statutory accounting basis, the company continues to use the
debt impairment approach as required under statutory accounting principles.
The company's credit analysis suggests that both issuers of the perpetual
securities that were impaired on a GAAP basis will be able to meet their
contractual obligations for payment of interest and principal. As a result,
no impairment charges will be recorded on a statutory accounting basis for
these perpetual securities.

The impact on net earnings from the change in fair value of the interest rate
component of the cross-currency swaps related to the company's senior notes,
as required by SFAS 133, decreased net earnings by $3 million, or $.01 per
diluted share in the first quarter of 2009. The impact from SFAS 133
increased net earnings by $3 million, or $.01 per diluted share in the first
quarter of 2008. Net earnings in the first quarter of 2009 benefited from a
gain of $10 million, or $.02 per diluted share from the extinguishment of
parent company debt.

We believe that an analysis of operating earnings, a non-GAAP financial
measure, is vitally important to an understanding of Aflac's underlying
profitability drivers. We define operating earnings as the profits we derive
from our operations before realized investment gains and losses, the impact
from SFAS 133, and nonrecurring items. Management uses operating earnings to
evaluate the financial performance of Aflac's insurance operations because
realized gains and losses, the impact from SFAS 133, and nonrecurring items
tend to be driven by general economic conditions and events, and therefore may
obscure the underlying fundamentals and trends in Aflac's insurance
operations.

Furthermore, because a significant portion of our business is in Japan, where
our functional currency is the Japanese yen, we believe it is equally
important to understand the impact on operating earnings from translating yen
into dollars. We translate Aflac Japan's yen-denominated income statement
from yen into dollars using an average exchange rate for the reporting period,
and we translate the balance sheet using the exchange rate at the end of the
period. However, except for a limited number of transactions, we do not
actually convert yen into dollars. As a result, we view foreign currency as a
financial reporting issue for Aflac and not as an economic event to our
company or shareholders. Because changes in exchange rates distort the growth
rates of our operations, we also encourage readers of our financial statements
to evaluate our financial performance excluding the impact of foreign currency
translation. The chart toward the end of this release presents a comparison
of selected income statement items with and without foreign currency changes
to illustrate the effect of currency.

Operating earnings in the first quarter of 2009 were $568 million, compared
with $475 million in the first quarter of 2008. Operating earnings per
diluted share rose 24.5% to $1.22, compared with $.98 per share a year ago.
The stronger yen/dollar exchange rate increased operating earnings per diluted
share by $.09 for the first quarter. Excluding the benefit from the stronger
yen, operating earnings per diluted share rose 15.3% in the first quarter.

The company early adopted the FASB Staff Positions on SFAS 157-4 and SFAS
115-2 in the first quarter. SFAS 157-4 addresses fair value measurements of
assets, whereas SFAS 115-2 speaks to the determination and recognition of
other-than-temporary impairments. The fair values of the company's
investments were not materially affected by the adoption of the staff position
on SFAS 157-4.

Total investments and cash at the end of March were $61.7 billion, or 1.7%
lower than a year ago. The decrease in total investments and cash reflected
the impact of the global widening of credit spreads on the company's
long-duration portfolio, which produced lower fair values for debt securities
that are classified as available for sale on the balance sheet. Gross
unrealized losses on investment securities classified as available for sale
were $5.9 billion at March 31, 2009, compared with $4.1 billion at December
31, 2008, and $1.9 billion a year ago.

Shareholders' equity was $5.2 billion at March 31, 2009, compared with $6.6
billion at December 31, 2008. Shareholders' equity at March 31, 2009,
included a net unrealized loss on investment securities of $3.0 billion, which
primarily resulted from the previously mentioned widening of credit spreads,
compared with a net unrealized loss of $1.2 billion at December 31, 2008. The
annualized return on average shareholders' equity in the first quarter was
38.4%. On an operating basis (excluding realized investment losses, the
impact of SFAS 133 and the gain from the extinguishment of debt from net
earnings and unrealized investment gains/losses in shareholders' equity), the
annualized return on average shareholders' equity was 28.3% for the first
quarter of 2009.

On April 15, 2009, Aflac Incorporated used internally generated cash flow to
repay its $450 million senior notes and settle the related cross-currency,
interest rate swaps that were used to convert the original dollar-denominated
debt obligation into yen. The funds were transferred through a loan from the
company's principal life insurance subsidiary, American Family Life Assurance
Company of Columbus, to Aflac Incorporated. The loan is an admitted asset on
the insurance subsidiary's books under statutory accounting principles; and
therefore, does not negatively impact the insurance company's risk-based
capital ratio (RBC). This note has an annual interest rate of 7.13% and a
term of three years with a provision for early repayment. The three-year term
provides flexibility in accessing the external debt markets when conditions
and interest costs improve.

AFLAC JAPAN

Aflac Japan premium income in yen rose 3.6% in the first quarter. Net
investment income increased .5%. Investment income growth in yen terms was
lowered by the stronger yen/dollar exchange rate because approximately 34% of
Aflac Japan's first quarter investment income was dollar-denominated. Total
revenues were up 3.3%. The benefit ratio continued to improve and the
operating expense ratio was slightly lower than a year ago. As a result, the
pretax operating profit margin expanded from 18.0% to 19.0%, and pretax
operating earnings in yen increased 9.3%.

The average yen/dollar exchange rate in the first quarter of 2009 was 93.37,
compared with an average rate of 105.06 in the first quarter of 2008. Aflac
Japan's growth rates in dollar terms were enhanced as a result of the 12.5%
strengthening of the average exchange rate during the quarter.

Premium income growth in dollar terms benefited from the stronger yen in the
first quarter and rose 16.5% to $3.0 billion. Net investment income was up
12.9% to $560 million. Total revenues increased 16.2% to $3.6 billion.
Pretax operating earnings were $681 million, or 22.9% higher than a year ago.

Aflac Japan sales declined .4% in the first quarter to 27.5 billion yen, or
$293 million. Cancer insurance sales were solid, rising 7.4% and accounting
for 34.3% of total new sales in the first quarter. The increase in cancer
insurance sales primarily benefited from efforts to upgrade the coverage of
existing policyholders to the benefit levels of Aflac Japan's newest cancer
insurance product. Bank channel sales increased 265.6% to 1.0 billion yen in
the first quarter, reflecting favorable comparisons to a year ago when bank
channel sales began. On a sequential basis, bank channel sales rose 5.2% over
the fourth quarter of 2008. At the end of March 2009, Aflac Japan's products
were available to customers of 250 banks. Aflac Japan's objective for the
full year is for sales to be flat to up 5% in yen terms.

AFLAC U.S.

Aflac U.S. premium income increased 5.0% to $1.1 billion in the first quarter.
Net investment income increased 1.4% to $125 million. Total revenues rose
4.7% to $1.2 billion. Pretax operating earnings were up 7.2% to $204 million.

Weak economic conditions continued to challenge Aflac's sales results in the
United States. Total new annualized premium sales in the first quarter were
down .6% to $351 million. Sales benefited from six additional production days
in the first quarter. Without the additional days, sales would have been down
approximately 6.5%. However, many sales indicators remained positive in the
quarter. Newly established payroll accounts were up 9.9% over a year ago,
suggesting Aflac's brand message and business-to-business efforts are reaching
employers around the country. In addition, the Aflac U.S. distribution system
expanded through new agent recruitment. During the first quarter, recruitment
of 8,100 new sales associates was 25.0% higher than the first quarter of 2008.
Importantly, the number of average weekly producing sales associates rose 2.4%
in the first quarter to more than 11,100. Like Aflac Japan, the objective for
Aflac U.S. is for sales to be flat to up 5% for the full year.

DIVIDEND

The board of directors declared the second quarter cash dividend of $.28 per
share. The second quarter dividend is payable on June 1, 2009, to
shareholders of record at the close of business on May 20, 2009.

OUTLOOK

Commenting on the company's first quarter results, Chairman and Chief
Executive Officer Daniel P. Amos stated: "The weakened economies in Japan and
the United States continued to pose challenges for the sale of our products.
However, we still sold more than 1.2 million policies during the first three
months of this year, which generated more than $643 million of new annualized
premiums. We are confident in our business model and remain convinced that
the underlying need for our products in both countries is strong. We also
believe we are well-positioned to meet consumers' needs.

"From a financial perspective, I am pleased with our start in 2009. Operating
earnings per diluted share were consistent with our expectations and annual
goal for 2009. Although net earnings reflected realized investment losses,
those losses were manageable. Our ability to absorb the investment losses is
a direct reflection of our capital position and the strength of our operation
in terms of earnings and cash flow. We remain very focused on maintaining a
strong capital position, especially on a regulatory basis. Although we have
not yet finalized our statutory financial statements, we estimate that our
risk-based capital ratio was 479% at March 31, 2009.

"As we assessed the changes to SFAS 157 and 115, we concluded we were in a
good position to adopt the revised standards in the first quarter. Our
investment portfolio's focus on a fairly limited number of asset classes gave
us confidence we will meet the increased disclosure requirements by the time
our first quarter Form 10-Q is filed with the SEC. Although the pricing of
our investments was not materially affected by the new provisions of SFAS 157,
we believe the changes to SFAS 115 support the notion of taking a longer view
on the recovery of the fair value of an investment, which is consistent with
the long-duration nature of our business.

"I continue to believe our overall investment approach of matching our
long-duration, yen-denominated liabilities with securities of comparable
characteristics is the most appropriate and prudent approach for us to take.
Because our liability requirements have not changed, we do not intend to
change our investment discipline. We will continue to purchase long-duration,
investment grade, fixed-maturity securities when investing our sizeable
investment cash flows. Although we have seen a global and significant
downward move in credit ratings, 95% of our total debt investments and
perpetual securities were rated investment grade at the end of the first
quarter.

"Our sales outlook for this year remains cautious due to global economic
uncertainty. At this point in the year, we continue to view flat sales to a
5% increase in both Japan and the United States as reasonable targets for
2009. However, we recognize that continued or further economic weakness would
likely result in a need to revisit those targets.

"We also continue to believe our 2009 objective for operating earnings per
share growth is reasonable and achievable. However, at this point in the
year, it appears unlikely that we will repurchase any of our shares in 2009.
As a result, we would expect operating earnings per diluted share to grow at
the low end of our 13% to 15% target range this year, assuming the same
average exchange rate as last year. An increase of 13% in operating earnings
per diluted share would equal $4.51 in 2009, assuming 2008's average
yen/dollar exchange rate of 103.46. If the yen averages 100 to 105 for the
full year, we would expect reported earnings to be in the range of $4.47 to
$4.59 per diluted share. Using that same exchange rate assumption, we would
expect second quarter operating earnings to be $1.11 to $1.14 per diluted
share."

For more than 50 years, Aflac products have given policyholders the
opportunity to direct cash where it is needed most when a life-interrupting
medical event causes financial challenges. As the number one provider of
guaranteed-renewable insurance in the United States and the number one
insurance company in terms of individual insurance policies in force in Japan,
Aflac insurance products provide protection to more than 40 million people
worldwide. Aflac has been recognized by Ethisphere magazine as one of the
World's Most Ethical Companies for three consecutive years and was also named
by the Reputation Institute as the Most Respected Company in the Global
Insurance Industry in 2008. In 2009 Fortune magazine recognized Aflac as one
of the 100 Best Companies to Work For in America for the eleventh consecutive
year. Fortune magazine also ranked Aflac No. 1 on its global list of the Most
Admired Companies in the Life and Health Insurance category. Aflac appears on
Hispanic Enterprise magazine's list of the 50 Best Companies for Supplier
Diversity and on Black Enterprise magazine's list of the 40 Best Companies for
Diversity. Aflac was also named by Forbes magazine as America's Best-Managed
Company in the Insurance category. Aflac Incorporated is a Fortune 500 company
listed on the New York Stock Exchange under the symbol AFL. To find out more
about Aflac, visit aflac.com.

A copy of Aflac's Financial Analysts Briefing (FAB) supplement for the first
quarter of 2009 can be found on the "Investors" page at aflac.com. In
addition, the company has added a complete listing of its investment holdings
in the financial sector. This list, along with a separate listing of the
company's perpetual securities, can also be found on the "Investors" page of
aflac.com.

Aflac Incorporated will webcast its first quarter conference call on the
"Investors" page of aflac.com at 9:00 a.m. (EDT) on Thursday, April 30.

AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED INCOME STATEMENT
--------------------------------------------------------------
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)

THREE MONTHS ENDED MARCH 31, 2009 2008 % Change
---- ---- --------

Total revenues.......................... $4,818 $4,267 12.9%

Benefits and claims..................... 2,811 2,538 10.7

Total acquisition and operating
expenses............................... 1,136 1,003 13.3

Earnings before income taxes............ 871 726 20.0

Income taxes............................ 302 252

Net earnings............................ $569 $474 20.0%

Net earnings per share - basic.......... $1.22 $.99 23.2%

Net earnings per share - diluted........ 1.22 .98 24.5

Shares used to compute earnings per
share (000):
Basic............................... 466,097 478,138 (2.5)%
Diluted............................. 467,132 484,417 (3.6)

Dividends paid per share................ $.28 $.24 16.7%

AFLAC INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE SHEET
--------------------------------------------------------------
(UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)

MARCH 31, 2009 2008 % Change
---- ---- --------

Assets:

Total investments and cash............. $61,729 $62,788 (1.7)%

Deferred policy acquisition costs...... 7,887 7,354 7.3

Other assets........................... 2,199 2,127 3.4

Total assets......................... $71,815 $72,269 (.6)%

Liabilities and shareholders' equity:

Policy liabilities..................... $62,664 $57,796 8.4%

Notes payable.......................... 1,573 1,606 (2.1)

Other liabilities...................... 2,379 4,733 (49.7)

Shareholders' equity................... 5,199 8,134 (36.1)

Total liabilities and shareholders'
equity.............................. $71,815 $72,269 (.6)%

Shares outstanding at end of period
(000)................................. 467,424 475,091 (1.6)%

RECONCILIATION OF OPERATING EARNINGS TO NET EARNINGS
----------------------------------------------------
(UNAUDITED - IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)

THREE MONTHS ENDED MARCH 31, 2009 2008 % Change
------ ------ --------

Operating earnings...................... $568 $475 19.6%

Reconciling items, net of tax:
Realized investment gains (losses).... (6) (4)
Impact from SFAS 133.................. (3) 3
Extinguishment of debt................ 10 -

Net earnings............................ $569 $474 20.0%

Operating earnings per diluted share.... $1.22 $.98 24.5%

Reconciling items, net of tax:
Realized investment gains (losses).... (.01) (.01)
Impact from SFAS 133.................. (.01) .01
Extinguishment of debt................ .02 -

Net earnings per diluted share.......... $1.22 $.98 24.5%

EFFECT OF FOREIGN CURRENCY ON OPERATING RESULTS(1)
--------------------------------------------------
(SELECTED PERCENTAGE CHANGES, UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2009 Including Excluding
Currency Currency
Changes Changes(2)
--------- ----------

Premium income.......................... 13.2% 4.1%

Net investment income................... 9.6 3.1

Total benefits and expenses............. 11.5 2.5

Operating earnings...................... 19.6 11.0

Operating earnings per diluted share.... 24.5 15.3

(1) The numbers in this table are presented on an operating basis, as
previously described.

(2) Amounts excluding currency changes were determined using the same
yen/dollar exchange rate for the current period as the comparable
period in the prior year.

2009 OPERATING EARNINGS PER SHARE SCENARIOS
-------------------------------------------

Average Annual
Exchange Operating % Growth Yen
Rate EPS Over 2008 Impact
-------- -------- ---------- ------

85 $5.04 - 5.12 26.3 - 28.3% $.53

90 4.87 - 4.96 22.1 - 24.3 .37

95 4.73 - 4.81 18.5 - 20.6 .22

100 4.59 - 4.68 15.0 - 17.3 .09

103.46* 4.51 - 4.59 13.0 - 15.0 -

105 4.47 - 4.55 12.0 - 14.0 (.04)

110 4.37 - 4.44 9.5 - 11.3 (.15)

*Actual 2008 weighted-average exchange rate

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
forward-looking 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
generally; governmental actions for the purpose of stabilizing the financial
markets; defaults and downgrades in certain securities in our investment
portfolio; impairment of financial institutions; credit and other risks
associated with Aflac's investment in perpetual securities; differing
judgments applied to investment valuations; subjective determinations of
amount of impairments taken on our investments; realization of unrealized
losses; limited availability of acceptable yen-denominated investments;
concentration of our investments in any particular sector; concentration of
business in Japan; ongoing changes in our industry; exposure to significant
financial and capital markets risk; fluctuations in foreign currency exchange
rates; significant changes in investment yield rates; deviations in actual
experience from pricing and reserving assumptions; subsidiaries' ability to
pay dividends to the Parent Company; changes in regulation by governmental
authorities; ability to attract and retain qualified sales associates and
employees; ability to continue to develop and implement improvements in
information technology systems; changes in U.S. and/or Japanese accounting
standards; decreases in our financial strength or debt ratings; level and
outcome of litigation; ability to effectively manage key executive succession;
catastrophic events; and failure of internal controls or corporate governance
policies and procedures.

Analyst and investor contact - Kenneth S. Janke Jr., 800.235.2667 - option 3,
FAX: 706.324.6330, or kjanke@aflac.com

Media contact - Laura Kane, 706.596.3493, FAX: 706.320.2288, or
lkane@aflac.com

(Logo: http://www.newscom.com/cgi-bin/prnh/20090422/CL03654LOGO )

SOURCE Aflac Incorporated

Analyst and investor contact, Kenneth S. Janke Jr., 1-800-235-2667 - option 3,
FAX: +1-706-324-6330, kjanke@aflac.com; Media contact - Laura Kane,
+1-706-596-3493, FAX: +1-706-320-2288, lkane@aflac.com