Aflac (AFL) 28 Apr 222022 Q1 Earnings call transcript

Good morning, and welcome to the Aflac Incorporated First Quarter 2022 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to David Young, Vice President of Investor and Rating Agency Relations and ESG. ahead. go Please

President update current U.S.; of results an our members be quarterly Incorporated, U.S. of Q&A will Max in other Management. who Chief we And Incorporated; capital first Accounting Andrea. and be Welcome to and our Global all remarks President Deputy CFO liquidity. from United Thank us Amos, call Crawford, release key Deputy touch in June the conditions financial and Dan and earnings Chief of President initiatives. Actuary; Dyslin, Chief after Steve Investments. good and investors.aflac.com call. a Riggieri, President Teresa Yesterday on Incorporated's Chairman Brad on and of Aflac along of COO for joining the Global operations to Investment of Officer Virgil related Chief earnings Kirsch, Executive of U.S.; quarter President the of will the Aflac Broden, and This Miller, Officer; Aflac video the briefly Incorporated about CFO segment posted the provided financial States Chief to Risk Aflac Aflac Al supplements Aflac Howard, with Global our with Officer Aflac and close along and you, Aflac CEO of Beaver, quarter morning. Japan U.S. and Fred Executive Officer; morning will discuss hearing we our and Investment then with quarter Vice Max Global White, Eric

Representative Aflac Koide, Lake, of and Director Team Aflac members by Charles Management President and Representative Director, Koichiro Sales Deputy also and Todd Director, President Director; Director and President Marketing. Japan. Insurance Masatoshi Daniels, and of Yoshizumi, at We of are International; Chairman Life Executive CFO, joined our

within are of laws. some we teleconference began, this in the Before forward-looking meaning statements securities federal

prove to they on those discuss to believe for are they some impact we XX-K be could results risk the no prospective statements today. that assurance can various Actual encourage accurate, Report our factors in from will reasonable, are we give we materially these Annual nature. Form you because our And we materially Although that results. differ of at look could

is mentioned earlier, certain and now on the investors.aflac.com I to As the earnings Dan. non-U.S. release Dan? reconciliations call available measures. of includes over hand I'll GAAP

Thank and joining you, morning. Thank you good David for us.

the committed reflect Japan. of on in for and first dedication, quarter States work I'm United I As and Aflac of our the hard XXXX. thankful team compassion the

policyholders to there employees, tirelessly team, continued force us promise. be management sales for to need work most, have as Our the when just they we

cautiously by weakening the the returns Also pandemic We conditions. continue yen. at contributed highlighted with remain were first solid update, reported the Max the in continuation in despite of his were we expected a of low earnings of earnings pandemic. than alternative the investments, benefit first per from optimistic in per the part Adjusted quarter, quarter diluted diluted Incorporated share first Aflac in supported quarter As share XXXX. of navigate video net the associated to better as $X.XX $X.XX ratio

On quasi-states that sales of Post This in has operations support quarter of approximately continued Post for transfer employees to start the new of was the it time Post This fiscal the with Japan product. the may Aflac's briefing. meet insurance mid-March. solely Mr. above the quarter, analyst to Japan's with to a impacted of Persistency were strong of it second the were first in financial part launched. a XX,XXX November also Masuda Group Japan strategic of XX.X%. constrained June April margin customers our with XXXX quarter Japan activities the these insurance in end to Japan strong, the focus place at up for Looking framework of selling in to we and year emergency new to CEO our through picking of company companies. as products Aflac included Post cancer to Post sales framework, first outlook alliance. of of with of financial gears to XXXX Japan This offer XXXX. half ability overall When the of Post traveling in sales the the anticipate Aflac product and President on as results decline Japan insurance I'm Japan comparisons and the remained up ramp Postal sales year. new the along momentum generated employees take to as face-to-face governance under Since the profit insurance. up contributing Japan will the range towards that medical collaboration Japan remains ongoing the excited provided meet Japan some employees however, These sales the was Holding note, at be we

Given stronger in that refreshment Japan overall second escalate Group. and plans, the sales improve and pandemic do year, execute of continues the conditions product the this Post that assuming to the productivity introductions we not we in expect sales half on our

range the improvements margin that outlook increase a Turning I'm investment above build our Financial and from a the conditions, quarter also a results we XX.X%. fourth momentum in products to of quarter. the pleased has at we This sales pandemic of in XX% out growth Aflac profit U.S. U.S., that saw continued the in This growth Briefing. provided the our in core continued with reflects sales initiatives. Analyst solid first was annual

Disability Premier which Dental are sales. Absent small Solutions, Group call plants relatively and and part of and our Vision Management we Life, While Aflac

they're pleased very how with We to our are contributing growth.

-- sale combination be long-term short-term, core U.S. core with also growth me, the we as top-line buying explain modestly The evolving. and by in Our strategy ongoing success. on they for products will tend in that person they a In preferences position future products moment. before. health is sell time, strong need comp better products, our remain the impacted to excuse to our Aflac access, ever initiatives in been the focused tend accompanied or our This of to supplemental but the stronger same we service Fred virtually. or whether for consumers being of penetration retention. part and increase to is as customers, have the habits than offer At also able know We and

to addition, in shares our dividend of XX.X% million achieve approach. of a extend deployed a In capital seek of deployment, value the remain consecutive first demonstrated in and tactical Incorporated of million pursue strong the by the Aflac cash market quarter capital quarter first repurchase purchasing our comes stock to on treasure significant increase it a will dividend. $X continuing United tactical with in strength XXXX in Turning goes capital cost capital $XXX emerge dividend deployment. ratios approach, of we Keep is shareholders. on and With to mind, on It discipline a return We of without and capital increases. capital we lowest to in This behalf shares. play in Japan have leadership. When investments, to position this States declaration growth the period industry. in from and we the fourth importance to among saying that stable balance this growth, and The common the continued of creation repurchase. marked including record we in we highest through dividend look XXth its year policyholders growth. a quarters our actions, our record

achieved and that partners financial which return. don't we've social policyholders, translated I'm business We distribution, communities. we've it's terms made. of ultimately shareholders, strong, we've long-term have success, while right integrating into of the what both results, our accomplished in doing I the sales employees, on purpose a think proud things also focused our coincidence shareholder and growth focusing on investments for have

the potential Fred? And underlying We growth markets our morning. also Thank this the U.S. joining business now program you continued the our of Fred, insurance and two turn believe and the largest over in the for life of the to for world. us in Japan, in strength

some growth. low hospitalization I'll very with my levels. on conditions also illness, provide daily and efforts and Thank at market you, critical going today COVID on comments and in focus beginning Dan. U.S., the to to related I'm perspective in remains Japan, drive deaths Japan economic

cases much the and new were have lifted of as quarter, XX. come month down government's the elevated weekly last in they of March prevention measures While were infection for the intensive

However, further a for the of XXXX. the much XX% decline ongoing our retail evidenced, felt through we and quarter, as COVID to compared as traffic insurance shops in impact

benefit we of hospitalization. the the were Sales estimate in despite considered designation and our had confident allows remain hospitalization, increase the increase for disease care our hit COVID claims of we rising for meantime, rate give despite the is expectations third the were an of lower with incurred To COVID COVID In claims a cases the driven which COVID quarter positive, COVID claims sector quarter will related year. dynamics you perspective, deemed provided outside or very along in hoped in continued ratios we the infectious weaker than the trend by This hospital. seen to for over of we as XX% payment low. remain hospitalization. deemed claims, internal have We for

with market of Post, continue out designed non-exclusive weakness, where are investment in the we respect experienced pilot While sales strengthen exclusive accelerating agencies to to share the Insurance last With market plan this half are agency launched proposal low taking sequential a With in to roll we channel renewed and successful our launch Cancer we year. conditions the we have to our additional in second XXXX. program activity late refreshment we share. with mind, partially efforts to include and COVID explain have timing, associate action growth to as platform in Japan increased build

was As transfer Japan disruption. of sales to Insurance Post employees April without completed XX,XXX Dan mentioned, the

focused offices, Our and characterized within Japan selling XXX Japan Post branches post employees now Post network, sales. XX,XXX Insurance locations through XX,XXX the alliance sales as on best XX corporate Insurance is from distribution

quarter protection still two sized market first cancer three initial industry. softer been first distinct postal small, elderly roughly and into product, of relatively is in our equally care divided is Importantly, medical size to have our Insurance This targets the product after the further and years. The of market respect period. the in With savings. and classes the Japan offices sales Post for regional the to within promotional communicated system were of product, the one-tenth both sales time

we market on share of teens. are the captured Protection We quickly high focused the market, segment the where in have

product, shifting should well competitive are burden the to of with Japan contemplate We the positioned government of individuals. more

voluntary to U.S., to pre-pandemic worksite other conditions. markets have Turning for benefits and the effectively the recovered

create reflect on two focused market. especially impact difficulty we model, However, in inflation on are commission our are based the U.S. and a challenging markets recruiting to areas navigating Tight we U.S. profession. labor full-time recruiting When a and economic persistency. of labor environment, we to

are pandemic. productive new rates reengaging veteran focused are agents on agents during and conversion producing therefore the We improving of recruits less to who

Our has average driving X% increase producers in weekly successful, year-over-year. been a strategy

In agents within leverage better addition, veteran to brokers. business expansion our recent and product are the small to grow strategy equipped

important was our note In account it's terms to of persistency the in quarter. persistency, stable

was seen track rate, the Labor based, us extreme in believe persistency partially to in leads quarter history. declining then pandemic the policyholder which been labor first movement levels broad in Department's to the quit not to had weak We However attributable which the during and recent the jumped it's markets.

turnover. is channel, up small turnover their higher COVID Unfortunately, impressive individual and XX%, work, by often While up leave is the most agent sales they balance. business behind. leave policies about type, XX%. called in common, by covered to of Dan XX%, results, office dynamics voluntary the were is their along great with XX% group what place the so backdrop, split employees when benefits sector product return resignation and up driving is the this broker up sales was With Split higher

we combination all impact cross sales and dollar products. the Vision voluntary were were for network track life of of Dental other consumer Dental Vision off up and to buy-to-build every the and building but a small Premier of and Vision, platforms able and Our Dental halo XX% year-over-year of $X.XX sales, disability sell albeit markets up and We with base.

the launched Finally, throughout us we It's insurance targeting year. proposals. Trupanion in that performance powered responding results case balance request should market our confidence and are Aflac that give the the added Pet continue by busy larger to for

in our exposure investment do have Russia, operations, to Turning Ukraine. direct or we any not

a existing sector, We're the us impacted impact of our course, multinational to what risk cause chain credit nothing supply large global concern the risks significant enough in with credits. does generally impact include closely quality risks, namely portfolio companies are and inflation among watching secondary the and European but large, Of Europe. interests high business to recession the to conflicts energy region, in

also in Further, rising based from bond erode yields as tailwind benefit money their from a for sizable portfolio, our of have aggressive rate floating Fed increasing our some obviously interest While will rates. new portfolio unrealized rate environment, we hikes benefits short-term the provide rising of rates rate interest gain investments. are directly resets rate

Given from significant rate lock forward the five changes a by XX% the in our we swap over increases of expected we in increasing of the move rates elected the curve, short-term interest income our of to in rate now the strategy such years. that expect is protected approximately portion interest rate notional next

short-term investments holding company the will addition, holds short-term In rising that yields. with benefit

But gains of deliver off results, generating the from on. the understand to we could strong a favorable in goes to continues returns these portfolios. start strong the portfolio some well portfolios these we're year alternative very back give as expected Our

provided neutral Max there In exposure impacts, are weakness overall GAAP business us to to his reported model, see recorded strategy, do David to back is no protected not currency the capital perspective Q&A, which in reinforces our altering on our the There outcomes. while the well an hand call strategy, or we helpful our the short, economic and focus are hedging Yen activities. certainly Yen in investment to strategic I'll Finally, weakening take to our perspective are comments. from And David? deployment implications on

the we will Thank take first Fred. [Operator you, Instructions] question. Andrea, now

ahead. go Dally of Stanley. Our Please first Morgan Nigel from comes question

Great, thanks, morning. good

that some start the we in considering in you know of the U.S., remained but I are potential some you so, there's are options And persistency? to available? if seasonality what the some life, strategies that has once high, So potential have improve if

over has a been a on We but while under have way our long we the of expanding least a portfolio. strategies product not an and help run have Virgil outlet, had which the persistency, Teresa for this, comment number to of

of and As over contribute you by Dental nature persistency believe better product how will and the know, just time for example Vision we works. very to that the

meantime, influencing think anticipate right we're off we regulations think the in of scale, the this that number and there's to a contributing down. calm market is of state final that But on remain However, persistency labor we to focused seeing lot Virgil, off have now policies But the rates, much any better a that of were we the one, lapse to that remain is now, -- eventually would expect activities combination the issue fall Teresa, if force we conditions motion right persistency. on fall In in it. that place. you requiring or comments. larger of drive think a we certain

that retention what as that, persistency, think operational from which I'll is making we impacts of that perspective, stabilize the or We're going as to But today premium just we product it mentioned, the know relates mailed be of account because we're we you based in generally on. you to things addition that what's stickiness persistency an product, what we our mix. lot it, of some well. also But the said, on labor market also, might or level we're seeing about high you stable labor with is as doing. account we do force talked when the sure a

what's so persistency our going that. more that's that premium thinking we're so on this point, at and And on come with to

sales a particularly of expecting than I on sales. some Great. medical think a us Japan were appear was follow-up weak. -- that's little Then, as just The decline, worse

the that your to half. mostly in Should expect Or also sales that given was you or to you being in case. refresh? the recover your product will well? expect why And perhaps So we with medical canceled expectation rebound back the can discuss as

period. you after let and down during realize initial fresh Yoshizumi some first Number down we'll of really products But one answer see normally Koide medical launch we calm And launch of think calm a san sales in last identified the was san I medical question. all that period. sales the issues. quarter fact have year that

it looking And and across about sales have the are san you we're that Post our Koide san momentum addition of and board at that within impacting the in I'll then some conditions question results. generally System for right. second simple things. offset talk But improve seeing held the Cancer speaking, up slowly no things increased half launch. of Yoshizumi to really Japan better types reason there's we're that the However, results and COVID the cancer the year to

[Foreign you, Language]. Yes, Yoshizumi. this Thank Fred. is

in And the we who both customers Japan as question. very those In increase salespeople Language] customers much. Let the have with Language]. infected goes the infection me been answer explosive as agency the to visit shops. quarter who first [Foreign visit that our well [Foreign

of like appointments that that the is to our Language] in [Foreign new a would it they Fred now And to Language]. they That's to product, Language] means coverage post basically There been insurance first and Language] [Foreign customers. And Omicron. this measures, last example, be have the quarter Language] we are then lead that are over for to shops under online have gathering by February make decrease. product in [Foreign gone this further people, associates had because was sales Post good has like will we organization medical. fact we [Foreign of town new year. future sales information was have insurance we is our what to promote what start And as visiting to care [Foreign very have transferred our are For did prepared. we move And product. analyze the declined benefits their our change related rest [Foreign And to had XX%. And [Foreign post also [Foreign our place visit such April. the office sales like for that we XX%. our in a Japan a regarding the would And gotten number is the we been company work as Language] by in [Foreign that like than the -- lower decreased to they preparation the we And And [Foreign that and Language] has even Language] Post customers people nursing for as [Foreign customers actually sales. this it's organizational the of And hear, medical Language] impact sales did quarter a we many there. activities believe [Foreign sale. plan seems first Language] I a launched to And the that the insurance, off was And the in And your for place now actual insurance in and customers our expected, the regards in comprehensively to also infrastructure had Language] trying agencies Japan Language]. launch the And far bit to pampers will [Foreign think from And Japan I occurred. Group. good what products a as [Foreign sales what Group company. of since proposing resume insurance it more fully the a from the to a Post through various me. said. question been company, Language] since we through the a new sales product year, cycle medical consultants took Language] are using the

the wait not we've comment. things a Japan, you're second the new Dan. of don't things they degree, in second those more of the way me I had second I I you're half with have all in we of assuming that over see What not you And that be think we've the back impact quite great it a constantly. don't I to they But everything, can that right I And to to selling improve. going but the are with year. And And think moves U.S. normal Japan really that down in now. see second the Japan come And quarter cost from affects in been sales, one make the sure. they here into was mentioned, I This can't some what don't every us just But affect seeing the think got evolve in aspect. I But the the that I terms things. to different in and quarter terms new And in adjusting. been rolling is and get half, I'm recruiting, is I coming let and second restrictions. back. underestimate is one while back going of are past. offices of Because have But like our in normal. start past And other think the ability. see XX% more of think half But that it's talking moving And any as see sales be to they exactly reflections. you'll the they been quarter of to have affect people they they affect those

color. That's great. Appreciate the

Kamath The ahead. next comes from go Please Jefferies. Suneet question of

to start Japan again. Thanks. with I wanted

us of shortening like seems time. quarters new these these life we years couple as it over you has and the a launches, launches years ago, if runway to couple refreshes it's post of product Maybe think of had that it a about that. Just shelf feels been now

that's other over So market we're and some that's observation. changed competition. In I'm do And Japan seeing have any on time? is your you you a wondering in what and medical to words, one, due think two, if share how fair data of increased

maybe comments, and it hold I think in in Japan But tell bit it. is would Suneet to a due largely on up think fact what your let's I you have is environment. think competitive I I comment Yes, general, the

not of new has that a that product Japan including have product that become specialize of the We Bank cycle sector that's rate third more business. in and and went domestic your we've negative often by to life and third XXXX, towards speed interest business. nimble steady I in related you that had then as that less property an things firms But Competition a and the companies casualty of years. which the and tell competition been have companies to One attractive and subsidiaries for health you sector time quicker. of dynamics reserving surprisingly. sudden sector all that moving movements drive slow of insurance navigated that into and a started question currency product action of to so more to has have currency you way, companies, around product, saw means other not Even into and and shift the as now period you subsidiaries product is refreshment, observation first environment. But intensified, how be of intense way that at are off. years when rate up is nature no go for to not a would and back migration a the be there's getting were their just rendered And

But to yes, medical year perspective or means Koide quicker san I'll be maybe to that on So and shorter, you Japan two let product then cancer. colleagues. life of with simply cycles four that comment. and refresh expectancy new have the based for but to san my is year That's Yoshizumi cycles for revise products, old the talking our a

you think it, severe Language] cancer efforts very go because the about and the before make [Foreign of this cancer data time [Foreign competition, the this Language] is details. [Foreign Yoshizumi. insurance with until we And that's [Foreign good that regarding area. also cannot are every we almost [Foreign -- the Thank that that it we shorter. is of patients Language] [Foreign Language] have of Now we using support cancer And become I will day. very, perform. the let since really capability. start towards the That's And me and are me. brand. approval Language] it's much, we market the and Language] for just expanding services for recover that still are evolving And what we and is even solicitation insurance. Language] very hand, [Foreign the really very the [Foreign again [Foreign into is very from Language] shorter can have as we Language] new sales would tell all And that [Foreign changing good short product from can very you Language] very ourselves strong good is work. that still to when well differentiate having insurance, platform. On market thinking Language] overwhelming good until as market or saying by society we [Foreign [Foreign these competitive. this a medical benefit, competitors competitive Language] And is authority we do And especially work cancer various our brand base We very mentioned the of patients thinking With becoming they say grow [Foreign other Language] advertisement the or Language] do developing believe product [Foreign

Got it.

I some a about the And little do the you've or Or about limited have is the we floating right. on All portfolio locked to locked just a rate in Fred, made your income five five prepared pivot. Okay. wanted in remarks years, then for for XX% in go on and more been comment that into mean think having to that? Can think how of that just fed the just you've through, upside? Does aggressive. you really bit if that? trying just detail years? that I'm

on. for aggressive to that provide current other is and In be locking Dyslin the rates. couple doing effectively Eric in expectation fed in Brad but we be we're in not of points here to marketplace just can color, forward curve, action. what and Yes, words, the Remember, have we're the very locking a clear

the so the nature of very swaps. And that's

So curve. holding we're $X reversing or and will doing note billion forward that about not that risk not floating on account, down in the the the billion protecting if we're you calming forward, that losing out, or floaters in rate, at we're our are is what the Also general meeting if against will, of you we've embedded another that aggressive $XX got expectations of company.

And that so we a way still taking remain to that relatively exposed rate advantage exceeds curve to forward if expectation. you define want environment of the it

it or off taken Eric Brad all table. haven't But we to either the get I'll So comment.

that's look course, will, you to our And When an over of if have I thanks, out which we the we deeper Yes, Fred. start, you would dive years. current is five do a just excellent understand. Plus, little year. planning,

we Max forward you For the in curves. of has curves, the of as the change use set if because as the increased. forward you floating uses then back rate plans fed The But of EPS, and typically substantially policy know, franchise's were part we did, buck, which November, overall will. last financial

a floating rate all So was. if projecting forward on we flow at based realized. what income never than significantly you years, higher the the be will look our just where over curves said next the know that five occurs, plan are Having

or Those income. What take we've amount fixed the significant we basically in locked really a have of about we swaps, book, opportunity but three, rates then years, two, will and end forward in do to curves there's four, the the upside, are happen to be aggressive. five, people in going because be recession, five, say, of know do U.S. up four, is to never up, fed portion in know and because many year. will down. coming a rate is, more good that we fed is would if of what's years If An we've do change curves XX% go a true, became the even the forward talking if pickup don't an three, likely continue about policy. and in curves what forward So that to and realized chosen floating such that that example of next

Fortunately, covered of third about portion we've good swap. book by got the that's a not a the

few And as of potentially years, over still more we'll rate course enjoy we continue assets. then in So upside, next some well. floating invest to the

rates to exposure good got as we've So rising well.

in? locked to portion to Would be that just pickup March on you November willing the you've size that from

think will. kind relatively But give that's to all really the Yes, insignificant. there locking pickup we It's trying doing if remember, modest. that. would in thought is anyway, you to. year, I some is we're pickup We're of this The not have to

don't So investment done, of looked right that. but it's I value front because it a thought present to think me, net has the the give the more have life income. in material let numbers we've on in to at us what I some over it not swap of

like curves, in an Yes, book say example, basis But is three would this income currently at our month rate months the talk forward a one year. LIBOR the about further XX is year started It's points there three or XXX. from pickup LIBOR we XX when as floating and LIBOR. and I

we get this pickup year. a So

for and forward the at the these Now, you look the fed forward five we if curves goes and is years be curves went that all with three, rate projected to out, four hikes. through LIBOR X.X% aggressive debt

year, but this to the from positive back So our rate to book tailwind floating come there we'd have is size it. to a income

Thank right. you. All

comes John question Barnidge of go Please next Piper ahead. Sandler. The from

markets buy-to-build sales quarter What you. Thanks. this in consumer percent with grow expected year We've year? the products? was last Thank XX% in to of first

So, no. Go ahead, Teresa.

to I'll response that. Virgil

Okay, thank you, Teresa.

X% between Remember, to for numbers. X% on in QX. X% and our there's X% So seasonality

So numbers talking give especially when a the quarter, during annual grow, about average. us our fourth which you've XX%, high

more solid you this to X% Again, XX% had all anticipated. buy-to-build, than we'll the end XX% and anticipating X% up that when was year with we're combine between growth year. first quarter this again the we it So though

So to those products in market we're with the out starting gain now. traction

the ended higher up than U.S. might anticipated? coming it in on Great. in Thanks. follow-up. What FAB. capture That [Indiscernible]

Would that question again? you ask

in Sure, at captured guidance how end the rates November? into in anticipated? the U.S. lapse rates much Or did were up reflected higher station FAB higher lapse the the in of coming than

Yes, did -- at for a lapse last we station that see we of year. FAB plan higher

the benefit So there's our in on going quarter. of well. and net an through here ratio, across financials a three also those impact the But combined and impact million expense $X on lower all obviously favorable bottom-line through is running premium the and ratio as the

policies about have lowers I future what with slightly obviously, we that's lower would Overall So because would expected. premiums. the we're way it. And net otherwise enforced think sitting than it earned

future us this clearly value start That being value So from off year, to sales said, strong a well. negative. that a as the it's our for builds for standpoint, embedded an were and an embedded

So lapses. in than $X impact bottom-line was there's expected of and quarter, puts from a a takes, but positive the number higher there million

Hey, let's come back to the of numbers. some the swap, because we pulled up

And so we can answer that question more directly.

So an us give idea. little Eric, bit of kind why you don't a

assumes current the for curve. our and forward Yes, projection this year, the

income bucks floating an our materializes $XX So versus from our this of plan. extra rate million year, about

ahead. Research. comes next of The Erik Bass Autonomous go question from Please

kind other Hi, the talk in costs. you which thank that you. of about maybe be was NII, hoping hedge piece moving would I could

business? And so your these about and still hedge talk making for higher lock the level able And as to Japan investment move to outlook could spread on you dollar same approach? U.S. changes the assets? Aflac any of Are generate you costs the are and you

much the for Yes, thank you question. very

about First recollect for a as this talking you'll number year, years. of

of our at been the has the costs. strategy year beginning hedge our in Now, to lock

there majority are buck, For the moving parts. of the

good very our points. with estimated for year, locked $XXX the at FX was were basis basis forwards going we altogether, us are think this costs in that short-term So hedge up points. this I about XX the million around at And so on hedge rates for because on year. do costs higher XX about costs Obviously, And options hedge significantly.

impact flavor this just of wouldn't differential till and So XXXX. you give to a us the really

around XX. XX this versus months of forwards paying XXX for today costs basis what points we're year Forward

what times overall what's end. So we volatility happening and similarly, from interest rates. with FX options probably a increase cost more around than and levels us we paid, given increased significant that would at two the expect And

stay where we significantly probably costs rates XXX% So on if when so about book. they would the to are, by next or be hedge get up year,

said having Now that, over our change book time. does

So that's I book. or our at we well. you that as the even hedge of change it balances asset as our static when can ratio, looking just classes assure But revisit a may all in

you against reduced rate though, applied than as are thing The our well, it our what assets. on to was, those of remind floating other much forward forwards book, which is

those rate their as with up just question, income going So assets discussed we substantially. floating is

will correlation close hedge So costs XXX% amount while of go up. to the going pretty the up the not income,

up. net spreads those going of the spreads even pretty have with the level So and stay one being generally should assets been the on variable the

it costs net of So at up. the on pretty book, a on be should basis, hedge actual definitely line would least forward neutral, item but the go

make through they've done change Yen. to board It more, our on. And have is standpoint. And years Tom and year for into from very for stock you, work just to I a the it's we sophisticated Brad to just I to for want get but so, model the months want an gone hear And our is, revolution. such what and know to of what volatility Chairman Fred always I've a I they've three yet that and from not Eric all we or in last not and as what is and the been and done gratifying like even investment what But you or tell in I the only following Max. have have XX hard and done, how said also evolution, comment today with and specifically, team evolved, and they've of hear answers, we prepared you what's these want last dedication

to think comment. going were a I Max, So, you make

to Yes, comment. one add I more wanted

at so notional $X billion quarter. Eric, So company, end At of have our the way. holding think billion we the also about of you in that's other about going when $X.X Japan, flag, these of the notional the four words

scenario a would increase increased you you hedge have in as the income even costs dislocation marketplace Japan, holding significantly would an associated have in perhaps like the hedge So that where could company. the

costs well. hedge somewhat the exposure an standpoint, we're reduce from enterprise So to as volatility and

and guess all putting it Thank it. you, Got together. I

kind rates being the talked year costs benefits It the about higher? floating the this are in. like locked to of you sounds NII So hedge

those, sort that on this in of locked and neutral maybe you'd the based comment XXXX putting expect And a corporate that expectation year? is hedging happens for So of then in all a net kind rates you've for what floating together is costs, it the on benefit then impact. what

$XX got billion, all together, it putting impact, billion billion, billion a realize I and have U.S. $X a $XX think it we we of dollar $XX positive I portfolio, hedged. yes. it's We think

got it. question. you of positive billion mean, catalyst. a in $XX We've There's XX% of it's I So locked no floaters.

it. you. Got Thank

go The next Jimmy ahead. Securities. comes Bhullar JPMorgan from of question Please

pre-pandemic from or So think that working are pitching you the do how from employees Dan, close to in how the preclude U.S., returning I letting terms to businesses next sort sort you about still schedule normal of about in whether agents people Hi, on, ongoing less good comment the on their think headwinds, it's sales there ongoing home, year I your and return question had morning. process sales in interested so? the a it think environment getting as or is headwinds meetings? following might up pre-pandemic normal, normal in over whole of like to versus levels or come to in to or

take meeting, And officer Well, that first up got our and to includes XXX let had than Directors, lower for about people what we've little lunch we I'm going we that Virgil have after company, have our that pre-pandemic, just And just me maybe for have and let say, to but coming really today. example. our that's is we our normally would Directors. normally, XXX. a about Today,

everything are move things are people back. normal. But that certain of So will a but it said, forward happen gives things idea be you not moving of in new look second back quite a look to I of getting I how half, But I the be They're from work home. there I to for to it kind as back, will mean, an will normal. there. amount

very because up address Virgil came the and terms they'll Teresa had we too let until forward. and of quarter. having real been know pleased issue in go done And Virgil with persistency pleased problem me it in let on that of I've first I'm just fix And an that what So sales. as I impact this

start can wants can go ahead, So the do make and boss. you Teresa if she She's whatever Virgil, comments, she wants. to

anecdotal with it some numbers. I'm so support Thank you few so Yes, going do much, a to Dan. comments.

to return to focuses was driving key of out by our normal one So culture.

bringing momentum meetings, back gather we lot to of top we sales make working a kept our sure that producing around market when year strategies and as our our make That partners, collecting were our mentioned, their our had veterans we make we feedback well taught events in and that to sat is they in agents, out broker with having the is those back to stress we last we're company do. where very and They Dan out along them, about still broker to like to professional the got levels as you to pleased brokers, as that, teams, forward. things going. how support very, were and which bring going changed sales have includes So the everybody being things sales mentioned normal we've service said about got sure and able virtually. Having they there face-to-face, need informed right also support model sure our together,

I the to provide level So this, will tell you we're that able service. of

numbers it with whether I'll that, to couple self-enrollment, whether XXXX, our face-to-face, share sales one it's However, is at face-to-face. virtual, of of back support it's looking were whether XX% a you pre-COVID

XX%, the XXXX, of now rest the enrollment, were type model, self-service. virtual face-to-face in look sales As being of the sales our at you face-to-face. them I of were QX, as back And or doing height hybrid XX% pandemic are saw a our at to

you were still more going were product tremendous number face-to-face, we of course, that to getting And in and of we other our back up, able sold that means. now through a sum drop to we up. saw can that pre-pandemic, face-to-face So accommodate see

I I of was our converting have more we spoke around years when in recruiting been up I sales momentum force overall, now, is was more week hit hope reducers reengage Fred So saw across there's adjust are right helps. a same. XX% average Again, all our But of productivity that increase that here conversions, veterans The our model important, who tell QX. lot than you, our veterans, to did about we and lines earlier mentioned in in recruiting. can up, but our the expect the five we

the can the going here, remainder feeling of the see the about voice you very good as to we're in year. So see confidence

our headwinds to specifically, just financial address many I've in that the solutions. and to the positioned environment, model, mentioned, due Yes, we're just were distribution that digital our our and we seeing of strength, well

you sales momentum so our And that's today. of force hear there in tremendous is amount energy comments. Virgil's because the in And a

ride that going momentum. And see come we're the issues to we'll so to continue we any that up in market. And address

be last And sales second off couple similar than to got for the affect COVID. this year, then your just pattern obviously, to in quarter assume the of quarter, else you prior a we first terms of year higher sales have been typically the years, that and of progression of of that, because used there But is should quarter something lot obviously results? would sales, local fourth as a the well? Or in

than Yes, more so anticipated, I'll think say higher anticipated certainly we us. I than that for the most is and higher quarter first

our the the from and the QX. quarters. definitely our more to that, the factors momentum growth with again, seasonality season the we're in QX. momentum, tell that with this you'll premier in and two into from products the come So certainly really absence with on be lot in impact, see going will definitely so of But Again, come early But same and fourth the our a where products is of consistency I do in through second quarter. life in we're this have of that disability, you very seasonality maintain going And and majority maintain right to selling to earlier looking year. and third in is consistent the see now production. the those the you'll we the the fourth sales We'll highest has QX will I QX, third quarters, we contributing buy-to-build, mentioned will those to look and see expect pleased

you. Thank

Goldman of Scott Alex Sachs. ahead. from comes question next The go Please

Hey, good morning.

is of that give overall that Yen of what just I but deployment your am capital think hedge. remains understanding that's I what on maybe EPS is is that to if that like I understanding capital And economic not think how in your you're you had about as and capital are about deploying for one stronger. Capital First And Yen you I it'll actually My just the hurt, would general, business that. EPS short-term also the priorities weaker, the then a stronger. make opportunities Am of if result here. I got saying capital GAAP hedge weakening, have we and if economic think the the GAAP it's case, the have correct? flexibility? you deployment. more the this When on it It's impact with think And hedge in I Japan

sort of go weakening disclosures, model obviously our to we Yes, those way the is stronger and SMR long-term Alex, back Yen I Japan think it Capital can a hedging description with described is that give of how actually a you our reasonable fab you sensitivities sensitivities, and works. there. know you in

quarter And dropped what the Japan. you leverage in in XX basis sort you move denominated you in impact can on of in the debt issue FX holding So simply calculate our the also, alone points is the capital Yen, travel position because if company because over we saw quarter. first to this of

first have. And forwards current this spread I at capacity quite FX receipt they be as and we obviously, to of that's leads sort will as actually settlements So over any settle, the important tower and add that company. unencumbered, And that there's rate because collateral to settle, quarter, of of every settle the forwards term at we billion no level, expect a month. that they the generally debt billion context, should $X.X got then will somewhat use holding cash if that over convert specific of cash, we $X continues forward higher in also time, At unencumbered into pile this the had that excludes time that you it as have the cash. we the ultimately out, some end to the of

time, convert then into over program hedging this cash. will So

into obviously So FX long-term, it you But by And lower the cash. dollar then short-term, with associated from to that in a of you're Japan weakening over going these Yen, some have the translation opportunities, to in leverage, balances we sort also all it that time, hit out see over get our deployment Japan, EPS the by scenario, strengthens impact. in words extent converted long-term. position capital higher to portfolio a the SMR have leads

that same all see a IRR for it we follows based it capital, basis. where As deployments deploy, relates deployment that the an of of we have additional we risk return on capital to criteria good

more from of housed to maybe how I housekeeping because Got sort guess a trend in Corporate, it. question, yes believe. in I that And of derivatives here? a should that you are it's we moving offsetting expect lot a little just parts, have corporate this of

mean, rate for think maybe I that, help or investment of even how us about segment just think do corporate? that through in to can you run we could net would to the where be earnings So income how

stable a marketing GAAP housed number. number, amortize all the income the so hedge first corporate derivatives to not the fairly of the does mark through does. And that's pack Yes, at run but EPS the level,

-- then negative But that the tax at bit our the offsetting quarter, credit little tax corporate NII running run this look for So quarter, somewhat and NII a you little you a if bit quarter, high favorable NII on that negative as on the by credit run line. in a the through line. results depressed we're low was on as a impact have a the in obviously, expenses investments, the

As do company have assets floating are in discussed the most the we of holding nature. earlier, at rate

the over see bit increased the has come that in yield of curve So of up, you're a obviously, short-end NII little to now that and time. as means pickup going a

think look the generally, this a a if parts, the at puts current. quarter, some takes you So there's and results but for moving decent run I rate of lot of and it's

thank it, you. Got

ISI. Tom ahead. The Evercore of Gallagher next question Please comes go from

Good morning.

come back First question, Japan, underlying to in Fred, XX.X%. the to the just benefit ratio

the to that little COVID to balance the for the year you extraordinary this range COVID the elevated it range back the I why happened, is to think fair medical to, down it think you've a within cases IBNR go that is I going excluding explain down? That's of releases. as expect drop just above guided bit claims,

actually give most on don't few related incurred Yes, last mind, let recent this what's you the me COVID. if some Because going just quarters over illustrate perspective, on to with claims really it'll Omicron. you

had In second back incurred it very in go quarter to billion, you up the about to and million ¥X.X small so actually Delta claims Delta obviously, million, our the in that quarter almost place, right took first If when the claims non-existent. was then up in picked billion, last to of the first and was dropped were to the and the year, we ¥XXX that And third about they numbers. quarter, around ¥X.X quarter peak. coming fourth down quarter, then peak billion. That ¥X.X picked in, ¥XXX

three at about Delta. in saw case you're here week, you two, Omicron what if what largely I many a the that least, peak what levels, and during times saw Japan, so I working in And companies a of running U.S. and the around think at living that think were following don't realize just you're the peak if of U.S., you're talking and we economy, XXX,XXX level

high. it's in fortunately, And particularly among the a Omicron. Now very rates, are vaccination elderly, Japan, version mild of very fortunately,

that really up that in the haven't This opposite. is the that quite has of entirety COVID result, rates, deaths have don't But peak seen particularly of down, pick most And February moment the things you hospitalization, nor you environment. seen period the Japan a so that's for because think as severe seen time it's a Japan. calmed infection in throughout

some As seeing face-to-face off going of again, emergency what mentioned of a why on on. you're result, again, Dan states And that's the dynamics. about

and essentially this infectious with you I out disease. together the doctor claims reason that, for related agreed home as an got industry issue, if Japan cover not deemed home. issues. capacity cover to pointed and as does insurance for that and Japan Now, life reason allow the hospital you're a of COVID-XX versions, the allowed disease at hospitalization infectious And you government, COVID-XX allowed you're of and the to at to cause is want nature the will, at when to variants treatment, diagnose The that was claims our do the

degrees to that where freedom And place. of takes so allow care as more they

we we're because there's three Right May, in ago, months seeing not we're calm cases frequency April, lagging peak to now time, claims for to likely levels. two, down, and severity, seen we've would example, seeing go of calm that down sheer the of a related related effect. claims but coming are in cases in because So that volume the home treatment, of or but over at expect up because

that's it's we quarter, think day, we may what quarter. I continue, we going the So into would it But second probably for ratio don't to say at in the the really mean COVID end early, of of And second benefit the the lower you then see claims all year should goes medical claims the levels, you're again, on. in. other on, have lower as activity and face-to-face, continue. But is types remember, going not down this while calm come seeing know

the your don't of during And of benefit just so mix claims wrong time. period have you this necessarily see It's ratio shifted moving the direction.

very and to not would the expect continue, should And the say interesting. quarter carefully. necessarily upward you on not be dramatic data looking COVID ratio, lagging been I this busting given anticipate But that. but down benefit effect, pressure would second quite into and we've it's it at So claims I

Tom, the just north in on bit our benefit of points. And color the a incurred quarter you if from was some to you give XXX more little basis on it, COVID take normalized impact ratio

range and that take ratio quarter in normalized component, of XX%. that in smack So XX% will isolate your you our middle the you benefit to take first the of if that

in momentum there's for much so. that if up the whether terms and given like the you're on lag agents in brokers, My both some that that of a guys. numbers the initiatives. those knowing recruiting so productivity you can Got your color. sales improvement with Thanks the I from you does you just it in on sales? seeing to going about U.S., you, do that's recruits that know converting into curious maintain follow-up recruiting, the you to comment down the think then out, start U.S. all what you Virgil helpful now, look But and but two, don't gains in with thought of you drop from add you based think just What impact all together of taking severity is I'm think said, in he that's to think sales, strong three sounded if quarters do if your

Well, won't they if they don't, make bonuses.

impact going want comment? So it's to going certainly to them. But Virgil, you

thank you, Dan. Yes,

numbers, which to year, so with. small busiest is tell where about XX%, So converting year, crew our and we broker talked if that those you X,XXX, business them, of on still I'll do we year, look coming at conversions X,XXX lot we XX,XXX QX when I put close increase last the focus a time agents over you we the recruited was focus And the out And the on over of it think QX. of XX% in about in focus last converted. of had getting a brokers

So that strategy is working.

veterans numbers. higher Right solid, many because how reengage know, formula, need productivity, people that at can it at we're it's you conversion produce Now, and our that's a add hit up, rates important, veterans again, having the say to at you, tell back said look those can into rate. come you you and not seeing recruiting when can we a look now are to is that, we you

not to recruit. still we're numbers about So these I've look, not going ran are and that over to say how optimistic we going over, we're to

over on got in going is of So seeing final we've March, I and some weeks now, April. tell right in translating I the over progress you back a it XQ can few at weekly that I week in into and look additional on look, progress week, efforts If March basis.

may you our sales dramatically over saw been has effort is broker color which to at comments through of company. be driving the agents of go business add small I it, at focusing X,XXX agents upwards can that recruiting of add in not averaging And to one thing one through some X,XXX. looking on a now as column remember level recruited the Virgil well, quarter, we're XXXX, as recruiting And in focused would up but a historically brokers. to our you this result, and brokers of past in And year-end the

does sell it broker, broker. that when and appointed that product you what selling appointed broker, be through business you've what they've them, product a that recruit small mean, means to Now, doesn't you mean is you're eligible to through it

he And actually is last of talking about when brokerage into and the conversion large we're the platform. were that term is amount now brokers those appointed things so through now one focusing on that uses of working we're generating up their signed them Virgil that on converting sales year,

that. yet piece, So a runway that's go there's and on lot of to a big

Krueger The go Please ahead. next comes Ryan KBW. question from of

they it, was if I begin you know metric, give you prior your contribute you help cancer could production, a could morning. I you again, of the think more you about qualitative Japan much curious on but can could Post think one good selling to back was Thanks, if cancer mis-selling maybe us actively products it, I Post quantification, I believe give about give commentary just it as Japan third how any think issue. could

give could on thoughts your build cancer could what you percentage think of any up If they to? sales back you

with Japan go Post, is committed to stopped go us. I now. I'm shareholders, the how always them But they it. regained want, I regarding that you, They've there than into I all see. to can't been, they say, dedicated tell that but saying any to you detail with problem they to seeing I've It's have to been it And are to low. other the there's relationship. last or about what you us. the it's never as if more go And Basically want of timing happy us know large we that's and can help have so are nothing. that a very know wait can't have want any have since can production they just year, important. stronger and we to is, again. know detail other a and return tell position that they And just wonderful two gather and We're see no we than do feel have message all started we a getting to They happy this we'll I tasks but those Japan you into detail. asked still them give us they detail absolutely They're but inception the Post. Well, you into expecting that with like I'm But production. and encouraged to production, There's

understood. Okay, Appreciate the comments.

over our back like I David to for any would Young session. closing concludes turn question-and-answer the to This remarks. conference

to of for And want all you this our thank you, I joining Thank Andrea. call morning.

and questions, have any Till follow-up all the to care. speaking take to forward contact take you If phone be or to me email please look soon. via you I'll happy them, then,

you now is conference disconnect. Thank attending for may concluded. now presentation. you The today's And