SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file no. 1-7434
----------------- ------
AFLAC INCORPORATED
- ----------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-1167100
- ------------------------------------ ----------------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1932 Wynnton Road, Columbus, Georgia 31999
- ------------------------------------ ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 706-323-3431
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
----------------------------------------------------------------------
Common Stock, $.10 Par Value New York Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
--------
The number of shares of the registrant's Common Stock outstanding at March
17, 1997, with $.10 par value, was 136,612,572. The aggregate market value
of the voting stock held by non-affiliates of the registrant as of March 17,
1997 was $5,355,683,873.
DOCUMENTS INCORPORATED BY REFERENCE
PART I Item 1 Exhibit 13 - pages 13-5 to 13-24 (Management's
Discussion and Analysis of Financial
Condition and Results of Operations (MD&A)),
pages 13-37 to 13-46 (Notes 2 and 3 of the
Notes to the Consolidated Financial
Statements), and pages 13-57 to 13-58
(Note 10). The applicable portions of the
Company's Annual Report to Shareholders for
the year ended December 31, 1996, are
included as Exhibit 13
Item 2 Exhibit 13 - page 13-23 (Cash Flow section of
MD&A) and page 13-48 (Note 5)
PART II Item 5 Exhibit 13 - pages 13-1, 13-2 and 13-57
(Note 10)
Item 6 Exhibit 13 - pages 13-3 and 13-4
Item 7 Exhibit 13 - pages 13-5 to 13-24
Item 8 Exhibit 13 - pages 13-25 to 13-64
PART III Item 10 Incorporated by reference from the
definitive Proxy Statement for the Annual
Meeting of Shareholders to be held May 5,
1997 (the Proxy Statement)
Item 11 Incorporated by reference from the Proxy
Statement
Item 12 Incorporated by reference from the Proxy
Statement
Item 13 Incorporated by reference from the Proxy
Statement
i
AFLAC Incorporated
Annual Report on Form 10-K
For the Year Ended December 31, 1996
Table of Contents
Page
______
PART I
Item 1. Business................................................ I- 1
Item 2. Properties.............................................. I-16
Item 3. Legal Proceedings....................................... I-17
Item 4. Submission of Matters to a Vote of Security Holders..... I-17
Item 4A. Executive Officers of the Company....................... I-18
PART II
Item 5. Market for Company's Common Equity and Related
Shareholder Matters................................... II- 1
Item 6. Selected Financial Data................................. II- 1
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... II- 1
Item 8. Financial Statements and Supplementary Data............. II- 1
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... II- 1
PART III
Item 10. Directors and Executive Officers of the Company......... III- 1
Item 11. Executive Compensation.................................. III- 1
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................ III- 1
Item 13. Certain Relationships and Related Transactions.......... III- 1
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................... IV- 1
ii
PART I
ITEM 1. BUSINESS
GENERAL DESCRIPTION
AFLAC Incorporated (the Parent Company) was incorporated in 1973 under
the laws of the State of Georgia and acts as a general business holding
company. The Parent Company is a management company principally engaged,
through its insurance subsidiaries, in providing supplemental health
insurance products in the United States and Japan. In addition, the Parent
Company, through subsidiaries and a general partnership with American Family
Life Assurance Company of Columbus (AFLAC), operates in television
broadcasting. As a management company, the Parent Company oversees the
operations of its subsidiaries and provides capital and management services.
AFLAC Incorporated and its subsidiaries (the Company) have only one
significant industry segment - insurance. For financial information
relating to the Company's foreign and U.S. operations, see Exhibit 13, pages
13-5 to 13-24 (Management's Discussion and Analysis of Financial Condition
and Results of Operations (MD&A)) and page 13-37 (Note 2 of Notes to the
Consolidated Financial Statements), which are incorporated herein by
reference.
During 1996, the Company entered into definitive agreements for the
sale of its broadcast division business consisting of seven network-
affiliated television stations. The total pretax gain from this transaction
is estimated to be $325 million. Finalization of the transaction is subject
to approval by the Federal Communications Commission. The sale of one
station, WAFB-TV in Baton Rouge, Louisiana, closed on December 31, 1996.
The pretax and after-tax gains recognized on the sale of WAFB in 1996 were
$60.3 million and $48.2 million, respectively. The effect of the after-tax
gain on 1996 net earnings per share was $.33. Management expects the sale
of the six remaining stations to be finalized during the first half of 1997.
On March 12, 1997, AFLAC Incorporated sold its minor Canadian insurance
subsidiary.
The Parent Company's principal operating subsidiary is AFLAC, which
operates in the United States and Japan. AFLAC is a specialty insurer whose
dominant business is individual supplemental health insurance. Management
believes AFLAC is the world's leading writer of cancer expense insurance.
In recent years, AFLAC has diversified its product offerings to include
other types of supplemental health products in both the United States and
Japan. The Japan Branch (AFLAC Japan) also sells care plans, supplemental
general medical expense plans and a living benefit life plan. The United
States operation (AFLAC U.S.), in addition to cancer expense plans, also
sells other types of supplemental health insurance, including hospital
intensive care, accident and disability, hospital indemnity, long-term care,
short-term disability and Medicare supplement plans. AFLAC U.S. also offers
several life insurance plans.
The Company is authorized to conduct insurance business in all 50
states, the District of Columbia, and several U.S. territories and foreign
countries. The Company's only significant foreign operation is AFLAC Japan,
which accounted for 82% of the Company's total revenues in 1996.
The Company issued a three-for-two stock split on March 18, 1996.
Share and per-share amounts have been adjusted to reflect this split.
I-1
In the fourth quarter of 1996, the Company raised its primary financial
objective for 1997 through 2000 from 13% to 15% annual growth in operating
earnings per share to 15% to 17% excluding the effect of foreign currency
translation.
During 1996, the board of directors authorized the purchase of up to an
additional 7.0 million shares of AFLAC Incorporated common stock. Including
shares remaining under a previous authorization, the Company had approval to
purchase up to 8.0 million shares as of December 31, 1996. The Company had
purchased 20.4 million shares from the inception of the plan in February
1994 through December 31, 1996.
Due to the relative size of AFLAC Japan, fluctuations in the yen/dollar
exchange rate can have a significant effect on the Company's reported
results. During the first half of 1995, the yen strengthened substantially
versus the dollar. In the third quarter of 1995, the yen began to weaken in
relation to the dollar and continued to weaken throughout 1996. The average
yen-to-dollar exchange rates were 108.84 in 1996, 94.10 in 1995 and 102.26
in 1994.
In years when the yen weakens, translating yen into dollars causes
smaller increases or negative percentage changes for financial results in
dollars. When the yen strengthens, translating yen into dollars causes
larger increases for financial results in dollars.
Insurance premiums and investment income from insurance operations are
the major sources of revenues. The Company's consolidated premium income
was $5.9 billion for 1996, $6.1 billion for 1995 and $5.2 billion for 1994.
The following table sets forth consolidated premiums earned by class
offered by AFLAC in Japan and the United States for the three years ended
December 31.
(In thousands) 1996 1995 1994
---------- ---------- ----------
Premiums earned:
Health insurance $ 5,690,886 $ 6,037,206 $ 5,148,406
Life and other insurance 206,480 17,937 15,149
---------- ---------- ----------
Total U.S. and Japan
premiums earned $ 5,897,366 $ 6,055,143 $ 5,163,555
========== ========== ==========
I-2
The following table sets forth the changes in annualized premiums in
force for AFLAC health insurance for the years ended December 31.
(In thousands) 1996 1995 1994
---------- ---------- ----------
Annualized premiums in force,
at beginning of year $ 5,837,883 $ 5,578,987 $ 4,460,076
New issues including
policy conversions 763,836 965,321 922,773
Change in unprocessed
policies 18,587 (107,287) 212,058
Lapses and surrenders (414,628) (408,366) (347,020)
Other 3,284 (11,676) (129,932)
Foreign currency translation
adjustment (571,011) (179,096) 461,032
---------- ---------- ----------
Annualized premiums in force,
at end of year $ 5,637,951 $ 5,837,883 $ 5,578,987
========== ========== ==========
INVESTMENTS AND INVESTMENT RESULTS
The Company classifies all fixed-maturity securities as available for
sale. All fixed-maturity and equity securities are carried at fair value.
The fair value of fixed-maturity securities available for sale exceeded
amortized cost by $2.4 billion and $2.6 billion at December 31, 1996 and
1995, respectively.
I-3
The following table shows an analysis of invested assets at December 31:
(In thousands) 1996 1995 % Change
------------ ------------ --------
AFLAC U.S.:
Total invested assets, at
cost or amortized cost $ 1,910,154 $ 1,543,549 23.8%
Unrealized gains
on securities available
for sale 101,258 128,697
------------ ------------
Total invested assets $ 2,011,412 $ 1,672,246 20.3%
============ ============ ======
AFLAC Japan:
Total invested assets, at
cost or amortized cost $ 16,390,997 $ 15,924,083 2.9%
Unrealized gains
on securities available
for sale 2,334,537 2,468,018
------------ ------------
Total invested assets $ 18,725,534 $ 18,392,101 1.8%
============ ============ ======
Consolidated:
Total invested assets, at
cost or amortized cost $ 18,309,930 $ 17,447,551 4.9%
Unrealized gains
on securities available
for sale 2,436,605 2,597,413
------------ ------------
Total invested assets $ 20,746,535 $ 20,044,964 3.5%
============ ============ ======
Net investment income was $1.0 billion in 1996, unchanged from 1995.
Net investment income in 1995 was $186.1 million higher than in 1994. It is
generally AFLAC's policy to invest in high-grade investments, principally in
government and high-quality public utility and corporate bonds.
AFLAC primarily operates within the investment environments of the
United States and Japan. Although aspects of these two financial markets
are slowly converging, they remain fundamentally different. For example,
differences in asset selection, liquidity, credit quality, accounting
practices, insurance regulations and taxation affect the way the Company
invests and purchases securities. The challenge is to integrate the varied
market characteristics of Japan and the United States into a unified and
coherent investment strategy. The Company has streamlined and integrated
the organizational structure of investment operations into a single
functional unit and has set specific worldwide criteria regarding credit
quality, liquidity, compliance with regulatory requirements and conformance
to product needs.
I-4
For information on the composition of the Company's investment
portfolio and investment results, see Part IV, Schedule I, and Exhibit 13,
pages 13-16 to 13-24 (discussions relating to Balance Sheet and Cash Flow)
and pages 13-41 to 13-47 (Notes 3 and 4 of Notes to the Consolidated
Financial Statements), which are incorporated herein by reference.
INVESTMENTS - JAPAN
Approximately 96% of the 301.4 billion yen ($2.6 billion) that AFLAC
Japan had available for investment activities was invested in yen-
denominated securities at an average yield to maturity of 3.92%. The
company invested 26.6% of the total funds available in Japanese government
bonds at an average yield to maturity of 3.46% and allocated 56.6% to
longer-dated securities at an average rate of 4.29%. An additional 12.3%
was invested in yen-denominated securities of various other sectors.
Dollar-denominated securities accounted for the remaining 4.5% of the
purchases in 1996 at an average yield to maturity of 7.20%.
At year-end 1996, Japanese government bonds accounted for 37.2% of
AFLAC Japan's total investments (at amortized cost). Twenty-year government
bonds made up the majority of AFLAC Japan's government bond holdings. AFLAC
Japan continued to use longer-dated corporate instruments in 1996, which
provide a better match of asset and liability durations, and these
instruments accounted for 30.1% of total investments in Japan at year-end.
At the end of the year, municipal securities represented 3.8% of the total
investments, while utility bonds represented 15.3%. Other assorted sectors
accounted for 5.5%, and dollar-denominated securities represented 8.1% of
AFLAC Japan's total investments.
Low investment yields have posed difficulties for the entire insurance
industry in Japan for several years. To help insurers address the problem
of low rates of return, the Ministry of Finance (MOF) has required the
industry to raise premium rates on new policies for four consecutive years.
The most recent rate increase, which was implemented on all policies sold
after October 1, 1996, will benefit AFLAC Japan in the long run. In the
meantime, management believes the Company's investment approach in Japan
provides the Company with an advantage over its competitors. The Company's
asset allocation is much different than the industry as a whole, and
management believes it is better suited to a low interest rate environment.
As in 1995, the Company's portfolio yield was once again the third highest
among all life insurers in Japan based on March 31, 1996 data submitted to
the MOF.
The Company's investments in the Japanese equity and investment real
estate markets continued to be immaterial in 1996.
INVESTMENTS - U.S.
Profits repatriated from AFLAC Japan to AFLAC U.S. totaled $217.3
million in 1996, up from $140.5 million in 1995. AFLAC U.S. in turn paid
additional dividends to the Parent Company in 1996 in the amount of $64.3
million. Repatriation has a positive effect on consolidated results because
higher investment yields can be earned on funds invested in the United
States. Also, income tax expense is presently lower on investment income
earned in the United States. The Company expects future profit repatriation
to continue to have a positive impact on its consolidated net earnings.
I-5
AFLAC U.S. continued to focus on purchasing securities that emphasize
safety and liquidity. AFLAC U.S. maintained its overall investment quality
throughout the year. Approximately 44% of the fixed-maturity portfolio was
rated "AA" or better at the end of the year.
Including profit repatriation and proceeds from bond swaps and
redemptions, AFLAC U.S. invested $977.4 million in 1996. Of that amount,
approximately 31.0% was invested in U.S. government or agency securities at
an average yield to maturity of 7.60%, 65.0% was invested in corporate
fixed-maturity securities at 7.49%, and 1.8% was allocated to various other
sectors. Approximately $21.6 million, or 2.2% of total funds available for
investment, were added to the AFLAC U.S. equity portfolio.
At the end of 1996, fixed-maturity securities continued to dominate
AFLAC U.S. total investments. Fixed-maturity securities represented 84.9%
of total investments at the end of the year. Within that category, U.S.
government and agency securities accounted for 20.6% of the holdings, while
corporate securities were 73.0%. Equity investments made up 6.0% of total
investments. Mortgage loans on real estate remained immaterial.
INSURANCE - JAPAN
The following table sets forth AFLAC Japan's premiums earned by product
line for the last three years ended December 31.
(In thousands) 1996 1995 1994
---------- ---------- ----------
Premiums earned:
Cancer expense $ 4,314,821 $ 4,752,338 $ 4,054,697
Other accident and health 445,704 440,635 316,395
Life insurance 191,035 2,378 -
---------- ---------- ----------
Total AFLAC Japan
premiums earned $ 4,951,560 $ 5,195,351 $ 4,371,092
========== ========== ==========
The following table sets forth the changes in annualized premiums in
force for AFLAC Japan health insurance for the years ended December 31:
(In thousands) 1996 1995 1994
---------- ---------- ----------
Annualized premiums in force,
at beginning of year $ 4,900,779 $ 4,718,783 $ 3,672,594
New issues including
policy conversions 442,629 690,170 680,879
Change in unprocessed
policies 23,878 (105,496) 209,392
Lapses and surrenders (181,756) (200,507) (163,047)
Other (18,103) (23,075) (142,067)
Foreign currency translation
adjustment (571,011) (179,096) 461,032
---------- ---------- ----------
Annualized premiums in force,
at end of year $ 4,596,416 $ 4,900,779 $ 4,718,783
========== ========== ==========
I-6
INSURANCE PLANS - JAPAN
AFLAC's insurance is supplemental in nature and is designed to provide
insurance to cover the medical and nonmedical costs that are not reimbursed
by other forms of Japanese health insurance coverage.
The cancer expense insurance plans offered in Japan provide a fixed
daily indemnity benefit for hospitalization and outpatient services related
to cancer and a lump sum benefit upon initial diagnosis of internal cancer.
The plans differ from the AFLAC U.S. cancer plans (described on pages I-11
and I-12) in that the Japanese policies also provide death benefits and cash
surrender values (the Company estimates that approximately 28% of the
premiums earned are associated with these benefits). In 1997, AFLAC Japan
will offer an economy cancer plan that has lower premiums and benefits.
This new plan should appeal to those who may have postponed a purchase
decision due to the weak economy in Japan.
In 1992, AFLAC broadened its product line with the introduction of a
new care product. Care insurance provides periodic benefits to those who
become bedridden, demented or seriously disabled due to illness or accident.
This plan is offered with several riders, providing death benefits or
additional care benefits to enhance coverage. Prior to the introduction of
this care plan, AFLAC marketed a plan that primarily provided dementia care
benefits.
In 1995, the Company introduced two other products in Japan. The first
product is an improved medical expense policy. It is similar to hospital
indemnity insurance products in the United States and provides cash benefits
to policyholders when they are hospitalized. The market for medical expense
coverage in Japan is very competitive, but the Company believes the revised
policy gives AFLAC Japan's agents greater flexibility in product offerings.
AFLAC Japan also introduced a new living benefit life plan. This
product is a life insurance policy that provides lump-sum benefits when
policyholders experience heart attack, cancer or stroke. The Company is
offering this product in two forms - as a stand-alone policy or as a rider
to the cancer plan. The rider adds heart attack and stroke benefits to the
cancer policy. Marketing efforts for living benefit life primarily focus on
the sale of the rider. Introduction of the rider began in late 1995. Sales
of the rider for 1996, its first full year of availability, were $282.9
million in new annualized premium, representing 1.6 million units.
Due to the continued low level of available investment yields in Japan,
the Ministry of Finance has required insurers to increase premium rates on
new policy issues in recent years. AFLAC Japan increased premium rates by
an average of 16% on all cancer policy sales made after July 1, 1994.
Premium rates on care policy new issues were increased by an average of 16%
in September 1995. As a result of continuing low yields, the Company
increased premium rates on all new policy issues by approximately 13%
beginning in the fourth quarter of 1996.
AGENCY FORCE - JAPAN
The development of a "corporate agency" system has been important to
the growth of AFLAC Japan. Affiliated corporate agencies are formed when
companies establish subsidiary businesses to sell AFLAC products to their
I-7
employees, suppliers and customers. These agencies help AFLAC Japan reach
the employees of almost all of Japan's large corporations. AFLAC has no
ownership interest in these corporate agencies.
AFLAC products are also sold through independent corporate agencies and
individual agencies that are not affiliated with large companies. At
December 31, 1996, there were 5,166 agencies in Japan with 20,067 licensed
agents. Agents' activities are principally limited to insurance sales, with
policyholder service functions handled by the main office in Tokyo and 50
offices located throughout Japan.
COMPETITION - JAPAN
In 1974, AFLAC became the second foreign (non-Japanese) life insurance
company to gain direct access to the Japanese insurance market by obtaining
a license to do business in Japan. Through 1981, AFLAC was the only company
in Japan authorized to issue a cancer expense insurance policy. Since that
time, several other life companies offer cancer insurance. However, AFLAC
remains the leading issuer of cancer expense insurance coverage in Japan,
principally due to its lead time in the market, unique marketing system (see
Agency Force), low-cost operations and product expertise developed in the
United States. AFLAC has been very successful in the sale of cancer expense
policies in Japan, with 12.6 million cancer policies in force at December
31, 1996.
In December 1996, the governments of the United States and Japan
reached an agreement on deregulation of the Japanese insurance industry.
The agreement calls for the gradual liberalization of the industry over the
next four years and includes provisions to avoid "radical change" in the
third sector of the insurance industry. AFLAC and other foreign-owned
insurers, as well as some small to medium-sized Japanese insurers, operate
primarily in the third sector. One of the measures for avoiding radical
change in the third sector is the prohibition of additional Japanese life
and non-life insurance companies from selling cancer or medical insurance
until January 1, 2001.
AFLAC's strategy for future growth in Japan centers on broadening the
Company's product line and expanding the distribution system. Although the
basic plan for growth is the same in Japan as in the United States,
management has had to formulate a strategy specifically tailored for the
Japanese insurance marketplace, which is very different from the U.S.
system. There are only 44 life insurance companies in Japan, compared with
more than 2,000 life insurers in the United States. In Japan, insurers have
traditionally been restricted in the types of policies they could offer.
However, as Japan begins deregulating the insurance industry, the
marketplace should become more competitive, with insurers able to offer more
types of products as they do in the United States.
REGULATION AND REMITTANCE OF FUNDS - JAPAN
Payments are made from AFLAC Japan to the Parent Company for management
fees, and to AFLAC U.S. for allocated expenses and remittances of earnings.
These payments totaled $253.6 million in 1996, $179.5 million in
1995 and $167.9 million in 1994. Management fees paid to the Parent Company
are largely based on expense allocations.
I-8
A portion of AFLAC Japan's annual earnings, as determined on a Japan
statutory accounting basis, can be remitted each year to AFLAC U.S. after
satisfying various conditions imposed by Japanese regulatory authorities for
protecting policyholders and obtaining remittance approvals from such
authorities. These conditions include compliance with risk-based capital
guidelines for Japanese insurers. Profit remittances to the United States
can fluctuate due to changes in the amounts of Japanese regulatory earnings.
Among other items, factors affecting regulatory earnings include Japanese
regulatory accounting practices and fluctuations in currency translations of
AFLAC Japan's U.S. dollar-denominated investments into yen. It is expected
that profit remittances will continue in future years, based on projected
annual earnings of AFLAC Japan as computed on a Japanese regulatory
accounting basis.
Japan statutory accounting practices differ in many respects from U.S.
generally accepted accounting principles. Under Japan statutory accounting
practices, policy acquisition costs are charged off immediately, policy
benefit and claim reserving methods are different, deferred income tax
liabilities are not recognized, and investment securities are generally
carried at cost less certain market value adjustments.
The Japanese Ministry of Finance imposes solvency standards that
represent a form of risk-based capital requirements. AFLAC Japan must meet
these requirements to continue profit transfers to AFLAC U.S. At this time,
AFLAC Japan is in compliance with these standards, and management does not
expect these requirements to adversely affect the repatriation of funds from
Japan in the foreseeable future.
The Life Insurance Association of Japan, an industry organization, is
currently implementing a policyholder protection fund. The purpose of the
fund is to provide capital support to member companies for business assumed
from insolvent life insurers. AFLAC Japan has pledged investment securities
to the Life Insurance Association of Japan for this program. The Company
retains ownership of the securities and receives the related investment
income. The amount of securities pledged is based on premium income and
policy reserves. As of December 31, 1996, $49.5 million, at fair value, of
AFLAC Japan's investment securities had been pledged to this fund.
In 1994, the Japanese government passed a package of tax reform bills
centering on an increase in the consumption tax, which is similar to a sales
tax in the United States. The consumption tax is scheduled to increase from
the current rate of 3% to 5% effective April 1, 1997. AFLAC Japan currently
incurs consumption tax on agents' commissions. Had the rate increase been
enacted effective January 1, 1996, pretax operating earnings would have been
reduced by approximately $16.4 million ($9.0 million after income tax) in
1996. The Company is in the process of evaluating changes in its
compensation arrangements with its agents to mitigate a portion of this tax
increase.
In late 1996, the Japanese government proposed new income tax
provisions that would increase Japan's income taxes on investment income
received by foreign companies operating in Japan from securities issued from
their home country. The government plans to finalize the proposal near the
end of March 1997. The new provisions are expected to be effective
beginning in 1998. If the proposal had been enacted in 1996 in its present
form, AFLAC Japan's income tax expense would have been increased, and net
earnings of the Company would have decreased by approximately $23.7 million
for the year 1996.
I-9
Management is evaluating the impact of this proposal and will seek to
mitigate much of the tax impact through investment alternatives and by
restructuring portions of the existing investment portfolio. Based on a
preliminary review, management does not expect this tax change as it is
presently proposed to materially affect future net earnings of the Company.
The insurance business in Japan, which is conducted as a branch office
of AFLAC, is subject to regulation by the MOF, similar to the regulation and
supervision in the United States as described on pages I-14 and I-15 under
"Regulation - U.S." AFLAC Japan files annual reports and financial
statements for the Japanese insurance operations based on a March 31 year-
end, prepared in accordance with Japanese regulatory accounting practices
prescribed or permitted by the MOF. Also, financial and other affairs of
AFLAC Japan are subject to examination by the MOF.
Reconciliations of AFLAC Japan net assets on a GAAP basis to net assets
determined on a Japanese regulatory accounting basis as of December 31 are
as follows:
(In thousands - unaudited) 1996 1995
---------- ----------
Net assets on GAAP basis $ 1,697,003 $ 1,817,106
Elimination of deferred policy
acquisition costs (2,022,899) (2,067,409)
Adjustment to carrying value of fixed-
maturity securities (2,561,097) (2,613,600)
Adjustment to policy liabilities 2,476,384 2,205,072
Elimination of deferred income taxes 1,006,550 1,211,187
Reduction in premiums receivable (124,829) (237,929)
Other, net (4,222) 98,378
---------- ---------
Net assets on Japanese regulatory
accounting basis $ 466,890 $ 412,805
========== =========
For additional information regarding AFLAC Japan's operations, see
Exhibit 13, pages 13-9 to 13-13 (AFLAC Japan section of MD&A) and pages 13-
37 and 13-57 (Notes 2 and 10 of Notes to the Consolidated Financial
Statements), which are incorporated herein by reference.
EMPLOYEES - JAPAN
AFLAC Japan employed 1,584 full-time and 236 part-time employees at
December 31, 1996. AFLAC Japan considers its employee relations to be
excellent.
I-10
INSURANCE - U.S.
The following table sets forth AFLAC U.S. premiums earned by product
line for the last three years ended December 31.
(In thousands) 1996 1995 1994
-------- -------- --------
Premiums earned:
Cancer expense $ 429,006 $ 402,789 $ 384,943
Other accident and health 501,355 441,444 392,371
Life insurance 15,445 15,559 15,149
-------- -------- --------
Total AFLAC U.S.
premiums earned $ 945,806 $ 859,792 $ 792,463
======== ======== ========
The following table sets forth the changes in annualized premiums in
force for AFLAC U.S. health insurance for the years ended December 31.
(In thousands) 1996 1995 1994
--------- --------- ---------
Annualized premiums in force, at
beginning of year $ 937,104 $ 860,204 $ 787,482
New issues including policy
conversions 321,207 275,151 241,894
Change in unprocessed policies (5,291) (1,791) 2,666
Lapses (232,872) (207,859) (183,973)
Other 21,387 11,399 12,135
--------- --------- ---------
Annualized premiums in force, at
end of year $1,041,535 $ 937,104 $ 860,204
========= ========= =========
HEALTH INSURANCE PLANS - U.S.
AFLAC's insurance is supplemental in nature and is designed for people
who already have major medical or primary insurance coverage. AFLAC's
supplemental health insurance plans are guaranteed renewable for the
lifetime of the policyholder. Guaranteed-renewable coverage may not be
cancelled by the insurer, but premium rates on existing and future policies
may be increased by class of policy in response to claims experience higher
than originally expected (subject to federal and state loss-ratio
guidelines) on a uniform, nondiscriminatory basis subject to state
regulatory approval.
AFLAC's cancer plans are designed to provide insurance benefits for
medical and nonmedical costs that are generally not reimbursed by major
medical insurance. AFLAC currently offers a series of four different cancer
plans in the United States that vary by benefit amount and type. All four
plans provide a first occurrence benefit that pays an initial amount when
internal cancer is first diagnosed, a fixed amount for each day an insured
is hospitalized for cancer treatment, and benefits for medical, radiation,
chemotherapy, surgery and a "wellness" benefit applicable toward certain
diagnostic tests such as mammograms, pap smears, flexible sigmoidoscopy,
etc. Two of the plans currently offered contain benefits that reimburse the
insured for nursing services, anesthesia, prosthesis, blood, plasma, second
I-11
surgical opinion, ambulance, transportation, family lodging, extended care
facility, bone marrow transplant and hospice. The remaining two plans make
these benefits available as an optional schedule of benefits rider. AFLAC
also issues several riders, including one that increases the amount of the
first occurrence benefit on each rider anniversary date until the covered
person reaches age 65 or until internal cancer is diagnosed. AFLAC
periodically introduces new forms of coverage, revising benefits and related
premiums based upon the anticipated needs of the policyholders and AFLAC's
claim experience.
AFLAC offers an accident and disability policy to protect against
losses resulting from accidents. The accident portion of the policy
includes lump sum benefits for accidental death, dismemberment and specific
injuries. Fixed benefits for hospital confinement, emergency treatment,
follow-up treatments, ambulance, transportation, family lodging, wellness,
prosthesis, medical appliances and physical therapy are also provided.
Optional disability riders are available to the primary insured only and
include choices of a sickness disability rider, on-the-job disability rider
and off-the-job disability rider. These benefits are payable up to a
maximum benefit period of one year and for one disability at a time.
AFLAC currently markets five of the Medicare Supplement Standardized
Plans, with the majority of sales coming from Plans F and C. The plans are
priced on an issue-age basis. Under this method, rates are revised due to
changes in the Medicare program and medical inflation. There is no
automatic rate increase due to the aging of the insured. Premium rates are
determined based on zip code groupings, which are adjusted for increases in
costs for each area. The benefits provided range from the basic plan,
covering Part A and B coinsurance, to plans with more extensive coverage,
including Part A and B deductibles, skilled nursing coinsurance, Part B
excess and other benefits. AFLAC U.S. does not market the standardized
plans covering prescription drug benefits.
AFLAC also issues other supplemental health insurance, such as
intensive care, which is a low-premium policy that provides protection
against the high cost of intensive care facilities during hospital
confinement, regardless of reimbursements from other insurers. Other types
of health insurance issued by AFLAC include a long-term convalescent care
policy, long- and short-term disability, and a hospital confinement
indemnity policy.
LIFE INSURANCE PLANS - U.S.
AFLAC issues various life insurance policies including whole life,
limited pay life, voluntary group term life and term life coverage.
AGENCY FORCE AND MARKETING - U.S.
AFLAC's sales force comprises independent sales agents who are licensed
to sell accident and health insurance. Many are also licensed to sell life
insurance. Most agents' efforts are directed toward selling supplemental
health insurance. The 1996 monthly average number of U.S. agents actively
producing business was 6,665, compared with 6,121 in 1995 and 5,489 in 1994.
I-12
Agents' activities are principally limited to sales, with policyholder
service functions, including issuance of policies, premium collection,
payment notices and claims handled by the staff at headquarters. Agents are
paid commissions based on first-year and renewal premiums from their sales
of health and life insurance products. AFLAC's state, regional and district
sales coordinators, who are independent contractors, are compensated by
override commissions.
AFLAC has concentrated on the development of "payroll marketing" in
marketing its policies. Payroll marketing offers policies to individuals
through common media such as trade and other associations or at the work
site. This manner of marketing is distinct from "group" insurance sales in
that each individual insured is directly contacted by the sales associate.
Policies are individually underwritten in the payroll market, with premiums
generally paid by the employee. Additionally, AFLAC supplemental policies
are portable in that individuals may retain their full insurance coverage
upon separation from employment or such affiliation, generally at the same
premium. A major portion of premiums on such sales are collected through
payroll deduction or other forms of group billings. Group-issued plans
normally result in a lower average age of the insured at the time of policy
issuance and also result in certain savings in administrative costs, a
portion of which are passed on to the policyholder in the form of reduced
premiums. Management believes that payroll marketing enables the agency
force to reach a greater number of prospective policyholders than individual
solicitation and that this method lowers distribution costs.
Another valuable marketing and sales tool is the flexible benefits
program, or cafeteria plan, which allows an employee to pay for medical
insurance using pretax dollars. These programs help achieve increased
penetration as agents are required to present the program to all employees.
They also help improve overall persistency levels due to the limited changes
allowed during the plan year.
During 1996 and 1995, AFLAC continued to develop marketing arrangements
with insurance brokers. Insurance brokers generally have better access to
larger payroll groups than independent agents. The core of the Company's
distribution network will remain independent agents.
In 1996, AFLAC's U.S. premiums collected were $934.5 million, 7.0% of
which was collected in Georgia, 6.8% in Texas, 6.7% in Florida, 5.6% in
North Carolina and 5.0% in Tennessee. Premiums collected in all other
states were individually less than 5% of AFLAC's U.S. premiums.
COMPETITION - U.S.
The accident and health and life insurance industry in the United
States is highly competitive. AFLAC competes with a large number of other
insurers, some of which have been in business for a longer period of time or
have greater financial resources. In the United States, there are more than
2,000 life and accident and health insurance companies, most of which
operate in the states AFLAC conducts business.
Private insurers and voluntary and cooperative plans, such as Blue
Cross and Blue Shield, provide insurance for meeting basic hospitalization
and medical expenses. Much of this insurance is sold on a group basis. The
federal and state governments also pay substantial costs of medical
I-13
treatment through Medicare and Medicaid programs. Such major medical
insurance generally covers a substantial amount of the medical (but not
nonmedical) expenses incurred by an insured as a result of cancer or other
major illnesses. AFLAC's policies are designed to provide coverage that is
supplemental to coverage provided by major medical insurance. AFLAC's
benefits may also be used to defray nonmedical expenses.
Since other insurers generally do not provide full coverage of medical
expenses or any coverage of nonmedical expenses, AFLAC's supplemental
insurance is not an alternative to major medical insurance, but is sold to
complement (supplement) major medical insurance by helping cover the gap
between major medical insurance reimbursements and the total costs of an
individual's health care. AFLAC thus competes only indirectly with major
medical insurers in terms of premium rates and similar factors. However,
the scope of the major medical coverage offered by other insurers does
represent a limitation on the market for AFLAC's products. Accordingly,
expansion of coverage by other insurers or governmental programs could
adversely affect AFLAC's business opportunities. Conversely, any reduction
of coverages, such as increased deductibles and copayments, by other
insurers or governmental programs could favorably affect AFLAC's business
opportunities.
AFLAC competes directly with other insurers offering supplemental
health insurance and believes that its current policies and premium rates
are generally competitive with those offered by other companies selling
similar types of insurance.
For additional information regarding U.S. insurance operations, see
Exhibit 13, page 13-13 to 13-15 (AFLAC U.S. section of MD&A), which is
incorporated herein by reference.
REGULATION - U.S.
The Parent Company and its insurance subsidiaries are subject to state
regulations in the United States as an insurance holding company system.
Such regulations generally provide that transactions between companies
within the holding company system must be fair and equitable. In addition,
transfer of assets among such affiliated companies, certain dividend
payments from insurance subsidiaries and material transactions between
companies within the system are subject to prior notice to, or approval by,
state regulatory authorities.
AFLAC and its insurance subsidiaries, in common with all U.S. insurance
companies, are subject to regulation and supervision in the states and other
jurisdictions in which they do business. In general, the insurance laws of
the various jurisdictions establish supervisory agencies with broad
administrative powers relating to, among other things: granting and revoking
licenses to transact business, regulating trade practices, licensing agents,
prior approval of forms of policies and premium rate increases, standards of
solvency and maintenance of specified policy benefit reserves and minimum
loss ratio requirements, capital for the protection of policyholders,
limitations on dividends to shareholders, the nature of and limitations on
investments, deposits of securities for the benefit of policyholders, filing
of annual reports and financial statements prepared in accordance with
statutory insurance accounting practices prescribed or permitted by the
regulatory authorities, and periodic examinations of the
I-14
financial, market conduct, and other affairs of insurance companies. In
addition, the National Association of Insurance Commissioners (NAIC) is
currently working on regulatory initiatives relating to investments,
reinsurance, dividend restrictions, revision of the risk-based capital
formula and other matters.
Currently, prescribed or permitted statutory accounting principles
(SAP) may vary between states and between companies. The NAIC is in the
process of recodifying SAP to promote standardization throughout the
industry. Completion of this project will result in changes in statutory
accounting practices for the Company. The impact on the Company's statutory
capital and surplus is not presently determinable.
For further information concerning state regulatory and dividend
restrictions, see Exhibit 13, page 13-57 (Note 10 - Statutory Accounting and
Dividend Restrictions of Notes to the Consolidated Financial Statements),
incorporated herein by reference.
The NAIC risk-based capital formula for U.S. life insurance companies
established capital requirements relating to insurance risk, business risk,
asset risk and interest rate risk. These requirements are intended to
facilitate identification by insurance regulators of inadequately
capitalized insurance companies based upon the types and mixtures of risks
inherent in the insurer's operations. The formulas for determining the
amount of risk-based capital specify various weighting factors that are
applied to financial balances or various levels of activity based on the
perceived degree of risk. Regulatory compliance is determined by a ratio of
the company's regulatory total adjusted capital to its authorized control
level risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of which
requires specified corrective action. The levels are company action,
regulatory action, authorized control and mandatory control. AFLAC's NAIC
risk-based capital ratio continues to reflect a very strong statutory
capital and surplus position.
Currently, three states have laws, regulations or regulatory practices
that either prohibit the sale of specified disease insurance, such as
AFLAC's cancer expense insurance, or make its sale impractical. These
states are Massachusetts, New Jersey and New York. Regulations in
Connecticut were recently changed to allow the sale of specified disease
insurance beginning in June 1997. The remainder of the states do not impose
prohibitions or restrictions that prevent AFLAC from marketing cancer
expense insurance. AFLAC U.S. is marketing several of its other products in
these states, directly or through a subsidiary.
Under insurance guaranty fund laws in most U.S. states, insurance
companies doing business therein can be assessed up to prescribed limits for
policyholder losses incurred by insolvent companies with similar lines of
business. Such assessments have not been material to the Company in recent
years. The Company believes that future assessments relating to companies
currently involved in insolvency proceedings will not materially impact the
consolidated financial statements.
I-15
EMPLOYEES - U.S.
In its U.S. insurance operations, the Company employed 1,697 full-time
and 32 part-time employees at December 31, 1996. The Company considers its
employee relations to be excellent.
RESERVES - JAPAN AND U.S.
The reserves reported in the financial statements have been computed in
accordance with generally accepted accounting principles (GAAP). These
reserves differ from those reflected in the various regulatory financial
statements filed by the Company. Such differences arise from the use of
different mortality, morbidity, interest, lapse assumptions and actuarial
reserving methods as required by the laws of the various states and Japan.
OTHER OPERATIONS
The Company's other operations primarily include seven network-
affiliated television stations located in small to mid-size U.S. markets.
Broadcast revenues increased 13.3% in 1996 and 5.1% in 1995 primarily due to
increased advertising revenues from an improved U.S. economy and from the
political elections in 1996.
As previously mentioned, the Company entered into definitive agreements
for the sale of its broadcast division business. The sale of one station,
WAFB-TV in Baton Rouge, Louisiana, closed on December 31, 1996. Management
expects the sale of the remaining six stations will close during the first
half of 1997.
The Broadcast Division employed 477 full-time and 87 part-time
employees at December 31, 1996. The Broadcast Division considers its
employee relations to be excellent. The Company's other operations, in
addition to Broadcast, had 308 employees at December 31, 1996; employee
relations are considered to be excellent.
For additional information regarding other operations, see Exhibit 13,
page 13-15 (Other Operations section of MD&A), which is incorporated herein
by reference.
ITEM 2. PROPERTIES
AFLAC owns an 18-story office building, which is the worldwide
headquarters of the Parent Company and AFLAC, along with a six-story parking
garage. These structures are located on approximately 14 acres of land in
Columbus, Georgia. The Company also owns two additional buildings located
on the same property. AFLAC also owns administrative office buildings
located nearby. AFLAC New York occupies leased office space in Albany, New
York.
In Tokyo, Japan, AFLAC owns an 11-story administrative office building,
which was completed in April 1994. AFLAC also leases office space in Tokyo
along with regional sales offices located throughout the country, and owns a
training facility in Tokyo.
I-16
The Broadcast Division owns land, buildings, transmission towers and
other broadcast equipment in the cities where its six television stations
are located. These properties will be sold in conjunction with the sale of
the Broadcast Division during the first half of 1997.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various litigation considered to be in
the normal course of business. Some of this litigation is pending in
Alabama, where large punitive damages bearing little relation to the actual
damages sustained by plaintiffs have been awarded against other companies,
including insurers, in recent years. During 1995, the Company settled
certain litigation in Alabama related to an ancillary line of business.
However, the settlement was not material to the Company's consolidated net
earnings for the year. Although the final results of any litigation cannot
be predicted with certainty, the Company believes the outcome of the
litigation still pending will not have a material adverse effect on the
financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the security holders for a vote in
the fourth quarter ended December 31, 1996.
I-17
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
NAME PRINCIPAL OCCUPATION (*) AGE
- ------------------- ------------------------------------- ---
Daniel P. Amos President; Chief Executive Officer of 45
AFLAC Incorporated and AFLAC, Vice
Chairman of AFLAC Incorporated
Paul S. Amos Chairman of the Board of AFLAC 70
Incorporated and AFLAC
William J. Bugg, Jr. Senior Vice President, Corporate 57
Actuary of AFLAC
Monthon Chuaychoo Vice President, Financial Services, of 53
AFLAC Incorporated and AFLAC since
September 1993; Second Vice President,
Assistant Controller of AFLAC
Incorporated and AFLAC to
September 1993
Kriss Cloninger III Executive Vice President, Chief 49
Financial Officer of AFLAC Incorporated
and AFLAC, and Treasurer of AFLAC
Incorporated since March 1993; Senior
Vice President, Chief Financial Officer
of AFLAC Incorporated and AFLAC and
Treasurer of AFLAC Incorporated from
March 1992 until March 1993; Principal,
KPMG Peat Marwick LLP, Atlanta, GA until
March 1992
Martin A. Durant, III Senior Vice President, Corporate Services, 48
of AFLAC Incorporated and AFLAC since
August 1993; Vice President and
Controller of AFLAC Incorporated and
AFLAC to August 1993
Norman P. Foster Executive Vice President, Corporate 62
Finance, of AFLAC Incorporated
and AFLAC since March 1992; Senior Vice
President, Chief Financial Officer
of AFLAC Incorporated, and AFLAC and
Treasurer of AFLAC Incorporated until
March 1992
I-18
David Halmrast Senior Vice President, Director of 57
Corporate and Market Development of
AFLAC Incorporated since September
1996; Senior Vice President, Corporate
Development, of AFLAC until
September 1996; Senior Vice President,
Corporate Development of AFLAC
Incorporated until December 1993;
Senior Vice President and Chief
Financial Officer of Colonial
Companies, Inc. until July 1992
Kenneth S. Janke Jr. Senior Vice President, Investor 38
Relations, of AFLAC Incorporated
since August 1993; Vice President,
Investor Relations, of AFLAC
Incorporated until August 1993
Akitoshi Kan Deputy Chief Financial Officer of AFLAC, 49
Senior Vice President, AFLAC Japan,
Accounting, Information Systems, ABC
and Legal affairs since January 1997;
Senior Vice President, AFLAC Japan,
Accounting, Corporate Planning, Audit,
and Legal Affairs until January 1997;
Vice President, AFLAC Japan Accounting
Department until 1995
Kyoichi Kasuya Vice President, Chief Actuary, AFLAC 59
Japan
Nobuo Kawamura Senior Vice President, AFLAC Japan, 52
Underwriting, Policy Maintenance,
Premium Accounting, Customer Service,
Administration Support
Joseph P. Kuechenmeister Senior Vice President, Director 55
of Marketing of AFLAC
Joey M. Loudermilk Senior Vice President, General Counsel 43
and Corporate Secretary of AFLAC
Incorporated and AFLAC, and Director,
Legal and Governmental Relations of
AFLAC since May 1992; Senior Vice
President, Corporate Counsel and
Assistant Secretary of AFLAC
Incorporated and AFLAC and Director,
Legal and Governmental Affairs of AFLAC
until May 1992
I-19
Hidefumi Matsui President, AFLAC Japan, since January 52
1995, Executive Vice President of AFLAC
Japan until 1995
Minoru Nakai President of AFLAC International, Inc. 55
Yoshiki Otake Chairman, AFLAC Japan, since January 57
1995, Vice Chairman of AFLAC
International Inc., President of
AFLAC Japan until 1995
E. Stephen Purdom Executive Vice President, U.S. Operations, 49
of AFLAC since October 1994; Senior Vice
President, Medical Director of AFLAC
until October 1994, and also Medical
Director, Columbus Clinic, Columbus,
GA until September 1994
Joseph W. Smith, Jr. Senior Vice President, Chief Investment 43
Officer of AFLAC
Gary L. Stegman Senior Vice President, Assistant Chief 47
Financial Officer of AFLAC
Incorporated and AFLAC; Treasurer
and Assistant Secretary of AFLAC
(*) Unless specifically noted, the respective executive officer has held
the occupation(s) set forth in the table for at least five years.
Each executive officer is appointed annually by the board of
directors and serves until his successor is chosen and qualified,
or until his death, resignation or removal.
I-20
PART II
Pursuant to General Instruction G to Form 10-K, Items 5 through 8 are
incorporated by reference from the Company's 1996 Annual Report to
Shareholders, the appropriate sections of which are included herein as
Exhibit 13.
Exhibit 13 Annual Report
Pages Pages
__________ _______________
ITEM 5. MARKET FOR THE COMPANY'S COMMON 13-1; 13-2; 1; 50 (Note 10);
EQUITY AND RELATED SHAREHOLDER 13-57 and 53-54
MATTERS (Note 10)
ITEM 6. SELECTED FINANCIAL DATA 13-3; 13-4 26 - 27
ITEM 7. MANAGEMENT'S DISCUSSION AND 13-5 to 28 - 36
ANALYSIS OF FINANCIAL CONDITION 13-24
AND RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND 13-25 to 37 - 52
SUPPLEMENTARY DATA 13-64
ITEM 9. CHANGES IN AND DISAGREEMENTS None None
WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
II-1
PART III
Pursuant to General Instruction G to Form 10-K, Items 10 through 13 are
incorporated by reference from the Company's definitive Proxy Statement
relating to the Company's 1997 Annual Meeting of Shareholders, which was
filed with the Securities and Exchange Commission on March 14, 1997,
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
Refer to the Information Refer to
Contained in the Proxy Printed
Statement under Captions Proxy
(filed electronically) Statement
Pages
________________________ _________
ITEM 10. DIRECTORS AND EXECUTIVE Security Ownership of 3 - 7
OFFICERS OF THE COMPANY Management. 1. Election
Directors of Directors
Executive Officers -
see Part I, Item 4A
herein
ITEM 11. EXECUTIVE COMPENSATION Board and Committee 8 - 19
Meetings and Directors
Compensation; Summary
Compensation Table; De-
fined Benefit Pension
Plan; Retirement Plans
for Key Executives;
Employment Contracts and
Termination of Employ-
ment Arrangements
ITEM 12. SECURITY OWNERSHIP OF Voting Securities and 2 - 7
CERTAIN BENEFICIAL Principal Holders
OWNERS AND Thereof. Security Owner-
MANAGEMENT ship of Management.
1. Election of Directors
ITEM 13. CERTAIN RELATIONSHIPS Certain Transactions 19
AND RELATED and Relationships
TRANSACTIONS
III-1
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS Page(s)
-----------
Included in Part II of this report and
incorporated by reference to the following
pages of Exhibit 13:
AFLAC Incorporated and Subsidiaries:
Consolidated Statements of Earnings, for 13-25
each of the years in the three-year
period ended December 31, 1996
Consolidated Balance Sheets, at December 13-26
31, 1996 and 1995 13-27
Consolidated Statements of Shareholders' 13-28 -
Equity, for each of the years in the 13-29
three-year period ended December 31,
1996
Consolidated Statements of Cash Flows, 13-30 -
for each of the years in the three-year 13-31
period ended December 31, 1996
Notes to the Consolidated Financial 13-32 to
Statements 13-61
Report of Independent Auditors 13-63
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Auditors' Report on Financial Statement Schedules IV-5
Schedule I - Summary of Investments - Other IV-6
Than Investments in Related
Parties, at December 31, 1996
Schedule II - Condensed Financial Information of IV-7 -
Registrant, at December 31, 1996 IV-11
and 1995 and for each of the
years in the three-year period
ended December 31, 1996
Schedule IV - Reinsurance, for each of the IV-12
years in the three-year period
ended December 31, 1996
Schedules other than those listed above are omitted because they are
not required or are not applicable, or the required information is shown in
the financial statements or notes thereto.
IV-1
3. EXHIBITS
3.0 - Articles of Incorporation, as amended - incorporated by
reference from 1991 Form 10-K, Commission file number
1-7434, Exhibit 3.0; and Bylaws of the Company, as
amended - incorporated by reference from
Form 10-Q for June 30, 1996, Commission file number
1-7434, Accession No. 0000004977-96-000012, Exhibit 3.0.
4.0 - There are no long-term debt instruments in which the total
amount of securities authorized exceeds 10% of the total
assets of AFLAC Incorporated and its subsidiaries on a
consolidated basis. The Company agrees to furnish a copy
of any of its long-term debt instruments to the Securities
and Exchange Commission upon request.
10.0* - American Family Corporation Incentive Stock Option Plan
(1982) - incorporated by reference from Registration
Statement No. 33-44720 on Form S-8 with respect to the
AFLAC Incorporated (Formerly American Family
Corporation) Incentive Stock Option Plan (1982) and
Stock Option Plan (1985).
10.1* - American Family Corporation Stock Option Plan (1985) -
incorporated by reference from Registration Statement
No. 33-44720 on Form S-8 with respect to the AFLAC
Incorporated (Formerly American Family Corporation)
Incentive Stock Option Plan (1982) and Stock Option Plan
(1985).
10.1.1* - AFLAC Incorporated Amended 1985 Stock Option Plan -
incorporated by reference from 1994 Shareholders' Proxy
Statement, Commission file number 1-7434, Accession No.
0000004977-94-000003, Exhibit A.
10.1.2* - AFLAC Incorporated Amended 1985 Stock Option Plan, as
amended August 8, 1995 - incorporated by reference from
Form 10-Q for September 30, 1995, Commission file number
1-7434, Accession No. 0000004977-95-000023, Exhibit 10.
10.2* - American Family Corporation Retirement Plan for Senior
Officers, as amended and restated October 1, 1989 -
incorporated by reference from 1993 Form 10-K, Commission
file number 1-7434, Accession No. 0000004977-94-000006,
Exhibit 10.2.
10.3* - American Family Corporation Supplemental Executive
Retirement Plan - incorporated by reference from 1989
Form 10-K, Commission file number 1-7434, Exhibit 10.9.
10.3.1* - AFLAC Incorporated Supplemental Executive Retirement
Plan, as amended, effective September 1, 1993 -
incorporated by reference from 1994 Form 10-K, Commission
file number 1-7434, Accession No. 0000004977-95-000006,
Exhibit 10.3.1.
10.4* - AFLAC Incorporated Employment Agreement with Daniel P.
Amos, dated August 1, 1993 - incorporated by reference
from 1993 Form 10-K, Commission file number 1-7434,
Accession No. 0000004977-94-000006, Exhibit 10.4.
10.5* - American Family Life Assurance Company of Columbus
Employment Agreement with Yoshiki Otake, dated January 1,
1995 - incorporated by reference from 1994 Form 10-K,
Commission file number 1-7434, Accession No.
0000004977-95-000006, Exhibit 10.5.
IV-2
10.6* - AFLAC Incorporated Employment Agreement with Kriss
Cloninger, III, dated February 14, 1992, and as amended
November 12, 1993 - incorporated by reference from 1993
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-94-000006, Exhibit 10.6.
10.7* - AFLAC Incorporated Management Incentive Plan -
incorporated by reference from 1994 Shareholders' Proxy
Statement, Commission file number 1-7434, Accession
No. 0000004977-94-000003, Exhibit B.
10.8* - American Family Life Assurance Company of Columbus
Employment Agreement with Hidefumi Matsui, dated
January 1, 1995 - incorporated by reference from 1994
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-95-000006, Exhibit 10.8.
10.9* - American Family Life Assurance Company of Columbus
Employment Agreement with Dr. E. Stephen Purdom, dated
October 25, 1994 - incorporated by reference from 1994
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-95-000006, Exhibit 10.9.
10.10* - AFLAC Incorporated Employment Agreement with Paul S.
Amos, dated August 1, 1995 - incorporated by reference
from form 10-Q for September 30, 1995, Commission file
number 1-7434, Accession No. 0000004977-95-000023,
Exhibit 10.1.
13.0 - Selected information from the AFLAC Incorporated Annual
Report to Shareholders for 1996.
21.0 - Subsidiaries.
23.0 - Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-44720 with
respect to the AFLAC Incorporated (Formerly American
Family Corporation) Incentive Stock Option Plan (1982)
and Stock Option Plan (1985).
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-53737 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 333-01243 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-41926 with
respect to the AFLAC Associate Stock Bonus Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-41552 with
respect to the AFLAC Incorporated 401(k) Retirement
Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-64535 with respect
to the AFL Stock Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 333-16533 with respect
to the AFLAC Associate Stock Bonus Plan.
27.0 - Financial Data Schedule (electronic filing only).
*Management contract or compensatory plan or agreement.
IV-3
(b) REPORTS ON FORM 8-K
There were no reports filed on Form 8-K for the quarter ended
December 31, 1996.
(c) EXHIBITS FILED WITH CURRENT FORM 10-K
13.0 - Selected information from the AFLAC Incorporated Annual
Report to Shareholders for 1996.
21.0 - Subsidiaries.
23.0 - Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-44720 with respect
to the AFLAC Incorporated (Formerly American Family
Corporation) Incentive Stock Option Plan (1982) and Stock
Option Plan (1985).
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-53737 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 333-01243 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-41926 with respect
to the AFLAC Associate Stock Bonus Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-41552 with respect
to the AFLAC Incorporated 401(k) Retirement Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-64535 with respect
to the AFL Stock Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 333-16533 with respect
to the AFLAC Associate Stock Bonus Plan.
27.0 - Financial Data Schedule (electronic filing only).
IV-4
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Shareholders and Board of Directors
AFLAC Incorporated:
Under date of January 29, 1997, we reported on the consolidated balance
sheets of AFLAC Incorporated and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1996, as contained in the 1996 annual report to shareholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year
1996. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement
schedules as listed in Item 14. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
January 29, 1997
IV-5
SCHEDULE I
AFLAC INCORPORATED AND SUBSIDIARIES
Summary of Investments - Other than Investments in Related Parties
December 31, 1996
(In thousands) Amount in
Fair Balance
Type of Investment Cost Value Sheet
----------------------- ----------- ----------- ----------
Securities available for sale:
Fixed maturities:
Bonds:
United States Government and
government agencies and
authorities $ 687,556 $ 707,510 $ 707,510
States, municipalities and
political subdivisions 6,840 6,477 6,477
Foreign governments 7,523,637 8,954,473 8,954,473
Public utilities 2,865,634 3,263,311 3,263,311
Convertibles 27,005 29,544 29,544
All other corporate bonds 6,830,528 7,366,411 7,366,411
---------- ---------- ----------
Total fixed maturities
available for sale 17,941,200 20,327,726 20,327,726
---------- ---------- ----------
Equity securities:
Common stocks:
Public utilities 3,665 4,395 4,395
Banks, trusts and insurance
companies 6,628 11,685 11,685
Industrial, miscellaneous
and all other 75,956 120,248 120,248
---------- ---------- ----------
Total equity securities 86,249 136,328 136,328
---------- ---------- ----------
Total securities
available for sale 18,027,449 20,464,054 20,464,054
Mortgage loans on real estate 17,802 21,151 17,802
Policy loans 1,273 1,273 1,273
Other long-term investments 1,726 1,726 1,726
Short-term investments 261,680 261,680 261,680
---------- ---------- ----------
Total investments $18,309,930 $20,749,884 $20,746,535
========== ========== ==========
IV-6
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Balance Sheets
AFLAC Incorporated (Parent Only)
(In thousands)
December 31,
1996 1995
---------- ----------
ASSETS:
Investments:
Investments in subsidiaries* $ 2,677,304 $ 2,573,606
Other investments:
Money market funds 22,458 17,346
Mortgage loans and other 2,350 2,548
---------- ----------
Total investments 2,702,112 2,593,500
Due from subsidiaries* 3,947 3,910
Other receivables 2,523 4,478
Property and equipment, net 8,428 9,231
Other 3,288 1,291
---------- ----------
Total assets 2,720,298 2,612,410
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Cash overdraft 286 160
Due to subsidiaries* 869 1,237
Notes payable (note A) 327,408 272,158
Employee and beneficiary benefit plans 183,807 147,319
Income taxes, primarily deferred 45,948 33,577
Other 36,411 23,818
Commitments and contingencies (note B)
---------- ----------
Total liabilities 594,729 478,269
---------- ----------
Shareholders' equity:
Common stock of $.10 par value:
Authorized 175,000; issued 157,239
shares in 1996 and 156,358 shares
in 1995 15,724 15,636
Additional paid-in capital 208,994 196,928
Unrealized foreign currency
translation gains 229,782 213,319
Unrealized gains on securities
available for sale 280,154 482,787
Retained earnings (note D) 1,917,794 1,577,605
Treasury stock, at average cost (526,425) (351,117)
Notes receivable for stock purchases (454) (1,017)
---------- ----------
Total shareholders' equity 2,125,569 2,134,141
---------- ----------
Total liabilities and
shareholders' equity $ 2,720,298 $ 2,612,410
========== ==========
* Eliminated in consolidation.
See the accompanying Notes to Condensed Financial Statements.
IV-7
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Statements of Earnings
AFLAC Incorporated (Parent Only)
(In thousands)
Years ended December 31,
1996 1995 1994
---------- ---------- ----------
Revenues:
Dividends from subsidiaries* $ 137,692 $ 82,343 $ 109,533
Management and service fees
from subsidiaries* 30,470 30,509 26,391
Other income from subsidiaries,
principally rental and interest* 6 196 683
Other income 4,041 1,069 1,327
--------- --------- ---------
Total revenues 172,209 114,117 137,934
--------- --------- ---------
Operating expenses:
Interest expense - subsidiaries* 16 30 22
Interest expense - others 10,512 8,419 6,070
Capitalized interest - - (2,419)
Other operating expenses 84,055 70,921 65,635
--------- --------- ---------
Total operating expenses 94,583 79,370 69,308
--------- --------- ---------
Earnings before income taxes and
equity in undistributed earnings
of subsidiaries 77,626 34,747 68,626
Income tax expense (note C) 12,410 8,583 874
--------- --------- ---------
Earnings before equity in
undistributed earnings of
subsidiaries 65,216 26,164 67,752
Equity in undistributed earnings
of subsidiaries 329,147 322,893 225,038
--------- --------- ---------
Net earnings $ 394,363 $ 349,057 $ 292,790
========= ========= =========
* Eliminated in consolidation.
See the accompanying Notes to Condensed Financial Statements.
IV-8
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Statements of Cash Flows
AFLAC Incorporated (Parent Only)
(In thousands)
Years ended December 31,
1996 1995 1994
---------- ---------- ----------
Cash flows from operating activities:
Net earnings $ 394,363 $ 349,057 $ 292,790
Adjustments to reconcile net
earnings to net cash provided
from operating activities:
Equity in undistributed
earnings of subsidiaries (329,147) (322,893) (225,038)
Deferred income taxes 12,371 8,178 (578)
Employee and beneficiary
benefit plans 36,488 30,174 32,700
Other, net 14,814 17,017 4,307
--------- --------- ---------
Net cash provided by
operating activities 128,889 81,533 104,181
--------- --------- ---------
Cash flows from investing activities:
Net (increase) decrease in
other investments (4,914) (14,325) 18,998
Additional capitalization
of subsidiaries - - (3,592)
--------- --------- ---------
Net cash (used)/provided by
investing activities (4,914) (14,325) 15,406
--------- --------- ---------
Cash flows from financing activities:
Proceeds from borrowings 135,914 198,250 84,000
Assumption of debt from affiliate 15,389 - -
Principal payments under debt
obligations (57,671) (11,507) (26,541)
Proceeds from exercise of
stock options 6,549 3,235 2,163
Dividends paid to shareholders (54,174) (48,939) (44,928)
Purchases of treasury stock (204,169) (224,204) (131,734)
Treasury stock reissued 34,549 9,693 2,761
Net change in amount due
to/from subsidiaries (405) 6,186 (5,331)
Other, net (83) - -
--------- --------- ---------
Net cash used by
financing activities (124,101) (67,286) (119,610)
--------- --------- ---------
Net change in cash (126) (78) (23)
Cash (overdraft) at beginning of year (160) (82) (59)
--------- --------- ---------
Cash (overdraft) at end of year $ (286) $ (160) $ (82)
========= ========= =========
See the accompanying Notes to Condensed Financial Statements.
IV-9
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Notes to Condensed Financial Statements
AFLAC Incorporated (Parent Only)
The accompanying condensed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto of
AFLAC Incorporated and Subsidiaries (see Part II - Item 8).
(A) NOTES PAYABLE
A summary of notes payable serviced by the Parent Company at
December 31, 1996 and 1995 follows:
(In thousands) 1996 1995
-------- --------
2.74% unsecured, yen-denominated notes payable
to banks under reducing revolving credit
agreement, due annually through July 2001........ $ 284,238 $ 230,695
Unsecured, yen-denominated notes payable
to banks, due semiannually, through October
1997, variable interest rate (.88% at
December 31, 1996)............................... 17,453 -
9.60% to 10.72% unsecured notes payable to bank,
due semiannually, through 1998, assumed from
broadcast affiliates in 1996..................... 15,389 -
8.3% note payable, due monthly through March 1997,
secured by equipment............................. 478 2,296
5.965% unsecured notes payable to banks,
refinanced in 1996............................... - 39,167
Short-term yen-denominated note payable to
bank under unsecured line of credit, variable
interest rate (.76% at December 31, 1996)........ 9,850 -
-------- --------
Total notes payable............................ $ 327,408 $ 272,158
======== ========
The aggregate maturities of the notes payable for each of the five
years after December 31, 1996, are as follows:
(In thousands)
1997............................................ $ 93,074
1998............................................ 63,792
1999............................................ 56,848
2000............................................ 56,848
2001............................................ 56,846
IV-10
(B) CONTINGENCIES
In prior years, the Parent Company executed promissory notes to banks
and transferred the proceeds to its broadcast affiliates for the acquisition
of television broadcasting stations. On December 31, 1996, the Parent
Company assumed the remaining debt from the broadcast affiliates. The
amount of such debt assumed was $15.4 million.
(C) INCOME TAXES
The Company and its eligible U.S. subsidiaries file a consolidated U.S.
federal income tax return. Income tax liabilities or benefits are recorded
by each principal subsidiary based upon separate return calculations, and
any difference between the consolidated provision and the aggregate amounts
recorded by the subsidiaries is reflected in the Parent Company financial
statements.
For further information on income taxes, see Exhibit 13, page 13-51,
Note 8 of the Notes to the Consolidated Financial Statements.
(D) DIVIDEND RESTRICTIONS
See Exhibit 13, pages 13-57 and 13-58 (Note 10, Statutory Accounting
and Dividend Restrictions, of Notes to the Consolidated Financial
Statements) for information regarding dividend restrictions.
(E) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(In thousands) 1996 1995 1994
-------- -------- --------
Cash payments during the year for:
Interest on debt obligations $ 9,805 $ 7,807 $ 6,302
Income taxes - 406 400
(F) ACCOUNTING CHANGES
For information concerning the cumulative effect of new accounting
standards adopted in 1996, 1995, and 1994, see page 13-35 of Exhibit 13,
Note 1, section on Accounting Changes Adopted, of Notes to the Consolidated
Financial Statements.
IV-11
SCHEDULE IV
AFLAC INCORPORATED AND SUBSIDIARIES
Reinsurance
Years Ended December 31, 1996, 1995 and 1994
(In thousands)
Percentage
Ceded to Assumed from of amount
Gross other other assumed
Amount companies companies Net amount to net
------------- ------------- ------------- ------------- ------------
Year ended December 31, 1996:
Life insurance in force $ 16,329,749 $ 416,295 $ - $ 15,913,454 -
============= ============= ============= ============= ============
Premiums:
Health insurance $ 5,704,213 $ 657 $ - $ 5,703,556 -
Life insurance 207,232 752 - 206,480 -
------------- ------------- ------------- ------------- ------------
Total premiums $ 5,911,445 $ 1,409 $ - $ 5,910,036 -
============= ============= ============= ============= ============
Year ended December 31, 1995:
Life insurance in force $ 3,461,944 $ 230,238 $ - $ 3,231,706 -
============= ============= ============= ============= ============
Premiums:
Health insurance $ 6,053,137 $ 304 $ - $ 6,052,833 -
Life insurance 18,371 374 - 17,997 -
------------- ------------- ------------- ------------- ------------
Total premiums $ 6,071,508 $ 678 $ - $ 6,070,830 -
============= ============= ============= ============= ============
Year ended December 31, 1994:
Life insurance in force $ 2,715,954 $ 101,863 $ - $ 2,614,091 -
============= ============= ============= ============= ============
Premiums:
Health insurance $ 5,165,557 $ 171 $ - $ 5,165,386 -
Life insurance 15,713 367 - 15,346 -
------------- ------------- ------------- ------------- ------------
Total premiums $ 5,181,270 $ 538 $ - $ 5,180,732 -
============= ============= ============= ============= ============
IV-12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AFLAC Incorporated
Date MARCH 26, 1997 By /s/ PAUL S. AMOS
------------------------ ----------------------------------
(Paul S. Amos)
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ DANIEL P. AMOS Chief Executive Officer, MARCH 26, 1997
- ------------------------ President and Vice -----------------
(Daniel P. Amos) Chairman of the Board
of Directors
/s/ KRISS CLONINGER, III Executive Vice President, MARCH 26, 1997
- ------------------------ Chief Financial Officer -----------------
(Kriss Cloninger, III) and Treasurer
/s/ NORMAN P. FOSTER Executive Vice President, MARCH 26, 1997
- ------------------------ Corporate Finance -----------------
(Norman P. Foster)
IV-13
/s/ J. SHELBY AMOS, II Director MARCH 26, 1997
- ------------------------------ -----------------
(J. Shelby Amos, II)
/s/ MICHAEL H. ARMACOST Director MARCH 26, 1997
- ------------------------------ -----------------
(Michael H. Armacost)
/s/ M. DELMAR EDWARDS, M.D. Director MARCH 26, 1997
- ------------------------------ -----------------
(M. Delmar Edwards, M.D.)
/s/ GEORGE W. FORD, JR. Director MARCH 26, 1997
- ------------------------------ -----------------
(George W. Ford, Jr.)
/s/ JOE FRANK HARRIS Director MARCH 26, 1997
- ------------------------------ -----------------
(Joe Frank Harris)
/s/ ELIZABETH J. HUDSON Director MARCH 26, 1997
- ------------------------------ -----------------
(Elizabeth J. Hudson)
/s/ KENNETH S. JANKE, SR. Director MARCH 26, 1997
- ------------------------------ -----------------
(Kenneth S. Janke, Sr.)
/s/ CHARLES B. KNAPP Director MARCH 26, 1997
- ------------------------------ -----------------
(Charles B. Knapp)
IV-14
/s/ HISAO KOBAYASHI Director MARCH 26, 1997
- ------------------------------ -----------------
(Hisao Kobayashi)
/s/ YOSHIKI OTAKE Director MARCH 26, 1997
- ------------------------------ -----------------
(Yoshiki Otake)
/s/ E. STEPHEN PURDOM Director MARCH 26, 1997
- ------------------------------ -----------------
(E. Stephen Purdom)
/s/ BARBARA K. RIMER Director MARCH 26, 1997
- ------------------------------ -----------------
(Barbara K. Rimer)
/s/ HENRY C. SCHWOB Director MARCH 26, 1997
- ------------------------------ -----------------
(Henry C. Schwob)
/s/ J. KYLE SPENCER Director MARCH 26, 1997
- ------------------------------ -----------------
(J. Kyle Spencer)
/s/ GLENN VAUGHN, JR. Director MARCH 26, 1997
- ------------------------------ -----------------
(Glenn Vaughn, Jr.)
IV-15
Exhibit Index
3.0 - Articles of Incorporation, as amended - incorporated by
reference from 1991 Form 10-K, Commission file number
1-7434, Exhibit 3.0; and Bylaws of the Company, as
amended - incorporated by reference from Form 10-Q for
June 30, 1996, Commission file number 1-7434,
Accession No. 0000004977-96-000012, Exhibit 3.0.
4.0 - There are no long-term debt instruments in which the total
amount of securities authorized exceeds 10% of the total
assets of AFLAC Incorporated and its subsidiaries on a
consolidated basis. The Company agrees to furnish a copy
of any of its long-term debt instruments to the Securities
and Exchange Commission upon request.
10.0* - American Family Corporation Incentive Stock Option Plan
(1982) - incorporated by reference from Registration
Statement No. 33-44720 on Form S-8 with respect to the
AFLAC Incorporated (Formerly American Family Corporation)
Incentive Stock Option Plan (1982) and Stock Option Plan
(1985).
10.1* - American Family Corporation Stock Option Plan (1985) -
incorporated by reference from Registration Statement No.
33-44720 on Form S-8 with respect to the AFLAC
Incorporated (Formerly American Family Corporation)
Incentive Stock Option Plan (1982) and Stock Option Plan
(1985).
10.1.1* - AFLAC Incorporated Amended 1985 Stock Option Plan -
incorporated by reference from 1994 Shareholders' Proxy
Statement, Commission file number 1-7434, Accession No.
0000004977-94-000003, Exhibit A.
10.1.2* - AFLAC Incorporated Amended 1985 Stock Option Plan, as
amended August 8, 1995 - incorporated by reference from
Form 10-Q for September 30, 1995, Commission file number
1-7434, Accession No. 0000004977-95-000023, Exhibit 10.
10.2* - American Family Corporation Retirement Plan for Senior
Officers, as amended and restated October 1, 1989 -
incorporated by reference from 1993 Form 10-K, Commission
file number 1-7434, Accession No. 0000004977-94-000006,
Exhibit 10.2.
10.3* - American Family Corporation Supplemental Executive
Retirement Plan - incorporated by reference from 1989
Form 10-K, Commission file number 1-7434, Exhibit 10.9.
10.3.1* - AFLAC Incorporated Supplemental Executive Retirement
Plan, as amended, effective September 1, 1993 - incorporated
by reference from 1994 Form 10-K, Commission file number
1-7434, Accession No. 0000004977-95-000006, Exhibit 10.3.1.
10.4* - AFLAC Incorporated Employment Agreement with Daniel P.
Amos, dated August 1, 1993 - incorporated by reference
from 1993 Form 10-K, Commission file number 1-7434,
Accession No. 0000004977-94-000006, Exhibit 10.4.
10.5* - American Family Life Assurance Company of Columbus
Employment Agreement with Yoshiki Otake, dated January 1,
1995 - incorporated by reference from 1994 Form 10-K,
Commission file number 1-7434, Accession No.
0000004977-95-000006, Exhibit 10.5.
i
10.6* - AFLAC Incorporated Employment Agreement with Kriss
Cloninger, III, dated February 14, 1992, and as amended
November 12, 1993 - incorporated by reference from 1993
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-94-000006, Exhibit 10.6.
10.7* - AFLAC Incorporated Management Incentive Plan - incorporated
by reference from 1994 Shareholders' Proxy Statement,
Commission file number 1-7434, Accession
No. 0000004977-94-000003, Exhibit B.
10.8* - American Family Life Assurance Company of Columbus
Employment Agreement with Hidefumi Matsui, dated
January 1, 1995 - incorporated by reference from 1994
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-95-000006, Exhibit 10.8.
10.9* - American Family Life Assurance Company of Columbus
Employment Agreement with Dr. E. Stephen Purdom, dated
October 25, 1994 - incorporated by reference from 1994
Form 10-K, Commission file number 1-7434, Accession
No. 0000004977-95-000006, Exhibit 10.9.
10.10* - AFLAC Incorporated Employment Agreement with Paul S. Amos,
dated August 1, 1995 - incorporated by reference from
Form 10-Q for September 30, 1995, Commission file number
1-7434, Accession No. 0000004977-95-000023, Exhibit 10.1.
13.0 - Selected information from the AFLAC Incorporated Annual
Report to Shareholders for 1996.
21.0 - Subsidiaries.
23.0 - Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-44720 with respect
to the AFLAC Incorporated (Formerly American Family
Corporation) Incentive Stock Option Plan (1982) and Stock
Option Plan (1985).
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-53737 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 333-01243 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-41926 with respect
to the AFLAC Associate Stock Bonus Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-41552 with respect
to the AFLAC Incorporated 401(K) Retirement Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-64535 with respect
to the AFL Stock Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 333-16533 with respect
to the AFLAC Associate Stock Bonus Plan.
27.0 - Financial Data Schedule (electronic filing only).
*Management contract or compensatory plan or agreement.
ii
Exhibits Filed with Current Form 10-K:
13.0 - Selected information from the AFLAC Incorporated Annual
Report to Shareholders for 1996.
21.0 - Subsidiaries.
23.0 - Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-44720 with respect
to the AFLAC Incorporated (Formerly American Family
Corporation) Incentive Stock Option Plan (1982) and Stock
Option Plan (1985).
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-53737 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 333-01243 with respect
to the AFLAC Incorporated Amended 1985 Stock Option Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-41926 with respect
to the AFLAC Associate Stock Bonus Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-8 Registration Statement No. 33-41552 with respect
to the AFLAC Incorporated 401(K) Retirement Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 33-64535 with respect
to the AFL Stock Plan.
- Consent of independent auditor, KPMG Peat Marwick LLP, to
Form S-3 Registration Statement No. 333-16533 with respect
to the AFLAC Associate Stock Bonus Plan.
27.0 - Financial Data Schedule (electronic filing only).
iii