AFL - Earnings call transcript Q2 2021

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Operator

Welcome to the Aflac Incorporated 2021 Second Quarter Earnings Conference Call.

Your lines have been placed on listen-only until the question-and-answer session. Please be advised today’s conference is being recorded. I would now like to turn the call over to Mr. David Young, Vice President of Aflac Investor and Rating Agency Relations. ahead. go Please

David Young

Good quarter Andrea. welcome Aflac to Thank call. morning, second earnings Incorporated you, and

Incorporated, our CFO U.S.; current Virgil team results Miller, Chief Officer Executive Group financial U.S. Global will Chief our Aflac As posted be in key and second Aflac CEO we President summary in White, Teresa of prepared and joining a ongoing quarter begin investors.aflac.com. the always, will COVID-XX with the for of have related President Japan Risk Kirsch, Q&A President will Incorporated, This Global supplement of Executive President and quarter Amos, States morning, Members to and Howard, remarks Aflac U.S. and and financial of Crawford, Officer pandemic. navigating U.S.; liquidity. Fred and June how of briefly operations the Accounting we Officer; an Riggieri, touch conclude Beaver, Individual Broden, Chief Steve amid CFO are our the of Japan Actuary; our the Dan of segment of and Al with COO Eric pandemic; Aflac Investment Vice Benefits; will to of of and and hearing the on Chief call quarter are United initiatives, about our remarks us Incorporated, then operations earnings Management capital the in release Max the and we and overview Chairman on Global conditions President including Investments; of Aflac Aflac discuss

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

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

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

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

Daniel Amos

joining Thanks, David, and for good and morning, us. you thank

the cautiously vigilant uncertainty With the the of pandemic remain over conditions I ability our the am the proud our vaccination of face we associated evolve, emerging with as optimistic and year continued to variants. in to efforts and last currency very day each been and adapt and increased foreign the to per for I quarter challenging diluted has impact earnings share what continue for excluding everyone year. for a XX.X% everyone, for XX.X% to the Adjusted affected. time pray response

off year, ratio alternative on very pandemic a earnings the expected time, that Japan. a of and States strong the At a pandemic to are by start United investments. second improved time as well While for associated half to low mind in conditions it's are important they supported benefit the bear with largely first the for the first same both the in return year-over-year as in better quarter than sales the the during

Japan of the are insurance. and purchase to financial convey effective part sales way only protection applies provide. us to still United want strive That As products strategy, to Face-to-face our the people Aflac where most States. be we for the both to

protection virtual other the need demonstrated and clearly need. that them words, provide that has customers non-face-to-face for pandemic the means. reach us sales the help However, In potential with they

a more recovery distribution communities open face-to-face continue and in stronger similar from our second operation. to nature informed into now, in we bringing of tools a uncertain talk would Recognizing vaccinations businesses with invest in, my to encouraging how family, to integrate in which from a year the also the I continued expect to if to up, vaccinations. get community in keeping in the investments especially both interactions. that mind, COVID-XX addressing have countries, a Keeping allow half by these and way of right is by countries our both the the I employees them to them but am We medical pandemic, doctors

a virus becoming I avoid or sick As even to want the variant. or people being casualty worse of

operations increase XX.X%. and first quarter of launch generating an quarter a pandemic These the at persistency Japan results for easier and was the XX.X% Analyst of costs, profit Aflac range of generated the This our Japan its first as above at boost Sales improved also solid reported our in six growth XX.X%. improved the in the outlook year-over-year reflect Financial quarter, in XX.X% Aflac second Looking margin provided strong reflected Briefing. medical the from conditions financial product. months. new Japan, results for XXXX premium of

of government and declaration conditions and in Company Osaka strategic which surrounding agreements expand sales half three starting While scope to strengthen the of a sustained to especially expect improvement and determination and Okinawa, Tokyo state in is resumption Aflac make importantly, a and was the begun Post for of to and Japan the in Japan for five-year companies. the further do of sales cancer Tokyo growth are XXXX a The at Post May. Group's in Insurance and medium areas, to these increasing term emergency create the XX% plan, and a levels, management consistent Post most insurance with to in area, Japanese June But are targeted experienced evolving In metropolitan to the approximately of Japan. reached work and the limited in less navigate announced Tokyo both we we restricted states example, states of in prefectures Aflac as of have alliance Holdings, to emergencies alliance Osaka. strategic not pandemic represent Japan continue emergency gradual Japan other matter of the sales Japan XXXX continue we lockdowns soon first in Post however, April in have cases to contributing toward cycle countries. other in been Post proactive

While services and we recovery, societal immediate impact will on further to this an for community have customer's expect to position sales not do of as issues. customer-centric company value it respond we growth shared needs, long-term provide resolving and local create our

we saw strong Turning persistency margin of very XX.X% strong to XX.X%. profit U.S., Aflac of premium and a

activities. opportunities we also expected, sequential face-to-face As for sales improvement and more saw a

sales at a At recovery same small will time, focused U.S., still the businesses are on XX% result year quarter returning the to the are employees increased XXXX in As larger through a and remain softer first earlier In XXXX. businesses and which to for sales continue face-to-face primarily a XX.X% of of expect the of the we half more opportunities, level. the worksite. mode,

I As earlier, we able on person to customers, stated virtually. service being will sell and in focus or whether

build In U.S. we and previously life with network continue addition, portfolio Aflac dental acquired the product vision to businesses, out premier and disability. and

continue the better acquisitions margins in the persistency, have as profits future strong topline, they they U.S., States United long-term position the a pretax for investment While in Aflac underwriting to Japan. modest meanwhile, do income impact and success near-term on strong in drive these

growth same remain we we dividend ratios capital of behalf the growth capital and XX-year in that to We and always, in in investments remain Japan our time, cash the the At to focus flows. on and U.S. significant supported of prudent We the committed track treasure As platform. the will capital by placed strong investors. liquidity the tactically it shares, importance policyholders our to and extending to record repurchase made management. strength continuing our committed integrating we've of on achieve continue on and

emerge well-positioned a at toward our Analysts we achieving of and position from policyholders. more strategic so, our financial also while we and we about priorities Financial sharing doing forward promise the as look XXXX. are to work this We in period and look XX, Briefing strength to growth, By the long-term November continued on leadership, our deliver on ensuring to

program the Fred. to over Fred? So I now turn

Frederick Crawford

going same are we sales my for pre-pandemic product on areas With activities period online to from the development, or platform over product roughly positive and up are in down to specific revised Dan. development, restore production of our on levels to respect the Beginning back XX% efforts X% medical first the sales product growth continue the building you, to strategies. the and comments sales to only XXXX platform. pre-pandemic have period. focus focused levels digital assistant Thank in and see progress XXXX of product Post production, reception three Prime. with Medical we Japan, year Japan half to I'm approached EVER on our Aflac within

under product do substandard short-term about In medical small a targeting and SUDACHI. this who in coverage. policies. highly to for traditional launched share are subsidiary a with newly issued Earlier the quarter, back called formed year, first XXX XXX close have we medical We amount, agencies registered product second medical we not customers is our product this market gaining SUDACHI qualify competitive market. insurance The

short-term very in income early but adding are health We over of products. the support and stages this we anticipate time, additional initiative,

in the the elderly by supplemental a process of at are coverage aimed Japan. product care We developing of provided care government new

sales a financial this We coming timing in product believe we in shift around will to mature this third government burden will the sector population continued strategic meaningful the anticipation with in from an of and aging of into and future context driver but provide months, line product a individuals.

distribution. to Turning

contact national the training promoting processed sales. the permeates this technology activity online has sell to promotion we On have nearly agents proposal branches over virtual face-to-face quarter, month-to-month, in have in to capability. Japan as increased allow place that to pivot campaign a XX,XXX we as compared in We with advertising Aflac quarter. first In sales Post, the applications and conducted On over the March along XX,XXX XX, to latest month the training and second the providing with launched information Japan nationwide, from X,XXX sales office cancer the policyholders managers sales our reinforce inform Through regional in post visits Post existing office system on insurance. Activities agents quarter the XX,XXX nearly included to with of third to sessions Japan XXX,XXX visits advantages. June, process. coverage on has JP

U.S. Turning to the

business Critical respond our platform and to exceeding recruiting, converting group small with franchise weekly recovery include on recruits well sales focused investment hurt is the Overall restoring development. to agent-driven areas by pre-pandemic product continues pandemic. sales of levels. Our voluntary producers XXXX

on and traction and markets. In refocused in is appointments takes into the onboarding pressure, remains to we by exceeding under employment year new tight convert we enjoyed are training the and Agent at small Appointing COVID subside all producers critical we running recruiting recruiting, restrictions, production, but weekly under efforts recruiting with in our markets programs, is reach year. agent to to levels. in recruiting brokers subsidy vision have of of gaining our later Individual and business expanding time and of labor terms which XX% expect pre-pandemic. past the we dental broker pre-pandemic impacted

product later in dental with approved vision is in XX the network year. XX more online Our states states, coming in states and

new month in dental We to see access each We deepen to and our of vision relationships over are sales. voluntary accounts. have vision of supports our offerings. completing national existing our have XX% training quoted cases programs however, who our product trained accounts volume agents dental this strategic in building believe benefits and XX% and continue It's intent on include early, and our new increase and about we

strategy quarter, last as said learn vision summed adjust. can and As our year XXXX launch, a be dental and of I up

and continues are platform their building to quoted pipeline relationships client key and business. disability support premier of Our life a

have some we among model and early closing, Our since voluntary service not accounts and of interest have seen benefit any clients. exceptional lost our remains larger notable

XX and Aflac have e-commerce respect California. fact, leave the now been recently paid states, Governor acquired their in would Direct, Ned Leave the for awarded program. In selection Authority, Paid Aflac this accident administrator With and offer our administering our as without business approved to morning, This Lamont are of illness, not cancer Connecticut for including we group possible benefits announced Connecticut, statewide capabilities. initiative, critical

a this funneled reminder, actively traditional building platforms, customers to sales third-party the is a work an Like enjoy Aflac agent. we are call site. call on conversion center. center rates digital call As when center handed our platforms, Currently, are digital outside leads higher out a most platform to and we licensed lead focused reaching of licensed most is

rate conversion many overall consistent platform and a digital insurance leads digital Our is XX% DXC generally experiencing platforms. on qualified with

Through and early Our six protection consumer X% months our products early includes platforms as designed market distribution increased of and are partnerships product to access they development development building these also strategy and sales digital to in three expand and the to while combined in traffic site. new are in for have XXXX, stages.

three forecast increased partnership will contribute $X senior a infrastructure will Investments of second initiatives a to the sales an focused Global XX% made sustainable minority secured commitment continue general new strong entity launch and half created Aflac newly investment half sustainable the on debt has based billion a these Aflac We XX.X% activity of growth expect a in Aflac infrastructure. announced account platform week with in second to upwards Denham Capital. last in projects. interest on hold investing of to a debt multi-year Denham XXXX.

equity on making commitment to also fund investments. a $XXX million Denham infrastructure are We focused sustainable

of leverage leadership, Under stake to I'll a with and communities with firms Sound that When a take track combined strategy play Max? transaction in with by capital partner sustainable specialized important classes Point pass recent benefits. role an are firm on our distressed further We then efforts managers. that asset alliances discuss to investing our U.S. Capital external to and detail. in financial maintain records to our to in seek We investment, Eric's recognized now the our markets. the advanced the investment ESG more performance our leading our infrastructure partnering furthers Denham, in in we minority portfolio. across infrastructure sustainable this Max We strong maximize with pleased potential

Max Broden

you, Thank Fred.

QX earnings a have focus our review developed. begin our performance drivers me on and my Let comments capital a core with with of

For quarter, the exchange share. in diluted a increased by earnings quarter impact to was to yen/dollar adjusted especially slightly share the per strong second for largely $X.XX. pandemic, rate weaker claims adjusted performance U.S. significant did XX.X% utilization not the driven earnings have The the on due lower per This

strong to the significant per XX%, $XXX including reflecting status, was XX.X% benefit first earned the foreign ROE, while points to sector premium impact sector year-over-year, We impact, the premium which went Japan's expectations. products currency with was was in Total XX.X%, came earned sector income spread paid policies capital. continues our lower normal down above third experienced down to is sector foreign XXX the our down investment favorable share, due quarter, to gains come volumes. reaching grew IBNR Starting and variable adjusted ratio long-term addition, value for and higher ratio points a our a slightly release X.X% excluding segment. a total the basis than X.X%, declined cost our losses, year-over-year. the benefit recent our basis Adjusted translation reserving. Japan at return third relative in for In of third sales of for experience million book XX.X%, block up initial XXX and as quarter in currency

of due second This constraining quarter to quarter, since and release the IBNR primarily year-to-date. was pandemic utilization XXXX conditions

levels. longer activity claims rebound, begun normalized it Although below remains have to term

a our to with strong are releases. and year's a now to estimates to data, worth than XX.X%. has XX more down refined, of points, up lags was mature led yet reporting which IBNR increased at require claim pandemic year Persistency data, more Our basis remains the

was Our ratio adjusted XX year-over-year. in expense points up XX.X%, basis Japan

We includes continue technology-related higher investments to Aflac system company, to expenses. paperless our maintenance convert also which a Japan

quarter quarter. points up very partially a on lower margin fixed favorable XX.X% in which for our year-over-year, result quarter. hedge the and higher rate yen increased Japan net income driven returns investment by telework Additional for pretax in growing offset portfolio. to the primarily costs, was added expense the the portfolio ratio XXX yield on XX.X%, basis Adjusted The also favorable in expenses by our lower terms, reinvestment was alternatives

Japan lower This at range. expect the financial of of us results higher XX.X% given to at the at be XX.X% ratio range be leads to of guidance full-year for benefit quarters to three-year strong FAB XX.X% the end margin end to pretax the and the the XX% to

of year earned sales prior both Net X.X% orders. Persistency XX.X%, basis emergency basis improved XXX to explained to points premium the the Turning due second of and in results. XX elevated quarter can by to be was this year U.S. the points down persistency results. weaker

improved the XX was as is lapse quarter rates year-over-year. the no basis in net impact twice first roughly lapse attributed year persistency So rates. there sales of to for quarter total lower points are in-force

improved is points the basis XX Another improved of persistency efforts to due from and conservation largely comes experience. remainder

than by data was Our incurred initial itself our total estimates course benefit heavily lower for QX ratio at in XXXX, came of as basis points Lower or lower impacted matures year. claims a utilization claims XX expected the pandemic. over which than the XX.X% impact

our increase lower we behind our data matures, pandemic utilization. us, to on we reflect of with IBNR and data data year reliance our As a raw reduced the

to ratio, benefit an underlying releases points This releases XX.X%. quarter, which of the benefit on IBNR X.X excluding amounted IBNR ratio, leaves percentage impact

benefit throughout the the with year, gradually the resumption normal activity our the policyholders. expect We and communities of ratio by our to in increase remainder of

of full-year, benefit we be our in to ratio versus the of XX% range XX% guidance expect XX%. the to original our XX% to now For

Our ratio XX.X%, revenue. impacts points parts. XXX but year-over-year, negatively a lot up was of with Weaker in expense U.S. sales performance the basis moving

our expense. However, by to the ratio basis by and XX commission Higher offset advertising increased the points. impact DAC is ratio expense lower spend expense

Net-net, direct-to-consumer, tracking U.S. Our of contributed in offset as largely QX being investments plan. the group we ratio. producer in continued strive and not of Adjusted are our to adjusted investment life recent U.S. strong, with investment with These basis quarter, point very earnings with acquisitions. benefit quarter. disability, net income benefit the driven also parts, XX.X%, to pretax the to initiatives, growth as voluntary towards margin expenses efforts dental network, of core are a space. the driver. a vision in Profitability incurred up growth to lot despite the variable operating according expenses moving favorable lower core low-cost X.X%, segment expenses a build-out transition included a and integration and the in by low income and strategic the we mainly increase XXX of in associated by was the was ratio In million $X.X

full-year. investments, first be loss segment, low-end to last Corporate With due were than for now us expectation lower segment, enterprise. these our pretax the of but to are a well end the the in our pretax and the amounted amortization margin books, are to volatility held negative effective expectations This In the XX%. We up level investments lower lower the result recognized to of expectations. NII, of expect slightly with credit million above for XX% for the income To-date, which offset we to million to investment by the interest towards is returns short now corporate level. a quarter in half FAB. our increasing at end a year, of line $XX indicated are as Corporate the net we million cost GAAP, rates this U.S. was of equity performing corporate recorded a range this of adjusted in to we certain yield economic $XX our above reported $XX curve capital. the investments on tax tax Under and at rate at impact Initial these

above March strong, in bond corridor stock in our quarter, are at holding our balance, $X.X from million XX%. ended the on Aflac XX.X% an at bond our XXX% reinforced the which investments sustainable remains liquidity in of that paid includes approximately issued $X capital good $XXX $XXX minimum billion, In million long-term Leverage, offering believe IRR of and relative RBC we investments. also in middle position own of and company we initiatives XX% $XXX of dividends the our Columbus. remains and and the of million, an repurchased these to Unencumbered sustainability that good excluding quarter which billion leverage with SMR sustainability that comfortable was about we our a deployments. stood the capital proceeds XXX% Japan Our ESG

ROE of and I'll be David to drive capital. to tactical the how meaningful flexible and hand to capital will it in manage strong sheet that, over spread continue to And with risk-adjusted to cost deploy Q&A. a with our balance begin we We

David Young

Max. you, Thank

take participants Now please first a initial we me are question. Andrea, ready to you But allow an question follow-up yourself to take one limit let our ask your question, other to related and a we opportunity please. ask to first, to questions. will

Operator

question-and-answer begin Dally The Instructions] Nigel will session. comes ahead. first the We [Operator Please of go question from Morgan now Stanley.

Nigel Dally

Thanks. Good morning.

throughout I first the was better ask was about the So quarter, quarter. March February improved better than they to wanted February. sales, than they trended In January, month. every how

the Japan. and trended in quarter, second in interested in they the both So how U.S.

Teresa White

Well, the speak to [indiscernible] U.S. Virgil, trend? sales you the do want to

Virgil Miller

Nigel, this is Yes. Miller. Virgil

about you with second we've in sales our the share trends seen me Let quarter.

from looking favorably We're our about very First, side buy-to-build group are say right We're that again. looking XXX% trended platforms. business, the you in of to strong. and heard trending of positive we Fred once our we pleased XXXX, now with install good

really our We expected strong end then was our career our driven the year. of with the you We're channel. block career the QX. strong QX recruits. with our numbers Overall, We recruiting to veteran goals into our though. recruits. our headwinds, ran business individual to by with I'll And some as see, looks surpassed can looking We hit turn of for

second to getting at were I level producers. XX%, in look our things of In average week veteran the daily of back the is second we XXXX with veterans our In business. One QX, XX%, the of that quarter, the a increase half were increase have and showing looking so we a to favorable quarter. and strong for fourth throughout we're at year third there, and

would I comes with we're right overall, but say performing just bit what little when channel. to a expecting, the the behind with exceeding at credit we're group plan channel So it

Daniel Amos

question. Nigel's answer to Japan to turn maybe Now,

Masatoshi Koide

I Japan insurance that Japan, Yoshizumi Mr. Aflac XX Mr. the the But had Mr. before Division Manulife in of life of Ariyoshi Aflac let sales. he the years answer Mr. to Yoshizumi the January succeeding joining will asking is. took Sales Mr. of to Head Yoshizumi before you Yoshizumi the this assumed effective Koide, Manulife question, in Aflac CEO Masatoshi has has X. question. answer introduce of position of And who Sales Marketing and experience him the Japan. Yes. of have me led more position then on year, in the than July Japan. and

Mr. experience as pleased Aflac We leadership and extensive extremely very in well rich welcome to in has Sales as to Japanese are Yoshizumi life industry. very Division as very Marketing experience Head, sales Japan he insurance

Koichiro Yoshizumi

you I Thank Marketing talk to CEO I all Mr. And My before Aflac Really Yoshizumi. the And have introduction. Manulife the introduced, name I of Aflac, appointed to Koide the for to been the X. just great in you as U.S. is lead was Japan. July and effective Division the Japan, joined of Sales

sales you However, independent experienced that this and sales to has wonderful of Japan And agents I've be financial to forward. most the distribution institutions, able And to sales captive once or sales life with channels great been the channel, insurance. be be that experience. all have very to exist of of XX in discuss experience have to been you. my so here channels years opportunity able But channel, of Aflac with honored – has are my types in I'm marketing experience going my agents promotion been Japan’s again,

all Japan’s become year-on-year. and XX.X% me a situation, quarter. let popular common that And increase product for this the talk to has the second about So become a COVID let application very achieved upon new in means sales current of we first results And the and discussed first on COVID discussed, application. launched. have also the This medical start under me Aflac And was the now touch online we also situation, earlier. as under

under And what As moves we a active have and result, covered activities environment. by was Dan. current have enabled that's active to the very

we are we said, he And where for that's XXXX. were XX% in me. it of As about at

Nigel Dally

great. That's

Post there? actively Just sales, they've color – your expected expectations? be to any to but are early follow-up gradual Japan early indications they've proactive to begun coming improvement that on how begun a as as sales given relative in know proactive well, the some you pay to I any to

Daniel Amos

At particular to it's I call. the But said this early. wan I too reiterate point, quarter again, what first in

better Our the is writing the getting with to business Japan relationship now to has has into that been being been from that was thing that account matters they're corrective with done. regime sales due proactively a took adjusting new Actually dealing to way addressing back the Post. they they never were properly

said it's is But taking States we're that. see of, bit affected place stronger our with both there the half, that but reports, so and event that a the as in And growth isn't that everybody variant little if happens, United Japan not outlook aware takes we for longer. some all-in-all, to in this with second assuming

this feel to growth quarter good at So even I third. that that don't point, but the But going fourth probably for you're in than I'm sure encouraged. the see continued more know so we

Nigel Dally

That's very helpful. Thank you.

Operator

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

Jamminder Bhullar

good morning. Hi,

we've and your of year? those companies then half things work, in have the seen Has affected return of in sales also trends I that on and guess And in in on Japan. second the the heard this to we've the U.S. push in the some back both recently U.S., question markets, a views cases built in as is had just the first, well. your So increase sales

Daniel Amos

Teresa. ahead, Go

Teresa White

with start U.S. the We'll

ask First, I’ll Virgil to respond.

Virgil Miller

really impact in companies time large case market, by career it smaller engagements, dealing we said brokers We time. that. faced can all. virtual called really learned like small Rolled we that self-enrollments We our with small can a recruiting there to toolsets to, the We're of able much the driven enrollments Dan channel, around headwinds, online seen in around meet do our the we anticipated and haven't as they're it Again, virtually. or do group and our at – and virtual We said some some sell to serve the businesses I face-to-face earlier face-to-face. Yes. of market throughout products, year. last not XXX% really customer can specifically for where were with going pretty COVID possible. more any we his used online, speech, that it way used we We much

of right any we're get very you I tell able will yet, setup see to from enrollments, face-to-face I set closely, them that monitoring though, that have our we but been have changed we're still this Now now, to enrollments up. a have yet face-to-face

Jamminder Bhullar

And Japan… in then

Masatoshi Koide

for you question. Thank the

from is this Japan. Now

So sales onsite of lockdown emergency one state in situation question of to the declaration Japan from let the the is purpose the employees to the place control regarding the activities of of Japan, And limiting number we your me emergency U.S. is people, people's of Japan under answer to the in state really state different have movement emergency, Japan. are continuing. from although In And come our the been declaration another. in

As a And is daytime. sales declaration much to Tokyo state and the is emergency of activities during that just there to impact current result, not imposed really Okinawa. our

as affected, are are nationwide. normal of with prevention activities course And state to And the outside emergency do being able we of declaration being of And sales. that, nationwide successful so, top the We full have done on the believe areas quite kind prevent under the to try be spread and of sales in do these environment. we taken and of our have can have consultation applications this that activities. that we online measures root do

Jamminder Bhullar

market. results of the follow-up Okay. quarter, this recruiting pretty U.S., mostly because on And the if I in you strong broker could just had

is affecting career the your it market over because seems all. sort labor hard is Not side, it sector On the to recruit like the And how harder? agents? and back of retain ability coming services getting was so

Daniel Amos

you that Can Virgil? take

Virgil Miller

out coming we you into out harder. our It's strong, of And pipeline. QX, certainly going getting QX see, came can

begin with said of made slacken process, why QX. were Now now an slightly conscious the license, brokers, got the activated is that this to as products, through to a having year. go them really them used all Aflac brokers decision though, to giving take pipeline We with very really full come license. second exam pipeline new basically seen agents, recruit table to the Again, really to why with strong we we half understand already a and we in our earlier, to QX. them in we products. brokers, We've and certifying familiar remember, already get recruiting just in They're

Daniel Amos

of they're because bringing have I that. back we'll the U.S. And of with I very been in very is of thing them with on a is with terms is be The going good stopped contests basically a job renewals in Dan. need is agents us think them, instrumental just think I bring coming and of I Virgil producing, has the doing add who got This COVID company, one back, too. And would some soul of doing and doing back. have licensed to been it job think that they're Fred And kind is, we pushing have the they've good the that. of Teresa

which back, come production. to continue we'll reflect in that thinking will I'm the So

as more to there people gives we of Now, employment, lot work all, the a commissions, that even is that at as course, in licensed of us you got opportunity get out to site. just we've And imagine, simply to you enroll it's an Virgil recruits, difficult coming need back. based the on higher have people all labor as work harder the can new you're with in trouble because market, salary, mentioned, people having with but if

we the see believe and is it. certainly we So potential there should

Jamminder Bhullar

Okay. you. Thank

Operator

next Partners. comes go of from Please ahead. & Dowling The Humphrey question Lee

Humphrey Lee

XXXX Like not taking and just kind the overall little quarter about say you I level, how COVID, were think Can IBNR a of or what to of have is overall how like, focus of it. to the claims U.S. XXXX? the thank pre-pandemic questions. and this quarter this compared XQ big reserves maybe Good for but you end experience want more for the to talk you in on the piece? level of that at a about, year-end just IBNR like, Japan kind just morning and reserves the

Max Broden

is quarter, hold. paid I say speaking, Thank we In that, that we throughout did generally a expected don't the increased total below But This claims came Max. the you, would Humphrey. paid the through. levels had experience IBNR first exact we month-over-month into quarter, that go We claims.

expect and Going into to releases IBNR fall, as trend that into quarter. to normally we in to saw second less more sort April, and more extent leveled some our led see, input would together below and in quarter, used this we data and level that that the raw models at a with or what May of June, the we out reserve

of claims to Going – forward, future our expectation best we results. obviously the reserve

Humphrey Lee

are of level? holding more kind just compared to right IBNR pre-pandemic you still a maybe reserves guess, I qualitatively, now

Max Broden

reserving our changed not practices. have we No,

Humphrey Lee

Okay. I kind guess my going topic. follow-up on to that was of stay

level there were you claim the claims paid us how in U.S.? like sense Where that any to versus activities? paid and and help of the think pre-pandemic the claims, is they compare In they normal the can quarter lower to actual terms of about paid pandemic Japan second the in maybe do a during

Max Broden

our daily And by to is activity by [simply continues activity in policy. below constrained Paid claims long-term expectations the economies. activity] be

that indemnity providing and of So are events the policyholders accidents, but are terms drive sports lower playing less of car protecting given sports kinds our example, out also, accidents different also we into people accident coverage utilization products people that less with hospital from and in getting about product. is claims accidents on getting the our the we them policies, to drives and that or an both to and into as selling, life line

driven say would much or is activity mobility people. I our that by So claims very

Humphrey Lee

to so, there to sales, guess, like talking of many is relative you any able how XXXX? But you're Like I about XXXX in sense like of levels. – percentage like similar? when claims, – you're do percentage what Can something provide like sale

Todd Daniels

This Hey, Humphrey. Todd. is

paid quarter Max you I pretty restricted what flat, at think our just ¥X said, having as and claim That if movements that's he expectation XXXX, described. for lower about second people paid second was claims. long-term roughly below, of reflective XXXX billion quarter And XXXX. look is activity in and

Teresa White

would the have. that type say people from based said, I it's U.S. policies Then side, of on the what with consistent Max

policies, high short-term yet, you accident our utilization as see general, look may don't for there, utilization at So in on, disability see policy. you you example, on when higher

Humphrey Lee

Okay. Thank you.

Operator

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

Ryan Krueger

Fred, you elderly would you're morning. and individuals? products any products developing medical particular, are by good purchased Hi, from able current color that it how in differ would be elderly that to on the provide more care

Frederick Crawford

Sure.

for important. development involved is support its very maybe So and to there are confused supplements be actual that are and things elderly you supplemental risk couple very care under with of some mechanisms. a the product a This that. what And with long-term the care relative One is reasons U.S. is fundamental product care. to the not familiar government product

government it's care as basis And designed platform so And coverage. on being to significant it is for broader reason care, care. not levels a assisted medical benefit. described that realize defined very lump of the it to assisted of sum And the you annuity as lower more some universal also a inflation. to is of opposed do where move specific the of The that supplement payments structures are a type there's such then way I escalating healthcare into have when more levels you benefit more

you reserves, a don't have moving that's if well. assumed risk you're don't have assisted the and will, lifetime the risk, coverage, Therefore, living. tail interest into not nearly nearly as You of once therefore, more rate with building the

So there's really several why care support, be this defined supplemental example, mechanism. confused, is different for of types other a should reasons elderly with not riskier it

government program. is other the directly plays of qualifications it The off the

covered narrow definitions. definition you has a not of those what the covered feel then what in might off is I more and And it U.S. used plays so it to be is

quarter a Now, is This been is idea, keep mind in but of an probably platform roughly of this Japan. largest new area sector you that's to smaller existence, the an sales. it's developed, a of third area not it's in give third product that is one it's size a key, an be burden elderly the thing industry newly or with supplemental related shifting suspect medical expected at grow families will least building of we that their is or over to Japan. be believe, in what time. population platform this a that aging gradual that The care to however, individuals the onto and a we will To

there in to leverage and third to product, prominence. with competitive a we We our there want in want to now. want of get we so And off get sector

the So that strategy. is

when We forward. at it's time. we will to difference more be strategy in the Conference about But think Investor future maker move and developed you tell something our build more around will the out a this more as be because get could we we that clearly it

Ryan Krueger

insurance carriers domestic had that? in Thanks. now follow-up. and life one past, you Are the the that just guess the insurance Are I you're Japan they been I just market in mostly, to enter? the current in and going haven't offer

Frederick Crawford

sell important that different a that build successful to domestic that don't frankly, living insurance example to They understand supplement many care or Good smart sector market into manage is this players would services the type surround third assisted narrower elderly the categories elderly better with to traditional the you of of also aspect technology like notably care. insurance. players then in helps with non-insurance going elderly One other things industry that the home are. that's will other necessary individuals are They the find larger settle group help sector, claim prevent players. medical. service managing first they many on of atmosphere. parts moving share be largely of concierge an and this some of just It's of But the business

within of building to market one a is because also we're the business, product, this alongside share. So keys incubated services like that other care non-insurance building

a we'll platform we more this forward. that in go and larger you do. intend expansive if as more a build leader which business, be it's we again, color So around to And

Ryan Krueger

Thanks. Appreciate it.

Operator

and question more Please ahead. for Sandler. that Barnidge question John of We have come time Piper from one will go

John Barnidge

other to opportunity. Thanks in for talk you. what maybe do the you Can talked Connecticut? about about states, Thank opportunity you briefly the market for

Frederick Crawford

now. Sure. This about There XX is is Fred right states again.

are all in into up in much bit because of to states. typically add In program states there's employers of to opportunity fact, you Connecticut was state the expensive family of when And leave employees the in million fairly And medical these opt projecting in cover that to potential the legislative their a coverage the programs together the do this in in within who X.X qualified These we require further for this believe likely Connecticut, as you include the qualified as are may idea, programs the into in of future. state. Connecticut. activities participants XXth opted the states, effectively or we it the employers put gives are this an each excess the expand that that

the up within it nature prioritization take legislative takes And But the the of the and in fact platform. dynamics offered on benefit it obviously, needs state state can substantial legislators. nature opted that place, time. and a to means is this employees’ and program is So the depend activity political to a organized the it that of typically the program atmosphere

XX now it right expand. So but believe will we states,

of important already are that very lot a in receptivity the think I and programs Connecticut success It's it's to this entertain expansion, based a place. client be The the very We is be is good the qualified going that to that that of from news on run us. acquired to frankly, that. a use capabilities to the and Zurich states. our were pleased that additional we as and to program expect be us bid business foothold allowed to of for awarded

John Barnidge

Thank and the follow-up that. an you. to that Fred currently needs to is remaining was XX That Yes. know action states, states but there in the great, program? occur nine I have a the opportunity legislative other with

Frederick Crawford

and like outside out fact, for move an efficiencies, quality the provider looking some to administer originally specialization, of cetera. you to then outsource it when Others And in was enough, look handed other Connecticut to et states, Interestingly an greater outsource at the nine do service internally. them actually internally provider.

states some do it some so it. states outsource in-house, And

So not there's of a taking providers. One important on this. thing mix that's is risk you're a

the what traditional extensive drive an you're so level PPA – that a really would insurance to consumer. not competing this or your parameters, to consider you competing would ability administer on platform, some you're so on the administrative-only technology service platform you And call and

we if So these technology for to you a and great the premier you'd one strong customer this qualify that get that, programs. service, why the marketplace don't kind without of is service it reasons capabilities, sends an never you of unless this really contract strong like have you're statement contract employer,

And what pleased so about. that's we're

John Barnidge

luck quarter of ahead. the in Best Thanks.

Operator

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

David Young

today. you thank and for all joining us you Thank here

our you Looking soon. to on Analyst speaking for ahead, Financial with look More we XX hope you'll follow. us November forward details will join XXXX We Briefing.

you. please additional Agency And I follow-up If health. Thank with all Rating you questions, Relations. good you and any wish Investor have continued

Operator

now you has conference may disconnect. you Thank for concluded. The attending now presentation and today's

Aflac (AFL) 29 Jul 212021 Q2 Earnings call transcript