Aflac Incorporated Q2 2010 Earnings Call Transcript

As a result, ordinary life emerged as our number one product category in the second quarter with child endowment accounting for about half of the ordinary life category.

Although child endowment product has a lower profit margin than the health products, the premium is almost three times higher than our cancer or medical products. As such, it’s a solid contributor to both the top and bottom lines. Because of the relevance, simplicity and universal appeal to families with young children, we expect our child endowment product to remain an important part of the life insurance sales category.

Medical sales also remain strong and rose 23.5% in the second quarter. This increase was largely attributable to the successful revision and the promotion of our popular medical product ever.

As you know, maneki-neko duck or cat duck advertising campaign became an overnight sensation in Japan last year. We have shifted some of the promotional spendings from maneki-neko advertising to support other new product introductions. So even so the popularity of the advertising featuring the maneki-neko duck remains effective in generating sales.

In addition to product development and the expansion of our traditional sales force, we’ve established a very strong position with the bank channel. We continue to have significantly more bank selling our third sector products than any other insurer operating in Japan.

At the end of June, Aflac was represented by 354 or 88% of the total number of banks in Japan. Our estimated market share for cancer and medical sales was combined at 60% in the second quarter.

As we expected, we continue to experience strong sales gains through the bank channel. Sales in the second quarter were a record ¥3.9 billion, which represents a 177.7% increase over the second quarter of 2009, and a 26% increase over the first quarter of this year.

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