Daniel Paul Amos
Chairman & Chief Executive Officer at Aflac
Good morning, and thank you for joining us. 2021 was another year of uncertainty with vaccines incrementally gaining some momentum as the year progressed. There were hopes that the severity of COVID-19 would fade and allow us to return to some type of normalcy. Unfortunately, one year and several variants later the normalcy has been -- yet it did not remain idle. We have worked hard to adapt using virtual technology and seize the opportunity to accelerate investments in our platform. Considering what the global and national business landscape has experienced over the last two years, I think Aflac has been very fortunate with some tailwinds, while simultaneously working hard to achieve our objectives and continue our strong earnings performance. While Max will address the quarter in more detail, I'd like to highlight some of the items for the year. Adjusted earnings per diluted share, excluding the impact of foreign currency, increased 21% in 2021. This result was largely supported by the continuation of the low benefit ratios associated with the pandemic conditions and better-than-expected returns on alternative investments. We were pleased with this result, especially when you consider the pandemic pressure on revenues, accelerated investment in our core technology platforms and initiatives to drive future earned premium growth and efficiency. 2021, Aflac Japan generated solid overall financial results, with an extremely strong profit margin of 20.2% and solid premium persistency of 94.3%.
We continue to navigate Japan's evolving pandemic conditions, including various degrees of COVID-19-related restrictions that created headwinds for our face-to-face sales opportunities. Especially given this backdrop, I am encouraged by Aflac Japan's annual sales increase of 7.7%. This reflected the first quarter introduction of our medical product, EVER Prime, and the September launch of our new nursing care product. Amid evolving pandemic conditions, we continue to enhance and actively leverage our virtual sales technology to connect with customers as we monitor the recovery of face-to-face sales. Our goal in Japan is to be the leading company for living in your own way. This approach captures how we tailor our products to fill consumers' needs during the various stages of their lives, reaching them where and how they prefer to purchase insurance. This includes through our agencies, strategic alliance and banks as well as virtually. Aflac Japan continues to offer various measures of support to Japan Post Group as they gradually increase proactive sales activities and gear up for the start of their new fiscal year in April of 2022.
This will include the transfer of approximately 10,000 Japan Post company employees to Japan Post Insurance terms. These employees will handle only Japan Post Insurance products and most importantly, for us, Aflac Japan's insurance or cancer insurance. We expect this continued collaboration to further position the companies for the long-term growth and gradual improvement of Aflac Cancer Insurance sales in the interim. Turning to Aflac U.S. We saw a strong profit margin of 22.8%. This result was driven by lower incurred benefits and higher adjusted net investment income, partially offset by higher adjusted expenses. I am pleased with the 16.9% annual sales increase, especially considering the constraint face-to-face activities continues to be somewhat of a headwind in the U.S. as well. Aflac U.S. also continued to generate strong premium persistency of nearly 80%. In the U.S., small businesses have gained some incremental ground toward recovery, and we expect this to continue gradually. Within the challenging and small business and labor market, we continue to engage our veteran agents. At the same time, larger businesses appear to be more resilient given their traditional reliance on online virtual self-enrollment tools and we are making ongoing investments in the group platform. Excluding our acquired platforms, 2021 group sales are more than 104% of 2019 group sales. We remain focused on being able to sell and service customers whether in person or virtually. As part of the VISION 2025, we seek to further develop a world where people are better prepared for unexpected health expenses. Fred will provide more detail, but as we seek to fill the needs of customers, businesses and our distribution, we continue to build out our U.S. product portfolio with Aflac network Dental and Vision and Premier Life and Disability.
These new lines modestly impact the top line in the short term. In combination with our core products, they are better positioned Aflac U.S. for future long-term success. Depending on continued progress in the pandemic conditions, we remain cautiously optimistic for continued sales improvement in the U.S. The need for our products we offer is as strong or stronger than it has ever been. At the same time, we know consumers' habits and buying preferences have been evolving, and we are looking to reach them in ways other than traditional media and outside the worksite. This is part of the strategy to increase access, penetration and retention. I've always said that the true test of strength is how one handles adversity. While the pandemic has been and continues to be this type of test, I am pleased that 2021 confirms what we all knew. Aflac is strong, adaptable and resilient in both Japan and the United States, we look for ways to be where people want to purchase insurance. Related to capital deployment, we placed significant importance on continuing to achieve strong capital ratios in the U.S. and Japan on behalf of our policyholders and shareholders. When it comes to capital deployment, we pursue value creation through a balance of actions, including growth investments, stable dividend growth and disciplined and tactical stock repurchase. It goes without saying that we treasure our record of dividend growth. The fourth quarter's declaration marks the 39th consecutive year of dividend increases. Additionally, the Board approved a first quarter dividend increase of 21.2%. Our dividend track record is supported by the strength of our capital and cash flows. At the same time, we remain tactical in our approach to share repurchase, deploying $2.3 billion in capital to repurchase 43.3 million of the shares in 2021.
Keep in mind, in addition, we have among the highest return on capital and the lowest cost of capital in the industry. We have also focused on integrating the growth investments we have made in our platform. As always, we are working to achieve our earnings per share objective, while also ensuring we deliver on our promise to the policyholders. By doing so, we look to emerge from this period in a continued position of strength and leadership. I want to point out that the world has changed in many ways that surprises even the most cynical, but what it hasn't changed is the fact that the pandemic or no pandemic, people are facing the same illnesses, accidents and health conditions every day, only now COVID has been added. This means that the need for our products is even greater now. And we are committed to being there for them in their time of need. I don't think it's coincidental that we've achieved success while focusing on doing the right things for the policyholders, the shareholders, the employees, the distribution channel, the business partners and the communities. I am proud of what we've accomplished in terms of both our social purpose and financial results, which have ultimately translated into strong long-term shareholder return. Now I'll turn the program over to Fred. Fred?