For being here at the Bank of America Financial Services Conference. This session is Aflac. We're really pleased here to have Chairman and CEO Dan Amos and Vice President in charge of ESG, investor relations, and rating agency dealings, David Young. I just wanna say a few prepared remarks and then Dan is gonna give a presentation. There'll be time for Q&A at the end. In addition to being the Chairman and Chief Executive Officer of Aflac, I did a little web spelunking. I believe that Dan is the third longest serving CEO in the Fortune 500, S&P 500. His innovative leadership has grown the revenues from being $2.7 billion in 1990 to $19.5 billion this past year.
Aflac provides protections to over 50 million people in the U.S. and Japan. Among his successes, in January 2000, Dan launched the popular Aflac Duck advertising campaign, transforming it from a successful supplemental insurance company to a top international brand. Aflac's been named among the world's most ethical companies for 16 consecutive years. Dan's work for child cancer has raised $165 million. In this issue about being the third longest serving CEO, I did a little math. If you had bet on Dan when he became the CEO of Aflac in 1990, you're up over 10,000% on your investment in that period of time.
Not to cast aspersions anyone, but the other long-serving CEO who's really famous, if you try and figure out who it is, has only delivered 5,000% return over that period of time. I just meant to say that you should always bet with Dan Amos. We're really proud to have him here. Let's have hear what he has to say about Aflac, and we'll come back for Q&A at the end.
Well, thank you, Josh. Thank you all for being here today. Before we get started, you can see all the statements that the lawyers have today about issues. I'm not gonna go into all of those other than to say that the materials are available at investors.aflac.com. You're welcome to get any information about that. When we last gathered here, we were on the verge of the pandemic and facing challenges that it posed. For Aflac, the pandemic had two noticeable impacts. First, we were unable to meet face-to-face with potential and current customers to sell our policies. In addition, we were surprised by the impact of claims, especially in the U.S., as people really stayed away from doctor's offices, hospitals, and even for conditions other than just COVID.
In 2022, pandemic conditions continued to impact our operations in Japan, especially in the first half of the year, but they appeared to be gradually improving as we enter 2023. Meanwhile, the U.S. pandemic conditions have largely subsided. Today, I'd like to tell you about Aflac Incorporated's strategy, recent performance, and how we plan to grow while returning capital to shareholders. I'll begin with a high-level view of our strategy. Aflac operates in two of the largest insurance markets in the world, Japan and the United States. Our policies cover more than 50 million people. For many years, Aflac's strategy in Japan and the U.S. has remained straightforward and consistent. Aflac, in its core, develops supplemental health insurance products that consumers need to offset rising out-of-pocket expenses not covered by their national healthcare in Japan or major medical insurance in the United States.
Our supplemental health insurance policies are also unique in that they pay fixed benefits directly to the insured, regardless of any other insurance they might have. Because the benefits are fixed rather than open-ended, they are not subject to inflation. We also offer other voluntary health and life insurance products that complement our core offerings and fit the needs of the customers. Equally important is we want to be where the customer wants to purchase the insurance. As a result, we sell policies through multiple distribution channels, associates, brokers, other financial services companies with whom we partner, and direct to the consumer. Ultimately, this yields new sales, new accounts, and customers. Our strong and trusted brand is an integral part of our strategy that we leverage to open doors.
We cannot overstate how important, as silly as it might sound, the Aflac Duck has been to the building of the brand and connecting with consumers and businesses. The Aflac Duck was introduced in the U.S. in early 2000 and in Japan in, I mean, 2003. To put that in perspective, today, we have over 90% name recognition in the U.S. and 96% name recognition in Japan. We continually seek opportunities to leverage our strong brand and the popularity of the Aflac Duck through advertising campaigns that educate the audience on the gap or the risk that they face when medical events occur. We believe that if consumers better understand our products, they'll appreciate the value of them.
This is especially true in the United States, where people tend to spend less time on understanding the products or major medical insurance and what it actually covers. In addition to being the leading supplemental health insurer, we believe people would rather work and do business with a company that's also a good corporate citizen and one that has a good sense of purpose. In 1995, we established Aflac Cancer & Blood Disorders Center at Children's Healthcare of Atlanta, a natural fit being the leading cancer insurer. Since then, the Aflac Duck has also come to represent our commitment to fighting childhood cancer through supporting treatment and research. Our sales associates, employees, and the family, as it was mentioned, has given $165 million to the Aflac Cancer & Blood Disorders Center.
To me, the most important and interesting point is that over half was donated by our commissioned agents that gave the money out of their pocket. In 2001, we established the first Aflac Parents House in Tokyo. This is similar in concept to the Ronald McDonald House in the United States, they don't have them in Japan, we thought it only right that we establish one. At the Aflac Parents House, pediatric patients and their families can stay together at a home away from home while receiving treatment for cancer and other serious illnesses. The second Parents House was opened in Tokyo, followed shortly by the third one in Osaka. Over the time frame, Aflac Parents House locations have supported almost 150,000 patients and their families.
In 2018, we took our commitment to helping children with cancer one step further. Each year, about 15,000 children are diagnosed with cancer, and as you know, when a child gets cancer, everybody in the community that where they live knows it. We introduced My Special Aflac Duck, a smart, comforting, animatronic companion that helps young patients feel less alone during their cancer treatments. My Special Aflac Duck is not just a plush duck. It uses state-of-the-art technology designed by robotics professionals in collaborating with doctors, childhood specialists, and even young cancer patients. My Special Aflac Duck took home the Best in Show award at the Consumer Electronics Show in Las Vegas and was named by TIME Magazine as one of the best inventions of 2018 when we took it public.
This kind of technology means each one costs about $200 a piece, but it's worth every penny to help children across America and other places. We offer My Special Aflac Duck free of charge. Since it was introduced, we have taken it to Japan, and we have an IT operation in Northern Ireland, so we've also taken it there. Finally, because our Cancer and Blood Disorders is the number one sickle cell place in the world, we also took it to the kids with sickle cell. We have delivered more than 20,300 of these animatronic ducks to the children in the process by helping them with their treatments. Efforts like this, we believe, reinforces the power of the brand and our commitment and purpose as a company, which I take very seriously. Now let me turn to Aflac Japan.
Aflac Japan accounts for nearly 2/3 of Aflac Incorporated's adjusted revenues and insures one out of four Japanese households. Aflac has been operating in Japan since 1974 when we pioneered cancer insurance there and became the leader in the market. Following deregulation of Japan's insurance market, we launched a standalone medical product in 2002, and it rose to number one in medical within one year's time. Today, we are the leading cancer and medical insurer in Japan, and these third sector products remain the core of Aflac Japan's product portfolio today. Over the last four decades, Japanese consumers have seen healthcare costs continue to increase amid an aging population and a declining birth rate. This has put national healthcare system under increasing financial strain, and consumers have been required to pay more out-of-pocket expense for their healthcare expenses than ever.
The increase in medical expenses is projected to significantly outpace the GDP growth in Japan. Because of rapidly aging population, higher co-pays for the medical expenses, the market for the third sector products has been steadily growing, a trend we expect to continue. To that end, we will continue to refine an existing product portfolio to introduce innovative new products that our policyholders want and need, and sell them where the consumers want to purchase them. To remain in step with consumers' wants and needs and the evolving trend, Aflac Japan aims to have a full product lineup to meet consumers' needs during any stage of their life. Aflac Japan is addressing these needs of young and middle-aged customers to build assets through refreshed first sector products, particularly WAYS and Child Endowment policies.
Converting younger people to Aflac customers early in life also sets up an easier introduction to our third sector products when the need arises, whether at the initial point of sale or later in life. Within the third sector, income support insurance aims to protect those who are in their productive years, whereas our nursing care product offers protection to those in retirement. Aflac Japan will continue to develop and grow these newer products areas while continuing to enhance our core cancer and medical products. Last August, Aflac Japan launched a new cancer product called WINGS through our associate channel. WINGS offers a competitive premium and expanded coverage for the latest cancer treatments and cancer screenings. It also provides coverage opportunities for cancer survivors.
In 2022, we expect to pick up in the second half of the year, especially in the fourth quarter. That is exactly what took place. Sales in Japan rose 10.8% in the second half of the year, including an 11.4% increase in the fourth quarter, which was led by full-year sales coming in essentially flat. These results reflect the August launch through our associates of the WINGS product and our first sector product updates in the fourth quarter. Aflac Japan expects positive sales growth to continue in 2023. We continue to roll out WINGS along with other related measures. Dai-ichi Life, who sells for us, and the financial institutions began offering WINGS in January of 2023. In April, Aflac Japan will begin selling WINGS through Japan Post.
Subject to FSA approval, we are also begin selling a new rider, which is fairly inexpensive for serious diseases, which was developed in collaboration with the Japan Post Group. We expect this close collaboration to produce continued gradual improvement in Aflac's cancer insurance sales over the intermediate term while further positioning the company for long-term growth. Aflac Japan also began offering in January a comprehensive concierge service called Aflac Cancer Consultation Support or Yorisou. This innovative service is offered to policyholders battling cancer. It helps take people from diagnosis through treatment and recovery through its 32 services, including facilitating second opinions, counseling, and dietary support, just to name a few. This is yet another way in which Aflac Japan brings value to the policyholders, differentiating our cancer policies in the marketplace.
At the same time, we will continue to seek new policyholder growth in sales through our WAYS and Child Endowment policy and plan fourth quarter 2023 launch of a new revised medical product. As a result, we expect sales in 2023 to be driven by the continued rollout of cancer insurance at Japan Post in April, and then later an introduction of the revised medical product. Another important element of our growth strategy is our intense focus on being where consumers want to buy insurance. Our broad network of distribution channels, including agencies, alliance partners, banks, continue to optimize opportunities to help provide financial protection to the Japanese consumers. We are working hard to support each channel. More specifically, Aflac Japan is strengthening sales promotion with exclusive and Aflac preference agencies, which are a mainstay in our business in Japan.
We plan to increase the number of sales representatives, improve productivity, and provide future support of management of large agencies. This includes enhanced training and sharing of best practices to strengthen agent retention and increase sales. Aflac Japan is also taking steps to expand the market share through large non-exclusive agencies by strengthening our relationship with the agencies and introducing the revised medical product. As part of Aflac's strategic alliance with Japan Post, we continue to offer Japan Post Group with its 20,000 postal outlets nationwide, broad sales support. In June of 2022, Aflac Japan expanded the number of sales offices dedicated totally to supporting Japan Post Group from 17 to 48. We expect the new structure to continue to increase proposed activities when the launch of our new cancer insurance product is approved, hopefully in April. Let me now update you on Aflac Japan's performance.
Aflac Japan generated solid overall performance results in 2022. One of the consistent key contributors to Aflac Japan's strong financial results is its premium persistency, which is 94.1% in 2022. Net earned premium for the year was down 4.2%, impacted by our limited pay products reaching paid up status and lower sales during the pandemic. As anticipated, Aflac Japan's benefit ratio returned to the more normal level in the fourth quarter after a spike due to the practice of what they call deemed hospitalizations, the scope of which the government narrowed last September. Meanwhile, the expense ratio to revenues was flat. While pre-tax adjusted earnings declined 3.1%, pre-tax margins were still extremely high at 24.9%. Recently, Prime Minister Kishida announced that COVID would be downgraded to the same level as seasonal flu starting in mid-May.
While we're encouraged by this announcement as a sign of daily life returning to pre-pandemic conditions, we'll wait and see how it evolves. This is especially the case as we look to continue building on the sales momentum in 2023 through the multiple products and distribution initiatives that I mentioned earlier. Let me turn to the U.S. operation, which is the leader in worksite supplemental health insurance products in the United States. We expect to grow this leadership as we execute on s-strategy by protecting the core, scaling our acquisitions, and positioning for the future. Our core product portfolio, consisting largely of cancer, critical care, accident, disability insurance, and indemnity, allows us to meet customers' needs. Our individual and group supplemental health insurance products provide employers with more comprehensive benefits and solutions to offer their employees and policyholders with cash when they need it most.
This is so important because despite changes in the national health environment, no major medical plan, not even the best, is designed to cover all of the out-of-pocket expenses. In fact, 46% of Americans are not prepared for out-of-pocket expenses associated with an unexpected illness or accident, and 58% have less than $1,000 for such expenses. I believe this demonstrates the need for our products we offer, and they're as strong now or stronger than they've ever been before. At the same time, we know customers' habits and buying preferences have been evolving. We also know that our products are sold, they're not bought. As we communicate the value of our products, we know that the main brand alone is not enough. We must paint a better picture of how products help.
In our latest commercials featuring the Aflac Duck and the Gap Goat, the goat personifies the gap that people face in their medical treatments. Fortunately, the Aflac Duck has been the hero in that. But our research shows that it is absolutely making a difference, that people better understand what supplemental is, and that it's filling a gap that people have. Aflac U.S. also further strengthened its diversified, its product portfolio with the acquisition of Zurich North America Group Benefits, known as Aflac Group Life, Absence Management, and Disability, as well as the earlier acquisition led by the introduction of the Aflac Dental and Vision. This places Aflac on the front page of the benefit solutions for employers. Prior to that, our other products are on the second page or back further.
While these businesses contribute a relatively small part of our sales, we are pleased with how they are contributing to our growth and they're opening opportunities to sell our core supplemental health insurance products, which is really what got us in that business. Our multiple channel distribution model consists of agents, brokers, and a direct business consumer markets. This allows us to reach customers in how they prefer. Coupled with our focus on creating an easy customer experience, we will continue to protect our core that has yielded a 29% market share in supplemental health at the work site. We will also continue to work toward reinforcing our leading position and building on the momentum that we had in 2023.
With approximately 156 million people in the U.S. working population, Aflac U.S. has a very big opportunity to leverage its leading position to further penetrate the market. As you'll see, only 24% of the U.S. working population has Aflac and access to it at the work site. We are working with our strategic partners and sales force to increase our access to those at the work site. At the same time, our direct-to-consumer platform enables us to reach 16.1 million self-employed and 102.4 million who do not have access to the Aflac today. We continue to execute on our growth strategy to increase penetration with the diverse product mix and multichannel sales force enabled by best-in-class customer experience models.
Turning to Aflac U.S. for 2022, I'm pleased with the 17.4% sales increase in the 4th quarter. This reflected the largest amount of quarterly premium in the history of the U.S. and continued to a 16.1% increase for the year. These sales results demonstrated continued improvement in productivity of our agents and brokers, as well as excuse me, contribution from the build-out of our acquired platforms, namely Dental and Vision, and Group Life and Disability. As I mentioned earlier, these acquisitions are small contributors to our sales, but key elements for our growth strategy to sell our core supplemental products. I'm encouraged by the continued improvement in the productivity of our sales associates and brokers. We are seeing success in our efforts to reengage veteran sales associates. At the same time, we are seeing strong growth through our brokers.
These results reflect continued adaptation to pandemic conditions, growth in our core products, and our investments in build-out of growth initiatives. Premium persistency for the U.S. was greatly impacted by weakness early part of 2022. While the individual business has stabilized, group voluntary drove most of the decline in the premium persistency. Account persistency across the U.S. has remained flat. The industry has experienced weakness in the voluntary persistency, which tells us there's also a labor force dynamics contributing. Net earned premium for the year declined 0.8%, impacted by a combination of early lapses in the year and lower sales during the pandemic. Our total benefit ratio came in 20 basis points higher than 2021, and our expense ratio in the U.S. was up 240 points, reflecting our higher lapsation, our lower net earned premium in the denominator.
The continued build-out of our growth initiatives, Group Life, Dental, and direct to consumer, also weighed in on our U.S. expenses. We saw a strong profit margin in the U.S. of 20.4%. This result was driven by lower incurred benefits and higher adjusted net investment income, partially offset by higher adjusted expenses. We believe that viewing our results, excluding the impact of foreign currency, is the most meaningful way to assess our financial performance, whether in yen and in helping us or hurting us. We also believe that the analysis of adjusted earnings, a non-GAAP measure, is important to understanding Aflac's underlying profitability drivers. You'll find a detailed definition of adjusted earnings in the appendix to this presentation.
For the full year, the average yen exchange rate to the dollar was 130.17 versus 109.79 a year ago, which decreased our adjusted earnings per diluted share by 4.5%. When adjusting for material weakness in the yen, adjusted earnings per diluted share, excluding the impact of foreign currency, was $5.67. 2022 was the company's second-best year in its history following a record 2021. We continue to maintain strong capital profile as reflected in our capital ratios. We ended the fourth quarter with an SMR north of 850 in Japan and a combined RBC greater than 650 in the U.S. Our capital ratios demonstrate our commitment to maintaining financial strength and flexibility on behalf of our policyholders, our shareholders, and our bondholders.
We also finished the year with unencumbered holding company liquidity at $3.1 billion, $1 billion above the minimum balance. We have taken proactive steps to increase years to defend cash flow, deployable capital against a weakening yen. I'm pleased with what we have done to hedge the economic exposure to the yen. We do this by holding $23.8 billion of unhedged U.S. dollar assets in the Japanese general account. Approximately $5 billion in foreign currency forwards in the holding company. Third, JPY 4.2 billion in yen debt. We also pursue the creation through a balance of actions, including growth investments, stable dividend growth, and disciplined tactical stock repurchase. With the fourth quarter declaration, 2022 marks the 40th consecutive year that we have increased the dividend.
For context, when I presented here in 2018, Aflac Incorporated's dividend was $1.04. Since then, the dividend has increased 54% to $1.60 at the end of 2022. Additionally, the board declared the first quarter of this year's dividend reflecting a 5% increase. We treasure our track record of dividend growth and remain committed to extending it, supported by the strength of our capital and our cash flows. At the same time, we remain tactical in our approach to shareholder repurchase, deploying $2.4 billion in capital to repurchase 39.2 million of our shares in 2022. Combined with dividends, this means we returned $3.4 billion back to the shareholders in 2022.
Keep in mind, 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. We believe in the underlying strengths of the business and the potential for continued growth in Japan and in the United States. We are well positioned as we work toward achieving long-term growth while ensuring we deliver on our promise to our policyholders. I'm proud of what we have accomplished in terms of both social purpose, financial results, which have ultimately translated into strong long-term shareholder growth. In summary, our objective is to maintain our strong capital position while producing stable earnings and strong cash flows. We believe that in both Japan and the United States, market leading position, powerful brand, strong distribution, and innovative products will provide support toward this objective.
As we work toward our objectives and goals, we have confidence in our business model and the fundamentals of our product, and most importantly, the future of Aflac. Thank you, and now I'll be glad to take questions. Josh?
Okay. Well, if anyone wants to ask a question, they can ask a question, and It's open. I'll ask Dan and David some questions, but feel free to interrupt me. Raise your hand if you, if you have one. My, my first question is the difference between the Japanese market and the U.S. market. Cancer and critical care products seem to be just a natural fit culturally. How did you take the learnings you have in Japan and translate that to the U.S. market? What has to happen for the American consumer to value cancer and critical care products in the same way?
I think we're seeing a movement positive in the U.S. as we're enrolling bigger accounts than we've ever had in the past. You have to understand the culture of Japan. Japan, when we got licensed, they thought they were having an epidemic of cancer. They weren't. The life expectancy right after the war was about 54 years old. Now it's over 80. Cancer is a disease of age. The older you get, the higher the incidence rate is of cancer. They were just living long enough to get cancer. That's the real difference that's there. In our business in Japan, distribution also made a difference. When we actually got licensed. All the major companies, about 90% of them on the Tokyo Stock Exchange, immediately started selling our products to their employees.
We in turn. They submitted the premium, we then paid them the commission. The, say, Toyota then formed Toyota Insurance Agency. Insurance Agency sold to their employees. They then submitted the premium, and then we cut them a check. You can't do that in the United States. That's considered a rebate. Nothing's wrong with it. It's just the way it was set up structurally. We always had an enormous advantage because of that distribution channel, and that's what made the difference. I do think as we're seeing the broker business grow, it's changed. We did the opposite in Japan, where in Japan we got all the big accounts and now trying to get the smaller accounts. In the U.S., we got the small accounts, and now through the brokers, we're getting the bigger accounts.
It is becoming more and more accepted in making a difference. I'll say one other thing. The thing about the Gap Goat and whatever, what's interesting about that is our research showed us that explaining gap was important and it would help. What happened was is that was right at a time when Obamacare was coming out, and our people told us in Washington, "Don't go saying bad things by saying you've got gaps in insurance for the new product that's coming out." We didn't do it. We went back last year and said, "Is there any reason we can get this?" "Oh, no, there are gaps in every coverage. Go and do what you wanna do." It's really made a difference.
To put this in perspective of how important that duck is, it, like GEICO, I think their number is like somewhere between $1.5 billion - $2 billion. Nobody but us really advertise others in the property casualty insurance. We only spend about $125 million. I estimate that our brand, now this is my gut call, is, you know, $7 billion, $8 billion, $10 billion to have. I don't think you could give somebody $10 billion and they could guarantee you that you would get over a period of years the name recognition.
Yeah. I was just going to add, it comes down to that gap. In Japan, everybody knows in general there's a 30% copay. In the U.S. and in this room, there's probably 20 different major medical plans represented by the people in this room, but you don't really know what your gap is or what you're gonna be on the hook for. That's the main difference between U.S. and Japan. I think
That's why selling it through an employer is better. You know, in an employer-employee environment, you've got younger people, healthier people, and you've got the third party influence of the employer saying it's good to have. Yes.
I wanted to give you a little technical question here, and I apologize in advance. There's discussion in Japan about releasing the water from the Fukushima reactors into the ocean. Do you start to factor this in, into cancer policies for the Japan market?
The question is around a plan to release water from Fukushima into the waters around Japan. How do we factor that into our product?
Well, this would take a long time, but I can tell you the minute we had the incident, I got on the first plane to go to Japan. When I went over there, one of the things that we started research on was what happened in Chernobyl, and that there was something that iodine, which would lower the rate.
You know, I had lawyers telling me, "Don't dare take a position." I said, "If I don't take a position one way or another, the stock's gonna go to hell 'cause they're all gonna be scared to death." They said, "Well, then you're on your own." I said, "If I'm on my own and I don't take a position, and then the stock drops and it comes right back when we say something, I can't win." I went ahead and did it. It was the right decision. I think it's in our premiums, and I'm not worried about it. Well, I think it's in our premiums, but I still worry about everything, okay?
Well, we're out of time. David, Dan, thank you very much for coming. Really appreciate your time and attention. I know you have a good schedule today.
Thank you.
Thank you. Allstate's next, everybody. Have a great day.
Thanks, Josh.
Thank you.
Yeah.