Here. Hi, I'm Mike Kovac, the life insurance analyst, and it's my pleasure to welcome Aflac CFO Fred Crawford to the stage with me today. Aflac is a supplemental health and life insurance provider that operates in the U.S. and Japan. It's been a strong capital deployment story over a number of years, increasing buyback and dividend over that period. Fred has been with Aflac since 2015, but is a longtime industry veteran, having spent time at CNO and Lincoln prior to joining Aflac. I'm going to hand it off to Fred for some introductory remarks on the Aflac story before we conduct a fireside chat, and we'll leave plenty of time for audience questions as well. With that, Fred, do you want to make some introductory remarks on Aflac?
Sure. Recognizing that some of you are very familiar with our name, others may be less familiar, just a couple of comments. We, interestingly enough, Friday just had our annual outlook call. It's great timing to be here at the conference. Let me start by just thanking you for inviting us, Mike, and having a chance to present. A couple of things on Aflac very simply. We operate first and foremost in the two largest insurance markets on the planet, that being Japan and the U.S. We're a 60-year-old company, started in Columbus, Georgia, and we've been in Japan for about 40 years. Japan represents now upwards of 75%-80% of our business revenue cash flow earnings, depending on the JPY. It's a dominant piece of our business.
What we particularly like about our business model is importantly, in both countries, we have the leading market share in what we do. We've been innovative and, in fact, in some cases, really are responsible for having developed the marketplace both in Japan and the U.S. We maintain a dominant position. What that does for us is it creates what I'm sure you're all familiar with, one of the strongest brands in our sector for sure, and strongest brands period, both in the U.S. and Japan. We have scale, substantial scale. Example, in Japan, we have upwards of 28, 29 million policies in force, and you can only imagine that that scale drives very competitive expense ratios and allows us to compete and defend our market share.
In the U.S., we're some five times the size of our next largest competitor, as measured by earned premium. We take advantage of that scale to drive broad and efficient distribution, to drive and support our brand identity, and to innovate and invest back in the platform, to both defend and grow. We're a supplemental health insurance provider both in the U.S. and in Japan. In Japan, we fill the gaps that exist between the national healthcare system and the individual needs of the consumer in terms of deductibles and co-pays and out-of-pocket expenses. We do the exact same thing in the U.S., only in the U.S. it's more up against your major medical plan and the degree to which your plan covers everything or doesn't cover.
There's some very strong and important underlying trends in both countries, interestingly enough, that are important in supporting a growth rate for the company as we go forward. That's an aging population, both of course in Japan, as you all are well aware, but also in the U.S., and then a shift of the burden of healthcare onto the individual and away from either a national healthcare system or employers in the U.S. who are shifting that burden onto their employees. All of that tends to support an overall growth rate in both marketplaces, and being in that leading position with the leading brand, being where the product is sold and used every day in every way is key to our growth rate as we go forward.
More recently, we've become, as Mike mentioned, a strong capital and cash flow story. That's because the very large in-force blocks of business that we have are now producing substantial cash flow. We're doing what you would expect a company to do. We're looking for opportunities to reinvest that back in the platform to create future growth rates, but we're also delivering that back to the shareholder in the form of a 34-year track record of increasing our dividend and a pretty healthy amount of stock repurchase because we do remain our favorite company to buy. We tend to buy back, this year, for example, about $1.4 billion of our stock. We'll continue on that pace for a bit as we go into 2017. That's been our preferred investment. That's an elevator warm-up for where we're at, and maybe we'll turn to some questions.
Yeah, no, I think that's a great introduction. As you mentioned, I think good timing in terms of having just done an outlook call last week, made some fairly significant announcements as well. Maybe before we dive into the earnings and the margins and the growth parts of that, one of the key elements that you announced last week as well was the conversion of the Japan operation from a branch to a subsidiary.
I think what will be helpful for everyone and for us as well is to give some background in terms of why was this business originally structured as a branch versus a subsidiary? Where are you in the process of this restructuring? What are some of the key milestones that we should be looking for? Ultimately, why are you doing this conversion today?
I will, in one way, shape, or another, touch on those things, maybe plus fill in a few more blanks on it. In terms of the origin of our early days in Japan, again, 40 years ago, we launched as a branch status. Actually, it was really what the preferred structure was when dealing with the regulators in Japan. It's hard to imagine now given the sheer size and strength of our Japan operation, but back then, the Japan regulatory landscape and frankly, policyholders in Japan wanted to know that they had access to the, at that time, relative financial strength of our U.S. platform. We were only small and getting started, but that's where the capital and cash flow and financial strength was.
It made some sense from a regulatory standpoint to be structured that way, and all the way up to even today, that remains an acceptable structure both for regulators, policyholders, and operating. What changed, however, is after the financial crisis, you started to see slowly but surely globally, that the subsidiary structure became really more the preferred structure among financial service companies. This would include banks and insurance companies, broker-dealers and other forms of companies. We believe that that was gradually the case because it was an easier, more straightforward way of managing these types of localized entities if there were to be difficult economic conditions. The financial crisis really spiked out for regulators across the globe that they preferred, in general, a subsidiary structure if at all possible. You started to see companies, typically coupled with transactions.
Good examples, of course, in Japan would be some of our peers, AIG, Prudential, Met, who moved to subsidiary structure as part of broader transactions, acquisitions or the like. Slowly but surely globally, we were standing out as a branch structure, but more importantly, a very large financial service branch. We had always had some level of interest of considering moving to a subsidiary, but we had a problem, and the problem was a fairly large tax burden to convert this many years later. We have built up so much value in Japan that there could be a very damaging tax, if you will, tax obligation associated with converting to a subsidiary status. We couldn't really crack that code and figure out a way to do it on a tax-neutral basis.
Starting 18 months or so, maybe a couple of years ago, we started to investigate it more deeply, came up with a tax-neutral solution that we thought we could execute on, and more importantly, had to go into the tax authorities, obviously the IRS here in the U.S., and really make sure that we could pave the way with confidence that this was going to be tax neutral in the pattern and the method upon which we would convert. Once we were able to get secure with that ability to convert to a subsidiary, we felt it to be in our best long-term interest to really, as our CEO would say, travel with the pack, meaning really move to the more standard or standard accepted structure globally for a financial service company. That's the history and the why now.
In terms of as we go forward, there's a few things to note about the conversion. One, we always think it's good over the long run strategically to be in a common and commonly accepted structure, like subsidiary. The other thing it does for us is it really is quite helpful in clarifying, if you will, the cash flow and capital structure of the company. It does it in the following way. One, it unstacks our structure. Those of you familiar with the insurance industry know that an unstacked structure is better than stacked. What does that mean?
That means our current cash flow in Japan has to travel through the regulatory authority in Japan, the FSA, and then the U.S. regulator, in our case, Nebraska Department of Insurance, before that cash flow makes it up to the holding company to then be used for dividends, stock buyback, and other business growth opportunities. Okay? It's always better, if at all possible, to essentially unstack that and have one regulatory set of standards that are clear and concise, one set of conversations to then move the cash flow to the holding company. It's preferred by rating agencies, bondholders, investors for that flexibility. It unstacks our structure. The second thing it does is it creates certain intercompany contractual arrangements that move cash flow on a more consistent, stabilized basis, and stable cash flow is always better than potentially less stable. This does that.
Very importantly, capital. We do see a decline in our capital ratio in Japan, but it's really accounting driven, and we will gain that back over about a two or three-year period as we move down in retained earnings, reclassifying those capital categories, and then build it back up over time through earnings. That takes care of itself. On the U.S., we for the first time in 40 years, end up printing an actual statutory statement on our U.S. operations, and we also see an increase in our risk-based capital up to 1,000%. Those of you familiar with the industry know that that is a very sizable risk-based capital, but particularly large on a very low risk profile business like Aflac U.S.
It's not asset intensive, it's not subject to low for long interest rates, it doesn't have a great deal of default risk embedded in our business because it's good old-fashioned morbidity insurance, health-related insurance. We have an ability to manage down that risk-based capital and release the excess capital for our shareholders to the tune of about $1 billion is what we have estimated. I think going forward, a much cleaner and clearer cash flow generation model both in the U.S. and Japan that we could take advantage of.
That's really helpful. If I were to dig into sort of a couple of those where maybe there's some additional questions. As we think about in Japan, I know you mentioned, and I believe you mentioned last week as well, the impact on the SMR of this conversion. From an economic capital standpoint and as we think sort of longer term about where regulation of capital is headed in Japan, how do you see this new structure impacting your economic capital there?
Yeah. There's two things that are worth pointing out that this conversion does not involve. Okay? First, this conversion does not change our actual tax status as a company. We're changing our legal status, but our tax status, we remain a U.S. taxpayer. I mention that only because tax is on the minds, corporate tax rates and certainly relative corporate tax rates are on the minds of folks these days, it's worth noting that. To your question, economic capital, you are seeing in Europe predominantly the emergence, and have actually for a number of years now, the emergence of so-called solvency ratios. Those solvency ratios are important, and they're logical. They tend to, however, penalize companies that are heavily weighted in long duration interest and asset sensitive businesses.
Traditional annuity companies, for example, or obviously a long-term care-like company, will typically get penalized in those types of economic capital models, really particularly because of the low interest rate environment. In Japan, they have been working through a similar model of solvency ratios. They call it the Economic Solvency Ratio. Some call it the ESR or solvency ratio. In our case in Aflac, first of all, realize it's in trial, for one. There's no real clarity at the moment around when it may be adopted, once adopted in what exact form, and this has happened in Europe, once adopted and once knowing the form, how long do companies have to comply with it? All of those things are yet to be determined.
The good news as it relates to Aflac is that we are in businesses that tend to come out on the good side, if you will, of those types of economic models. Why? Because we are dominantly what's called a third sector business in Japan, i.e. health insurance, medical insurance, and related. Those tend to be not penalized, if you will, as much in a low interest rate environment, particularly low rate, obviously, in Japan. We fare very well. As we've mentioned even in our Japan conference, we tend to travel around 160 or plus in this interest rate environment. It's not unusual for companies concentrated in more of those interest rate sensitive businesses to be traveling more around 100 or even sub 100. We have quite an advantage in that respect. This conversion doesn't change that dynamic.
I know that was your simple question, but there's the background on the ratio, this really doesn't do that. We would manage to it and subject to it regardless.
Still 160-ish where you'd expect it to be post conversion.
Actually, I would say we're probably a bit north of that. The reason for that is only because when I quoted that rate, you had a 30-year JGB that I think was traveling around 40 basis points, give or take. Today it's up around 57, 58 basis points. Believe it or not, that's a startling number to start with. Nevertheless, that kind of recovery, if we want to call it that, in long dated rates, actually does play considerably into these ratios. The discount rate applied to your liabilities, if you will, under this type of scenario is a 60-year discount rate. You tend to look at the most observable long dated yield to start the process of the calculation, and that's a 30-year JGB.
That's helpful. As we think about timing in terms of what are the next milestones that investors should be looking for in this conversion process, can you kind of begin to outline those for us?
I think the milestones, we had talked on the call about it being roughly an 18-month process, that we would complete the conversion in mid 2018. The work effort that's involved in getting there is really involving some regulatory approval process dynamics in Japan and in the U.S. The U.S. taking a little longer simply because you're involving additional states and the like. It's a relatively straightforward process. As you can imagine, we have been in heavy and regular dialogue with both of our regulators about this conversion, the FSA and Nebraska as our lead for quite a while. You need to understand that it's often the case when a company wants to do something, the regulatory approval process suggests there to be a regulator that wants one thing and a company that wants another.
You have to realize in this particular case, we have regulators that are really in favor of and supportive of our effort to move this way because, in fact, we are looking like the standard structure. This is one of cooperation and working together with the regulators as opposed to making some sort of case for the conversion. It's a matter of time and execution. There are certain systems related activities and other changes that take place in the company. One thing to be very clear about, and this was a key prerequisite to moving forward, we talk about the tax issue, but very closely following the tax issue was zero disruption to our U.S. and Japan go-to-market operations as a company.
This does not change our products, our commercialization, obviously our branding, and all of the key points of leverage I mentioned earlier in my opening comments. It is absolutely business as usual in Japan and the U.S. This is somewhat of a legal entity engineering and to some degree capital engineering dynamic that falls in my area, legal and the regulatory group's area.
One last one, then I swear we'll move on to other parts of the company.
Yeah.
this is obviously very topical. In terms of the capital deployment path forward.
Yeah
What sort of line of sight do you have to reducing the $1 billion of excess capital that will now reside,
Sure. Yeah
in the U.S.?
Yeah.
As we think about the ultimate RBC ratio that you're managing to, I believe you mentioned 500%.
Right.
Why is that the right level? Over time, should we think that maybe that runs closer to a lower level?
Yeah.
That seems a little conservative.
Sure. Yeah. You will oftentimes end your commentary on Aflac with quote, "Seems a little conservative." We try to take a conservative approach to some of these long-range estimates, and be prudent in it, you're right to point that out. Let me just comment on capital. Publicly, what we have said, and this is part of our financial plan, this is not aspirational, our financial plan is calling for $5.8 billion-$7 billion of deployable capital over the 2016, 2017, and 2018 year period. What the $1 billion of additional excess capital in the U.S. provides for is a release of capital in 2017, 2018, and then again in 2019. Okay? I think a very simplistic way of thinking about the capital release for now is essentially equal parts in each of the three years.
Essentially, equally divided release of that capital through 2017, 2018, and 2019. On the outlook call itself, I pointed to something like $300 million to be released in 2017, for example. What that ends up doing for that guidance range is it puts us squarely at the midpoint or above of that guidance range as we go through there. It secures it, was the terminology I used, and that's the way I view it. Realize that it's also contributing then to a level of excess capital and capital deployment as you move into 2019. Each year at our investor conference, we tend to update our guidance on a three-year pattern of deployable capital. You'll see some of this conversion activity feeding into that next three-year period of 2017 to 2019. Okay? That's the way I would answer that question.
In terms of the RBC, I think really you start in gradually, then you work to refine as you get into the structure. That's really the way we've approached this. 500% was a good number to start with and to manage to. That provides comfort to the rating agencies, comfort to the regulators. It's a good number. Realize it's been 40 years since we've printed a standalone regulatory statement on our U.S. operations, so this gives us a chance to settle into the structure, actually produce a so-called Blue Book or statutory statement with an actually calculated RBC on our U.S. entity. Remember, for 40 years, that RBC has had to incorporate a $20 billion market cap branch in Japan. Not just some little branch, a major balance sheet into that equation. It's now separated out.
Being able to print that, watch the cash flows work, will likely lead to opportunity on that capital and getting more efficient. We're going to go in stages. Okay? We will absolutely keep looking at it. We'll look for opportunity. That probably presents some opportunity. At the moment, we want to manage to 500%. That's what we want to do. Realize we have among the highest ratings among stock companies in the U.S. Okay? In fact, in the case of Moody's, I believe we may be one of the highest, per their comments to us. As a result of that, we don't want to lose that type of status, particularly in the U.S., where we're moving more boldly into the group business and dealing with large brokers, which is the real growth engine recently in the U.S.
They do pay attention to your financial strength, that's a real advantage to us. We also carry one of the lowest costs of equity in the industry, that level of conservatism goes to our cost of equity and is a weapon, we believe, competitively.
Turning to earnings and the other part of the discussion last week, Aflac provided an outlook for 2017 from an EPS perspective on a constant currency basis of flat to up 3%, slightly below where I think the company has historically guided to and where I think it historically thinks of the EPS growth target.
Can you discuss some of the key drivers of that in 2017, and importantly, what is going to get 2018 and 2019 back to those mid-single digit levels?
Sure. Let me comment on it. Look, if you come into our story on the outlook call, you were to leave with a few sentences on the outlook call, setting aside this conversion discussion, it would be capital rich, cash flow rich, and building. Okay? Earnings growth rates on the weaker side of expectations, and certainly on the weaker side of what we have been producing historically, more in the mid-single digit area. Certainly, as our CEO mentioned on the call, our mission is to drive and continue to drive those types of mid-single digit growth rates over a long period of time. What's happening in 2017 is very specific and very understandable, and that is, one, we are kicking up our investment in the platforms.
I would tell you that that is somewhat of a marginal tax, if you will, on our EPS growth rate. We've signaled that incrementally it's $0.12 to perhaps $0.15 a share. Think of it this way. Every $0.065 a share is one percentage point increase in EPS. At a tax of about 2% growth rate in EPS, we're investing back in our platforms. Let me just say, if you are the number 1 brand in the space you occupy, the largest scale In the two largest insurance markets in the world, and you are not actively investing back in your platform, you are not doing what's right as a management team. We want to secure that investment. We can afford that investment.
We're enjoying record margins, both in the Japan and the U.S. businesses, it is a good time for us to be investing back in the platform to advance our technology and secure better growth rates, better persistency, and better customer experience. That's really what we're doing. The big difference, really, the big difference is the investment strategy. As you can imagine, we woke up January this year with an unusual announcement, the Bank of Japan announcing a negative rate environment, we sit on roughly at that time, about $100 billion general account in Japan with about $6 billion to $7 billion coming due for reinvestment every year, no matter what we do. Okay. We had to tactically go at how do we want to shift our investment strategy to make sure that we retain stability in our net investment income, stability in our go-forward earnings.
What we will not do is reach on the credit curve to go get that yield. That tends to end badly for companies in our industry. Okay. The reality is when you have 3% and 4% yield maturing, you're moving into a 1% to 2% marketplace after hedging costs, for example, on the U.S. dollar side, that is going to have a realistic impact on your net investment income. What we did is we woke up after that BOJ announcement, we made the following key long-range strategic decisions. One is we are going to pull back on the level of interest-sensitive product that we sell in Japan.
That is obviously a decision that is good for capital redeployment, meaning as we pull back on that business, we generate more cash flow because that business is capital-intensive, we shift that capital and cash flow to higher returning areas of the company, namely our health insurance businesses in Japan, or repatriating or dividending back to the U.S. for investment in U.S. or back to you as a shareholder. Okay. That's a good long-range strategy when you realize those businesses are really having a tough time being profitable and avoiding volatility in this kind of a rate environment. That was one big decision. That is an unfriendly decision to EPS growth rate, a very friendly decision to cash flow and overall return on capital as a company, we sided towards the economics. Okay. The second issue is we repositioned the U.S. dollar portfolio in Japan. Okay.
We repositioned it to stabilize the net investment income of that portfolio and stabilize hedging costs on those U.S. dollars that we hedge back to yen. Those hedge costs can move around, sometimes dramatically, we wanted to extend the duration of those hedge instruments, lock more of it in, so that we have a more stable outlook for the net investment income in Japan over a two- and three-year period. Okay. What we did, in effect, is by shifting the portfolio to lower yielding securities to then build up over time, we gave up a little bit of net investment income, we are experiencing a higher hedge cost by extending the duration, all in the spirit of stability.
At the end of the day, we want a stable level of net investment income, stable level of earnings, because that means stable cash flow, we are now a very strong capital deployment story, we don't want to risk that with instability in those earnings lines. Okay? It's not perfect. We're still subject to those types of costs. Because we string it out more, management can react more to anomalies in the marketplace that may spike some of those costs. We can readjust our investment strategy. That's really what we did. All of that together cost us $0.25 a share looking year-over-year. Remember, think about that. Okay? That's four percentage points of EPS growth rate that were essentially sacrificed in 2017 to get on a more stable basis to grow from there.
The path back, to your question is, start to build back that investment portfolio that's sitting now in JGBs to build out that U.S. portfolio on a floating rate basis, which is easier and more efficient to hedge. That will build net investment income. Ultimately what we have to do is continue to grow the business and see some of the investments in our platform shift from investment to return. That takes a longer period of time. Remember, I believe this is very good for stability, good for ratings, good for capital deployment, good for shifting our capital towards higher returns, will eventually lead to a more stable and higher quality level of earnings, let alone earnings growth rate.
That's helpful and very comprehensive in terms of helping us think about it. I wanted to focus maybe on some of the latter points you made there on the hedging costs, on the hedging strategy, in terms of where we are in that process today. Certainly, you've discussed extending duration, that is an ongoing process I think into 2017 and 2018. As we think about the drivers of hedging costs next year and beyond, I think historically we think, or sort of told us to think in some ways between what's happening on the monetary policy basis in the U.S. and Japan could lead to some costs there.
Right.
Can you help us sort of frame what your hedging costs are into 2017 and 2018, what could potentially lead to either higher or lower costs on that?
Our hedge costs in 2016 were approximately $190 million pre-tax. That is an estimate because we're not done with 2016, but it's largely locked in around that territory. As we move into 2017, as I mentioned, we've now locked in 90% of our hedge costs in 2017 as part of our extending the duration and calming down any potential risk or volatility. That hedge cost estimate is between $250 million-$270 million pre-tax. What's driven that hedge cost up? Essentially, it goes all the way back to that same January announcement by the Bank of Japan.
Essentially, when the Bank of Japan takes a downward-looking view in the short end of the curve, the Fed takes an upward view, i.e., fear of inflation or managing inflation, kicking the short-term rates up, the Federal Reserve System, when you have that kind of bifurcation or separation in monetary policy, that will drive the hedge costs up. That's essentially what you watch when you're trying to watch hedge costs, okay? The way hedge costs move is very straightforward. The more notional or the larger your U.S. dollar portfolio and the larger your hedge position as a result is obviously going to mean more hedge costs. The longer duration your hedge portfolio is typically going to be a higher cost than a shorter duration, but much more safe and stable, okay? Those are the two big things.
The third one, I would say, is how much do you want to hedge or go unhedged? Most subsidiaries now of U.S. companies will maintain a portion of their U.S. dollar portfolio unhedged. Why? Because the call on that money is not to a Japanese policyholder on reserves or capital to support that business. That represents the equity or the value that you all, as investors, have in the Japan operation, and that comes back in dollars because you all trade in dollars. You'll tend to keep an unhedged portion of that portfolio at all times. When hedge costs are rising, what I have an ability to do is say, all right, how much of the hedged unhedged do we want to do? How long do we want to go out on the forward curve?
I can tend to regulate some of those costs through that, plus my investment strategy. Our move to floating rate assets is very simple, and that is, guess what? Floating rate investments, the yield on a floating rate investment tends to map pretty closely to hedge costs. The same pressure that's causing a rising hedge cost, i.e., Federal Reserve increasing rates in the U.S., will tend to mean LIBOR-based rollover or LIBOR spread net investment income on floating rate assets are also climbing, okay? I now have a correlation between net investment income and hedge cost that helps preserve my net margin. That's really what we were doing, okay? Calm it all down, extend the hedge program, shift to floating, dial in a hedge ratio that helps us manage the cost so that we can permanently move forward without much volatility.
At the end of the day, I don't want the discussion about Aflac to be a hedging discussion because that's the tail wagging the dog. The dog is our dominant position in supplemental health insurance, both in Japan and the U.S.
Maybe shifting to that, as we think about growth in those two markets today, you suggested that the first sector, some real strategic reasons to be pulling back in that part. In the third sector, probably somewhat better than expected growth off of tougher comps in 2016.
Right.
Can you talk about the dynamics in those two markets?
Growth strategy in Japan and U.S. is simple, and I can give you the short conversation on it. In Japan, it's focused on our dominant third sector business, and it's about keeping fresh and innovative product in the marketplace and regularly freshening your market. That is key strategically to continuing to grow. It's about product innovation. This year, for example, coming out with a new income protection product in Japan that essentially protects you as a policyholder on a for supplemental disability-like business, and then also cancer for cancer survivors. We own the cancer market in Japan, so we need to constantly innovate around that market share to continue to grow and defend our market share. We then bring it in a multitude of distribution opportunities. The biggest and most recent growth engine being Japan Post, where we sell our cancer product through 20,000 post offices in Japan.
Realize in Japan Post is the largest bank and insurance company. It's where people go, normal citizens in neighborhoods go to do a lot of their banking insurance business. When you walk into that post office, you can buy Aflac's cancer insurance in those post offices. Looking at good, diverse distribution has been the pattern of growth there and keeping our products fresh and launching new products. We're in one in four households in Japan. We have every right to create insurance markets in the third sector, and we can do that. In the U.S., it's a very different story. In the U.S., it's about increasing our penetration. In the U.S., it's not uncommon for 20% or so of employees at a given company to buy our particular type of supplemental insurance. Why?
First they're doing their major medical, then they're doing their group life and group disability, they finally make their way to our supplemental products. We want to increase the importance and penetration of those products. We do that through things like One Day Pay for great customer experience, investing in Everwell, which is allowing a small business to actually have a system in place to enroll their employees, an enrollment platform that has our products on it. By partnering, in some cases, with other firms so that we become a more important part of the conversation to brokers who broker the business. We're looking to really increase our market share in the U.S. through those activities. That's basically the growth formula in Japan and the growth formula in the U.S.
When I talk about $0.12 to $0.15 of investment, you can probably guess that that incremental investment is being steered the direction of those activities to support growth.
That's very helpful. I think we are just out of time here. Join me in thanking Fred and Aflac for their attendance today.