Good evening, everybody. I'm Robin Wilkey, Senior Vice President of Investor Relations and Corporate Communications, I'd like to welcome all of you tonight to Aflac's Investor Day. You'll be able to meet the speakers tomorrow, this evening, I would first like to introduce you to the many officers who are here today to support all of the speakers. Please stand as I read your name. From the United States, we're joined by Teresa White, Executive Vice President and Chief Administrative Officer for Aflac U.S. Sue Blank, Executive Vice President and Corporate Actuary, and first Senior Vice President of Aflac Japan. June Howard, Senior Vice President and Chief Accounting Officer. Bill Wright, Senior Vice President, Investment Strategy and Risk Management. Laura Cain, Vice President, Corporate Communications. Tom McDaniel, Second Vice President, Investor Relations. Atul Agrawal, Second Vice President, Aflac U.S. Competitive Intelligence.
Joining us also tonight from Japan, Charles Lake, Chairman of Aflac Japan. We're also very pleased to have several members of our board with us tonight, they include Douglas Johnston. Please stand up. Mr. Johnston is a retired audit partner with Ernst & Young. He's a financial expert of the audit committee and also serves on the executive committee. He joined the board in 2003. Marvin Schuster . Mr. Schuster is chairman of Schuster Enterprises, Inc., which owns and operates Burger King restaurants throughout the Southeast. Mr. Shuster chairs the corporate governance committee and is also a member of the audit and executive committees. He joined the board in 2000. Dr. Robert L. Wright. Dr. Wright is chairman of FE Holdings, Inc., a company that has interest in motorsports, gaming, entertainment, real estate, and lighting. He was previously chairman of both Dimensions International, an international information technology company, and Flight Explorer.
Dr. Wright chairs the audit committee, he's also a member of the compensation committee. He's been a member of the board since 1999. I'd like to thank all of our board members and all the members of Aflac management for their attendance. Let's give them all a big round of applause, please. Before we begin tonight's program, I want to first remind you of some statements that you'll hear that are forward-looking in nature within the meaning of federal securities law. Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they're prospective in nature. Our actual results could differ materially from those we discuss tonight and tomorrow. Please look at our latest 10-Q filing for some of the various risk factors that could be materially impactful upon our results. Please remember, the presentation is being webcast.
As a courtesy, please take a few moments, turn off your cell phones, BlackBerrys, Droids, iPads, or any other electronic devices that you have with you tonight. Although we will not have a Q&A session tonight, there will be ample time to answer all of your questions tomorrow. Now I'd like to introduce this evening's speaker. Dan Amos graduated from the University of Georgia with a degree in insurance and risk management. He's been with the company on a full-time basis since 1973. He started in sales and quickly became one of the most successful state sales coordinator in our history. In 1983, he was appointed president of Aflac, in 1990, he became CEO of Aflac and Aflac Incorporated. In 2001, he was also named to the position of chairman. Aflac has received many awards and accolades since Dan's been at the helm.
Earlier this year, Fortune magazine recognized Aflac as one of the best places to work for the 13th consecutive year, Ethisphere magazine named Aflac as one of the most ethical companies for five consecutive years. Dan has been named the top CEO in the insurance industry by Institutional Investor magazine five times. I suspect that one of the reasons that Dan has earned this recognition is that he listens to his shareholders like all of you out there tonight, and that he is the right man to navigate Aflac in this challenging environment. Dan has said on many occasions that he would not trade places with any CEO, and I can safely say for all of management and the board members here tonight, we wouldn't trade him either. Without further ado, I would like to have you welcome in Dan Amos, our Chairman and CEO.
Thank you, Robin, and good evening, everyone. It's hard to believe that this is my 22nd time that I have been before you as CEO to make a presentation this evening. As I kick off this year's meeting and give you an overview of our operations and our strategies for growth, I believe that the actions that we have taken during the past several years and continue to take serve only to enhance shareholder value for the future. For decades, Aflac has had a two-part growth strategy for the United States and Japan and the driving force behind our success. We offer relevant products through expanded distribution channels. By managing our business using this strategy, we've achieved growth in our insurance operations. Japan and the United States are countries that are ideally suited for voluntary products that we offer.
In Japan and the U.S., we proactively look for ways to anticipate changes that might come our way, but there are some things that you just cannot prepare for. Before the sun had come up on March the 11th, a call came that reminded me of a call I received in 1995 about the Great Hanshin earthquake that was part of Kobe, Japan. It was news about the earthquake and the tsunami that had hit the Sendai area. As the days and weeks unfolded, the whole world watched helplessly through TV and social media as the devastation became more evident and tested the resolve of many Japanese people. Having operated in Japan for more than 35 years, we found that the Japanese people are very resilient. I saw this resilience when I visited Japan the week after the quake.
Only a month and a half later, the catastrophe of a different kind unfolded in a record number of tornadoes that went across central and southern parts of the United States, and now the floods along the Mississippi are testing the resolve of many Americans, revealing the resilience of the human spirit. While these are completely different events, they serve as stark reminders about how important products like accident, and medical, and life insurance are. I'll start this evening with a review of our U.S. operations. Aflac U.S. has applied our growth strategy for providing relevant products through expanding distribution for decades now. On the product side, the two-part strategy that we transformed Aflac U.S. from basically a one-product company to the leading provider of individually written insurance since the 1990s.
We took a significant step to further enhance our product portfolio with the 2009 acquisition of CAIC, now we call Aflac Group. This acquisition has allowed us to add group products to our existing portfolio of individual voluntary products. In doing so, we can now leverage the strong brand and the market-leading status that we've established through our individual products as we now also apply the strength of the portfolio of the group products. On the distribution side, we've been establishing and developing broker relations through the Aflac for Brokers initiative. The unmistakable synergies between the two efforts has gained traction ever since. We're pleased and thrilled to see the payoff, which is even more remarkable in an economy that is still challenging.
The new annualized premium sales increased 6.3% in the first quarter with a good start toward achieving our 2011 sales objective of flat to a 5% sales growth. As you know, we don't typically update you on sales results in the second quarter, but in light of the situation in Japan, I told you that I would update you about Japan sales. I thought it was only fair that I update you on the U.S. as well. In the first six weeks of the second quarter, Aflac U.S. generated annualized premium growth in line with the first quarter results after adjusting for an extra day in the first quarter and one less day in the second quarter. I want to remind you, though, that the majority of our sales come in the final few weeks of the quarter.
The six-week growth only provides a small snapshot, therefore, you cannot reflect sales for the entire quarter. I can tell you, it's better to be up than to be down. You know, we've come through a challenging economy, but even during the toughest of times, we did not sit back helplessly and wait for the economy to turn. With economic recovery in mind, we assembled several key product and distribution initiatives to position Aflac U.S. for better growth. We're now seeing both results and synergies from those efforts. To give you some idea about the growth of our group operations, in a year and a half since we've acquired CAIC, we've outgrown our offices in South Carolina. With the addition of the Aflac Group Insurance to our individual portfolio, Aflac U.S. is now fully product and distribution equipped.
Paul will update you tomorrow, we offer a portfolio of individual and group products that are voluntary, that are sold by traditional agents and brokers in small and large accounts. The way I see it, the more products that we offer or the more options that we have and distribution channels, the more potential policyholders we have to write. You'll hear more tomorrow from Tom Mori about how we develop individual and group products. You'll also hear about how we're driving sales through synchronized product introductions as we do in Japan. When it comes to selling group versus individual products, I've told our entire sales force many times that I am product neutral. I don't care whether you sell group or individuals, but I do want to make sure that both products have been offered at the work site to the employers of 100 or more people.
That's because if we don't offer the group product upfront, then you can bet someone else will. I truly believe that if an employer wants group product and knows Aflac offers them, they'll choose Aflac over the competition. In addition, we've developed initiatives centered around recruiting, training, motivating, and selling. Our sales teams put those as core tenets into action, and our marketing department is on board to prove support on each one. As we consider new initiatives, it doesn't help him or us to accomplish one of these core tenets. We have to move on and make sure that the tenets that we're doing are the ones that matter. Today, or tomorrow rather, you'll hear more details from Tom Giddens and also Michael Zuna about what's going on in that effort.
While leveraging our strong, trusted brand, equipping our traditional sales agents and the brokers with tools to help them recruit, train, and motivate, and sell. With all these factors working together, we're striving to create a sum that's greater than its parts to help generate success for our traditional sales agents, for the brokers, and for Aflac. We continue to believe that the U.S. provides a vast, accessible market for our products, and we are building our business with that potential in mind. We believe our expectations that Aflac U.S. sales growth for 2011 will be flat to up 5% is reasonable. Given the fact that the economy is still recovering, we still remain somewhat cautious.
I would remind you that I'd like to see the momentum business build for a little while, and after that, then I'll feel much more comfortable as we get a few more quarters under our belt. It is clear, however, that the addition of the group product platform for our field force and our growing broker initiative only serve to enhance our ability to leverage the Aflac brand and to reach more companies across the United States. Now let me turn to Aflac Japan, where our strategy for growth has also generated positive results. Before I cover some of the operational highlights, I promised you that I'd talk about Aflac Japan's second quarter sales growth and the impact of the earthquake and the tsunami. I'll start there. Our sales growth in the first six weeks of the second quarter has been virtually flat compared to last year.
Since our original projection was for the second quarter to be up 4%, it's obvious that the quake and the tsunami had some impact on our sales. Through this week, Japan sales are up approximately 8% year to date, which is ahead of our sales target for the year. As we told you before, comparisons will get tougher in the second half of the year. However, we still expect to achieve our sales target of -2% to +3% for the year. Now to address the growth strategies in Japan, I'll provide a brief overview of our products and distribution, and our Japanese management will follow up with more details tomorrow. For more than three decades, Aflac has been positioned as the number one seller of third sector or supplemental insurance products in Japan.
The growing need for supplemental insurance reflects Japan's rapidly aging population and the related financial stress on the national healthcare system. Because of the significant financial risk that can arise from a serious illness, accident, Japan's consumers have increasingly understood the need for additional insurance coverage. Aflac's leading market position has resulted in part from an intense focus on protection-oriented products. By monitoring changing consumer needs and improving our products, our product line has remained a key competitive strength for many years. Aflac has earned a reputation as being a product innovator, and we've developed and maintained a strong brand. That is certainly the case with our founding product, cancer insurance. Keep in mind that the foundation of our product portfolio has been and continues to be cancer and medical products.
Importantly, we maintain our position as the number one seller of both these products in Japan, which continues to confirm the popularity and the demand for our innovative policies. The solid platform we've established with these two pillar products has allowed us to leverage our competitive advantages such as branding and administrative efficiency. More recently, we've also found success through the development of two unique life insurance products, child endowment and WAYS. As we've discussed, our child endowment product has premiums that are about three times that of our health products but has a much lower profit margin of about 5%. However, the profit margin increases to at least 10% when the customers purchase it with a discounted advance premium. With respect to a lower profit margin, understand one thing, we're in the business to make money.
I'm willing to accept a lower profit margin if it helps grow the business. I'm not willing to accept loss leaders. Tomorrow, Chris will show you how child endowment contributes to our profit. Keep in mind that child endowment product has also helped us in enhancing our policyholder base, allowing the opportunity for our sales agents to cross-sell additional products like cancer and medical to new consumers. In fact, for every five endowment policies that we sell, one additional sale is made on a medical or a cancer product. In the non-bank channel, for every five child endowment products that we sell, we're selling two additional products, or 40%. The sale of the child endowment product has been consumer driven with the government subsidy for children. We feel the demand for the product is dropping and sales of this product are slowing for two primary reasons.
First, we've already taken one pass at selling our child endowment for children up to age seven. Essentially, the remaining growth would come from newborns. Second, the child subsidy is reduced or suspended, and it may be as the government reevaluates its post-earthquake spending, it will further reduce the demand for the product. The sales force, including our banks, has already started shifting to sales of other product like WAYS in the bank channel and cancer insurance in the other channel. Another unique life product that we've seen success is our WAYS product. You'll recall that WAYS is a unique hybrid whole life product that can be converted to fixed annuity, medical coverage for nursing care benefits when the policyholder reaches a predetermined age. Consumers find WAYS attractive because it's guaranteed principal and future flexibility of the benefit options.
Banks like to sell this product because it has a high premium and attractive commissions. We like it because the average premium for WAYS is about 10 times the premium for health products, which contributes strongly to Aflac's top-line growth. WAYS has a profit margin of around 14% and is enhanced to 18% when the policyholder elects to pay all the premiums up front through the discounted advance premium. I'll give you an overview of the other important aspects of our growth strategy, distribution for Aflac Japan. In the mid-1970s, virtually all of our sales came from affiliated corporate agencies. Since that time, our distribution has steadily evolved to include a diversity of sales outlets. During the 1990s, we expanded our ability to provide face-to-face sales by building a large network of independent corporate and individual agencies.
In late 2000, we entered a strategic marketing alliance with Dai-ichi Life, which I believe has been one of the most effective alliances in the insurance industry. We also added alternative distribution outlets, including internet sales and telemarketing capacities. Most recently, we're selling through more banks than any company offering third sector products, and our initiative for products align well with the product needs of the banks. At the end of the first quarter of 2011, Aflac Japan was represented by more than 90% of all the banks in Japan. Shin Katsunobu will provide you with more details on that tomorrow. Like our product line, our extensive and diversified distribution system is a key competitive strength in Japan's market. With our ability to provide sales force with valued products, attractive commissions, effective support, and financial strength, I don't expect the competitive strength to diminish.
Having covered our operations in the U.S. and Japan, I'll turn to our strategy for investment portfolio activities and capital management. Our business generates large cash flows, and managing this capital means making decisions and adjustments about the factors we have control over. You will hear more on this topic tomorrow from Ken and from Chris, but I want to give you some insight into our thought process when considering capital deployment options and the factors that play into our decisions in this regard. The underlying strength of our operations has allowed us to build capital, and our balance sheet is strong. We remain focused on maintaining a strong RBC ratio that is consistent with the management incentive plan of achieving a minimum RBC of 400 with a target of 450.
While concentrating on achieving the RBC range, we also intend on managing our capital position in a way that supports our financial strength and our debt ratings. At the end of last week, we completed our first quarter statutory financial statement and finalized our calculations for our RBC ratio. At the end of March, we estimated that our RBC would be 520, down from year-end number in part due to the de-risking activity in the first quarter. I will update you on these de-risking activities in a moment, but let me remind you that our first quarter de-risking activities didn't mark the start of de-risking. They marked another step in an ongoing process because we're in the business of managing risk, not avoiding risk. I want to review with you some of the portfolio de-risking activities that we've been actively carrying out over the last couple of years.
For instance, for the first quarter of 2009 through the first quarter of 2011, we significantly decreased our exposure to perpetual subordinated securities, going from approximately 13% of the portfolio to less than 9% of the portfolio, or a 30% decrease. From the perspective of exposure to PIIGS countries, we have lowered our exposure there as well. At the start of 2009, the sovereign and financial exposures to these countries made up approximately 6% of our total portfolio. This number declined to 4% at the end of the first quarter of this year, a 33% decrease. We've also lowered our concentration in financial exposures by selling assets as well as reducing the percentage of new investments allocated for the financial sector. At the start of 2009, banks and other financials made up about 41% of our total portfolio.
At the end of the first quarter of this year, that number had dropped to 33%, a 20% decrease. Even subsequent to the end of the first quarter, we've actively continued our de-risking efforts. We sold our entire perpetual holdings in the Bank of Scotland and our entire holdings in Irish Life & Permanent. Additionally, we sold the last of our perpetual exposures to Lloyds. As I told you during the first quarter teleconference, we are now focusing on de-risking from the standpoint of reducing our concentrated positions, which are predominantly legacy issues. Following the first quarter, we sold $57 million of our Tunisian holdings at $0.94 on the dollar. Although that represents a small % of our holdings, it shows that there is a market for the yen-denominated bond. We view de-risking as a process, not an event.
Based on market conditions, we will continue to identify and consider potential de-risking activities on an ongoing basis throughout the year. While Jerry will provide further details tomorrow, I want to tell you that now our two largest concentrations are JGBs and US Treasuries. As I said in the first quarter earnings teleconference call, we are willing to accept lower earnings growth in order to reduce risk in our portfolio. Until late 2008, we were deploying excess capital to our shareholders through share repurchase and dividend increases because of a very high capital adequacy ratio. When the financial crisis hit, we focused on preservation of capital and enhancing our capital adequacy ratios. With the crisis largely in the rear-view mirror, we are now in a position to deploy capital again. Our approach will still reflect a cautious outlook.
We remain cognizant of the impact of the RBC and the solvency margin ratio. We are willing to reduce share repurchase to focus the portfolio de-risking. Keep in mind, we view this as a short-term sacrifice to preserve capital as we prudently de-risk the business. The amount of funds applied to share repurchase will depend on the RBC level, which also relates to the results of the de-risking activities and other financial results. Another option that we have for deploying capital comes in the ways of paying cash dividends to the shareholders. Keep in mind that 2010 marks Aflac's 28th consecutive year of cash dividend increases, which is one of the strongest records out there today. We expect to increase the dividend this year.
I can't think of a more unusual year in which we've been aggressively pursuing our earnings objectives that are so important and at the same time in conflict with portfolio de-risking. As we move forward, striking the right balance between all of these priorities is paramount to the managing of the company for the long-term benefit of the shareholders. Let me comment on some of the factors that have impacted the growth of our earnings per share for the past several years and also will impact for the next several years. The most important influences to the growth include the portfolio de-risking activities, which I discussed earlier. The other factors are, one, the continued low interest rate environment, especially in Japan, two, slower earned premium growth in the U.S., and three, a slowing rate of decline in the benefit ratios in Japan.
While interest rates have been declining for many years in Japan, the past two years have been especially tough with the new money yields averaging less than 3%. Lower earned premium growth has also been a factor in the U.S., where prior to 2008, we averaged growth was double digits. As we've discussed for several years, the decline or rate of decline in the benefit ratio in Japan has moderated. We expect the rate of decline will continue to flatten out even more this year and next. This slowing rate of decline in the benefit ratio has been impacted by the products mix and the claims trends that have already improved quite substantially over the past decade. While all these factors individually may have a small impact on earnings growth, together, the impact is much stronger.
Tonight, I want to reaffirm our 2011 objective of growing operating earnings per diluted share at 8%, excluding the impact of the yen. For earnings growth in 2012, our target is to achieve operating earnings per diluted share flat to up 5% on a currency-neutral basis. While tonight I've given a broad overview of the factors influencing our growth, we will provide more details tomorrow. I firmly believe we are up to the challenge of striking the right balance among the priorities that I've discussed this evening. Investor concerns have changed. Current events too numerous to count have changed in the world forever. We will continue to adapt to those changes. What has not changed is our confidence that we place in the product and our distribution strategy for growth. We believe that de-risking our portfolio, we are better positioned to enhance shareholder value. Robin, thank you.
I want to thank each of you for attending tonight or listening to the webcast. When you leave, if you'll please return your name tag, it'll be waiting on you in the morning when you come in. We'll begin tomorrow morning with a continental breakfast in the ballroom at approximately 7:30 A.M. The business meeting will begin promptly at 8:00 A.M. in the ballroom to our right. Before we adjourn for tonight, though, I'd like to take a couple of seconds and introduce the members of the investor relations and meetings area because they're truly the backbone of making this meeting all come together. If you'd stand when I call your name. Delia Moore, Manager of Investor Relations. Darren Cordell. Mike Penn. Cathy Shand. Malcolm Trammell. Ichiro Murakami, who's the General Manager of our investor relations area in Japan.
Akiko Tachi, who joins us from Aflac Japan tonight to help with translation. Heidi Carlisle from our meetings and travel department. They put in a lot of hours to make this meeting come together, and I'm very grateful for their hard work. Please see them if you have any questions. They can help you out with anything you may need. Again, when you leave tonight, please turn in your badge, and we will trade you a duck. It's a blue duck that is associated with our New Cancer DAYS product that you'll hear more about tomorrow. Thank you for joining us tonight, and we'll see you in the morning. Thank you