In computing the estimate of unpaid policy claims, we consider many factors, including the benefits and amounts available under the policy, the volume and demographics of the policies exposed to claims, and internal business practices, such as incurred date assignment and current claim administrative practices. We monitor these conditions closely and make adjustments to the liability as actual experience emerges. Claim levels are generally stable from period to period, however, fluctuations in claim levels may occur. In calculating the unpaid policy claim liability, we do not calculate a range of estimates. However, if current period claims were to change by 1%, we would expect the unpaid policy claim liability to change by approximately $24 million.
In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (SFAS 123R). This standard amends SFAS No. 123, Accounting for Stock-Based Compensation, and supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as granting stock options. It requires that companies use a fair value method to value stock options and other forms of share-based payments and recognize the related compensation expense in net earnings. We plan to adopt SFAS 123R effective January 1, 2005, using the modified-retrospective transition method.
Subject to the assumptions set forth above, our objective for 2004 was to achieve net earnings per diluted share of at least $2.21, an increase of 17%. Based on 2004 net earnings per diluted share of $2.52, adjusted for realized investment losses (a loss of $.01 per diluted share), the impact from SFAS 133 (a loss of $.03 per diluted share), the release of the valuation allowance for deferred tax assets (a gain of $.25 per diluted share), the gain related to the Japanese pension obligation transfer (a gain of $.01 per diluted share) and foreign currency translation (a gain of $.08 per diluted share), we exceeded our objective for the year.
We established a marketing alliance with Dai-ichi Life in 2001. In 2004, Dai-ichi Life sold 244,400 of our cancer life policies, compared with 305,600 in 2003 and 359,500 in 2002. Dai-ichi Life sales of our cancer life policies accounted for 7% of total new annualized premium sales in 2004, compared with 10% in 2003 and 11% in 2002. We believe the decline in cancer life policy sales through Dai-ichi Life is attributable to its increased focus on the sale of its life and annuity products.
Although we generally do not convert yen into dollars, we do translate financial statement amounts from yen into dollars for financial reporting purposes. Therefore, reported amounts are affected by foreign currency fluctuations. We report unrealized foreign currency translation gains and losses in accumulated other comprehensive income.
Our investment philosophy is to maximize investment income while emphasizing liquidity, safety and quality. Our investment objective, subject to appropriate risk constraints, is to fund policyholder obligations and other liabilities in a manner that enhances shareholders' equity. We seek to meet this objective through a diversified portfolio of fixed-income investments that reflects the characteristics of the liabilities it supports.
In 2004 consolidated cash flow from operations increased 32.4% to $4.5 billion, compared with $3.4 billion in 2003 and $3.0 billion in 2002. Net cash flow from operations other than Japan increased 23.2% in 2004 to $817 million, compared with $663 million in 2003 and $521 million in 2002. Net cash flow from operations for Aflac Japan increased 34.6% in 2004 to $3.7 billion, compared with $2.7 billion in 2003 and $2.5 billion in 2002. The increase in Aflac Japan cash flows in 2004 was primarily attributable to the growth of our business, lower cash surrender values as a result of improved policy persistency, and the stronger yen. The increase in Aflac Japan cash flows in 2003 was primarily attributable to the growth of our business and the stronger yen.
Consolidated cash used by financing activities was $313 million in 2004, $298 million in 2003 and $320 million in 2002. Cash provided by investment-type contracts increased to $220 million in 2004, compared with $159 million in 2003 and $74 million in 2002. In 2002, we received net proceeds of $254 million in connection with the issuance of Samurai notes due in 2007 and paid in full our revolving credit agreement ($221 million).
Basis of Presentation: We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants. The preparation of financial statements in conformity with GAAP requires us to make estimates when recording transactions resulting from business operations based on currently available information. The most significant items on our balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments, deferred policy acquisition costs, and liabilities for future policy benefits and unpaid policy claims. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, mortality, morbidity, commission and other acquisition expenses, and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates will be revised and reflected in operating results. Although some variability is inherent in these estimates, we believe the amounts provided are adequate.
The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S. We sell individual supplemental health and life insurance through Aflac Japan and Aflac U.S.
Receivables consisted primarily of monthly insurance premiums due from individual policyholders or their employers for payroll deduction of premiums. At December 31, 2004, $183 million, or 43.9% of total receivables were related to Aflac Japan's operations, compared with $291 million, or 53.2%, at December 31, 2003.
At December 31, 2004, we owned debt securities that were rated below investment grade in the amount of $807 million at amortized cost ($740 million at fair value), or 1.8% of total debt securities, compared with $1.1 billion at amortized cost ($1.0 billion at fair value), or 2.8% of total debt securities a year ago. Each of the below-investment-grade securities was investment grade at the time of purchase and was subsequently downgraded by credit rating agencies. These securities are held in the available-for-sale portfolio.
As of December 31, 2004, we had outstanding cross-currency swap agreements related to the $450 million senior notes (see Note 6). We have designated the foreign currency component of these cross-currency swaps as a hedge of the foreign currency exposure of our investment in Aflac Japan. The notional amounts and terms of the swaps match the principal amount and terms of the senior notes.
The following table presents the assumptions that were used for options granted during the years ended December 31.