Executives at Aflac Inc. say they want to continue to use their own career agents to increase sales to smaller U.S. employers, while attracting brokers to help them increase sales to large and midsize U.S. employers.
Executives at the Columbus, Georgia-based supplemental benefits company talked about their U.S. distribution operations today while talking about fourth-quarter earnings with securities analysts.
Aflac is reporting $751 million in net income for the fourth quarter of 2016 on $6 billion in revenue, up from $730 million in net income on $5.3 billion in revenue for the fourth quarter of 2015.
Aflac has major operations in both the United States and Japan.
Teresa White, the president of Aflac's U.S. unit, said the company generated about $1.5 billion in premiums from new U.S. sales in 2016, but that the distribution force had failed to meet the company's 3 percent sales growth target.
White and other executives reported that sales to groups with fewer than 100 lives, and sales to groups with 250 to 1,000 lives, were flat.
Sales to groups with 1,000 or more lives grew more than 10 percent.
Sales to groups with 100 to 250 lives fell in 2016, partly because Aflac de-emphasized sales of products to employers in that size category, according to Dan Amos, Aflac's chairman.
"Sales leaders who have done really well have been rewarded, and those who have not done well have caused significant turnover," White said Aflac's Teresa White. The company's promotional star, seen here, is the Aflac Duck. (Photo: Associated Press file)
The company is just breaking even on those accounts due to the nature of the administration systems Aflac now uses to service employers with 100 to 250 lives, Amos said.
Aflac is preparing to introduce more efficient systems for the midsize employers in 2018, and it will be more aggressive at selling to those employers once the new systems are in place, Amos said.
White said Aflac is also working to improve the productivity of its career agents and brokers.
"Sales leaders who have done really well have been rewarded, and those who have not done well have caused significant turnover," White said. "This results in short-term disruption, but these changes are better for Aflac, in the long run."
White noted that Aflac has seen more competitors entering its markets. "We're hoping to see that stabilize in 2017," she said.
One securities analyst asked whether uncertainty about efforts to change the Affordable Care Act could hurt supplemental benefits sales.
"I don't have enough evidence to say whether it will impact sales or not," White said.
White added that she will be talking to agents and brokers over the next weeks to find out what they are hearing.
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