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Aflac's earnings: 3 things executives said about producers

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Executives at a big seller of supplemental health insurance products talked warmly, and often, about insurance agents and brokers during the company’s latest earnings call.

The company, Aflac Inc. (NYSE:AFL), organized the call to discuss its fourth-quarter performance with securities analysts.

Aflac is a major seller of health insurance products in Japan as well as a major in the U.S. voluntary and worksite benefits markets.

See also: 3 things Aflac is saying about PPACA strategy

The company is reporting $2.5 billion in net income for the latest quarter on $21 billion in revenue, compared with $3 billion in net income on $23 billion in revenue for the fourth quarter of 2014.

The drop in net income reflects the effects of the weak yen-dollar exchange rate and the cost of currency hedging. Operating earnings per share, which exclude those effects, held steady at $6.16.

At the Aflac U.S. unit, pretax operating earnings increased 18 percent, to $237 million; premium revenue increased 2.7 percent, to $1.5 billion; and new annualized sales increased 9.6 percent, to $497 million.

For a look at three things Aflac executives said about the U.S. operations that might interest agents and brokers, read on. 


1. The company is trying to do a better job of building both career agent and outside broker distribution.

Executives at publicly traded major medical insurers have said little about agents and brokers during their recent earnings calls, and many of those insurers have announced agent compensation cuts.

See also: As Humana jolts market, Kentucky pans mid-year agent comp changes

Aflac executives referred to agents and brokers dozens of times during their earnings call.

Daniel Amos, the company’s chairman, said the Aflac U.S. unit saw 2015 as a “year of building our business through our career and broker distribution channels.”

“We not only enhanced our career sales management of infrastructure over the past year, we also set the foundation for greater opportunities within the broker market,” Amos said.

The number of agents focusing on employers with 99 or fewer employees rose 5.3 percent, and the total number of agents increased 2.5 percent, Amos said.

Big dog with a small dog

2. The company wants its agents and brokers to get along.

Aflac has been trying to carve out separate markets for agents and brokers, to keep them from feeling as if they are competing with each other, Amos said.

Aflac has tried to have brokers focus on bigger employers and agents focus on smaller employers.

In the past, “even though they weren’t direct competitors, our agents were always calling on these big accounts, even though they weren’t landing them, and the brokers didn’t like that,” Amos said. “Now, they’re working together, as a team. I think that, with time, there’s enormous potential for the broker market to continue to grow.”

See also: Voluntary goes mainstream

Suits in an elevator

3. The company is noticing the level of competition in the U.S. voluntary and worksite markets growing.

Other insurers have noticed that Aflac is doing well, and “success and opportunity breed competition,” Amos said. 

Aflac provides good contact center service and pays claims quickly, and that will help it stay ahead of the competition, Amos said.

Competition may also influence Aflac’s willingness to pay agents and brokers.

The company has not yet released fourth-quarter producer comp information, but a report filed with the U.S. Securities and Exchange Commission shows that the amount of commissions it paid for the first three quarters of 2015 fell only slightly year-over-year, to $441 million, from $443 million for the first three quarters of 2014.

See also: 

Top AHIP officials departing

CMS hates some agents and other draft 2017 PPACA parameters

3 top industry targets for non-medical benefits


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