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Aflac Aims to Compete Harder for Dental and Vision Business

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Aflac Inc. is hoping to use a stronger line of provider-network-based dental and vision plan products to increase overall U.S. sales.

Aflac executives talked about their hopes for Argus Dental & Vision Inc. Friday, during a conference call with securities analysts.

(Related: Aflac Courts Group Life Benefits Brokers)

The Columbus, Georgia-based insurer reported earlier this month that it has agreed to acquire the Florida-based holding company that controls Argus Dental.

The Argus Deal

Aflac will pay $75 million in cash for Argus once it completes the purchase, and it could make up to $21 million in additional payments over the next three years if the Argus unit does well, according to a note in a quarterly report Aflac filed with the U.S. Securities and Exchange Commission.

Argus Dental was founded in 2006. It now manages provider networks that support dental and vision plans with 1 million enrollees.

Dan Amos, Aflac’s chief executive officer, told the securities analysts that the company expects Argus-based dental and vision plans to place the company’s name “on the front page of the benefit enrollment process.”

Argus-based plans should help Aflac attract new clients, and the plans will give Aflac a chance to sell more different types of products to the 460,000 businesses Aflac already serves, Amos said.

“We expect our dental and vision strategy will serve to improve recruiting and retention of agents,” Amos said.

Aflac executives said that they expect the Argus deal to begin having a significant impact on Aflac’s U.S. operations starting in 2020, and that they expect to focus on selling dental and vision benefits mainly to small and midsize employers.

Aflac appears to be pursuing a strategy similar to the strategy Unum Group Corp. has adopted. Unum, a company best known for its disability insurance plans, acquired the parent of AlwaysCare Benefits, a dental and vision plan company, in 2016. Unum managers have said that they believe offering dental and vision benefits helps agents and brokers get employers’ attention.


Aflac held the conference call mainly to go over second-quarter earnings.

Aflac is reporting $817 million in net income for the second quarter on $5.5 billion in revenue, compared with $832 million in net income on $5.6 billion in revenue for the second quarter of 2018.

Aflac has major operations in Japan as well as in the United States.

The Aflac U.S. unit reported $338 million in pretax adjusted earnings for the latest quarter on $1.6 billion in adjusted revenue, compared with $340 million in pretax adjusted earnings on $1.6 billion in adjusted revenue for the year-earlier quarter.

New annualized premium sales in the United States fell to $362 million, from $370 million.

Insurance commission spending increased to $150 million, from $145 million.

U.S. dental and vision products accounted for just 5.2% of U.S. sales.

Accidental insurance and short-term disability insurance accounted for 53% of U.S. sales.


Links to documents related to Aflac’s latest earnings announcement are available here.

— Read Unum Agrees to Acquire AlwaysCare Parent, on ThinkAdvisor.

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