Aflac Faces a Tight Labor Market

Aflac has been working hard to get and keep the producers it needs to sell its famous accidental disability insurance products, hospital indemnity insurance, and other supplement life and health products.

Company executives talked about how they are trying to keep the agent pipelines flowing Thursday in a conference call they held to go over second-quarter earnings with securities analysts.

The second quarter ended June 30.

The company works with outside brokers, but it still has a large network of career agents.

One analyst, Jamminder Bhullar of JP Morgan Chase & Co., asked about the impact of the tightening labor market on producer recruiting.

"It's certainly getting harder," said Virgil Miller, Aflac executive vice president and president of its Group and Individual Benefits divisions.

One Aflac response has been to recruit more brokers, Miller said.

"Brokers already come to the table with a license," he noted. "They're already familiar with all products."

Daniel Amos, the company's CEO, pointed out that the company is using contests to lure back some experienced agents who stopped selling when the lockdowns came.

"They're the soul of the company," he said. "We need to bring them back."

The Earnings

Aflac is reporting $1.1 billion in net income for the second quarter on $5.6 billion in revenue, up from $805 million in net income on $5.4 billion in revenue for the fourth quarter of 2019.

Total commission spending at the Columbus, Georgia-based insurer fell to $315 million, from $332 million.

The Aflac U.S. unit is reporting $413 million in pretax adjusted earnings for the latest quarter on $1.4 billion in revenue, compared with $426 million in pretax adjusted earnings on $1.5 billion in revenue for the year-earlier quarter.

The average number of weekly producer equivalents increased to 5,925, from 4,252. The number increased because COVID-19-related lockdowns decreased the number of producers in the year-earlier quarter; the average was always over 7,000 from the first quarter of 2019 through the first quarter of 2020.

New annualized premiums from sales of U.S. products increased 64%, to $264 million, because of the effects of the COVID-19 pandemic. In 2019, the typical average was over $300 million.

Annualized premiums from in-force U.S. coverage fell 1.5%, to about $6 billion.

Here's what happened to new annualized premiums for U.S. sales of some types of products in the fourth quarter, when compared with the year-earlier quarter.