Aflac Implements Distribution Changes



Daniel P. Amos, Aflac chairman and chief executive officer, said the company was instituting changes in its U.S. compensation structure for regional sales executives in an effort to boost sales, which dropped 8.2 percent in the second quarter.

The company reported that second-quarter revenue for the three-month period ended June 30 was $5.38 billion, down 3.4 percent compared with the year-ago period.

Net income of $810 million in the second quarter was down 8.8 percent from the year-ago period, the company also reported. Net income of $1.78 per share diluted, dropped 6.3 percent from the year-ago period.

"From a financial perspective, Aflac U.S. continued to perform well in the second quarter. However, our sales results remain disappointing,” Amos said. “Given sales production in the first half of the year, we now expect sales for the full year will likely be down 4 to 8 percent.”

In a conference call with analysts last month, Amos said the company began instituting incentive bonuses for its district sales coordinators on July 1. District sales coordinators are primarily responsible for selling Aflac products and training new sales associates.

The move is designed to execute a more consistent sales strategy across the country, and if the sales incentive proves successful, the company will implement the strategy again in 2015, Amos added.

“We believe it’s vital to ensure that all levels of our sale hierarchy have the potential to earn the best compensation in the industry,” he said.

Amos also said the company has eliminated the commission-based position of the “state sales coordinator,” and instituted instead a new position of “market director.”

“Market directors will be salaried with the opportunity to earn sales-related bonuses,” Amos said. “We believe this will enhance our performance management and better align their pay with the new business results.

Market directors begin working in their positions Oct. 1, Amos added.

Amos said the company needed to change because commission-based agents weren’t reaping the full reward of their work. The key, Amos told analysts, is for Aflac to give its agents the opportunity and the incentive to do well.

If agents do well, “everybody else up the structure does well,” Amos said.

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The restructuring costs will set the company back by $0.02 per diluted share beginning in the fourth quarter. The company said it would release more accurate expense estimates related to the changes in October.

is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at

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