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Aflac (AFL) Grows Product Menu Via New Dental & Vision Offers

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Aflac Inc. (AFL - Free Report) has  launched Aflac Dental and Vision Insurance, marking its expansion into offering products, based on a provider network. Notably, the company is a leading provider of supplemental insurance products in the United States.

The launch of these employee benefit products is in line with Aflac’s strategy to grow continuously by offering more such key benefits to businesses that look to provide attractive employee benefit products. Employee benefits with exciting features help businesses remain competitive plus attract and retain top talents.

Aflac rolled out this new vision and dental offering, given its high demand among the U.S. employees. Per the Aflac 2020-2021 WorkForces report, for the U.S. workforce, dental insurance holds the second most important benefit after health insurance with vision insurance ranking fourth among the most valued benefits after life insurance.The new dental and vision coverage will be available for very small businesses even with as few as three employees in many locations. The new product contains features like a streamlined underwriting process, more than 100 easy-to-understand and fully customizable plans, and upfront rates.

The unveiling of these dental and vision products is followed by Aflac’s acquisition of Argus (in 2019), which has a platform, administration and the required technology and many years of industry expertise in the said area.

The company is working to expand its U.S. operations. Last November, Aflac acquired Zurich, which is North America's U.S. Corporate Life and Pensions (Group Benefits) business. The strategic move will allow the company to offer its employee benefits products to the global clients of Zurich who are present in the United States. The acquisition positions the company for expanded capacity in 2021.

The company is also working on reducing expenses in its U.S. segment to preserve margins. To this end, it trimmed its U.S. employee workforce by 9%, which will lead to a decline in the operating expenses, thereby aiding its margins. A series of strategic actions taken in 2020 is expected to take out approximately $100 million of annualized run rate expenses in 2021.

Aflac is redirecting its cash flow in the US segment to place  it well for growth since the U.S. employee benefit insurance market is a less penetrated space. Also, the company’s brand recognition and distribution reach provide it with some real opportunities to capitalize on.

Shares of Aflac have rallied 29.5% in the past six months compared with its industry’s growth of 31.1%.

Other companies in the same space, such as The Allstate Corp. (ALL - Free Report) , MetLife, Inc. (MET - Free Report) and Unum Group (UNM - Free Report) have also gained 22.3%, 32.5% and 45.6%, respectively, in the said period.

Aflac stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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