Business Context and Reporting Period
This Form 8-K Current Report was filed by Aflac Incorporated on March 11, 2009. The filing discloses a material event regarding the company's business relationships under Item 7.01 (Regulation FD Disclosure).
Key Financial Metrics
The filing provides specific metrics regarding Aflac's relationship with Wal-Mart as of December 31, 2008:
- Payroll Accounts: Wal-Mart represented one of more than 427,700 Aflac U.S. payroll accounts.
- Premiums in Force: Wal-Mart accounted for 0.6% of total consolidated annualized premiums in force and 2.0% of total U.S. annualized premiums in force.
- New Premium Sales: Wal-Mart accounted for 1.1% of consolidated new annualized premium sales and 1.8% of U.S. new annualized premium sales during 2008.
The filing text does not provide clear values for overall company revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes
Aflac was informed that it was not selected in a completed bid process to provide its products to Wal-Mart employees through payroll deduction starting in benefit plan year 2010. The current contract with Wal-Mart is scheduled to end on December 31, 2009.
Outlook and Management Commentary
Following the end of the payroll deduction arrangement, Wal-Mart employees will retain the option to keep their current Aflac insurance policies. These policies are individual guaranteed-renewable products and will be maintained on a direct-bill basis rather than through payroll deduction.
Investor Verification Checklist
- Verify the impact of losing the Wal-Mart payroll deduction channel on future U.S. premium growth.
- Assess the retention rate of Wal-Mart employees transitioning from payroll deduction to direct-bill status.
- Review the company's strategy for replacing the 0.6% of consolidated premiums in force associated with Wal-Mart.