(Updates shares in seventh paragraph.)
Sept. 17 (Bloomberg) -- Aflac Inc., the insurer that gets most of its sales in Japan, is withdrawing from the U.S. Medicare supplement market after results fell short of goals in the first year.
“We determined that the product did not meet our sales targets and profit objectives,” Chief Executive Officer Dan Amos said today in an e-mailed statement. “Therefore we decided to discontinue it.”
Aflac is the largest seller of coverage that complements health insurance by paying a fixed amount of cash when policyholders are injured or fall ill. The Columbus, Georgia- based firm has been working to increase sales in the U.S. amid President Barack Obama’s health-care overhaul, which is drawing competitors to Aflac’s main market in the country.
There are “vast opportunities heading our way,” Amos said during a May 22 investor presentation. “At the same time, success does breed competition.”
Medicare supplement plans are offered by private insurers to fill in gaps for the U.S. program for the elderly, including paying for out-of-pocket expenses not covered by Medicare. The policies have faced increased competition in recent years from another offering from private industry, Medicare Advantage plans, which generally cost less.
About 20 percent of Medicare beneficiaries purchased supplemental coverage in 2010, according to a 2011 report from the U.S. Department of Health and Human Services. That’s down from more than 25 percent in 2002.
Aflac advanced 0.6 percent to $62.22 at 4:01 p.m. in New York. The stock has gained 17 percent this year.
Life insurer Genworth Financial Inc. agreed in 2011 to sell its Medicare supplement business to health-insurer Aetna Inc. to narrow the firm’s focus. Principal Financial Group Inc., which sells savings products and life insurance, reached a deal in 2010 to transfer customers to UnitedHealth Group Inc. as part of an exit from medical insurance.
--With assistance from Alex Nussbaum in New York. Editors: Dan Kraut, Reg Gale