Guardian Does It for the Kids: Acquires Dental Carrier Premier Access

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An old-guard major player among dental benefits providers sunk its teeth into a relatively young competitor.

New York-based GuardianLife Insurance Co. of America, which was founded pre-Civil War, will acquire Premier Access Insurance Co., a dental benefits provider that was started in Sacramento, California, by a single dentist in 1989.

The deal, announced April 9, extends Guardian’s reach into the state-run Medicaid and Children's Health Insurance Program markets, which are expected to grow significantly due to expanded eligibility under the Affordable Care Act.

“As of January, dental coverage is required for all children,” said Chris Hill, CEO of Spotlite, a Chicago-based provider of cloud-based enterprise applications for employee benefits. “Guardian’s decision to acquire Premier Access strategically extends their entire service territory and places them in geographical reach of more American children.”

Premier Access has approximately 620 employees, serves over 5,000 employer plans and operates 18 dental centersand provides dental insurance to more than 634,000 members in five states and Mexico. Guardian, as one of the industry’s behemoths, coversmore than 8 million employees and their families at over 115,000 companies, according to a company statement.

The deal is pending regulatory approval, and terms were not revealed.

The Affordable Care Act’s two key components — accessibility for all and profit limitations for insurance carriers — may be prompting insurers to re-evaluate their business models, Hill said.

“Dental insurance is a relatively low-margin product in terms of profitability, so it is no surprise that Guardian is looking to expand their service territory and utilize the increased need for their product in order to balance how the ACA regulates their profits,” Hill said. 

Guardian also will gain a presence on six individual state exchanges, which complements its existing offering on 48 of the Small Business Health Options Programs, or SHOP, exchanges, Guardian said in a written statement.

Guardian Executive Vice President Dong Ahn said that the Affordable Care Act played a role in the acquisition of Premier Access.

“ACA is changing the dental benefits landscape. It is the responsibility of insurers such as Guardian to deliver cost-effective, quality dental care to more Americans where and how they are looking to be served,” Ahn said in a written statement. “Guardian’s acquisition of Premier Access demonstrates our commitment to maintaining our position as a leading dental company while expanding our reach to serve more customers who are seeking access to dental insurance through Medicaid and the exchanges.”

Premier Access is something of a success story. Sacramento dentist Reza Abbaszadeh started a dental health maintenance organization called Access Dental Plan. According to the Sacramento Business Journal, Abbaszadeh launched Premier Access to local employers in 1998 as a less-restrictive PPO plan. Annual revenue in 2012 was $175 million, the most recent data available, according to the Business Journal.

Premier Access has about 620 employees nationwide and an estimated 110 at its Sacramento, California, headquarters, while Guardian counts 5,000 employees in the United States and a network of more than 3,000 financial representatives in more than 80 agencies nationwide, according to a Guardian statement.

Hill said it’s possible that Premier Access is the first domino to fall, as more acquisitions could follow.

“The ACA has created higher demand for benefits and it is very possible that other benefit carriers will take similar action to Guardian in order to combat the profit regulations of the ACA and reach more people,” Hill said.