After almost a decade in the making, OneAmerica’s rebirth as a mutual insurance holding company is proving as successful as company executives had planned.
“It’s turned out exactly as we hoped,” says Dayton Molendorp, the company’s president and CEO. “We are positive about the future.”
Molendorp, who joined the company in 1987 when it was American United Life Insurance Co., worked through its transformation under its previous CEO, Jerry Semler, who was the driving force behind the change. In the late 1990s, Semler led the legislative charge to change state law to allow the company’s restructuring.
Today, the company is financially stronger than ever, with assets of more than $14 billion and annual revenue of $1 billion.
But Molendorp, who worked closely with Semler during the transformation before ascending to the top spot on Sept. 1, 2004, says this is only the beginning.
“We are very pleased with the result of the restructuring,” he says. “We have ambitious plans to double in size. We hope to have $25 billion in assets in five years.”
Molendorp’s swift rise to the CEO position began in 1999, when he was named senior vice president of then-AUL’s Individual Operations. Three years later, he became president of the company’s Pioneer Mutual Life Insurance Co. subsidiary. The next year, he was named executive vice president of AUL and president of The State Life Insurance Co., making him Semler’s right-hand man during the final pieces of the restructuring and preparing him for the role of CEO.
With the restructuring complete, Molendorp and his team now have the ability to seek further capital, affiliate and merge with other companies, aggregate financials and adopt best practices of other companies that have joined the OneAmerica portfolio.
“The new structure allows us to enter into relationships with other companies, which we’ve done,” he says.
As an example, he cites the acquisition of Pioneer Mutual Life Insurance Co., a stock subsidiary of the company. Pioneer Mutual offers life insurance and annuity products, and is licensed to conduct life insurance business in 42 states and the District of Columbia.
“The management teams and boards voted to join us,” Molendorp says. “Thanks to the new structure, we have a cash-free growth engine.”
OneAmerica was able to increase its value and the value for Pioneer Mutual Life customers without spending capital. The combined companies fall under the One America Financial Partners brand, which Molendorp says has a lot of strength.
“Both companies have thrived with the affiliation,” he says.
Profitable combinations
Pioneer Mutual isn’t the only company that has joined forces with the new OneAmerica. R.E. Moulton Inc., one of the oldest and largest managing general underwriters in the United States, and The State Life Insurance Co. have also become a part of the financial conglomerate. And all have profited.
“[It] allows us to leverage infrastructure across more customers and assets,” says Molendorp. “If we can add 50,000 to 60,000 policies to the same administrators and deliver the same service at a lower price, it is one example of how the combination of companies can create value.”
But Molendorp isn’t underestimating the value of human contributions to the equation.
“The other companies brought good, talented people that have taken senior and mid-level leadership positions in the company,” he says. “They have added strength to our company through their talent and dedication. They would not have been available to us without the affiliations.”
OneAmerica isn’t the only company pursuing this strategy; the insurance industry on the whole is consolidating. But OneAmerica plans to use this method to continue to grow and improve.
“Bigger isn’t better,” Molendorp says. “Better is better. We are trying to get bigger and better.”
Molendorp says the company plans to achieve its goals by growing organically and joining forces with other companies, a challenge given the slow growth in the industry as a whole.
“There is pressure on the industry to contain costs and there is strength in size,” he says. “And we are winning at both — we have had a very strong year.”
With all the growth and change at the company, one aspect that hasn’t changed is its core values.
“Our core values are still there,” he says. “And our focus in the marketplace hasn’t changed. We focus on individual life and annuities, 401(k) retirement plans, group life and long-term disability. These haven’t changed. As we develop more critical mass and size, it will strengthen our position in the marketplace.”
With plans to double its assets, OneAmerica is looking for more companies to affiliate with, and one of the top factors it considers is the company’s culture.
“We are looking for like-minded companies,” says Molendorp. “We are building synergies between our cultures. That is the No. 1 thing that has to be in place. We look at how the people in the company see their role in the marketplace and how they approach business and life.”
Molendorp says growth will be the biggest challenge in the near term.
“It takes no talent to grow unprofitably,” he says. “We could offer a product which will pay a half a point higher than the competition and flood the doors, but that is unprofitable. We can’t pay that rate, our people, and make a fair return. That is the biggest challenge.”
Molendorp is juggling three recipients when it comes to that fair return: the customer, the company and the agent. If any of them are out of balance, it is unhealthy for all three.
“The challenge is to find the balance that is fair to our customers, our people and our agents, and deliver a good product to our customers,” ” Molendorp says. “That takes all our energy.”
Change is good
Molendorp is the first to admit that there have been bumps in the road on the path to restructuring, but says it was worth the effort.
“There were some detractors,” he says. “But they were in a great minority.”
And, despite all the due diligence, OneAmerica executives still encountered several surprises during the acquisition process.
“Every time we did our due diligence and felt we had a good handle on the picture, once you actually got a good look under the hood, you find things you didn’t expect,” says Molendorp. “But there was nothing we couldn’t work through with the two teams.”
He says it is evidence of the quality of people on both sides.
“There were great people in the companies,” he says. “When a problem was on the table, we got it solved, we worked it through.”
Molendorp makes it clear that he is pleased with the caliber of people working for the company.
“We re-emphasized the need to have the right people in the right positions,” he says. “We’ve gone through some changes in leadership and management personnel that resulted in a tremendous amount of energy and enthusiasm in the company.”
The biggest risk of the restructuring over the last several years, says Molendorp, was not to do it at all.
“I don’t see any risk, just the opposite,” he says. “If we had stayed the same, we couldn’t raise capital, and that limits the amount we can put in our growth. Now there are no limitations.”
In fact, it could be said that “Change” is now Molendorp’s credo.
“If a company doesn’t continually change, it won’t do well,” he says. “We want to change together. We were looking for management people that would see change as part of their everyday work.
“You have to grow or you will begin to decline. We are working to make sure we are on the growth side of that curve.”
How to reach: OneAmerica, (317) 285-1111 or www.oneamerica.com
