Aflac finalizes deal to buy Continental America

Since its founding nearly 30 years ago, Columbia-based insurer Continental American Insurance Company has purposely flown under the radar.

Not any more.

At midnight, the deal for Aflac to acquire privately owned Continental American for $100 million was finalized. It was the first time in its 54-year history that Aflac - the supplemental insurance seller known for its duck commercials - has acquired another insurance company.

Aflac executives hope the deal will allow the Columbus, Ga.-based insurer to deepen its United States market reach. Both companies sell supplemental life and health products through large and small employers, but they market them in vastly different ways.

Aflac sells primarily to individuals through a massive agent network. Continental American sells group products that companies offer to their employees at a cost.

Aflac relies on one of the largest field forces in the country - about 75,000 agents - while Continental American has a limited sales force, just six agents, but heavily relies on a network of more than 4,000 insurance brokers.

Aflac is the largest competitor to Colonial Life, which is one of Columbia's largest private employers.

Continental American chief executive Chris Goodall, son of the company's founder, chairman emeritus Leon Goodall, will continue to run the company as an Aflac subsidiary, but will report to Aflac president Paul Amos.

"Flying under the radar in Columbia, S.C., was part of our strategy," Goodall said last week. "I guess you could say we have operated as a 'stealth company.' We have a great name and a great reputation within the brokerage community."

The reputation is part of the reason Amos targeted Continental American in November. That's when Amos flew to South Carolina and had dinner with Chris Goodall.

"I didn't know what to expect," Chris Goodall said.

At the time, Continental American was not for sale.

"I knew in the first five minutes this was somebody I liked and could respect," Chris Goodall said.

The next morning, he met with his 84-year-old father, whom he describes as "as sharp as he can be."

"I told him I had an interesting and productive meeting with Paul Amos of Aflac," said Chris Goodall, 52.

His father offered some advice.

"He told me, 'You're going to be here a lot longer than I am. You're going to have to live with the consequences of this,'" Goodall said. "He was intrigued and apprehensive."

For months, Amos and Chris Goodall moved forward. Chris Goodall chose to keep the talks quiet, not telling anyone until he informed Continental American chief financial officer Rob Moran as the deal became imminent.

"I did not want to bring others into it until I was reasonably sure it was going to move forward," he said.

One of the things - other than the market capability - that impressed Amos was the Continental American staff.

"They have a very young, excitable work force," Amos said. "And they are passionate about what they do. One of the things that amazed me as I talked to some of them is the amount of insurance experience."

There is a vast difference in the size of the two companies.

In 2008, Continental American had total revenues of $79 million and net income of $7 million. Compare that to Aflac , which had $15.4 billion in revenue and made $1.63 billion.

Last year, Continental American generated about $112 million in premium income. Aflac's four largest districts - Texas, California, Florida and Georgia - each write substantially more than that in a year.

Aflac has more than 8,000 employees worldwide. Continental American has 163.

Amos calls it a perfect fit, adding that if Aflac was not acquiring Continental American, it would probably have to build internally the brokerage outlets that Continental American brings to the game.

"It would have probably cost us 20 percent more in straight dollars, and that doesn't include the time investment," he said.