NAAC's new contract added new earning ($0.17/share) to an estimated earning ($1.07/share). Trading now is about $2.50
NAAC's Acquisition, Maryland Southern Life, Signs Pact to Administer ERISA Trusts Marketed to 700,000
Hotel Employees Nationwide
NORTH BETHESDA, Md.--(BUSINESS WIRE)--Oct. 29, 1997-- Estimated Annual Fees to add $0.17 Per
Share for NAAC Maryland Southern Life Insurance Company (MSLIC), a unit of National Affiliated Corp.
(NASDAQ:BB NAAC), has signed an agreement with Paradigm Insurance Group to provide Plan
Administration Services for ERISA self-funded trusts that Paradigm will market to more than 8,000 hotels and
their 700,000 employees nationwide.
The ERISA plan is designed to provide health care benefits to these employees, many of whom have salaries
near minimum wage and/or are part timers. The plan is designed to provide only
needed benefits at low rates. The plan is to be issued under the Federal Employee Retirement and Income
Security Act which allows employers to self fund the plans and avoid costly exotic benefits dictated by the
individual states and which often make health insurance unaffordable to low end wage earners.
MSLIC, under its arrangement with Paradigm, will provide administrative expertise in formulating the trust
agreements used by employers who purchase the health plan. MSLIC will also serve as plan administrator and
third party administrator in certain cases. In addition, MSLIC will reinsure in certain cases some of the Stop
Loss insurance coverage which will be issued to the plans to protect against catastrophic losses any single plan
may suffer in a given year.
Edward J. Birrane, Jr., architect of the MSLIC plan, and former Maryland Insurance Commissioner,
estimated that the annual fees consolidated into NAAC will reach $2.4 million. He projects pre-tax income of
$1,770,000, or about $0.17 per share. The contract calls for approximately $48 in revenue annually per
employee. Paradigm management expects 50,000 employees to be under contract in the first year.
''The market for affordable health plans tailored to the low end wage earner is just enormous,'' Birrane said.
''Many employers of these workers simply cannot afford to buy the high end plans
which states are increasingly requiring in the small, under 100 employee, group market, and the Paradigm
plan with MSLIC administration is one of the first on the scene.''
Biranne's estimates are based on Paradigm's initial marketing focus on individual employers who are
franchisees of the hotel chain, Choice Hotel Group (NYSE:CHH), and members of the Asian
American Hotel Owners Association which together make up 8,000 hotels with 700,000 employees,
according to earlier published reports.
Forward-looking statements include statements that represent the company's beliefs concerning future or
projected levels of sales or the earnings or profitability of the company's activities. Forward-looking
statements are based on estimates and assumptions that are subject to significant business, economic and
competitive uncertainties, many of which are beyond the company's control and are subject to change. These
uncertainties can affect actual results and could cause actual
results to differ materially from those expressed in any forward-looking statements made by, or on behalf of,
the company.
NAAC is committed to the acquisition and consolidation of insurance companies, mainly those with clear
potential for a high return on investment from immediate cost reductions and timely marketing of profitable
niche products.
Please visit our website at: southerngroup.com.
Contact:
Martin E. Janis & Co., Chicago
Wayne Schumacher
312/943-1100 |
