E-insurance' goal closer for Provident
The E. Norriton life insurer plans to buy a software firm in a move to become an online brokerage.
phillynews.com
By Joseph N. DiStefano
INQUIRER STAFF WRITER
Fortified by $57 million in new investor capital, Provident American Corp. said yesterday it would acquire Insurdata Inc. of Dallas, furthering its conversion from a money-losing life insurer into an online health-insurance brokerage.
Provident American officials said the deal would boost the East Norriton company's ability to sell employer and self-insurance health plans through its HealthAxis.com online brokerage, which sells such plans for Aetna U.S. Healthcare, the national Blue Cross-Blue Shield Association, and 11 other insurers. The new company is to be called HealthAxis.com.
Michael Ashker, chief executive officer of Provident American, declined to say how much the company would pay for Insurdata, which provides health-insurance administration software.
He said he expected to disclose more information in filings with the Securities and Exchange Commission. The companies expect to close the deal next month, pending federal antitrust approval.
Provident American, which had revenues of $75 million last year, has lost a net $55 million since 1993, reporting annual profits only in 1996.
Ashker said Provident American had sold all the insurance underwriting and "risk-bearing" operations that produced those losses. But he also said the company, in its new incarnation, would still have future losses as its e-insurance company grows.
After the takeover, the company plans to retain its headquarters in Montgomery County as well as Insurdata's Dallas operations center. The combined company would employ more than 700 people, including 150 in East Norriton.
Ashker is to head the combined company, and Provident American would name four of the seven members of its board of directors.
Insurdata is a unit of publicly traded UICI, the former United Insurance Cos.
Investors appeared initially confused by yesterday's announcement. In early trading, Provident American shares jumped as much as $8 to hit a record $40 before closing at $34.50, up $2.44 for the day. UICI lost $1.56 to close at $23.06. UICI officials did not return calls seeking comment.
Also yesterday, Provident American's HealthAxis.com subsidiary said a group of investors that includes Brown Simpson Asset Management, the Royal Bank of Canada, LBI Group Inc., Tudor Investments, and others had invested $57 million in exchange for 3.85 million shares of common stock. Brown Simpson officials declined to comment on the deal. Last summer, Intel Corp. invested $4 million in HealthAxis.com.
Once the purchase of Insurdata is complete, Ashker said, the combined company will record estimated 1999 revenues of $42 million, mostly from Insurdata clients, which range from Texas church groups to school employees in South Florida. He said the company would compete with such online firms as Insweb and Quotesmith, as well as with the benefits arms of such mainstream health insurers as Cigna's Intracorp unit.
Provident American stock has bounced between $20 and $40 since April, when Ashker announced plans to sell off the last of the company's insurance underwriting businesses and focus on Internet sales. That's up from the $3-to-$7 range where it had languished for most of the previous two years.
Provident had a tough time finding buyers for its military-personnel insurance businesses. Last month, Alvin H. Clemens, Provident American's chairman and largest shareholder, agreed to purchase and resell the remaining non-Internet businesses after Provident American agreed to invest $14 million in them.
|
