Here's the release from Central Reserve. Sounds very positive:
Central Reserve Life Insurance Company to Acquire Provident American Life and Health Insurance Company, All Health Insurance of Provident American Corp.
Companies to Share Risk/Profits of Provident American Corp.'s New HealthAxis
Internet Insurance Venture
STRONGSVILLE, Ohio, Nov. 12 /PRNewswire/ -- Central Reserve Life Insurance Company (CRL), a subsidiary of Central Reserve Life Corporation (Nasdaq: CRLC) today announced that it has signed an agreement to purchase all of the common stock of Provident American Life and Health Insurance Company (PALHICO) from Provident American Corporation (Nasdaq: PAMC) for approximately $5 million. In addition, CRL, in conjunction with The Reassurance Company of Hannover, will assume through reinsurance all the individual and small group health insurance currently in force through PAMC's subsidiaries, PALHICO and Provident Indemnity Life Insurance Company, for a payment to PAMC of approximately $10 million. In addition, CRL will assume PAMC's administrative service agreement with Health Plan Services (HPS).
The purchase and reinsurance are expected to be completed on or before January 1, 1999, subject only to customary regulatory approval. The transactions will not affect the policies or benefits of customers insured by PAMC's two subsidiaries.
PAMC's insurance subsidiaries, based in Norristown, Pa., specialize in marketing managed care health insurance products to individuals and small businesses in 40 states, through a distribution system of 27,000 agents. In 1998, over $100 million in insurance revenue is expected.
CRL will continue to market PALHICO insurance products through PAMC's existing network of agents. Under the agreement, CRL will provide PAMC's agent force with additional products, including CRL's small and large group health product line, specialty health insurance products and senior health and life insurance product lines.
CRL will also offer small group and specialty health insurance products through HealthAxis.com, PAMC's Internet insurance marketing subsidiary. HealthAxis.com is a leader in offering direct on-line health insurance products.
The acquisition of Provident American is the CRLC group's third acquisition since its $40 million equity funding was completed in July 1998. CRLC also last week announced its first quarterly profit since the fourth quarter of 1995. This turnaround was the result of new management and the implementation throughout the year of a wide range of changes to improve operational and financial activities.
"This is a fabulous opportunity for CRLC," said Peter W. Nauert, President and Chief Executive Officer of Central Reserve Life Corporation. "This transaction once again highlights our strategy of growing our company through strategically-targeted acquisitions and by capitalizing on the marketing strength of the acquired companies.
"Even more importantly, this acquisition affords us access to PAMC's extensive 27,000-agent distribution system," Nauert added. "We will now be able to substantially broaden the distribution system for CRL's product line. It will also allow us to provide PAMC agents with a variety of new CRL products to increase their sales effectiveness. We are certain that PAMC's health insurance agents will welcome CRL's broad complement of new products and our long-term commitment to all our agents. Our goal is to significantly increase new sales and profitability through existing agent distribution systems."
"This acquisition is positive for both entities," said James O. Bowles, president of Provident American Life Insurance Company, who will remain responsible for PALHICO's distribution. "It will bring additional products to Provident's field force and enhance their sales. Our two distribution systems will complement each other both geographically and by product mix."
"In addition, the connection with HealthAxis.com will give us our first real entry into mass marketing of insurance products through the Internet, and it will further develop our cross-selling programs," Nauert said. "I believe this will become a significant part of CRL's new revenue and profit flow as we enter the new millennium."
"We are delighted to have reached this sale agreement that continues our strategic shift to our on-line health insurance venture, HealthAxis.com," said Alvin H. Clemens, Chairman and Chief Executive Office of PAMC. "We look forward to working with Central Reserve Life to develop cutting-edge consumer products for HealthAxis.com."
As a pioneer in the electronic distribution of health insurance, HealthAxis.com will offer Internet consumers a full range of insurance products, including health insurance for individuals and small groups, dental insurance, vision care insurance, prescription coverage, critical care and long-term care insurance. HealthAxis.com also will provide product and health information, instant price quotes, on-line billing, claim status, and policy or personal information changes, and a 24-hour customer hotline.
This news release contains certain forward-looking statements with respect to the financial condition, results of operations and business of the company. Forward-looking statements are statements other than historical information or statements of current condition. In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements herein should not be regarded as representation by the company or any other person that the objectives or plans of the company will be achieved. There is no assurance that the acquisition of Continental General will be completed. Many other factors could cause actual results to differ materially from those contemplated by such forward-looking statements, including, among others, failure to successfully implement the business plan for the company, rising healthcare costs, business conditions and competition in the healthcare industry, developments in healthcare reform and other regulatory issues. The foregoing review of important factors should not be construed as exhaustive. The company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Central Reserve Life Corporation, through its subsidiaries, specializes in meeting the accident and health insurance needs of individuals and small to mid-sized businesses and the health and life insurance needs of Americans age 65 and over.
Visit on the worldwide web at www.centralreserve.com.
SOURCE Central Reserve Life Insurance Company
CO: Central Reserve Life Insurance Company; Central Reserve Life Corporation; Provident American Life and Health Insurance Company; Provident American Corporation
ST: Ohio
IN: INS
SU: TNM
11/12/98 17:34 EST prnewswire.com
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