From this past Saturday's Philadelphia Inquirer:
Provident American to sell agent-based insurance business
The Norristown firm has restructured to cut costs and to focus on an online health-insurance sales site.
By Bob Fernandez
INQUIRER STAFF WRITER
Provident American Corp., which is developing an Internet site to sell
health insurance, has agreed to sell its traditional agent-based insurance business to an Ohio company for $15 million.
Central Reserve Life Insurance Co., an acquisition-minded firm in
Strongsville, a suburb of Cleveland, is buying Provident American Life and Health Insurance.
The Provident American Corp. subsidiary includes 27,000 agents nationwide and about 60 employees at the head office in Norristown, Peter Nauert, Central Reserve's chief executive, said yesterday. Provident American Life and Health generates annual premiums of about $100 million from 45,000 policyholders.
The deal, which needs regulatory approval, also calls for Central Reserve to provide health-insurance products for online sales on HealthAxis.com, Provident American's online venture. The two companies will share in the profits from these sales.
Provident American, which has struggled financially, has been restructuring to cut costs and to focus on the online venture.
This year, it has struck deals to advertise its insurance products on
America Online and two other popular Internet portals, Lycos and Cnet.
"We're becoming a virtual company," company spokesman John Gillin said. HealthAxis, which replaces agents as the firm's main selling tool, was to be launched yesterday or Monday, he said. Nauert called the deal a "fabulous opportunity." He said Central Reserve also has reached an agreement to buy an insurance firm in Omaha, Neb. He
expected both the Omaha and Provident American deals to be closed in the first quarter of next year.
He said Central Reserve likely would relocate some of the jobs in Norristown to the Cleveland area, but declined to say how many jobs would be lost. "I could be wrong in this, but I don't expect any quick loss of jobs in this thing," Nauert said.
Provident American suffered a net loss of $18.4 million last year, and it
reported a net loss of $2.4 million in the second quarter this year. It has
not reported third-quarter earnings yet.
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