From Dow News:
April 16, 1999
Provident American Up 17%; Online Insurance Business Cited
Dow Jones Newswires
By Anne Colden
NEW YORK -- Shares of Provident American Corp. (PAMC), although off from earlier highs, were up 18% Friday afternoon on heavy volume as investors targeted financial-services firms with online business potential.
Provident American, based in Norristown, Pa., is a majority owner of HealthAxis.com Inc., an online distribution outlet for health insurance.
Gary Craft, an analyst at E*Offering, an online investment banking firm, started coverage of the stock Thursday with a buy rating and a positive note on the company's prospects. Craft had been an influential analyst at BancBoston Robertson Stephens before joining E*Offering. He set a 12-24 month price target of 75 on the shares.
Provident American seems to have riden the wave of investor interest in Internet-related financial companies this week. Its stock closed Tuesday at 19 1/14, but by Wednesday, it finished at 27. Wednesday was the day when shares of several regional banks jumped on news that they were planning to begin online business ventures. The shares gained another 1 1/2 to close at 28 1/2 on Thursday.
"We've seen a lot of strengths in online financial services providers, and with Provident the only public vehicle with which to play the insurance side, that's starting to catch some attention for them," said Joseph Garner, an analyst with Emerald Research. "People are recognizing the value that's there in Provident."
Craig Gitlitz, senior vice president for business affairs, said, "The word has spread that Provident has divested out of the insurance business, and that financial services is right for the Internet."
Provident sold its Provident American Life & Health Insurance Co. unit to Ceres Group Inc.'s (CERG) Central Reserve Life Insurance Co. unit for about $15 million.
Gitlitz said HealthAxis had about $750,000 in online premium sales in the first quarter, "and that's only with one product in 19 states."
Provident American reported a fourth-quarter loss of $9.3 million, or 90 cents a share, on $38.9 million of revenue, but Gitlitz said most of those losses were attributable to the business it has since sold.
Recently, shares of Provident American were up 5 1/4, or 18.4%, to 33 3/4, on volume of 1.2 million shares, compared with average daily turnover of 195,500. Earlier Friday, the shares traded as high as 37.
- Anne Colden; 201-938-5299
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