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Non-Tech : pamc -- Ignore unavailable to you. Want to Upgrade?

To: Crossy who wrote (163)	1/19/1999 9:17:00 AM
From: RON BL	Respond to of 570

PAMC new signing. First to offer dental/vision on the NET. biz.yahoo.com

To: Crossy who wrote (163)	1/21/1999 1:14:00 AM
From: RON BL	Read Replies (1) \| Respond to of 570

By: smkcpa From the Jan 20th issue of Insurance Mergers and Acquisitions - SNL Securities Provident American Goes Online As the Internet becomes an increasingly important busi-ness tool, more and more companies are tapping into that resource in order to remain competitive and technologically savvy. Toward that goal, Provident American Corp. is pursuing a strategic plan to become an Internet-based company selling health insurance online. Provident American sold its insurance unit, Provident American Life and Health Co., to Ceres Group Inc. unit Central Reserve Life Insurance Co. for approximately $15 million on Jan. 5. Provident announced that the sale was a move to further facilitate its strategic shift to the Internet via HealthAxis.com, its online health insurance marketing venture. Most of the proceeds from the sale were used for general work-ing capital. Craig Gitlitz, director of corporate finance and communications at Provident American, explained why the company decided to sell off the insurance unit:“From a profit standpoint, Provident American has struggled in the health insurance business. The sale enabled [Provident American] to focus almost exclusively on the Internet. HealthAxis comprises most of the value of what remains at Provident American. ... [HealthAxis] will take us out of a business that we have struggled in.We have brought in completely new man-agement, built a whole new team of employees at HealthAxis, and we expect to be the dominant player in the health care space on the Internet.” In addition to selling off the unit, Provident entered into a mar-keting agreement with Ceres whereby HealthAxis.com would market Provident American Life & Health's insurance products beginning early this year. HealthAxis.com was formed in December 1997 as an online vehicle to market and sell its various insurance products. While HealthAxis' main provider is Provident American, products are available from other insurers such as Ameritas, Fortis and Ceres. Gitlitz said HeathAxis expects to reach marketing agreements with other insurers in the near future. “As much as 30% of the first-year premium costs associated with a standard managed care policy come from distribution. [Provident American] is able to pass much of those cost savings to the consumer. I think that will be an attractive proposition and can help them drive some strong premium growth,” said Joseph Garner, an analyst with Emerald Research. Additionally, Gitlitz said, by selling directly over the Internet, Provident American is able to save up to 50% on com-missions and pass the savings on to the consumer. The Internet also affords an enormous amount of privacy, flexibility and efficiency. A consumer can buy a policy 24 hours a day, seven days a week and even check on the status of a filed claim or change account information via the HealthAxis.com site. Another plus for Provident American and HealthAxis.com is lack of competition. Garner said the only companies he views as competitors are those such as InsWeb, which refer consumers to insurance providers and possi-bly provide quotes. HealthAxis.com, however, is still the sole vehi-cle available to consumers who want to purchase health insurance online. Other sites refer the consumer to health-care providers whose products can be purchased only through a broker, rather than directly online. Garner said Provident American's focus on the Internet does not necessarily indicate a trend among life and health insurers. “One of the things that holds back a lot of the insur-ers is the presence of a large sales force” he said. “It creates a bit of a conflict in house by trying to grow the Internet. An attractive aspect of Provident's [HealthAxis.com] operation is that a large insurance carrier could sell their insurance through Provident without really causing any disruptions in their own sales force.” In a Jan. 5 news release, Provident American also announced that it was evaluating the possibility of separating the rest of its risk-assuming businesses from its Internet operations. By doing that, Provident can “continue to focus on its Internet business, which I think is going to be their major growth engine going forward,” said Garner. “It [would be] a simpler, more streamlined management structure. Additionally, in order to recognize the full value of the company, Provident is trying to achieve an example of 1+1=3. Many times when you have a couple different companies under one corporate structure, you tend not to get the full value for each individual business,” said Garner. He said he expects future acquisitions by Provident American to be “Internet-related [businesses] or businesses that it could leverage through its existing Internet structure.” Gitlitz said Provident American will not acquire insurance entities going for-ward, but rather will divest some of its other insurance operations. “What you might see is Provident becoming a publicly traded com-pany separate from HealthAxis — so there will be two companies. But there definitely are no acquisitions on the table in the insur-ance arena. We are evaluating all options for maximum sharehold-er value and there is a distinct possibility we may sell off other operations in the future.”