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America Online and Provident American Insurance Company Announce Exclusive Agreement for Provident to Offer Health Insurance to AOL Users Business Wire - March 26, 1998 09:02 %AMERICA-ONLINE AOL %VIRGINIA %PENNSYLVANIA %COMPUTERS %ELECTRONICS %COMED %ENTERTAINMENT %INTERACTIVE %MULTIMEDIA %INTERNET %INSURANCE %MEDICINE V%BW P%BW -------------------------------------------------------------------------------- DULLES, Va. and NORRISTOWN, Pa.--(BUSINESS WIRE)--March 26, 1998-- Provident American to Offer Individual and Small Group Health Insurance on AOL and AOL.COM Insurance Offerings to Include Health, Vision, Dental, Prescription, Critical Care and Long-Term Care Insurance Products AOL Interactive Services, the Internet online services division of America Online, Inc. (NYSE: AOL), and Provident American Corporation, (NASDAQ: PAMC), an insurance company specializing in the marketing of managed-care health insurance to individuals and small groups, today announced a new alliance that will allow Provident American to be the exclusive direct marketer of medical insurance and certain other health care-related insurance products and services on the AOL service and AOL.COM, the most visited consumer site in cyberspace from home. To ensure the best quality of service and technological support for the interactive site, Provident is partnered with HealthPlan Services (NYSE: HPS), the nation's largest third party administrator. Through prominent placement of Provident banners in various areas of AOL.COM and the AOL service, including permanent placement in the AOL Insurance Center, Provident's newly formed subsidiary, Insurion, Inc., will offer insurance products including: health insurance for individuals and small groups, dental insurance, vision care insurance, prescription coverage, critical care and long-term care insurance. With the assistance of HealthPlan Services, Insurion will develop the content of a highly interactive, user-friendly one-stop health care insurance Website. In addition to transacting product sales, Insurion, in conjunction with the proprietary electronic transaction processing system developed by HealthPlan Services, will provide product and health information, price quotes for their products, applications processing, customer service and claims processing. During the initial term of the agreement, which will run for one year from the launch of Provident's Website, Provident American will make guaranteed payments to AOL totaling $8 million, and will make additional guaranteed payments to AOL of $32.5 million if Provident renews the agreement for an additional two years. AOL may also receive certain administrative fees under the agreement. In addition, AOL received warrants to purchase up to 300,000 shares of Provident American common stock and may receive warrants to purchase up to 450,000 additional shares of Provident American common stock, based on certain criteria under the agreement. The exercise price of the 450,000 warrants will be at a premium over market based upon a recent measurement period. AOL users clicking on Provident banners within the AOL service and on AOL.COM will be automatically linked to Provident's Insurion-managed Website. Provident's Website and links to it from the AOL service and AOL.COM are expected to launch in the fall of 1998. Provident's managed-care health insurance products will offer AOL members and AOL.COM users not only competitive pricing, but also a variety of choices and high quality service. Provident's price advantage is derived from the company's ability to age-rate its policyholders as opposed to the more expensive community rating standard. To help it offer the widest range of choice, Provident American is partnered with First Health Group. The First Health network includes 231,000 physicians and 2,600 hospitals, giving more than 80% of the entire U.S. population access to First Health hospitals. Barry Schuler, president of AOL Interactive Services said, "Provident American is a sophisticated marketer that recognizes the unparalleled value of AOL's brand and audience. This agreement will deliver real value and convenience to our users - offering AOL users easy access to Provident American's low cost, high quality health care insurance products coupled with important medical and health care related information." Alvin H. Clemens, chairman and chief executive officer of Provident American, commented, "Provident's mission is to leverage cost-efficient electronic distribution channels to be the lowest cost provider of health care insurance to the individual and small group market. This new relationship with AOL is a significant step in the company's strategy of expanding our reach to include the growing number of sophisticated consumers purchasing products and services online. By offering our product online, we and our health care partners can deliver a compelling value to the AOL consumer." James K. Murray, Jr., chairman and chief executive officer of HealthPlan Services Corporation, stated, "We are delighted to extend our partnership with Provident into the world of electronic commerce. HPS's investment in technology permits us to launch with Provident the first 'paper-less' insurance product, in which enrollment, billing, and claims processing will be handled electronically." America Online Inc., (NYSE: AOL) based in Dulles, Va., is the world's leader in branded interactive services and content. America Online operates two worldwide Internet online services: AOL, with more than 11 million members; and CompuServe, with more than 2 million members. America Online also operates AOL Studios, the world's leading creator of original interactive content. Other branded Internet services operated by America Online include AOL.COM, the world's most accessed Web site from home; AOL instant messenger, allowing instant communication with all AOL members and Internet users using the AOL Instant Messenger product; and AOL NetFind, AOL's comprehensive guide to the Internet. The Provident American is an insurance holding company specializing in the marketing of managed-care health insurance through the underwriting of unique, affordable health care and life policies to individuals and small businesses, a $300 billion annual premium market. CONTACT: America Online Inc. Tom Ziemba, 703/265-3284 or Provident American Corporation John Gillin, 610/279-2500 | ||||||||||||||
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