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Allstate Life to buy Provident National Assurance
Allstate Life Insurance Co. plans to buy Provident National Assurance Co., a subsidiary of UNUMProvident Corp.
"This is the latest in a series
of actions we have taken to become a
leader in this market segment."
Provident National, based in Chatanooga, Tenn., is described as an "inactive" subsidiary of UNUMProvident, meaning it is licensed to do business in 50 states, but it is not currently selling products. UNUMProvident Corp. was formed by the June 1999 merger between Unum Corp. and Provident Cos. Inc.
Financial terms of the transaction were not disclosed.
Tom Wilson, president of Allstate Life, says the Provident National acquisition is part of Allstate's strategy to become a "premier provider" of variable life and annuity products. "This is the latest in a series of actions we have taken to become a leader in this market segment," says Wilson, pointing to Allstate's alliance with Putnam Investments and its marketing agreements with Morgan Stanley Dean Witter, AIM Funds, and Scudder Investments.
Justin Schmitt, a spokesperson for Allstate Life, would not say whether the products would be sold under the Allstate or Provident National name, or how the new products would be sold. "We have a number of things we are looking at, but we have nothing specific at this time," Schmitt says.
The sale needs approval from the Tennessee and New York departments of insurance (DOI). Even though neither Provident National nor Allstate Life is domiciled in New York, the New York DOI has the right to review and rule on transactions of companies doing business in its state. Allstate Life expects the transaction to be completed by the fourth quarter of this year.
In an analysis, A.M Best, an insurance ratings company based in Oldwick, N.J., says that UnumProvident has encountered "numerous difficulties" since its 1999 merger, "most notably the disruption to its sales efforts due to the loss of a large number of group sales representatives."
Carl Austin, an analyst with A.M. Best, says the sale of Provident National is simply a consolidation move. He speculates that other small companies within UnumProvident could also be sold off in the near future. "They had nine or 10 operating companies when they started," he says. "Now they're starting to consolidate within the group and get a little money for them also."