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Providian may sell unit
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December 17, 1996: 8:10 a.m. ET
Sale of insurance operations could fetch more than $3 billion
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NEW YORK (CNNfn) - Financial-services company Providian Corp. is reportedly looking to shed its large but underperforming insurance operations, a transaction would be one of the largest to date in the insurance industry.
Some analysts believe the operations, which have provided only lackluster earnings for Providian over the past three years, could command more than $3 billion, according to Tuesday's The Wall Street Journal.
Such a sale would greatly slim down Providian, which has a current market capitalization of more than $5 billion.
Goldman, Sachs & Co. is working on the sale for Providian and has sounded out potential acquirers in recent weeks, according to the Journal. Some serious discussions already have taken place, although no deal has been struck.
Providian is apparently seeking a single buyer for its three insurance units, whose book value is $2.4 billion, the paper said.
Some companies that have already examined the units and passed include SunAmerica Inc. Analysts said other potential bidders include American General Corp. and Conseco Inc., the paper said.
Interested companies looking to expand their U.S. presence include International Nederlanden Group of the Netherlands.
If Providian is successful in finding a buyer, it would be left with a fast-growing consumer-lending and banking business that includes a highly profitable and innovative credit-card operation.
The possible sale comes at a time when the life-insurance industry is undergoing increasing consolidation amid rising costs and growing competition from banks, securities brokerage firms and mutual-fund companies.
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