Qual-Med To Buy Insurance Company -- Purchase Of Gna Life Will Supplement Business

DOWNTOWN

The life-insurance subsidiary of Great Northern Insured Annuity Corp. is being sold to Qual-Med Inc. for between $4 million and $5.3 million.

The Great Northern subsidiary, GNA Life Insurance Co., has transferred all its insurance business to Great Northern and is only a shell company.

But GNA has licenses to sell life and health insurance in 34 states, and Qual-Med is willing to pay for those licenses.

Qual-Med President Malik Hasan said it would cost more in legal fees to earn the licenses it can buy outright through purchase of GNA Life.

"We've been handicapped in the past, because we only have an HMO (health maintenance organization), and some of our clients want us to offer life insurance and (regular) health insurance," said Hasan.

"This will allow us to supplement our existing business."

Hasan said the purchase of GNA didn't mean Qual-Med, one of the largest HMOs in Washington, was entering the life-insurance business.

He said the company may expand its offerings to Nevada, Arizona, Utah and Florida, if clients have operations in those states that they want to include in a health plan.

Qual-Med is spending about $1 million for GNA and will also pay between $3 million and $4.3 million for GNA's invested assets.

Qual-Med, which operates in six states, is a health-maintenance organization, offering health services for fixed fees to predesignated doctors and hospitals.

About one-third of the company's 235,000 customers are in Washington.

Qual-Med also offers its HMO in Oregon, California, Idaho, New Mexico and its home state of Colorado.

"This is Qual-Med's first acquisition, since the company went public in June," said Hasan.

"(We) plan to reactivate GNA Life under a new name. . . ."

Great Northern said none of its operating units will be affected by the sale.

GNA Life's insurance business was assumed by Great Northern in 1990.

The two sides said the final sale is subject to negotiation of a definitive agreement, which is expected to be reached early next year.