Riding the wave of recent bank financed insurance acquistions, Chase Manhattan Corp. is leading a $750 million loan for Provident Cos.' $1.2 billion acquisition of Paul Revere Corp.

This latest deal follows several other bank-financed insurance acquisitions announced in the first quarter. Travelers Group will use $2.5 billion in bank loans for its $4.0 billion acquisition of Aetna Life & Casualty's property-casualty insurance business, while Wellpoint Health Networks will use $1.0 billion in bank loans for its $380 million acquisition of the life and health operations of Massachusetts Mutual Life Insurance Co.

"The sun, the moon, and the stars are all lined up for the insurance industry," said David W. Nelson, the head of Chase Manhattan's global insurance group. "It's just the right time."

Many American and foreign banks have kicked their insurance lending groups into a higher gear this year, anticipating a flurry of mergers involving different lines of business, and various investment ratings.

Indeed, George Shell Jr., the treasurer at Chattanooga, Tenn.-based Provident, said six banks that the company doesn't have relationships with have already called to help finance the transaction. "It's an aggressive time in the bank market," he said.

Insurance companies have also looked to the hungry bank market for a host of services, including refinancings and new credits.

"We think there are a lot of opportunities out there on the credit side and we've been proactive in approaching our clients about new opportunities or taking advantage of the market," said Jerry Fall, a vice president in the insurance group at J.P. Morgan & Co. "We are making an effort to cover the market as closely as we can."

Theresa A. Radzinski, a senior vice president in charge of insurance in the Atlanta office of NationsBank Corp., said this is probably the most active time she's ever seen for insurance deals.

Bankers and insurance industry experts cited the willing bank market as one of a host of factors driving the current consolidation.

"As little as two years ago, you probably couldn't loan over $300 for a low investment grade credit" to an insurance company, Ms. Radzinski said. - "Today, that number is well in excess of $1 billion,"

Insurance experts said, however,that the primary factor driving the deals remained the strategic importance of the combinations.

"The fact that you have a lot of investment funds and bank debt available is clearly something that's fueling the fire," Mr. Nelson said. The Provident deal for Paul Revere, he said, is a good example of one that has "great economics."

In general, the insurance market is saturated, and as a result, returns have been pushed down, Mr. Nelson said.

Bankers said the insurance industry consolidation will probably continue beyond 1997.

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