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SUPPLEMENT DATED JANUARY 5, 1998
TO PROSPECTUS DATED MAY 1, 1997
On January 5, 1998, the Board of Directors of Provident Mutual Life
Insurance Company ("Provident Mutual Life") approved and adopted a Plan of
Conversion ("Plan") under which Provident Mutual Life would convert from a
mutual life insurance company to a stock life insurance company ("Provfirst
America Life Insurance Company") that is ultimately controlled by a mutual
holding company. As a mutual life insurer, Provident Mutual Life is restricted
in its ability to raise capital which is necessary to compete in the financial
services industry. This transaction is intended to result in a corporate
structure that provides, among other things, better access to external sources
of capital. Under the Plan, upon the conversion, Provfirst America Life
Insurance Company would be a wholly owned subsidiary of a newly-formed stock
holding company called Provfirst America Corporation. With the exception of a 1%
ownership interest held by an Employee Stock Ownership Plan for the employees of
Provfirst America Life Insurance Company, all of Provfirst America Corporation's
remaining initially issued voting stock would be owned by a newly-created mutual
holding company called Provident Mutual Holding Company. It is anticipated that
Provfirst America Corporation could, subsequent to the conversion, offer
additional shares of its stock publicly or privately; however Provident Mutual
Holding Company must always hold at least 51% of the voting authority of
Provfirst America Corporation. Provfirst America Corporation would always own
100% of the voting stock of Provfirst America Life Insurance Company. Except as
described herein, no plans have been formulated to issue any shares of capital
stock or debt securities of Provfirst America Corporation to the public at this
time.
Since Provident Mutual Life currently is a mutual life insurance
company, owners ("Policyholders") of Provident Mutual Life's annuity contracts
and life insurance policies ("policies") have certain membership interests in
Provident Mutual Life consisting principally of the right to vote on the
election of the Board of Directors, and on other matters, and certain rights
upon liquidation or dissolution of Provident Mutual Life. Under the Plan,
Policyholders will become policyholders of, and their contractual rights will be
serviced by, Provfirst America Life Insurance Company. However, they would no
longer have a membership interest in the insurance company; rather,
Policyholders would have membership interests in Provident Mutual Holding
Company. These interests in the mutual holding company would be substantially
the same as the membership interests that Policyholders have in Provident Mutual
Life prior to the conversion, consisting principally of the right to vote on the
election of the Board of Directors, and on other matters, and certain rights
upon liquidation or dissolution of Provident Mutual Holding Company. After the
conversion, persons who acquire policies that confer membership rights from
Provfirst America Life Insurance Company would automatically be members in
Provident Mutual Holding Company. THE CONVERSION WILL NOT, IN ANY WAY, INCREASE
PREMIUM PAYMENTS OR REDUCE POLICY BENEFITS, VALUES, GUARANTEES OR OTHER POLICY
OBLIGATIONS TO POLICYHOLDERS.
Providentmutual Life and Annuity Company of America ("PLACA") is
currently a wholly-owned subsidiary of Provident Mutual Life. Under the Plan,
PLACA will become wholly-owned by Provfirst America Life Insurance Company, and
its name will be changed to Provfirst America Life and Annuity Company. There
are no other changes to PLACA provided for under the Plan. THE CURRENT AND
FUTURE RIGHTS AND INTERESTS OF PLACA ANNUITY CONTRACT HOLDERS AND LIFE INSURANCE
POLICYHOLDERS WILL NOT CHANGE.
The Plan is subject to approval by the Insurance Commissioner of
Pennsylvania and by Provident Mutual Life's policyholders, among other approvals
and conditions. If the necessary approvals are obtained and conditions met, the
conversion is expected to occur in 1998.
