UICI's Insurance Subs' Ratings Unaffected by Market Conduct Review

NEW YORK--(BUSINESS WIRE)--April 15, 2005--Fitch Ratings has not taken action on the 'A' insurer financial strength ratings on The MEGA Life and Health Insurance Company (MEGA) and Mid-West National Life Insurance Company of Tennessee (Mid-West) following UICI's announcement that it has received notice of a multistate market conduct review. MEGA and Mid-West are the principal insurance subsidiaries of UICI (NYSE:UCI), a Dallas-based provider of insurance products (primarily health) and selected financial services to niche consumer and institutional markets.





The NAIC's Market Analysis Working Group has designated the departments of insurance in Washington State and Alaska as the lead states on the review, which will likely target a broad range of topics, including agent issues, claims practices, and product design. Because the timeframe for such a review cannot be determined (often greater than 12-15 months) and details of specific issues have not been identified as of yet, Fitch will monitor closely the impact the ongoing review may have on the company's earnings, new sales, and renewals during the review. Fitch's main concern is the potential negative impact on UICI's revenue and earnings prospects due to increased regulatory scrutiny. Fitch believes that the review is primarily focused on the company's self-employed division, which accounts for approximately 75% of total premium. The majority of this business is sold through an association type arrangement and any potential change to this business model could have a material adverse effect on future sales and revenue. On a positive note, the market conduct review is not being driven by any particular claims of wrongdoing, unlike the recent probes initiated by New York Attorney General Eliot Spitzer.



The insurer financial strength ratings for MEGA and Mid-West are based on the companies' strong earnings, particularly in the self-employed division, solid capital position, conservative reserving methods, and well established niches in the self-employed health market.



The Mega Life and Health Insurance Company



-- Insurer financial strength 'A'/Stable Outlook.



Mid-West National Life Insurance Company of Tennessee



-- Insurer financial strength 'A'/Stable Outlook.