Filed by CII Financial, Inc. Pursuant to Rule 425 under the Securities Act of 1933 For: CII Financial, Inc. Commission File No.: 333-52726 CII FINANCIAL, INC. California Indemnity Insurance Company Commercial Casualty Insurance Company subsidiaries of Sierra Health Services, Inc. P.O.Box 15645, Las Vegas, Nevada 89114-5645 PRESS RELEASE FOR IMMEDIATE RELEASE CONTACTS: John F. Okita Andrew C. Karp Chief Financial Officer Managing Director (702) 242-7531 Banc of America Securities LLC High Yield Special Products (704) 388-4813 or (888) 292-0070 CII FINANCIAL ANNOUNCES EXTENSION OF EXCHANGE OFFER FOR CONVERTIBLE SUBORDINATED DEBENTURES Las Vegas, January 19, 2001 - CII Financial, Inc. today announced the extension of its pending exchange offer for all $47 million of its outstanding 7 1/2% convertible subordinated debentures due September 15, 2001 (CUSIP No. 12551LAB7). Under the offer, holders can choose to exchange their old 7 1/2% junior subordinated debentures for either new debentures or cash. The Company said the registration statement filed in connection with the exchange offer is being reviewed by the Securities and Exchange Commission and that, consequently, the expiration date for the exchange offer has been extended from 5:00 p.m., New York City time, on January 25, 2001, to 5:00 p.m., New York City time, on February 12, 2001. The Company said all other terms of the offer remain unchanged. The Company said that as of 5:00 p.m., New York City time, on January 18, 2001, it had received tenders from holders of $1,494,000 in aggregate principal amount of junior subordinated debentures. The complete terms of the offer are contained in the Preliminary Prospectus and Exchange Offer dated December 26, 2000. Banc of America Securities LLC is the exclusive dealer manager for the offer. D.F. King & Co., Inc. is the information agent and Wells Fargo Corporate Trust is the depositary. Copies of the Preliminary Prospectus and Exchange Offer may be obtained by calling D.F. King at (800) 735-3591. Additional information concerning the terms and conditions of the offer may be obtained by contacting Banc of America Securities LLC at (888) 292-0070. ---more--- CII Announces Extension of Exchange Offer p. 2/2/2/2/2 CII Financial is a holding company primarily engaged in writing workers' compensation insurance in nine western and mid-western states through its wholly owned subsidiaries, California Indemnity Insurance Company, Commercial Casualty Insurance Company, Sierra Insurance Company of Texas and CII Insurance Company. CII Financial is a wholly owned subsidiary of Sierra Health Services, Inc. (NYSE:SIE), a diversified health care services company based in Las Vegas. Statements in this news release that are not historical facts are forward-looking and based on management's projections, assumptions and estimates; actual results may vary materially. Forward-looking statements are subject to certain risks and uncertainties, some of which may be found in the Preliminary Prospectus and Exchange Offer and other documents filed with the Securities and Exchange Commission and which are incorporated herein by reference. Additional Information and Where to Find It: CII Financial, Inc. has filed a Registration Statement with the Securities and Exchange Commission on Form S-4 registering the new debentures to be issued in the exchange offer. The Registration Statement and the preliminary prospectus contained therein have important information about CII Financial, the exchange offer and related matters. Security holders are urged to read the Registration Statement and the preliminary prospectus contained therein and any other relevant documents filed by CII Financial with the SEC. The Registration Statement has not yet become effective. The new debentures may not be sold and, although you may tender your old debentures, tenders may not be accepted prior to the time the Registration Statement becomes effective. This shall not constitute an offer to sell or an offer to buy nor shall there be any sale of the new debentures in any State in which such offer, solicitation or sale would be unlawful. Security holders are able to obtain copies of the Registration Statement on Form S-4 and the preliminary prospectus and any other relevant documents for free through the Web site maintained by the SEC at http://www.sec.gov. In addition, these documents are available free of charge by contacting the Information Agent for the offer, D.F. King & Co., at (800) 735-3591. If you have any questions about the offer, please call the Dealer Manager for the offer, Banc of America Securities LLC, at (888) 292-0070. # # #