SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 21, 2001
AMERICAN MEDICAL SECURITY GROUP, INC.
(Exact name of Registrant as specified in its charter)
WISCONSIN 1-13154 39-1431799
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
3100 AMS BOULEVARD, GREEN BAY, WISCONSIN 54313
(Address of principal executive offices) (Zip Code)
(920) 661-1111
(Registrant's telephone number, including area code)
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ITEM 9. REGULATION FD DISCLOSURE
American Medical Security Group, Inc. (the "Company") has developed an
investor financial presentation that will be available on its website -
AMSchoices.com. The presentation describes the Company's current businesses,
strategies and financial highlights. It also includes projected changes in the
mix of revenue contributions from the Company's major businesses anticipated by
2003. The content of the presentation will form the base of future presentations
the Company expects to make at financial forums, including health care
conferences sponsored by various financial institutions. The presentation is
prepared in summary fashion and contains information that should be read in
conjunction with the Company's reports filed with the Securities and Exchange
Commission from time to time.
Following is the content of the presentation.
AMERICAN
MEDICAL SECURITY
RX for Good Health
FEBRUARY 2001
AMERICAN CAUTIONARY STATEMENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
This presentation is a summary of previously disclosed historical financial data
as of December 31, 2000, unless otherwise indicated, and expectations of the
Company held as of February 21, 2001. The Company undertakes no obligation to
update this information as a result of new information or future events. This
presentation contains certain "forward-looking" statements (within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act of
1995) with respect to strategic business plans, earnings and changes in business
mix. Such statements are subject to inherent risks and uncertainties that may
cause actual results to differ materially from those contemplated. See the last
page of this presentation for risk factors that may affect actual results.
Information in this presentation related to the Company's major business
products is provided in addition to previously disclosed information. In this
presentation, historical and forward looking data reflecting the Company's
health and life insurance segment businesses have been allocated to major
business products based on the underlying customer base.
2
AMERICAN FINANCIAL HIGHLIGHTS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Investment Considerations
- Growing MedOne business
- Leader in small group market
- Profitable dental business
- Strong systems and back office
- High book value
- Book value of $15.77 per share on 12/31/2000
- Tangible book value of $8.24 per share on 12/31/2000
- Effective action plans in place
- Low debt to equity ratio - 18.3%
3
AMERICAN AMS OVERVIEW
MEDICAL SECURITY
- -----------------
Rx for Good Health
[Map of the United States] - Specializes in providing
Current markets served: healthcare benefit plans
for small-employer groups,
Alabama Arizona Arkansas individuals & families
Colorado Delaware Georgia
Illinois Indiana Iowa - PPO model
Kansas Louisiana Michigan
Mississippi Missouri Nebraska - 2000 Revenues:
Nevada New Mexico North Carolina $989.9 million
North Dakota Ohio Oklahoma
Pennsylvania South Carolina South Dakota - 516,856 medical members
Tennessee Texas Utah at 12/31/2000
Virginia West Virginia Wisconsin
Washington DC
4
AMERICAN AMS OVERVIEW
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Preferred Provider Organization (PPO) Model
- Open access to health care providers
- PPOs have gained market share over HMOs
- Less litigation risk
- Less potential impact from legislation
5
AMERICAN AMS OVERVIEW
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Only public company exclusively focused on small-group and individual market
- --Average group size is 6 employees
- --Dedicated to Independent Agent
- --24-hour, world-class customer service
- --Efficient back office, low-cost G & A
6
AMERICAN AMS OVERVIEW
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Ongoing Action Plans
- Maintain prices in line with claim costs
- Rapidly expand MedOne product sales
- Individuals & Families
- Focus small group sales in core markets
- Continue efforts to reduce drug claim costs
7
AMERICAN AMS OVERVIEW
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Ongoing Action Plans (continued)
- Enhance claims cost management programs
- Introduce Affordable Series products
- Greater member participation in medical care costs
- Strengthen Specialty Business
- Dental
- Leverage Internet in all businesses
8
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
BUSINESSES
9
AMERICAN BUSINESSES
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Health Business
- MedOne Component
- MedOne Medical, and Life and STD associated with MedOne
members
- Small Group Component
- Small Group Medical, and Dental, Life and STD associated
with group members
-- Specialty Business
- Self-Funded and Network Revenue and Dental, Life and STD not
associated with group or MedOne members
-- Corporate
- Revenue and Expenses not associated with the other segments
10
AMERICAN BUSINESSES
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contributions in 2000 (% of all AMS revenues)
[Pie Chart] 63% Small Group
25% MedOne
9% Specialty
3% Corporate
11
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
HEALTH BUSINESS
MedOne and Small Group
12
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
MedOne
MedOne Medical, and Life and STD
associated with MedOne members
13
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Product for individuals and their families
- No employer coverage
- Self-employed
- -- Sold through Independent Agents
- -- Higher profit potential than small group
- Plan features higher deductibles, copays, etc.
- More flexibility in underwriting and pricing
- Better risk selection
14
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- 2000 Revenues
- Up 24% from 1999
- -- 2000 Membership
- 34% of total membership vs. 23% in 1999
15
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Significantly increase revenues & profitability by:
- Expanding number of local agents
- Creating additional regional/national distribution relationships
- Developing e-business efficiencies
- Increasing number of e-agency relationships
16
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contribution Growth (% of all AMS revenues)
MedOne
[Pie Chart] [Pie Chart]
25% MedOne 50% MedOne
2000 2003 (projected)
17
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
SMALL GROUP
Small Group Medical, and Dental, Life and STD
associated with group members
18
AMERICAN SMALL GROUP COMPONENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Small-employer groups, ranging in size from 2 to 50 employees
- --Average group size is 6 employees
- -- Distribution through 17,500 Independent Agents
19
AMERICAN SMALL GROUP COMPONENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Increase Small Group profitability by:
- Focusing on core markets
- Enhancing underwriting
- Developing new products
-Higher deductibles, copays, etc.
- Strengthening claims cost management
- Providing agents with power of Internet
-eAMS.com secured agent site
20
AMERICAN SMALL GROUP COMPONENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contribution Change (% of all AMS revenues)
Small Group
[Pie Chart] [Pie Chart]
63% Small Group 41% Small Group
2000 2003 (projected)
21
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
SPECIALTY BUSINESS
Self-Funded and Network Revenue, and Dental, Life and STD
not associated with group or MedOne members
22
AMERICAN SPECIALTY BUSINESS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Consists of:
- Stand-Alone Dental Business
- Owned Provider Networks leased to third parties
- Self-Funded Business
23
AMERICAN SPECIALTY BUSINESS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Increase Profitability by:
- Expanding stand-alone dental
- Increase sales & marketing activity
- Grow non-AMS provider network members
- -- Selectively develop self-funded business
24
AMERICAN SPECIALTY BUSINESS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contribution Change (% of all AMS revenues)
Specialty
[Pie Chart] [Pie Chart]
9% Specialty 8% Specialty
2000 2003 (projected)
25
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
TOTAL REVENUE CONTRIBUTION CHANGES
26
AMERICAN BUSINESSES
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contribution Changes (% of all AMS revenues)
[Pie Chart] [Pie Chart]
63% Small Group 41% Small Group
25% MedOne 50% MedOne
9% Specialty 8% Specialty
3% Corporate 1% Corporate
2000 2003 (projected)
27
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
FINANCIAL HIGHLIGHTS
28
AMERICAN CONDENSED CONSOLIDATED STATEMENTS OF INCOME
MEDICAL SECURITY (IN MILLIONS)
- -----------------
Rx for Good Health
Three months ended Twelve months ended
December 31, December 31,
------------------ ---------------------
2000 1999 2000 1999*
------------------ ---------------------
REVENUES:
Insurance premiums $ 230.7 $ 262.9 $ 951.1 $ 1,056.1
Investment and other income 9.4 9.9 38.8 41.3
------------------ ---------------------
Total revenues 240.1 272.8 989.9 1,097.4
EXPENSES:
Medical and other benefits 174.4 205.8 724.6 841.3
SG&A and other expenses 64.9 66.0 259.2 274.0
------------------ ---------------------
Total expenses 239.3 271.8 983.8 1,115.3
------------------ ---------------------
Pre-tax income (loss) 0.8 1.0 6.1 (17.9)
After-tax income (loss) $ 0.1 $ 0.5 $ 2.7 $ (12.2)
================== =====================
EPS $ 0.01 $ 0.03 $ 0.18 $ (0.74)
* EXCLUDES NONRECURRING CHARGE
29
AMERICAN CONDENSED CONSOLIDATED BALANCE SHEETS
MEDICAL SECURITY (IN MILLIONS)
Rx for Good Health
December 31,
2000 1999
-------------------
ASSETS:
Cash and invested assets $ 285.0 $ 293.5
Goodwill and intangibles 107.5 111.4
Other assets 79.4 98.2
--------------------
Total assets $ 471.9 $ 503.1
====================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Medical and other benefits payable $ 145.3 $ 169.1
Notes payable 41.2 42.5
Other liabilities 64.2 71.2
--------------------
Total liabilities 250.7 282.8
Shareholders' equity 221.2 220.3
--------------------
Total liabilities and shareholders' equity $ 471.9 $ 503.1
====================
30
AMERICAN OTHER FINANCIAL DATA
MEDICAL SECURITY
- -----------------
Rx for Good Health
AS OF
-------------------------------
12/31/98 12/31/99 12/31/00
-------------------------------
Book Value per Share $15.93 $14.86 $15.77
Tangible Book Value $8.95 $7.69 $8.24
per Share
Debt to Equity Ratio 20.8% 18.4% 18.3%
Risk-Based Capital 447% 339% 389%
31
AMERICAN FINANCIAL HIGHLIGHTS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Projected Earnings per Share
- 1Q 2001 $0.05
- Full year 2001 $0.35 - $0.45
32
AMERICAN FINANCIAL HIGHLIGHTS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Investment Considerations
- Growing MedOne business
- Leader in small group market
- Profitable dental business
- Strong systems and back office
- High book value
- Book value of $15.77 per share on 12/31/2000
- Tangible book value of $8.24 per share on 12/31/2000
- Effective action plans in place
- Low debt to equity ratio - 18.3%
33
AMERICAN CAUTIONARY FACTORS
MEDICAL SECURITY
- -----------------
Rx for Good Health
Risks and uncertainties that may affect future results
- - Inability to successfully implement the Company's business plan, attain new
business sales goals (particularly for MedOne and dental products) and
maintain acceptable profit margins
- - Rising medical costs and increased utilization of medical services and
prescription drugs
- - Competitive practice and demand for the Company's products
- - Changes in the Company's relationship with key sales agents and the ability of
the Company to expand its distribution network for MedOne products
- - Developments in health care reform and changes in insurance and health care
regulations and other regulatory issues
- - General economic conditions affecting consumer spending and the Company's
investment performance
- - Outcome of commercial and other litigation
- - Other factors referred to in the Company's reports filed with the Securities
and Exchange Commission from time to time
34
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: FEBRUARY 21, 2000 AMERICAN MEDICAL SECURITY GROUP, INC.
/S/ GARY D. GUENGERICH
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Gary D. Guengerich
Executive Vice President & Chief Financial Officer