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): MAY 18, 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 -
www.AMSchoices.com, and presented to a number of financial analysts. The
presentation is an update to a presentation previously furnished pursuant to a
Form 8-K dated February 21, 2001. The presentation (i)describes the Company's
current businesses, strategies and financial highlights; (ii) describes
projected changes in the mix of revenue contributions from the Company's major
businesses anticipated by 2003; and (iii) provides new forward looking revenue
projections through 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
MAY 2001
AMERICAN CAUTIONARY STATEMENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
This presentation is a summary of previously disclosed historical financial data
as of March 31, 2001, unless otherwise indicated, and expectations of the
Company held as of May 18, 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 $15.54 per share on 3/31/2001
- Tangible book value of $7.97 per share on 3/31/2001
- Effective action plans in place
- Low debt to total capital ratio - 15.8%
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 Florida
Georgia Illinois Indiana - PPO model
Iowa Kansas Louisiana
Maryland Michigan Mississippi - 2000 Revenues:
Missouri Nebraska Nevada $989.9 million
New Mexico North Carolina North Dakota
Ohio Oklahoma Pennsylvania - 1Q 2001 Revenues:
South Carolina South Dakota Tennessee $232.3 million
Texas Utah Virginia
West Virginia Wisconsin Washington DC - 652,683 medical members
at 3/31/2001
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
- -- 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
- Ensure premium yields exceed claim cost trends
- 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
- Promote 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
MedOne
MedOne Medical, and Life and STD
associated with MedOne members
12
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
13
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Revenues
- Up 24% in 2000 from 1999
- Up 31% in 1Q 2001 over 1Q 2000
- -- Membership
- 34% of total 2000 membership vs. 23% in 1999
- 38% of total 1Q 2001 membership
14
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
15
AMERICAN MedOne Component
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Revenue Contribution Growth (% of all AMS revenues)
MedOne
[Pie Chart] [Pie Chart]
2000 (actual) 2003 (projected)
25% MedOne 50% MedOne
16
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
SMALL GROUP
Small Group Medical, and Dental, Life and STD
associated with group members
17
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
18
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
-e AMS.com secured agent site
19
AMERICAN SMALL GROUP COMPONENT
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Revenue Contribution Change (% of all AMS revenues)
Small Group
[Pie Chart] [Pie Chart]
2000 (actual) 2003 (projected)
63% Small Group 41% Small Group
20
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
21
AMERICAN SPECIALTY BUSINESS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- --Consists of:
- Dental Business
- 171,000 stand-alone dental members
- 126,000 additional members bundles to group plans
- Owned Provider Networks leased to third parties
- 96,000 non-AMS members
- Self-Funded Business
22
AMERICAN SPECIALTY BUSINESS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Increase Profitability by:
- Expanding dental business
- Increase sales & marketing activity
- Grow non-AMS provider network members
- -- Selectively develop self-funded business
23
AMERICAN BUSINESSES
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Revenue Contribution Changes (% of all AMS revenues)
[Pie Chart] [Pie Chart]
2000 (actual) 2003 (projected)
63% Small Group 41% Small Group
25% MedOne 50% MedOne
9% Specialty 8% Specialty
3% Corporate 1% Corporate
24
AMERICAN
MEDICAL SECURITY
- -----------------
Rx for Good Health
FINANCIAL HIGHLIGHTS
25
AMERICAN REVENUE CHANGES
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Near-term revenue reductions
- Disciplined pricing
- Changing small group market focus
- -- Significant MedOne revenue growth
26
AMERICAN REVENUE CHANGES
MEDICAL SECURITY
- -----------------
Rx for Good Health
[line graph]
1998 1999 2000 2001* 2002* 2003*
Revenues:
Small Group 633,948 750,057 620,409 518,042 503,536 512,096
MedOne 187,369 206,223 252,767 319,497 446,657 617,281
Other 139,552 141,100 116,689 85,066 95,700 117,710
====================================================================================
Total Health 960,869 1,097,380 989,865 922,605 1,045,893 1,247,087
27
AMERICAN CONDENSED CONSOLIDATED STATEMENTS OF INCOME
MEDICAL SECURITY (IN MILLIONS)
- -----------------
Rx for Good Health
2000 2001
Qtr1 Qtr2 Qtr3* Qtr4 Qtr1*
REVENUES:
Insurance premiums $ 247.9 $ 240.5 $ 232.0 $ 230.7 $ 222.5
Investment and other income 9.8 9.8 9.7 9.4 9.8
----------------------------------------------------------------------------
Total revenues 257.7 250.3 241.7 240.1 232.3
EXPENSES:
Medical and other benefits 188.1 182.0 180.1 174.4 166.6
SG&A and other expenses 66.8 64.5 61.7 64.9 64.2
----------------------------------------------------------------------------
Total expenses 254.9 246.5 241.8 239.3 230.8
----------------------------------------------------------------------------
Pre-tax income (loss) 2.8 3.8 (0.1) 0.8 1.5
After-tax income (loss) $ 1.7 $ 2.3 $ (0.6) $ 0.1 $ 0.7
============================================================================
EPS $ 0.11 $ 0.15 $ (0.04) $ 0.01 $ 0.05
============================================================================
* EXCLUDES NONRECURRING CHARGE
28
AMERICAN CONDENSED CONSOLIDATED BALANCE SHEETS
MEDICAL SECURITY (IN MILLIONS)
Rx for Good Health
March 31,
2001 2000
-------------------
ASSETS:
Cash and invested assets $ 278.4 $ 284.6
Goodwill and intangibles 106.7 110.4
Other assets 79.4 88.8
--------------------
Total assets $ 464.5 $ 483.8
====================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Medical and other benefits payable $ 133.3 $ 150.5
Notes payable 40.9 42.1
Other liabilities 72.0 69.6
--------------------
Total liabilities 246.2 262.2
Shareholders' equity 218.3 221.6
--------------------
Total liabilities and shareholders' equity $ 464.5 $ 483.8
====================
29
AMERICAN OTHER FINANCIAL DATA
MEDICAL SECURITY
- -----------------
Rx for Good Health
AS OF
-------------------------------
12/31/99 12/31/00 3/31/01
-------------------------------
Book Value per Share $14.86 $15.77 $15.54
Tangible Book Value $7.69 $8.24 $7.97
per Share
Debt to Total Capital Ratio 16.2% 15.7% 15.8%
Risk-Based Capital 339% 389% 385% est.
30
AMERICAN FINANCIAL HIGHLIGHTS
MEDICAL SECURITY
- -----------------
Rx for Good Health
- -- Earnings per Share
- 1Q 2001 $0.05*
- Projections
- 2Q 2001 $0.06 - $0.08
- Full year 2001 $0.35 - $0.45*
* Excluding 1Q 2001 $0.41 non-recurring charge
31
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 $15.54 per share on 3/31/2001
- Tangible book value of $7.97 per share on 3/31/2001
- Effective action plans in place
- Low debt to total capital ratio - 15.8%
32
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
33
AMERICAN
MEDICAL SECURITY
RX for Good Health
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: MAY 18, 2001 AMERICAN MEDICAL SECURITY GROUP, INC.
/S/ GARY D. GUENGERICH
--------------------------------------------------
Gary D. Guengerich
Executive Vice President & Chief Financial Officer