EXHIBIT 99
[American Medical Security Group LOGO] P. O. Box 19032
Green Bay, WI 54307-9032
[ News Release ] For more information contact:
[ for Immediate Release ] Cliff Bowers
Vice President
Corporate Communications
(920) 661-2766
AMERICAN MEDICAL SECURITY GROUP REPORTS
FIRST QUARTER 2003 FINANCIAL RESULTS
o NET INCOME OF $0.48 PER SHARE IN QUARTER;
UP 30% YEAR OVER YEAR
o GUIDANCE OF $1.85 TO $1.95 PER SHARE FOR 2003 AFFIRMED
o COMBINED RATIO CONTINUES SEQUENTIAL IMPROVEMENT
o FAVORABLE FLORIDA APPEALS COURT RULING
GREEN BAY, Wis. - May 6, 2003 - American Medical Security Group, Inc.
(NYSE: AMZ) (AMS), today reported net income of $6.5 million or $0.48 per
diluted share for the first quarter of 2003. Net income in the period is the
highest since AMZ shares became publicly traded in 1998. The company's net
income per share includes $0.02 of realized capital gains from investments.
The first quarter 2003 results compare to income of $5.4 million or
$0.37 per share in the first quarter of 2002 before the cumulative effect of a
change in accounting principle associated with the adoption of SFAS No. 142
(write-down of goodwill).
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"We are pleased with our profitability in the quarter, and we remain
focused on revenue and membership growth," said Samuel V. Miller, AMS Chairman,
President & Chief Executive Officer. "While total revenue is still not up to our
expectations, we fully expect to achieve our 2003 earnings projections."
"We will accomplish that through a combination of pricing discipline,
expense control and the extensive action plans we've implemented throughout
our business. We believe the 10% increase in new member enrollment we
experienced in the first quarter compared to the fourth quarter of 2002 is
evidence those plans are beginning to take hold."
REVENUE & MEMBERSHIP
Total revenues for the first quarter of 2003 were $187.6 million. This
compares to total revenues of $190.5 million and $203.7 million for the
fourth quarter and first quarter of 2002, respectively.
Total health membership was 552,303 at the end of the first quarter
compared to 571,461 at the end of the fourth quarter of 2002, and 613,151
at the end of the first quarter of 2002.
According to AMS, its products and support programs are very well
positioned for existing market conditions, and it anticipates quarterly
improvements in total membership and revenue beginning later this year.
The roll-out of the company's MedOne Security product, increased agent
recruiting, and a new marketing approach to small group products called,
"Defined Contribution at Work," are driving increased monthly new member
enrollment and should aid the company's growth in upcoming quarters.
HEALTH SEGMENT LOSS RATIO
The health segment loss ratio for the first quarter of 2003 was 67.9%,
down from 68.5% in the first quarter of last year and up compared to 67.4%
for the fourth quarter of 2002.
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HEALTH SEGMENT EXPENSE RATIO
For the first quarter of 2003, the company's health segment expense
ratio was 27.9%, a slight improvement over the 28.2% recorded in the first
quarter of 2002 and 28.4% for the fourth quarter of 2002.
HEALTH SEGMENT COMBINED RATIO
The combined ratio - total health segment loss ratio plus the expense
ratio - was 95.8% in the first quarter of 2003, compared to 96.7% in the
first quarter of 2002. The combined ratio was 95.9% in the fourth quarter
of 2002.
CASH FLOW & BALANCE SHEET
Cash used in operations in the first quarter of 2003 was $3.6 million.
This primarily reflects the anticipated seasonal pay-down of AMS' claim
inventory at year-end as well as other annual expenditures made in the
period. AMS expects cash flow to follow seasonal patterns and improve in
subsequent quarters of 2003.
At March 31, 2003, AMS had a book value of $14.68 per share, compared
to $12.19 at the end of the first quarter of 2002.
EARNINGS GUIDANCE
AMS has reconfirmed its earnings guidance range for 2003 of $1.85 to
$1.95 per share, an increase of 14% to 19% over 2002. Earnings for the
second quarter of 2003 are expected to be approximately $0.47 per share.
OTHER COMPANY NEWS
On January 7, 2003, the company announced that its board had authorized
it to purchase up to $10 million of its outstanding common shares. The share
repurchase plan allows AMS to buy back its shares, from time to time, in open
market or privately negotiated transactions, subject to price and market
conditions. Under this authority, AMS purchased approximately 53,000 of its
outstanding common shares during the first quarter of 2003. The shares were
purchased at an average price of $12.46 per share, and at an aggregate cost of
approximately $0.7 million.
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In addition, AMS recently reported that it had received a favorable
ruling in a Florida Appeals Court affirming the legality of its prior
rating practices in that state. The decision reverses an order that would
have suspended the company's license to sell new business in that state for
one year. The order had been stayed pending the appeal.
Also, AMS announced the hiring of industry veteran, John R. Lombardi,
to serve as its Executive Vice President & Chief Financial Officer.
Lombardi previously held senior financial management positions with Aetna
and Cigna.
American Medical Security Group, through its operating subsidiaries,
markets health care benefits and insurance products to small businesses,
families and individuals. Insurance products of American Medical Security
Group are underwritten by United Wisconsin Life Insurance Company. The
company serves customers nationwide through partnerships with professional,
independent agents and quality health care providers. It provided health
coverage for 552,303 members as of March 31, 2003.
# # #
AMS WILL HOST A CONFERENCE CALL TO DISCUSS ITS FINANCIAL RESULTS ON
WEDNESDAY, MAY 7, 2003, AT 10:00 A.M. (CENTRAL TIME). INTERESTED PARTIES MAY
LISTEN TO THE CONFERENCE CALL LIVE VIA THE INVESTOR SECTION OF THE COMPANY'S
WEBSITE AT WWW.EAMS.COM. LISTEN-ONLY ACCESS TO THE LIVE CONFERENCE CALL IS ALSO
AVAILABLE BY DIALING 913-981-5549. FOLLOWING THE LIVE CALL, A REPLAY WILL BE
AVAILABLE UNTIL MIDNIGHT, FRIDAY, MAY 9, 2003, BY DIALING 719-457-0820
(CODE 432970). THIS PRESS RELEASE AND FINANCIAL AND OTHER STATISTICAL
INFORMATION CONTAINED IN THE CONFERENCE CALL WILL APPEAR IN THE INVESTOR SECTION
OF THE COMPANY'S WEBSITE AT WWW.EAMS.COM.
CAUTIONARY STATEMENT: Some of the statements contained in this press release are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Generally, forward-looking statements express
expectations for or about the future, rather than historical fact.
Forward-looking statements are subject to inherent risks and uncertainties that
may cause actual results or events to differ materially from those contemplated
by such statements. Such risks and uncertainties include, among others,
unexpected increases in health care costs; the company's ability to predict
future health care costs and adequately price its products; the company's
ability to expand its distribution network, generate new sales, sell new
products and retain existing members; the company's ability to control expenses
during a time of declining revenue and membership; legislative and regulatory
matters, including delays in regulatory approvals, changes in government
regulation, regulatory action resulting from market conduct activity; general
business conditions, including competitive practices and demand for the
company's existing and new products; adverse outcomes of legal and
administrative proceedings; publicity about the company; development of and
changes in claims reserves; general economic conditions that impact the
performance of the company's investment portfolio or decisions of consumers to
purchase our products; and other factors that may be referred to in American
Medical Security Group, Inc.'s reports filed with the Securities and Exchange
Commission from time to time. Forward-looking statements made in this release
express expectations only as of the date they are made. The Company does not
undertake any obligation to update or revise such statements as a result of new
information or future events.
AMERICAN MEDICAL SECURITY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
-------------------------------
(THOUSANDS, EXCEPT PER COMMON SHARE DATA) 2003 2002
- --------------------------------------------------------------------------------------------------------------------
REVENUES
Insurance premiums $ 179,055 $ 194,401
Net investment income 3,402 3,924
Net realized investment gains 375 14
Other revenue 4,786 5,405
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Total revenues 187,618 203,744
EXPENSES
Medical and other benefits 120,334 131,800
Selling, general and administrative 56,329 62,024
Interest 339 494
Amortization of intangibles 238 183
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Total expenses 177,240 194,501
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Income before income taxes and cumulative
effect of a change in accounting principle 10,378 9,243
Income tax expense 3,915 3,813
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Income before cumulative effect of a change in accounting principle 6,463 5,430
Cumulative effect of a change in accounting principle - (60,098)
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 6,463 $ (54,668)
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Earnings (loss) per common share - basic:
Income before cumulative effect of a change in accounting principle $ 0.50 $ 0.39
Cumulative effect of a change in accounting principle - (4.35)
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.50 $ (3.96)
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Earnings (loss) per common share - diluted:
Income before cumulative effect of a change in accounting principle $ 0.48 $ 0.37
Cumulative effect of a change in accounting principle - (4.15)
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.48 $ (3.77)
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AMERICAN MEDICAL SECURITY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
(THOUSANDS, EXCEPT SHARE DATA) 2003 2002
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value $ 283,595 $ 278,222
Fixed maturity securities held to maturity, at amortized cost 3,175 4,288
Trading securities, at fair value 1,142 926
- --------------------------------------------------------------------------------------------------------------------
Total investments 287,912 283,436
Cash and cash equivalents 20,396 30,620
Property and equipment, net 34,112 33,061
Goodwill, net 32,846 32,846
Other intangibles, net 2,622 2,860
Other assets 50,737 46,117
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 428,625 $ 428,940
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Medical and other benefits payable $ 131,650 $ 134,479
Advance premiums 17,300 15,200
Payables and accrued expenses 23,466 29,141
Notes payable 33,558 33,858
Other liabilities 32,736 33,512
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 238,710 246,190
Shareholders' equity:
Common stock (no par value, $1 stated value, 50,000,000 shares authorized,
16,654,315 issued and 12,935,698 outstanding at March 31, 2003,
16,654,315 issued and 12,905,898 outstanding at December 31, 2002) 16,654 16,654
Paid-in capital 190,367 189,813
Retained earnings 9,321 2,858
Accumulated other comprehensive income (net of taxes of
$4,357 at March 31, 2003 and $4,117 at December 31, 2002) 8,090 7,646
Treasury stock (3,718,617 shares at March 31, 2003
and 3,748,417 shares at December 31, 2002, at cost) (34,517) (34,221)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 189,915 182,750
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 428,625 $ 428,940
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AMERICAN MEDICAL SECURITY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
---------------------------------
(THOUSANDS) 2003 2002
- --------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 6,463 $ (54,668)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Cumulative effect of a change in accounting principle - 60,098
Depreciation and amortization 2,520 2,226
Net realized investment gains (375) (14)
Increase in trading securities (216) (149)
Deferred income tax benefit (1,154) (2,694)
Changes in operating accounts:
Other assets (3,698) 1,870
Medical and other benefits payable (2,829) (2,935)
Advance premiums 2,100 (103)
Payables and accrued expenses (5,675) (1,376)
Other liabilities (711) 860
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (3,575) 3,115
INVESTING ACTIVITIES
Purchases of available for sale securities (42,425) (32,283)
Proceeds from sale of available for sale securities 36,959 49,214
Proceeds from maturity of available for sale securities 1,775 -
Purchases of held to maturity securities - (1,335)
Proceeds from maturity of held to maturity securities - 1,295
Purchases of property and equipment (2,845) (2,799)
Proceeds from sale of property and equipment 2 -
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (6,534) 14,092
FINANCING ACTIVITIES
Issuance of common stock 845 262
Purchase of treasury stock (660) (19,540)
Repayment of notes payable (300) (5,300)
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Net cash used in financing activities (115) (24,578)
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Cash and cash equivalents:
Net increase (decrease) (10,224) (7,371)
Balance at beginning of year 30,620 24,975
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Balance at end of period $ 20,396 $ 17,604
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