EXHIBIT 99
[AMERICAN MEDICAL SECURITY GROUP, INC. LOGO]
P.O. Box 19032 Green Bay, WI
54307-9032
FOR MORE INFORMATION CONTACT:
Cliff Bowers
Vice President
Corporate Communications
(920)661-2766
- ---------------------------
NEWS RELEASE
for Immediate Release
- ---------------------------
AMERICAN MEDICAL SECURITY GROUP REPORTS
THIRD QUARTER 2003 FINANCIAL RESULTS
o RECORD QUARTERLY INCOME
o EARNINGS PER DILUTED SHARE OF $0.61 IN QUARTER (INCLUDING
REALIZED INVESTMENT GAINS AND INCOME FROM DISCONTINUED
OPERATIONS)
o FULL YEAR 2004 EARNINGS GUIDANCE IN A RANGE OF $2.13 TO
$2.18 PER DILUTED SHARE
GREEN BAY, Wis. - November 3, 2003 - American Medical Security Group,
Inc. (NYSE: AMZ) (AMS), today reported GAAP net income for the third quarter of
2003 of $8.8 million or $0.61 per diluted share.
Adjusted net income (See Note No.1) for the third quarter of 2003 was
$7.0 million or $0.49 per diluted share. Adjusted net income for the quarter
excludes $0.06 per diluted share from realized investment gains, as well as
income from discontinued operations of $0.06 per diluted share which is
primarily from the September 2003 gain on the sale of the company's subsidiary,
Accountable Health Plans of America, Inc. Adjusted net income in the quarter
compares to $5.8 million or $0.42 per diluted share for the third quarter of
2002.
GAAP net income for the first nine months of 2003 was $22.0 million or
$1.58 per diluted share. GAAP income for the first nine months of 2002 was
$16.4 million or $1.18 per diluted share, before the cumulative effect of a
change in accounting principle associated with the adoption of SFAS No. 142
(write down of goodwill). Adjusted net income for the first nine months of 2003
was $20.1 million or $1.44 per diluted share compared to $16.8 million or $1.20
per diluted share for the first nine months of 2002.
More
Ad One
Quarterly and year-to-date GAAP net income and income per share
reconcile to adjusted net income and adjusted net income per share as follows:
NET INCOME RECONCILIATION
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------------------------------------------------
INCOME (millions)
GAAP Net Income (Loss) $ 8.8 $ 5.7 $ 22.0 $(43.7)
Less: Cumulative Effect of Change
In Accounting Principle - - - (60.1)
- ----------------------------------------------------------------------------------------------
Income Before Change in Accounting Principle 8.8 5.7 22.0 16.4
Less: Income (Loss) from
Discontinued Operations 0.9 (0.1) 0.7 (0.5)
- ----------------------------------------------------------------------------------------------
Income from Continuing Operations 7.9 5.8 21.3 16.9
Less: Realized Investment Gains,
Net of Tax 0.9 0.0 1.2 0.1
- ----------------------------------------------------------------------------------------------
Adjusted Net Income (1) $ 7.0 $ 5.8 $ 20.1 $ 16.8
==============================================================================================
INCOME PER SHARE - DILUTED
GAAP Net Income (Loss) Per Share $ 0.61 $ 0.42 $ 1.58 $ (3.13)
Less: Cumulative Effect of Change
In Accounting Principle - - - (4.31)
- ----------------------------------------------------------------------------------------------
Income Before Change in Accounting Principle 0.61 0.42 1.58 1.18
Less: Income (Loss) from
Discontinued Operations 0.06 (0.01) 0.05 (0.03)
- ----------------------------------------------------------------------------------------------
Income from Continuing Operations 0.55 0.42 1.52 1.21
Less: Realized Investment Gains,
Net of Tax 0.06 0.00 0.08 0.00
- ----------------------------------------------------------------------------------------------
Adjusted Net Income Per Share (1) $ 0.49 $ 0.42 $ 1.44 $ 1.20
==============================================================================================
PER SHARE COLUMNS MAY NOT TOTAL DUE TO ROUNDING
"Our net income in the third quarter is the highest since AMZ shares
were first publicly traded in 1998," said Samuel V. Miller, AMS Chairman,
President & Chief Executive Officer. "We're delighted that our strategy to focus
on core markets with a disciplined approach to pricing has produced a three-year
history of improving earnings performance. Our efforts continue to be centered
on opportunistic product development, plans to increase penetration in select
markets and a number of other growth strategies."
REVENUES(2)
Total revenues for the third quarter of 2003 were $185 million, down
slightly from the $186 million reported for the second quarter of 2003. Total
revenues were $195 million in the third quarter of 2002. For the first nine
months of 2003, total revenues were $558 million, compared to $597 million for
the same period of 2002.
More
Ad Two
MEMBERSHIP
Total health membership at the end of the third quarter was 540,993,
compared to 546,501 at the end of the second quarter of 2003, and 588,860 at the
end of the third quarter of 2002.
"We've experienced three consecutive quarters of improving new member
enrollment thanks to new product offerings, proprietary agent support tools and
other actions," said John R. Lombardi, Executive Vice President & Chief
Financial Officer. "However, our revenue and membership results in the quarter
reflect a seasonally slower enrollment period as well as restrained hiring among
small employers likely due to the slow employment recovery."
Lombardi added, "Existing trends, as well as expectations we have for
sales growth in the fourth quarter, make us hopeful that we may still achieve
quarterly revenue and membership growth in 2003."
HEALTH SEGMENT RATIOS(2)
The health segment combined ratio (loss ratio plus expense ratio) was
95.3% in the third quarter, an improvement over the 95.5% reported for the
second quarter of 2003. The health segment combined ratio of 95.5% for the first
nine months of 2003 is a 100-basis-point improvement over the 96.5% reported
for the same period of 2002.
The health segment loss ratio of 68.2% in the third quarter is up from
the 67.5% reported in the second quarter of 2003. However, for the first nine
months of 2003, the loss ratio of 67.9% is an improvement over the loss ratio of
68.3% reported in the first nine months of 2002.
As a result of continuing expense control, AMS' health segment expense
ratio improved considerably in the quarter. It was 27.0% in the third quarter of
2003 compared to 28.5% in the same quarter of 2002. The expense ratio was 27.6%
for the first nine months of 2003 and 28.1% for the same period of 2002.
More
Ad Three
CASH FLOW & BALANCE SHEET
As anticipated, cash flow provided by operations in the quarter
exceeded that for the prior quarters of 2003. Cash flow from operations was $9.1
million for the third quarter and $7.5 million for the first three quarters of
2003.
At September 30, 2003, AMS had a book value per share of $15.71. That
compares to $15.27 at the end of the second quarter and $13.70 at the end of the
third quarter of 2002.
EARNINGS GUIDANCE
AMS believes that fourth quarter 2003 earnings per diluted share will
be approximately $0.50, which would result in adjusted net income per diluted
share of approximately $1.94 for full-year 2003. Including $0.14 in investment
gains and income from discontinued operations, GAAP net income for the year
would be $2.08 per diluted share.
In addition, the company now estimates that full-year 2004 earnings
will be in a range of $2.13 to $2.18 per diluted share. At this juncture,
earnings are expected to fall in the middle of that range. However, they could
move higher if the company experiences an improvement in its medical cost trend
and if domestic hiring increases among the nation's small employers.
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.
# # #
NOTES
(1) AMS management believes that this measure of profitability provides a
meaningful presentation of the underlying earnings of the Company's
continuing operations. Adjusted net income excludes: (a) income (loss)
from discontinued operations related to the sale of the Company's
Accountable Health Plans network subsidiary; (b) realized investment gains
from the sale of securities net of tax; and (c) the cumulative effect of a
change in accounting principle related to a write-down of goodwill upon
the adoption of SFAS No. 142.
(2) Numbers reported reflect those for continuing operations.
AMS WILL HOST A CONFERENCE CALL TO DISCUSS ITS FINANCIAL RESULTS ON
TUESDAY NOVEMBER 4, 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, NOVEMBER 7, 2003, BY DIALING 719-457-0820
(CODE 750806). THIS PRESS RELEASE, ACCOMPANYING FINANCIAL INFORMATION 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. LOGO]
FINANCIAL SUPPLEMENT
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
INCOME DATA
(in thousands, except earnings per share)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUES
Premiums $ 194,401 $ 190,787 $ 187,135 $ 182,137 $ 754,460 $ 179,055 $ 178,776
Investment income 3,924 3,799 3,591 3,691 15,005 3,402 3,345
Realized investment gain (loss) 14 48 39 (62) 39 375 91
Fees & other 4,512 4,116 4,162 4,016 16,806 4,040 3,845
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 202,851 198,750 194,927 189,782 786,310 186,872 186,057
EXPENSES
Benefits 132,078 129,457 125,376 121,759 508,670 120,598 119,315
General and administrative 32,389 31,138 31,221 30,404 125,152 29,284 29,244
Commissions and selling 26,406 26,815 26,398 25,076 104,695 24,042 24,294
Interest expense 494 463 460 431 1,848 339 324
Depreciation 1,696 1,750 1,771 1,767 6,984 1,777 1,664
Amortization 183 182 183 182 730 238 239
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 193,246 189,805 185,409 179,619 748,079 176,278 175,080
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 9,605 8,945 9,518 10,163 38,231 10,594 10,977
Income taxes 3,951 3,557 3,704 3,870 15,082 3,997 4,151
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 5,654 5,388 5,814 6,293 23,149 6,597 6,826
Income (loss) from discontinued
operations (224) (147) (76) (216) (663) (134) (57)
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 5,430 5,241 5,738 6,077 22,486 6,463 6,769
Cumulative effect of a change in
accounting principle (60,098) - - - (60,098) - -
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (54,668) $ 5,241 $ 5,738 $ 6,077 $ (37,612) $ 6,463 $ 6,769
====================================================================================================================================
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 1.67 $ 0.47 $ 0.48
Income from continuing operations
- diluted $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 1.67 $ 0.49 $ 0.49
Income (loss) from discontinued
operations - diluted $ (0.02) $ (0.01) $ (0.01) $ (0.02) $ (0.05) $ (0.01) $ (0.00)
Net income (loss) - basic $ (3.96) $ 0.42 $ 0.45 $ 0.47 $ (2.88) $ 0.50 $ 0.51
Net income (loss) - diluted $ (3.77) $ 0.38 $ 0.42 $ 0.45 $ (2.72) $ 0.48 $ 0.48
Weighted average common shares
- basic 13,803 12,615 12,890 12,891 13,047 12,981 13,160
Weighted average common shares
- diluted 14,492 13,681 13,714 13,466 13,835 13,575 14,015
MARGIN ANALYSIS
Income from continuing operations
before income taxes 4.7% 4.5% 4.9% 5.4% 4.9% 5.7% 5.9%
Net income (loss) (26.9%) 2.6% 2.9% 3.2% (4.8%) 3.5% 3.6%
(in thousands, except earnings per share)
- ------------------------------------------------------------------------------------------------------------------------------------
2003 YTD
3rd Qtr 09/30/02 09/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUES
Premiums $ 176,735 $ 572,323 $ 534,566
Investment income 3,211 11,314 9,958
Realized investment gain (loss) 1,416 101 1,882
Fees & other 3,899 12,790 11,784
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 185,261 596,528 558,190
EXPENSES
Benefits 119,218 386,911 359,131
General and administrative 26,908 94,748 85,436
Commissions and selling 24,292 79,619 76,628
Interest expense 309 1,417 972
Depreciation 1,673 5,217 5,114
Amortization 238 548 715
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 172,638 568,460 523,996
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 12,623 28,068 34,194
Income taxes 4,735 11,212 12,883
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 7,888 16,856 21,311
Income (loss) from discontinued
operations 923 (447) 732
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 8,811 16,409 22,043
Cumulative effect of a change in
accounting principle - (60,098) -
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 8,811 $ (43,689) $ 22,043
====================================================================================================================================
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.49 $ 1.20 $ 1.44
Income from continuing operations
- diluted $ 0.55 $ 1.21 $ 1.52
Income (loss) from discontinued
operations - diluted $ 0.06 $ (0.03) $ 0.05
Net income (loss) - basic $ 0.66 $ (3.34) $ 1.67
Net income (loss) - diluted $ 0.61 $ (3.13) $ 1.58
Weighted average common shares
- basic 13,392 13,099 13,179
Weighted average common shares
- diluted 14,340 13,954 13,978
MARGIN ANALYSIS
Income before income taxes 6.8% 4.7% 6.1%
Net income (loss) 4.8% (7.3%) 3.9%
(1) - See page 8 for reconciliation of GAAP net income to adjusted net income.
Page 2
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
FINANCIAL DATA
(in thousands, except membership)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE MIX
Health premiums $ 190,720 $ 187,314 $ 183,752 $ 178,891 $ 740,677 $ 175,924 $ 175,703
Life premiums 3,678 3,473 3,383 3,246 13,780 3,131 3,073
Investment income 3,938 3,847 3,630 3,629 15,044 3,777 3,436
Service fees 4,442 4,086 4,091 3,934 16,553 4,003 3,811
Other 73 30 71 82 256 37 34
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 202,851 $ 198,750 $ 194,927 $ 189,782 $ 786,310 $ 186,872 $ 186,057
====================================================================================================================================
MEMBERSHIP ANALYSIS
Fully insured medical 329,531 319,675 309,980 293,341 293,341 278,091 275,323
Self funded medical 43,128 43,058 43,426 43,584 43,584 42,704 42,568
Dental 240,492 235,250 235,454 234,536 234,536 231,508 228,610
- ------------------------------------------------------------------------------------------------------------------------------------
Total Health 613,151 597,983 588,860 571,461 571,461 552,303 546,501
Life 174,126 166,857 158,343 151,206 151,206 144,207 141,930
FINANCIAL STATISTICS
Book value per share $ 12.19 $ 12.87 $ 13.70 $ 14.16 $ 14.16 $ 14.68 $ 15.27
Cash flow from operations $ 3,115 $ 233 $ 16,137 $ 15,690 $ 35,175 $ (3,575) $ 1,978
Return on equity, annualized 11.8% 13.5% 13.6% 14.0% 11.2% 14.2% 13.9%
Debt to total capital 18.5% 17.2% 16.2% 15.6% 15.6% 15.0% 14.1%
Common shares outstanding,
net of treasury 12,590 12,845 12,890 12,906 12,906 12,936 13,254
(in thousands, except membership)
- ------------------------------------------------------------------------------------------------------------------------------------
2003 YTD
3rd Qtr 09/30/02 09/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE MIX
Health premiums $ 173,744 $ 561,786 $ 525,371
Life premiums 2,991 10,534 9,195
Investment income 4,627 11,415 11,840
Service fees 3,873 12,619 11,687
Other 26 174 97
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 185,261 $ 596,528 $ 558,190
====================================================================================================================================
MEMBERSHIP ANALYSIS
Fully insured medical 270,401 309,980 270,401
Self funded medical 43,858 43,426 43,858
Dental 226,734 235,454 226,734
- ------------------------------------------------------------------------------------------------------------------------------------
Total Health 540,993 588,860 540,993
Life 137,395 158,343 137,395
FINANCIAL STATISTICS
Book value per share $ 15.71 $ 13.70 $ 15.71
Cash flow from operations $ 9,092 $ 19,485 $ 7,495
Return on equity, annualized 15.3% 11.1% 14.4%
Debt to total capital 13.5% 16.2% 13.5%
Common shares outstanding,
net of treasury 13,434 12,890 13,434
Page 3
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
BALANCE SHEETS
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003
3/31 6/30 9/30 12/31 3/31 6/30 9/30
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
Securities available for sale, at fair value:
Fixed maturities $ 250,217 $ 257,361 $ 276,601 $ 278,222 $ 283,595 $ 286,044 $ 286,324
Fixed maturity securities held to
maturity, at amortized cost 4,303 4,305 4,297 4,288 3,175 3,168 3,483
Trading securities, at fair value 666 754 786 926 1,142 1,217 1,254
- ------------------------------------------------------------------------------------------------------------------------------------
Total investments 255,186 262,420 281,684 283,436 287,912 290,429 291,061
Cash and cash equivalents 17,604 14,407 17,629 30,620 20,396 22,036 30,183
Other assets:
Property and equipment, net 34,460 34,344 34,347 33,061 34,112 35,118 34,445
Goodwill and other intangibles, net 36,254 36,071 35,889 35,706 35,468 35,229 34,283
Other assets 44,744 47,006 44,141 46,117 50,737 49,239 49,378
- ------------------------------------------------------------------------------------------------------------------------------------
Total other assets 115,458 117,421 114,377 114,884 120,317 119,586 118,106
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 388,248 $ 394,248 $ 413,690 $ 428,940 $ 428,625 $ 432,051 $ 439,350
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Medical and other benefits payable $ 132,569 $ 131,950 $ 134,178 $ 134,479 $ 131,650 $ 131,023 $ 127,023
Advance premiums 16,634 15,426 16,743 15,200 17,300 16,453 16,150
Payables and accrued expenses 26,656 24,341 27,850 29,141 23,466 21,039 24,020
Notes payable 34,758 34,458 34,158 33,858 33,558 33,258 32,958
Other liabilities 24,154 22,715 24,221 33,512 32,736 27,860 28,162
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 234,771 228,890 237,150 246,190 238,710 229,633 228,313
Shareholders' equity:
Common stock 16,654 16,654 16,654 16,654 16,654 16,654 16,654
Paid-in capital 187,892 189,232 189,738 189,813 190,367 192,362 193,509
Retained earnings (14,198) (8,957) (3,219) 2,858 9,321 16,090 24,901
Unrealized gain (loss) on investments (74) 3,051 7,655 7,646 8,090 9,964 7,521
Treasury stock (36,797) (34,622) (34,288) (34,221) (34,517) (32,652) (31,548)
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 153,477 165,358 176,540 182,750 189,915 202,418 211,037
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 388,248 $ 394,248 $ 413,690 $ 428,940 $ 428,625 $ 432,051 $ 439,350
====================================================================================================================================
Page 4
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - HEALTH
(in thousands, except financial statistics)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 190,720 $ 187,314 $ 183,752 $ 178,891 $ 740,677 $ 175,924 $ 175,703
Investment income 1,934 1,809 1,484 1,444 6,671 1,715 1,683
Other revenue 4,480 4,087 4,127 3,991 16,685 3,965 3,772
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 197,134 193,210 189,363 184,326 764,033 181,604 181,158
Expenses:
Benefits 130,842 128,451 124,469 120,883 504,645 119,783 118,637
General and administrative 32,039 30,352 30,694 30,212 123,297 29,352 29,189
Commissions and selling 25,752 26,183 25,765 24,483 102,183 23,472 23,724
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 188,633 184,986 180,928 175,578 730,125 172,607 171,550
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes $ 8,501 $ 8,224 $ 8,435 $ 8,748 $ 33,908 $ 8,997 $ 9,608
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 68.6% 68.6% 67.7% 67.6% 68.1% 68.1% 67.5%
Expense ratio:
General and administrative 14.4% 14.0% 14.5% 14.7% 14.4% 14.4% 14.5%
Commissions and selling 13.5% 14.0% 14.0% 13.7% 13.8% 13.3% 13.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense ratio 28.0% 28.0% 28.5% 28.3% 28.2% 27.8% 28.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Combined ratio 96.7% 96.6% 96.2% 95.9% 96.3% 95.9% 95.5%
====================================================================================================================================
Premiums per member per month:
Fully insured medical $ 168 $ 170 $ 172 $ 174 $ 171 $ 181 $ 184
Self funded 53 51 52 52 52 53 53
Dental 22 22 22 23 22 23 23
Short-term disability 20 21 21 21 21 22 22
Benefits cost per member per month:
Fully insured medical $ 117 $ 118 $ 118 $ 120 $ 118 $ 125 $ 124
Self funded 28 26 29 22 26 27 36
Dental 15 15 14 14 15 15 16
Short-term disability 14 11 9 12 12 12 8
(in thousands, except financial statistics)
- ------------------------------------------------------------------------------------------------------------------------------------
2003 YTD
3rd Qtr 09/30/02 09/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 173,744 $ 561,786 $ 525,371
Investment income 1,596 5,227 4,994
Other revenue 3,828 12,694 11,565
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 179,168 579,707 541,930
Expenses:
Benefits 118,518 383,762 356,938
General and administrative 27,090 93,085 85,631
Commissions and selling 23,727 77,700 70,923
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 169,335 554,547 513,492
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes $ 9,833 $ 25,160 $ 28,438
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 68.2% 68.3% 67.9%
Expense ratio:
General and administrative 13.4% 14.3% 14.1%
Commissions and selling 13.7% 13.8% 13.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense ratio 27.0% 28.1% 27.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Combined ratio 95.3% 96.5% 95.5%
====================================================================================================================================
Premiums per member per month:
Fully insured medical $ 184 $ 170 $ 183
Self funded 55 52 54
Dental 24 22 23
Short-term disability 23 21 22
Benefits cost per member per month:
Fully insured medical $ 127 $ 118 $ 125
Self funded 40 28 34
Dental 15 15 15
Short-term disability 3 11 8
Page 5
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - LIFE
(in thousands, except financial statistics)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003 YTD
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/02 9/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 3,678 $ 3,473 $ 3,383 $ 3,246 $ 13,780 $ 3,131 $ 3,073 $ 2,991 $ 10,534 $ 9,195
Investment income 150 153 141 115 559 133 129 121 444 383
Other revenue 32 29 27 25 113 75 73 71 88 219
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 3,860 3,655 3,551 3,386 14,452 3,339 3,275 3,183 11,066 9,797
Expenses:
Benefits 1,218 1,017 907 864 4,006 837 679 700 3,142 2,216
General and administrative 540 482 480 489 1,991 510 487 383 1,502 1,380
Commissions and selling 679 644 643 602 2,568 589 585 582 1,966 1,756
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,437 2,143 2,030 1,955 8,565 1,936 1,751 1,665 6,610 5,352
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes $ 1,423 $ 1,512 $ 1,521 $ 1,431 $ 5,887 $ 1,403 $ 1,524 $ 1,518 $ 4,456 $ 4,445
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 33.1% 29.3% 26.8% 26.6% 29.1% 26.7% 22.1% 23.4% 29.8% 24.1%
Expense ratio:
General and administrative 13.8% 13.0% 13.4% 14.3% 13.6% 13.9% 13.5% 10.4% 13.4% 12.6%
Commissions and selling 18.5% 18.5% 19.0% 18.5% 18.6% 18.8% 19.0% 19.5% 18.7% 19.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense ratio 32.3% 31.6% 32.4% 32.8% 32.3% 32.7% 32.5% 29.9% 32.1% 31.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Combined ratio 65.4% 60.9% 59.2% 59.5% 61.3% 59.4% 54.6% 53.3% 61.9% 55.8%
====================================================================================================================================
Page 6
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
CORPORATE AND OTHER
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003 YTD
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/02 9/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 3 $ - $ - $ - $ 3 $ - $ - $ - $ 3 $ -
Investment income 1,840 1,837 1,966 2,132 7,775 1,554 1,533 1,494 5,643 4,581
Realized investment gain (loss) 14 48 39 (62) 39 375 91 1,416 101 1,882
Other revenue - - 8 - 8 - - - 8 -
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 1,857 1,885 2,013 2,070 7,825 1,929 1,624 2,910 5,755 6,463
Expenses:
Benefits 18 (11) - 12 19 (22) (1) - 7 (23)
General and administrative 1,506 2,054 1,818 1,470 6,848 1,199 1,232 1,108 5,378 3,539
Commissions and selling (25) (12) (10) (9) (56) (19) (15) (17) (47) (51)
Interest expense 494 463 460 431 1,848 339 324 309 1,417 972
Amortization of intangibles 183 182 183 182 730 238 239 238 548 715
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,176 2,676 2,451 2,086 9,389 1,735 1,779 1,638 7,303 5,152
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes $ (319) $ (791) $ (438) $ (16) $(1,564) $ 194 $ (155) $ 1,272 $(1,548) $ 1,311
====================================================================================================================================
Page 7
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME
(in thousands, except eranings per share)
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
GAAP Net income (loss) $ (54,668) $ 5,241 $ 5,738 $ 6,077 $ (37,612) $ 6,463 $ 6,769 $ 8,811
Less:
Cumulative effect of accounting
principle change (60,098) - - - (60,098) - - -
Income (loss( from discontinued
operations (224) (147) (76) (216) (663) (134) (57) 923
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 5,654 5,388 5,814 6,293 23,149 6,597 6,826 7,888
Less:
Realized investment gains, net
of tax 8 29 24 (38) 24 234 57 885
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 5,646 $ 5,359 $ 5,790 $ 6,331 $ 23,125 $ 6,363 $ 6,769 $ 7,003
====================================================================================================================================
INCOME PER SHARE - DILUTED
GAAP Net income (loss) per share $ (3.77) $ 0.38 $ 0.42 $ 0.45 $ (2.72) $ 0.48 $ 0.48 $ 0.61
Less:
Cumulative effect of accounting
principle change (4.15) - - - (4.34) - - -
Income (loss) from discontinued
operations (0.02) (0.01) (0.01) (0.02) (0.05) (0.01) (0.00) (0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 0.39 0.39 0.42 0.47 1.67 0.49 0.49 0.55
Less:
Realized invetment gains, net
of tax 0.00 0.00 0.00 (0.00) 0.00 0.02 0.00 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted net income per share $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 1.67 $ 0.47 $ 0.48 $ 0.49
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
YTD
09/30/02 09/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
GAAP Net income (loss) $ (43,689) $ 22,043
Less:
Cumulative effect of accounting
principle change (60,098) -
Income (loss( from discontinued
operations (447) 732
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 16,856 21,311
Less:
Realized investment gains, net
of tax 61 1,173
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 16,795 $ 20,138
====================================================================================================================================
INCOME PER SHARE - DILUTED
GAAP Net income (loss) per share $ (3.13) $ 1.58
Less:
Cumulative effect of accounting
principle change (4.31) -
Income (loss) from discontinued
operations (0.03) 0.05
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 1.21 1.52
Less:
Realized invetment gains, net
of tax 0.00 0.08
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted net income per share $ 1.20 $ 1.44
====================================================================================================================================
Page 8