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
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AMERICAN MEDICAL SECURITY GROUP REPORTS
FOURTH-QUARTER AND FULL-YEAR 2003 FINANCIAL RESULTS
o RECORD QUARTERLY OPERATING INCOME SINCE AMZ
WAS FIRST PUBLICLY TRADED
o EARNINGS PER DILUTED SHARE OF $0.50 IN QUARTER
o SEQUENTIAL REVENUE AND MEMBERSHIP GROWTH
o 2004 EPS OF $2.13 - $2.18 REAFFIRMED
GREEN BAY, Wis. - February 2, 2004 - American Medical Security Group,
Inc. (NYSE: AMZ) (AMS), today reported net income for the fourth quarter of 2003
of $7.3 million or $0.50 per diluted share, which compares to $6.1 million or
$0.45 per diluted share for the fourth quarter of 2002. The company also
reported a slight improvement in membership and revenue for the fourth quarter
of 2003 compared to the third quarter of 2003.
"We're pleased that our strong earnings track record has now been
complemented by a modest amount of membership and revenue growth," said Samuel
V. Miller, AMS Chairman, President & Chief Executive Officer. "While this is a
start, our product development, targeting of markets and other sales and
marketing strategies are all designed to drive further top-line growth for AMS."
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Ad One
GAAP net income for the full-year 2003 was $29.3 million or $2.08 per
diluted share. GAAP income for the full-year 2002 was $22.5 million or $1.63 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(1) for the full- year 2003 was $27.4 million or $1.94 per diluted
share, compared to adjusted net income of $23.1 million or $1.67 per diluted
share for the full-year 2002.
Full-year GAAP net income and net income per share reconcile to adjusted
net income and adjusted net income per share as follows:
NET INCOME RECONCILIATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Full Year Ended Full Year Ended
December 31, December 31,
2002 2003
----------------------------------------------
INCOME
GAAP Net Income (Loss) $ (37,612) $ 29,310
Less: Cumulative Effect of
Accounting Principle Change (60,098) -
- --------------------------------------------------------------------------------
Income Before Accounting Principle
Change 22,486 29,310
Less: Income (Loss) From
Discontinued Operations (663) 732
- --------------------------------------------------------------------------------
Income from Continuing Operations 23,149 28,578
Less: Realized Investment Gains,
Net of Tax 24 1,192
- --------------------------------------------------------------------------------
Adjusted Net Income (1) $ 23,125 $ 27,386
- --------------------------------------------------------------------------------
INCOME PER SHARE - DILUTED
GAAP Net Income (Loss) Per Share $ (2.72) $ 2.08
Less: Cumulative Effect of
Accounting Principle Change (4.34) -
- --------------------------------------------------------------------------------
Income Before Accounting Principle
Change 1.63 2.08
Less: Income (Loss) From
Discontinued Operations (0.05) 0.05
- --------------------------------------------------------------------------------
Income from Continuing Operations 1.67 2.03
Less: Realized Investment Gains,
Net of Tax 0.00 0.08
- --------------------------------------------------------------------------------
Adjusted Net Income Per Share (1) $ 1.67 $ 1.94
- --------------------------------------------------------------------------------
PER SHARE COLUMNS MAY NOT TOTAL DUE TO ROUNDING
REVENUES(2)
Total revenues for the fourth quarter of 2003 were $185.5 million, up
slightly from the $185.3 million reported for the third quarter of 2003. Total
revenues were $189.8 million for the fourth quarter of 2002. Total revenues for
the full-year 2003 were $743.7 million, compared to $786.3 million for the
full-year 2002.
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Ad Two
MEMBERSHIP
Total health membership at the end of the fourth quarter was 546,766, up
from 540,993 at the end of the third quarter of 2003. Total health membership
was 571,461 at the end of the fourth quarter of 2002.
"Our modest membership growth in the fourth quarter has been supported
by our fourth consecutive quarter of improved new member enrollment," said John
R. Lombardi, Executive Vice President & Chief Financial Officer. "Deletions
still exceed additions within our existing groups. However, our overall member
persistency has continued to improve in each of the past three quarters."
HEALTH SEGMENT RATIOS(2)
The health segment combined ratio (loss ratio plus expense ratio) of
95.3% in the fourth quarter of 2003 was flat with that of the third quarter of
2003 and improved over the 95.9% for the fourth quarter of 2002. The full-year
2003 combined ratio of 95.5% compares favorably with 96.3% for the full-year
2002.
The health segment loss ratio in the fourth quarter was 67.9%, compared
to 68.2% for the third quarter of 2003 and 67.6% for the fourth quarter of 2002.
The full-year 2003 loss ratio of 67.9% improved over the 68.1% for full-year
2002.
AMS' health segment expense ratio of 27.4% is up from 27.0% for the
third quarter of 2003, but significantly lower than the 28.3% for the fourth
quarter of 2002. The full-year 2003 expense ratio of 27.5% was an improvement
over the 28.2% for the full-year 2002.
CASH FLOW & BALANCE SHEET
Cash flow provided by operations in the quarter was $12.6 million. It
was $20.1 million for the full-year 2003 and $35.2 million for the full-year
2002.
At December 31, 2003, AMS had a book value per share of $16.12. That
compares to $15.71 at the end of the third quarter of 2003 and $14.16 at the end
of the fourth quarter of 2002.
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Ad Three
EARNINGS GUIDANCE
As previously announced, AMS anticipates that earnings per share for
2004 will be in a range between $2.13 and $2.18. At this juncture, earnings are
expected to fall in the middle of that range.
The company believes earnings for the first quarter of 2004 will be
approximately $0.52 per share.
American Medical Security Group, Inc., 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 of America, Inc., 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
MONDAY, FEBRUARY 2, 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 913-981-5546. FOLLOWING THE LIVE CALL, A REPLAY WILL BE
AVAILABLE UNTIL MIDNIGHT, FRIDAY, FEBRUARY 6, 2003, BY DIALING 719-457-0820
(CODE 502780). 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;
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)
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2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr
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REVENUES
Premiums $ 194,401 $ 190,787 $ 187,135 $ 182,137 $ 179,055 $ 178,776 $ 176,735
Investment income 3,924 3,799 3,591 3,691 3,402 3,345 3,211
Realized investment gain (loss) 14 48 39 (62) 375 91 1,416
Fees & other 4,512 4,116 4,162 4,016 4,040 3,845 3,899
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 202,851 198,750 194,927 189,782 186,872 186,057 185,261
EXPENSES
Benefits 132,078 129,457 125,376 121,759 120,598 119,315 119,218
General and administrative 32,389 31,138 31,221 30,404 29,284 29,244 26,908
Commissions and selling 26,406 26,815 26,398 25,076 24,042 24,294 24,292
Interest expense 494 463 460 431 339 324 309
Depreciation 1,696 1,750 1,771 1,767 1,777 1,664 1,673
Amortization 183 182 183 182 238 239 238
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Total expenses 193,246 189,805 185,409 179,619 176,278 175,080 172,638
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INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 9,605 8,945 9,518 10,163 10,594 10,977 12,623
Income taxes 3,951 3,557 3,704 3,870 3,997 4,151 4,735
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INCOME FROM CONTINUING OPERATIONS 5,654 5,388 5,814 6,293 6,597 6,826 7,888
Income (loss) from discontinued
operations (224) (147) (76) (216) (134) (57) 923
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 5,430 5,241 5,738 6,077 6,463 6,769 8,811
Cumulative effect of a change in
accounting principle (60,098) - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (54,668) $ 5,241 $ 5,738 $ 6,077 $ 6,463 $ 6,769 8,811
====================================================================================================================================
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 0.47 $ 0.48 $ 0.49
Income from continuing operations
- diluted $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 0.49 $ 0.49 0.55
Income (loss) from discontinued
operations - diluted $ (0.02) $ (0.01) $ (0.01) $ (0.02) $ (0.01) $ (0.00) 0.06
Net income (loss) - basic $ (3.96) $ 0.42 $ 0.45 $ 0.47 $ 0.50 $ 0.51 0.66
Net income (loss) - diluted $ (3.77) $ 0.38 $ 0.42 $ 0.45 $ 0.48 $ 0.48 0.61
Weighted average common shares
- basic 13,803 12,615 12,890 12,891 12,981 13,160 13,392
Weighted average common shares
- diluted 14,492 13,681 13,714 13,466 13,575 14,015 14,340
MARGIN ANALYSIS
Income from continuing operations
before income taxes 4.7% 4.5% 4.9% 5.4% 5.7% 5.9% 6.8%
Net income (loss) (26.9%) 2.6% 2.9% 3.2% 3.5% 3.6% 4.8%
(in thousands, except earnings per share)
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2003 YTD
4th Qtr 12/31/02 12/31/03
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REVENUES
Premiums $ 177,852 $ 754,460 $ 712,418
Investment income 3,573 15,005 13,531
Realized investment gain (loss) 28 39 1,910
Fees & other 4,073 16,806 15,857
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 185,526 786,310 743,716
EXPENSES
Benefits 119,366 508,670 478,497
General and administrative 27,989 125,152 113,425
Commissions and selling 24,455 104,695 97,083
Interest expense 283 1,848 1,255
Depreciation 1,660 6,984 6,774
Amortization 188 730 903
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Total expenses 173,941 748,079 697,937
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INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 11,585 38,231 45,779
Income taxes 4,318 15,082 17,201
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INCOME FROM CONTINUING OPERATIONS 7,267 23,149 28,578
Income (loss) from discontinued
operations - (663) 732
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 7,267 22,486 29,310
Cumulative effect of a change in
accounting principle - (60,098) -
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 7,267 $ (37,612) $ 29,310
====================================================================================================================================
PER SHARE DATA
Adjusted net income - diluted (1) $ 0.50 $ 1.67 $ 1.94
Income from continuing operations
- diluted $ 0.50 $ 1.67 $ 2.03
Income (loss) from discontinued
operations - diluted $ - $ (0.05) $ 0.05
Net income (loss) - basic $ 0.54 $ (2.88) $ 2.21
Net income (loss) - diluted $ 0.50 $ (2.72) $ 2.08
Weighted average common shares
- basic 13,542 13,047 13,270
Weighted average common shares
- diluted 14,464 13,835 14,100
MARGIN ANALYSIS
Income from continuing operations 6.2% 4.9% 6.2%
before income taxes
Net income (loss) 3.9% (4.8%) 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)
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2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE MIX
Health premiums $ 190,720 $ 187,314 $ 183,752 $ 178,891 $ 175,924 $ 175,703 $ 173,744
Life premiums 3,678 3,473 3,383 3,246 3,131 3,073 2,991
Investment income 3,938 3,847 3,630 3,629 3,777 3,436 4,627
Service fees 4,515 4,116 4,162 4,016 4,040 3,845 3,899
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Total revenues $ 202,851 $ 198,750 $ 194,927 $ 189,782 $ 186,872 $ 186,057 $ 185,261
====================================================================================================================================
MEMBERSHIP ANALYSIS
Fully insured medical 329,531 319,675 309,980 293,341 278,091 275,323 $ 270,401
Self funded medical 43,128 43,058 43,426 43,584 42,704 42,568 43,858
Dental 240,492 235,250 235,454 234,536 231,508 228,610 226,734
- ------------------------------------------------------------------------------------------------------------------------------------
Total Health 613,151 597,983 588,860 571,461 552,303 546,501 540,993
Life 174,126 166,857 158,343 151,206 144,207 141,930 137,395
FINANCIAL STATISTICS
Book value per share $ 12.19 $ 12.87 $ 13.70 $ 14.16 $ 14.68 $ 15.27 $ 15.71
Cash flow from operations $ 3,115 $ 233 $ 16,137 $ 15,690 $ (3,575) $ 1,978 $ 9,092
Return on equity, annualized 11.8% 13.5% 13.6% 14.0% 14.2% 13.9% 15.3%
Debt to total capital 18.5% 17.2% 16.2% 15.6% 15.0% 14.1% 13.5%
Common shares outstanding,
net of treasury 12,590 12,845 12,890 12,906 12,936 13,254 13,434
(in thousands, except membership)
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2003 YTD
4th Qtr 12/31/02 12/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE MIX
Health premiums $ 174,871 $ 740,677 $ 700,242
Life premiums 2,981 13,780 12,176
Investment income 3,601 15,044 15,441
Service fees 4,073 16,809 15,857
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Total revenues $ 185,526 $ 786,310 $ 743,716
====================================================================================================================================
MEMBERSHIP ANALYSIS
Fully insured medical 273,252 293,341 273,252
Self funded medical 46,012 43,584 46,012
Dental 227,502 234,536 227,502
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Total Health 546,766 571,461 546,766
Life 136,423 151,206 136,423
FINANCIAL STATISTICS
Book value per share $ 16.12 $ 14.16 $ 16.12
Cash flow from operations $ 12,630 $ 35,175 $ 20,125
Return on equity, annualized 13.6% 11.2% 14.3%
Debt to total capital 12.2% 15.6% 12.2%
Common shares outstanding,
net of treasury 13,511 12,906 13,511
Page 3
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
BALANCE SHEETS
(in thousands)
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2002 2003
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
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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 $ 302,277
Fixed maturity securities held to
maturity, at amortized cost 4,303 4,305 4,297 4,288 3,175 3,168 3,483 3,377
Trading securities, at fair value 666 754 786 926 1,142 1,217 1,254 1,424
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Total investments 255,186 262,420 281,684 283,436 287,912 290,429 291,061 307,078
Cash and cash equivalents 17,604 14,407 17,629 30,620 20,396 22,036 30,183 17,289
Other assets:
Property and equipment, net 34,460 34,344 34,347 33,061 34,112 35,118 34,445 37,446
Goodwill and other intangibles, net 36,254 36,071 35,889 35,706 35,468 35,229 34,283 34,095
Other assets 44,744 47,006 44,141 46,117 50,737 49,239 49,378 48,179
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Total other assets 115,458 117,421 114,377 114,884 120,317 119,586 118,106 119,720
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TOTAL ASSETS $ 388,248 $ 394,248 $ 413,690 $ 428,940 $ 428,625 $ 432,051 $ 439,350 $ 444,087
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Medical and other benefits payable $ 132,569 $ 131,950 $ 134,178 $ 134,479 $ 131,650 $ 131,023 $ 127,023 $ 129,809
Advance premiums 16,634 15,426 16,743 15,200 17,300 16,453 16,150 15,865
Payables and accrued expenses 26,656 24,341 27,850 29,141 23,466 21,039 24,020 24,099
Notes payable 34,758 34,458 34,158 33,858 33,558 33,258 32,958 30,158
Other liabilities 24,154 22,715 24,221 33,512 32,736 27,860 28,162 26,332
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Total liabilities 234,771 228,890 237,150 246,190 238,710 229,633 228,313 226,263
Shareholders' equity:
Common stock 16,654 16,654 16,654 16,654 16,654 16,654 16,654 16,654
Paid-in capital 187,892 189,232 189,738 189,813 190,367 192,362 193,509 194,431
Retained earnings (14,198) (8,957) (3,219) 2,858 9,321 16,090 24,901 32,168
Unrealized gain (loss) on investments (74) 3,051 7,655 7,646 8,090 9,964 7,521 6,133
Treasury stock (36,797) (34,622) (34,288) (34,221) (34,517) (32,652) (31,548) (31,562)
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Total shareholders' equity 153,477 165,358 176,540 182,750 189,915 202,418 211,037 217,824
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TOTAL LIABILITIES AND SHAREHOLDERS' $ 388,248 $ 394,248 $ 413,690 $ 428,940 $ 428,625 $ 432,051 $ 439,350 $ 444,087
EQUITY
====================================================================================================================================
Page 4
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - HEALTH
(in thousands, except financial statistics)
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2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 190,720 $ 187,314 $ 183,752 $ 178,891 $ 175,924 $ 175,703 $ 173,744
Investment income 1,934 1,809 1,484 1,444 1,715 1,683 1,596
Other revenue 4,480 4,087 4,127 3,991 3,965 3,772 3,828
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Total revenues 197,134 193,210 189,363 184,326 181,604 181,158 179,168
Expenses:
Benefits 130,842 128,451 124,469 120,883 119,783 118,637 118,518
General and administrative 32,039 30,352 30,694 30,212 29,352 29,189 27,090
Commissions and selling 25,752 26,183 25,765 24,483 23,472 23,724 23,727
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Total expenses 188,633 184,986 180,928 175,578 172,607 171,550 169,335
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Income from continuing operations
before income taxes $ 8,501 $ 8,224 $ 8,435 $ 8,748 $ 8,997 $ 9,608 $ 9,833
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 68.6% 68.6% 67.7% 67.6% 68.1% 67.5% 68.2%
Expense ratio:
General and administrative 14.4% 14.0% 14.5% 14.7% 14.4% 14.5% 13.4%
Commissions and selling 13.5% 14.0% 14.0% 13.7% 13.3% 13.5% 13.7%
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Total expense ratio 28.0% 28.0% 28.5% 28.3% 27.8% 28.0% 27.0%
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Combined ratio 96.6% 96.6% 96.2% 95.9% 95.9% 95.5% 95.3%
====================================================================================================================================
Premiums per member per month:
Fully insured medical $ 168 $ 170 $ 172 $ 174 $ 181 $ 184 $ 184
Self funded 53 51 52 52 53 53 55
Dental 22 22 22 23 23 23 24
Short-term disability 20 21 21 21 22 22 23
Benefits cost per member per month:
Fully insured medical $ 117 $ 118 $ 118 $ 120 $ 125 $ 124 $ 127
Self funded 28 26 29 22 27 36 40
Dental 15 15 14 14 15 16 15
Short-term disability 14 11 9 12 12 8 3
(in thousands, except financial statistics)
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2003 YTD
4th Qtr 12/31/02 12/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 174,871 $ 740,677 $ 700,242
Investment income 1,675 6,671 6,669
Other revenue 4,008 16,685 15,573
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Total revenues 180,554 764,033 722,484
Expenses:
Benefits 118,708 504,645 475,646
General and administrative 28,004 123,297 113,635
Commissions and selling 23,901 102,183 94,824
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 170,613 730,125 684,105
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes $ 9,941 $ 33,908 $ 38,379
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 67.9% 68.1% 67.9%
Expense ratio:
General and administrative 13.7% 14.4% 14.0%
Commissions and selling 13.7% 13.8% 13.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Total expense ratio 27.4% 28.2% 27.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Combined ratio 95.3% 96.3% 95.5%
====================================================================================================================================
Premiums per member per month:
Fully insured medical $ 185 $ 171 $ 183
Self funded 53 52 54
Dental 24 22 23
Short-term disability 23 21 22
Benefits cost per member per month:
Fully insured medical $ 128 $ 118 $ 126
Self funded 29 26 33
Dental 15 15 15
Short-term disability 4 12 7
Page 5
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
SEGMENT DATA - LIFE
(in thousands, except financial statistics)
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2002 2003 YTD
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 12/31/02 12/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 3,678 $ 3,473 $ 3,383 $ 3,246 $ 3,131 $ 3,073 $ 2,991 $ 2,981 $ 13,780 $12,176
Investment income 150 153 141 115 133 129 121 129 559 512
Other revenue 32 29 27 25 75 73 71 65 113 284
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Total revenues 3,860 3,655 3,551 3,386 3,339 3,275 3,183 3,175 14,452 12,972
Expenses:
Benefits 1,218 1,017 907 864 837 679 700 658 4,006 2,874
General and administrative 540 482 480 489 510 487 383 415 1,991 1,795
Commissions and selling 679 644 643 602 589 585 582 575 2,568 2,331
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Total expenses 2,437 2,143 2,030 1,955 1,936 1,751 1,665 1,648 8,565 7,000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes $ 1,423 $ 1,512 $ 1,521 $ 1,431 $ 1,403 $ 1,524 $ 1,518 $ 1,527 $ 5,887 $ 5,972
====================================================================================================================================
FINANCIAL STATISTICS
Loss ratio 33.1% 29.3% 26.8% 26.6% 26.7% 22.1% 23.4% 22.1% 29.1% 23.6%
Expense ratio:
General and administrative 13.8% 13.0% 13.4% 14.3% 13.9% 13.5% 10.4% 11.7% 13.6% 12.4%
Commissions and selling 18.5% 18.5% 19.0% 18.5% 18.8% 19.0% 19.5% 19.3% 18.6% 19.1%
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Total expense ratio 32.3% 31.6% 32.4% 32.8% 32.7% 32.5% 29.9% 31.0% 32.3% 31.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Combined ratio 65.4% 60.9% 59.2% 59.5% 59.4% 54.6% 53.3% 53.1% 61.3% 55.2%
====================================================================================================================================
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 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 12/31/02 12/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Revenues:
Premiums $ 3 $ - $ - $ - $ - $ - $ - $ - $ 3 $ -
Investment income 1,840 1,837 1,966 2,132 1,554 1,533 1,494 1,769 7,775 6,350
Realized investment gain (loss) 14 48 39 (62) 375 91 1,416 28 39 1,910
Other revenue - - 8 - - - - - 8 -
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 1,857 1,885 2,013 2,070 1,929 1,624 2,910 1,797 7,825 8,260
Expenses:
Benefits 18 (11) - 12 (22) (1) - - 19 (23)
General and administrative 1,506 2,054 1,818 1,470 1,199 1,232 1,108 1,230 6,848 4,769
Commissions and selling (25) (12) (10) (9) (19) (15) (17) (21) (56) (72)
Interest expense 494 463 460 431 339 324 309 283 1,848 1,255
Amortization of intangibles 183 182 183 182 238 239 238 188 730 903
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Total expenses 2,176 2,676 2,451 2,086 1,735 1,779 1,638 1,680 9,389 6,832
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Income (loss) from continuing
operations before income taxes $ (319) $ (791) $ (438) $ (16) $ 194 $ (155) $ 1,272 $ 117 $(1,564) $ 1,428
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Page 7
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME
(in thousands, except eranings per share)
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2002 2003
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
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INCOME
GAAP Net income (loss) $ (54,668) $ 5,241 $ 5,738 $ 6,077 $ 6,463 $ 6,769 $ 8,811 $ 7,267
Less:
Cumulative effect of accounting
principle change (60,098) - - - - - - -
Income (loss( from discontinued
operations (224) (147) (76) (216) (134) (57) 923 -
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Income from continuing operations 5,654 5,388 5,814 6,293 6,597 6,826 7,888 7,267
Less:
Realized investment gains, net
of tax 8 29 24 (38) 234 57 885 18
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Adjusted net income $ 5,646 $ 5,359 $ 5,790 $ 6,331 $ 6,363 $ 6,769 $ 7,003 $ 7,249
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INCOME PER SHARE - DILUTED
GAAP Net income (loss) per share $ (3.77) $ 0.38 $ 0.42 $ 0.45 $ 0.48 $ 0.48 $ 0.61 $ 0.50
Less:
Cumulative effect of accounting
principle change (4.15) - - - - - - -
Income (loss) from discontinued
operations (0.02) (0.01) (0.01) (0.02) (0.01) (0.00) 0.06 -
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Income from continuing operations 0.39 0.39 0.42 0.47 0.49 0.49 0.55 0.50
Less:
Realized invetment gains, net
of tax 0.00 0.00 0.00 (0.00) 0.02 0.00 0.06 0.00
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Adjusted net income per share $ 0.39 $ 0.39 $ 0.42 $ 0.47 $ 0.47 $ 0.48 $ 0.49 $ 0.50
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YTD
12/31/02 12/31/03
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INCOME
GAAP Net income (loss) $ (37,612) $ 29,310
Less:
Cumulative effect of accounting
principle change (60,098) -
Income (loss( from discontinued
operations (663) 732
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Income from continuing operations 23,149 28,578
Less:
Realized investment gains, net
of tax 24 1,192
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Adjusted net income $ 23,125 $ 27,386
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INCOME PER SHARE - DILUTED
GAAP Net income (loss) per share $ (2.72) $ 2.08
Less:
Cumulative effect of accounting
principle change (4.34) -
Income (loss) from discontinued
operations (0.05) 0.05
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Income from continuing operations 1.67 2.03
Less:
Realized invetment gains, net
of tax 0.00 0.08
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Adjusted net income per share $ 1.67 $ 1.94
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