P.O. Box 19032
Green Bay, WI 54307-9032
American For more information contact:
Medical Security Group TM Cliff Bowers
AMS
Vice President
Corporate Communications
(920)661-2766
New Release
for Immediate Release Bill Zaferos
Cobalt Corporation
Manager
Corporate Communications
414-226-5431
American Medical Security Group & Cobalt Corporation
Announce Plans For Share Repurchase by AMS;
Secondary Public Offering of AMS Shares by Cobalt
GREEN BAY, Wis. - March 20, 2002 - American Medical Security Group, Inc.
(NYSE: AMZ) (AMS) and Cobalt Corporation (NYSE: CBZ) announced today that they
have entered into an agreement by which AMS will repurchase 1,400,000 of its
shares from Cobalt for $18.2 million or $13.00 per share. In addition, Cobalt
Corporation has announced that it plans to sell at least 3,000,000 of its AMS
shares in an underwritten secondary offering.
Currently, Cobalt Corporation, through its wholly owned subsidiary, Blue
Cross & Blue Shield United of Wisconsin, owns 6,309,525, or approximately 45%,
of the outstanding AMS shares. Following the repurchase, Cobalt will own
4,909,525, or approximately 39%, of the approximately 12,555,000 then
outstanding AMS shares. Assuming a successful secondary offering by Cobalt, if
the minimum of 3,000,000 AMS shares were sold, Cobalt would own approximately
1,909,000 shares, or approximately 15% of the approximately 12,555,000 shares
then outstanding.
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According to AMS, the share repurchase will require no additional
financing. The share repurchase is expected to close promptly following the
receipt of necessary consents.
Cobalt expects the secondary public offering of its AMS shares will take
place in the second quarter of 2002.
"This agreement is in the best interest of both companies," said Thomas R.
Hefty, Cobalt's President, Chairman and CEO. "However, AMS is no longer a
strategic asset of Cobalt, and this agreement allows us to reduce our position
in an orderly fashion."
Samuel V. Miller, AMS Chairman, President & CEO, stated, "We believe these
transactions are in the best long-term interest of all AMS shareholders."
As part of the agreement, Cobalt Corporation will withdraw the slate of
directors it had nominated for election to AMS' board. In addition, the AMS
board of directors has appointed Thomas R. Hefty and Kenneth L. Evason,
nominated by Cobalt, to serve as directors on the AMS board of directors,
effective as of the date the share repurchase is closed.
Cobalt has agreed to certain standstill provisions and to vote in favor of
the slate of directors nominated by the AMS board of directors, and has also
agreed not to present any new AMS shareholder proposals or nominate for election
to the company's board of directors any additional directors for a period as
specified in the agreement.
Cobalt Corporation is the Blue Cross and Blue Shield licensee for the state
of Wisconsin. It is one of the leading, publicly traded health care companies in
the nation, offering a diverse portfolio of complementary insurance and managed
care products to employer, individual, insurer and government customers.
Headquartered in Milwaukee and formed by the combination of Blue Cross & Blue
Shield United of Wisconsin and United Wisconsin Services, Inc., Cobalt
Corporation serves 2.9 million lives in 50 states.
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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 provides medical and dental coverage for
557,716 members.
# # # # #
This press release shall not constitute an offer to sell or the solicitation of
an offer to buy the shares nor shall there be any sale of the shares in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Cautionary Statement: Some of the statements contained in this press release are
"forward-looking" statements within the meaning of the safe harbor provisions of
the United States 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, the inability to complete the secondary offering due to
factors affecting the equities market, industry conditions or lack of interest
by potential investors; the inability to achieve earnings expectations due to
unexpected increases in medical costs; increased utilization of prescription
drugs or medical services resulting from bioterrorism concerns or otherwise; the
Company's ability to predict rising health care costs and adequately price its
products; the Company's ability to increase its agent distribution force,
generate new sales, sell new products and retain existing customers; changes in
the Company's relationships with key agents that sell its products; the
Company's ability to control expenses during a time of declining revenue and
membership; legislative and regulatory matters, including the effects of health
care or other legislation or regulation, delays in regulatory approvals, and
regulatory action resulting from market conduct activity; general business
conditions, including competitive practices and demand for the Company's
existing and new products; development of and changes in claims reserves; rating
agency policies and practices; general economic conditions, including the effect
of changes in interest rates on the Company's investment portfolio; the outcome
of commercial or other litigation; and other factors that may be referred to in
American Medical Security Group, Inc.'s reports filed with the Securities &
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.