1
MAY 30, 1997 CONFIDENTIAL
MATERIALS PREPARED FOR DISCUSSION
ANTHEM, INC.
2
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ANTHEM, INC.
TABLE OF CONTENTS
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1. EXECUTIVE SUMMARY
2. TRANSACTION STRUCTURE
3. CSFB VALUATION SUMMARY
4. GOING PRIVATE CONSIDERATIONS
5. APPENDICES
A. ACORDIA, INC. MARKET AND SHAREHOLDER DATA
B. ACORDIA BROKERS VALUATION
C. ACORDIA HEALTH VALUATION
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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ANTHEM, INC.
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1.
EXECUTIVE SUMMARY
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____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 1
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ANTHEM, INC.
OBJECTIVE
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Solve the business tension between Anthem and Acordia in the health
sector in response to competitive pressures
* Focus on core healthcare-related business
* Reduce costs in order to remain competitive
* Acquire the health operations of Acordia
* Exit non-core businesses
* Maximize the value of Anthem's investment in Acordia
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
5
CONFIDENTIAL 2
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ANTHEM, INC.
WHERE WE ARE TODAY
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SALE OF ACORDIA BROKERS
-----------------------
* 45 parties contacted; 26 signed confidentiality agreements
* 11 preliminary indications of interest on March 19, 1997
* 3 potential buyers completed on-site due diligence and
attended management presentations
* Bain Capital/Goldman Sachs
* Kelsar & Company/Insurance Partners
* PennCorp/Knightsbridge Capital Fund I
* Final bids submitted by 2 potential buyers on May 9, 1997
* Discussions with PennCorp/Knightsbridge Capital Fund I
ongoing at $335 million
ACQUISITION OF ACORDIA, INC.
----------------------------
* Preliminary understanding reached with Acordia's Independent
Committee for purchase of Acordia, Inc. for $40.00 per share
* Documentation drafted
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 3
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ANTHEM, INC.
TRANSACTION STRUCTURE
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STEP 1: TENDER FOR ACORDIA SHARES
- ----------------
Anthem, Inc.
- ----------------
: :
: 100% :
: :
: ------------ --------
: Cash
: Merger Sub ---------------------------> Public
: Acordia, Inc. shares
: ------------ <------------------------- --------
: :
: :
: --------------- :
: :
- ------------------------ Acordia, Inc. ------------
66.8% --------------- 33.2%
:
:
:
-------------------
: 100% :
: :
----------- -----------
Acordia Anthem
Brokers' Related
Companies Companies
----------- -----------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 4
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ANTHEM, INC.
TRANSACTION STRUCTURE
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STEP 2: SQUEEZE-OUT MERGER
- ---------------- ----------
Cash
Anthem, Inc. -------------------------------> Public
- ---------------- ----------
: :
: :
: :
100% :---------------------- : --------------------
: :
------------ -----------------
Merge
Merger Sub -------> Acordia, Inc.
------------ -----------------
:
:
:
-------------------
: 100% :
: :
----------- -----------
Acordia Anthem
Brokers' Related
Companies Companies
----------- -----------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 5
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ANTHEM, INC.
TRANSACTION STRUCTURE
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STEP 3: SALE OF ACORDIA BROKERS
-------------
Anthem, Inc.
-------------
:
100% :
:
------------ -------
Cash
Acordia, Inc. <-------------------------------------- Buyer
Shares of
------------ --------------------------------------> -------
: Acordia Brokers' Companies
:
:
-------------------
: 100% :
: :
----------- -----------
Acordia Anthem
Brokers' Related
Companies Companies
----------- -----------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 6
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ANTHEM, INC.
TRANSACTION STRUCTURE
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STEP 4: POST-TRANSACTION STRUCTURE
- ---------------- --------------
Anthem, Inc. Buyer
- ---------------- --------------
: :
: :
: 100% : 100%
: :
: :
- ---------------- ---------------
Acordia
Acordia, Inc. Brokers'
Companies
- ---------------- ---------------
:
:
: 100%
-------------
Anthem
Related
Companies
-------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 7
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ANTHEM, INC.
CREDIT SUISSE FIRST BOSTON'S VALUATION APPROACH
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Acordia, Inc. was valued on a total company and segment basis:
* Segments analyzed were Acordia Brokers and Acordia Health
* Consolidated Acordia, Inc. equity valuation equals value of
Acordia Brokers plus value of Acordia Health plus operating cash
and equivalents (including cash from option and warrant
exercise) less Acordia, Inc. debt and applicable taxes
Credit Suisse First Boston has primarily utilized the following
analytical techniques:
* Comparable Publicly-Traded Companies analysis, which applies
selected stock price multiples of historical and estimated
financial data for comparable publicly-traded companies to
historical and projected financial data of Acordia's business
segments
* Comparable Acquisition analysis which applies selected multiples
of acquisition prices paid to historical financial data for
transactions involving companies in similar lines of business to
Acordia's business segments
* Discounted Cash Flow ("DCF") analysis, which discounts to
present value projected cash flows provided by Acordia
broker's business segments under a variety of operating
scenarios
* Leveraged Buy-Out ("LBO") analysis, which looks at the range of
equity returns supported by Acordia Brokers' projected cash
flows under a variety of capital structures
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 8
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ANTHEM, INC.
ACORDIA, INC. -- VALUATION SUMMARY
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PER SHARE VALUATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARES)
---------------------------------------------------------------------
VALUE RANGE
-------------------------------------
LOW HIGH
------------------------------------------------------------------------------------------------------
CSFB Enterprise Value Reference Range - Acordia Brokers $ 325.0 -- $ 375.0
Tax paid on sale (1) (19.7) -- (39.7)
------- -------
Acordia Brokers after-tax consideration (2) $ 305.3 -- $ 335.3
CSFB Enterprise Value Reference Range - Acordia Health 340.0 -- 440.0
Operating cash and equivalents 13.6 -- 13.6
Cash from option and warrant exercise 75.7 -- 75.7
Debt outstanding (3) (202.7) -- (202.7)
ACO EQUITY VALUE(4) $ 531.9 -- $ 661.9
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ACO PER SHARE VALUE $ 33.45 -- $ 41.63
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Shares and equivalents outstanding (5) 15,902 -- 15,902
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(1) Calculated based on net proceeds after assumption of Acordia
Brokers debt, 40% tax rate and tax basis of $230.0mm.
(2) Brokerage operations after-tax consideration includes assumption
of $45.9mm in Acordia Brokers debt.
(3) Includes earn-out obligations.
(4) Gross of option and warrant exercise proceeds of $75.7mm.
(5) Common shares outstanding and outstanding options and warrants in
000s.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 9
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ANTHEM, INC.
ACORDIA, INC. -- MULTIPLE ANALYSIS
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARES)
--------------------------------------------------------------------------------------------------
PER SHARE PRICE
------------------------------------------
ACORDIA, INC. LOW END HIGH END
DATA $33.45 $40.00 $41.63
--------------------------------------------------------------------------------------------------
Multiple of:
1996A EPS(1) $ 1.98 16.9x 20.2x 21.0x
LTM EPS(2) 1.97 17.0 20.3 21.1
1997E EPS(2) 2.10 15.9 19.0 19.8
1998E EPS(2) 2.30 14.5 17.4 18.1
ACO Enterprise value $645.3 $749.5 $775.3
LTM Revenues $ 662.0 1.0x 1.1x 1.2x
LTM EBITDA 103.0 6.3 7.3 7.5
LTM EBIT 61.6 10.5 12.2 12.6
--------------------------------------------------------------------------------------------------
(1) Net of $2.8mm (pretax) gain on sale of assets.
(2) Per First Call estimates as of 5/27/97.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 10
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ANTHEM, INC.
ACORDIA BROKERS VALUATION DISCUSSION
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* Key valuation issues are: (1) lack of reported net income due to
acquisitions; (2) ability of Acordia Brokers to achieve pro forma
financial results; and, (3) value of non-Anthem TPA businesses
* The most comparable publicly-traded companies are Arthur J.
Gallagher, Hilb, Rogal & Hamilton and Poe & Brown
====================================================================================================
P/E MULTIPLES ENTERPRISE VALUE/LTM
----------------------------------------------- -----------------------------------
1996A LTM 1997E 1998E REVENUES EBITDA EBIT
----------------------------------------------------------------------------------------------------
AJG 12.1x 11.9x 11.6x 10.9x 1.0x 5.6x 6.4x
HRH 16.9 16.3 16.3 15.1 1.3 6.7 10.4
POBR 15.6 14.9 13.4 11.6 2.0 6.6 8.3
----------------------------------------------------------------------------------------------------
* Merger activity in the insurance brokerage sector has accelerated
in the last 12 months and valuations have varied dramatically
====================================================================================================
ENTERPRISE VALUE/LTM
------------------------
ACQUIROR/TARGET REVENUES EBITDA
----------------------------------------------------------------------------------------------------
Marsh & McLennan/ Johnson & Higgins 1.5x 10.2x
Aon Corp./ Minet Group 0.2 NM
Aon Corp./ Alexander & Alexander 0.9 6.0
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____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 11
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ANTHEM, INC.
ACORDIA BROKERS -- VALUATION SUMMARY
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ACORDIA BROKERS VALUATION SUMMARY -- ENTERPRISE VALUE
(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA VALUE RANGE
--------------------------------------
ANALYSIS BROKERS DATA LOW HIGH
--------------------------------------------------------------------------------------------------------------
Comparable Companies Analysis $321 -- $396
Comparable Acquisition Analysis 300 -- 400
Discounted Cash Flow Analysis 325 -- 400
LBO Analysis 365 -- 416
CSFB ENTERPRISE VALUE REFERENCE RANGE $325 -- $375
==== ====
Reference Range as a multiple of:
1996A Net Income(1) $ (1.0) NM -- NM
1997E Net Income(1) 7.8 35.8x -- 42.2x
LTM Revenues 336.2 1.0 -- 1.1
LTM EBITDA 34.2 9.5 -- 11.0
--------------------------------------------------------------------------------------------------------------
(1) Adjusted for debt and equivalents equal to $45.9 million at March
31, 1997.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 12
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ANTHEM, INC.
ACORDIA HEALTH VALUATION DISCUSSION
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* There is uncertainty surrounding the valuation of Acordia Health
due to the unique relationship between Anthem and Acordia
* The intrinsic value of Acordia Health depends largely on the future
profitability permitted by Anthem since Acordia Health is dependent
on Anthem for revenues and profits
- Existing contract with Acordia can be canceled by Anthem
without penalty
- Future profitability of Acordia Health is expected to fall
dramatically as Anthem transitions to managed care
* As a result, different valuation techniques give markedly different
valuations for Acordia Health
- None of the comparable companies or comparable acquisitions
analyzed by CSFB have an analogous customer relationship
- Publicly-traded healthcare service and administration companies
all have high (18.5% - 19.9%) projected rates of earnings
growth in contrast to Acordia Health
- In determining CSFB's reference range for Acordia Health, we
have placed more emphasis on our DCF valuation since it is the
valuation technique which takes into account the future
earnings potential of Acordia Health
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 13
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ANTHEM, INC.
ACORDIA HEALTH -- VALUATION SUMMARY
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ACORDIA HEALTH VALUATION SUMMARY -- ENTERPRISE VALUE
(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA VALUE RANGE
------------------------------------
ANALYSIS HEALTH DATA LOW HIGH
-----------------------------------------------------------------------------------------------------------------
Comparable Companies Analysis $400 -- $500
Comparable Acquisition Analysis 450 -- 550
Discounted Cash Flow Analysis 225 -- 325
CSFB Enterprise Value Reference Range $340 -- $440
==== ====
Reference Range as a multiple of:
1996A Net Income $ 36.0 9.4x -- 12.2x
1997E Net Income(1) 33.9 10.0 -- 13.0
LTM Revenues 325.8 1.0 -- 1.4
LTM EBITDA 68.9 4.9 -- 6.4
LTM EBIT 60.1 5.7 -- 7.3
-----------------------------------------------------------------------------------------------------------------
Note: Acordia Health has no debt allocated to its operations.
(1) Adjusted for non-recurring $6.0 million payment for termination
of Anthem US relationship.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 14
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ANTHEM, INC.
IMPLIED VALUE OF ACORDIA HEALTH @ $40.00 PER SHARE
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(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA HEALTH ACORDIA BROKERS ENTERPRISE VALUE
---------------------------------------------------
DATA $325 $335 $375
---------------------------------------------------------------------------------------------------------------
Implied Value of Acordia Health $444.1 $438.1 $414.1
As a multiple of:
1996A Net Income $ 36.0 12.3x 12.2x 11.5x
1997E Net Income(1) 33.9 13.1 12.9 12.2
LTM Revenues 325.8 1.4 1.3 1.3
LTM EBITDA 68.9 6.4 6.4 6.0
LTM EBIT 60.1 7.4 7.3 6.9
---------------------------------------------------------------------------------------------------------------
(1) Adjusted for non-recurring $6.0 million payment for termination
of Anthem US relationship.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 16
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ANTHEM, INC.
CONSIDERATIONS IN TAKING ACORDIA PRIVATE
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* Purchase by a controlling shareholder of all the remaining shares
(termed a "minority squeeze-out") generally requires a premium to
prevailing market price
* Since Anthem announced that it was reviewing its investment in
Acordia, Inc. on February 6, 1997, Acordia's stock price has
appreciated 28.7% versus a 8.8% increase in the S&P 500 and a 14.0%
increase in the Brokers Index over the same period
* The indicated value range for Acordia relative to premiums paid in
similar situations is as follows:
ACQUISITION PREMIUM ANALYSIS FOR ACORDIA VALUATION
INDICATED MARKET PREMIUM
===================================================================
DATA
---------------------------------------------------------------------------------------------------------------------
Acordia per share value $33.452 $40.000 $41.627
Premium to current market(1) $35.875 (6.8)% 11.5% 16.0%
Premium to one day prior to 2/6/97 27.875 20.0 43.5 49.3
Premium to one week prior to 2/6/97 28.000 19.5 42.9 48.7
Premium to one month prior to 2/6/97 27.875 20.0 43.5 49.3
---------------------------------------------------------------------------------------------------------------------
(1) As of 5/23/97.
1990--1996 "SQUEEZE-OUT" TRANSACTIONS
===================================================================
PREMIUM TO STOCK PRICE PRIOR TO ANNOUNCEMENT
-------------------------------------------------------------
ONE DAY ONE WEEK ONE MONTH
---------------------------------------------------------------------------------------------------------------------
75th Percentile 36.0% 42.7% 47.7%
MEAN 20.0% 23.1% 25.9%
MEDIAN 26.1% 29.6% 31.4%
25th Percentile 10.8% 12.5% 8.2%
Transactions 105 105 106
---------------------------------------------------------------------------------------------------------------------
Source: Securities Data Company and Credit Suisse First Boston
Database.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 16
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ANTHEM, INC.
ACORDIA, INC. LTM STOCK PRICE AND VOLUME GRAPH
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ACORDIA, INC.: MAY 23, 1996 TO MAY 23, 1997
LTM DAILY TRADING VOLUME/LTM DAILY CLOSING PRICE
LTM Daily Trading Volume (In thousands) LTM Daily Closing Price
[ ] Volume - Price Close
5/23/96 7/9/96 8/21/96 10/4/96 11/18/96 1/3/97 2/18/97 4/3/97 5/16/97
Volume XXX XXX XXX XXX XXX XXX XXX XXX XXX
Price Close XXX XXX XXX XXX XXX XXX XXX XXX XXX
Earnings Release
10/31/96
Announcement Date
2/6/97
ACO Press Release
5/20/97
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
20
CONFIDENTIAL 17
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ANTHEM, INC.
ACORDIA, INC. STOCK PRICE AND VOLUME GRAPH SINCE IPO
- --------------------------------------------------------------------------------
ACORDIA, INC.: IPO TO MAY 23, 1997
DAILY TRADING VOLUME/DAILY CLOSING PRICE
Daily Trading Volume (In thousands) Daily Closing Price
[ ] Volume
- -- Price Close
10/21/92 4/21/93 10/18/93 4/15/94 10/13/94 4/12/95 10/10/95 4/9/96 10/4/96 4/4/97
Volume XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX
Price XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX
Community Mutual Insurance Co.
Ann. Date 11/29/94
Blue Cross & Blue Shield of NJ
Ann. Date 5/28/96
Blue Cross & Blue Shield of CT
Ann. Date 10/1/98
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 18
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ANTHEM, INC.
ACORDIA, INC. SHAREHOLDER PROFILE
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ACORDIA, INC. OWNERSHIP ANALYSIS
(IN THOUSANDS)
================================================================================
PRIMARY FULLY-DILUTED
------------------------------- ----------------------------------
SHARES OWNERSHIP SHARES OWNERSHIP
INSTITUTION HELD PERCENTAGE HELD PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------------
Anthem, Inc.(1) 8,693.1 66.8% 8,693.1 54.7%
American Financial Corp. 800.0 6.2% 2,300.0(2) 14.5%
Harris Associates 501.3 3.9% 501.3 3.2%
Barclays Bank plc 245.6 1.9% 245.6 1.5%
Ruane Cunniff 220.3 1.7% 220.3 1.4%
Mellon Bank Corp. 134.2 1.0% 134.2 0.8%
U.S. Bancorp 105.7 0.8% 105.7 0.7%
NY State Teachers 102.5 0.8% 102.5 0.6%
Dimensional Fund Advisors 71.5 0.5% 71.5 0.4%
Bankers Trust NY Corp. 70.2 0.5% 70.2 0.4%
State Street Boston Co. 51.6 0.4% 51.6 0.3%
IBM Ret Plan 36.8 0.3% 36.8 0.2%
Kennedy Capital Mgt 30.4 0.2% 30.4 0.2%
ANB Investment Mgt 29.8 0.2% 29.8 0.2%
Century Capital Mgt 25.0 0.2% 25.0 0.2%
Colonial Management 21.5 0.2% 21.5 0.1%
Calif State Teachers Ret Fund 20.9 0.2% 20.9 0.1%
World Asset Mgt 11.9 0.1% 11.9 0.1%
Colorado Public Emp 9.9 0.1% 9.9 0.1%
Morgan Stanley Group 8.3 0.1% 8.3 0.1%
-------- ----- -------- -----
Sub-total, 20 Largest Holders 11,190.4 86.0% 12,690.4 79.8%
All Others 1,815.1 14.0% 1,815.1 11.4%
-------- ----- -------- -----
Total Shares Outstanding 13,005.5 100.0% 14,505.5(2) 91.2%
======== ===== --------
Stock Options 1,396.1 8.8%
-------- -----
Total Shares and Equivalents 15,901.6 100.0%
======== =====
- -----------------------------------------------------------------------------------------------------------------------
Sources: Anthem, Inc., Acordia, Inc. proxy and CDA/Spectrum.
(1) Includes shares reserved under Anthem's Acordia stock ownership program.
(2) Includes 1,500,000 warrants.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
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CONFIDENTIAL 19
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ANTHEM, INC.
RELATIVE PRICE PERFORMANCE
- --------------------------------------------------------------------------------
(1)
- ---- ACO ---BROKERS
5/23/96 7/12/96 8/31/96 10/20/96 12/9/96 1/28/97 3/19/97 5/8/97
- ------------------------------------------------
(1) Brokers Index comprised of Aon Corp; Arthur J. Gallagher; E.W. Blanch;
Hilb, Rogal and Hamilton; Marsh & McLennan; and Poe & Brown.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
23
CONFIDENTIAL 20
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ANTHEM, INC.
PRICE AND VOLUME DISTRIBUTION OF ACORDIA, INC. TRADES
- --------------------------------------------------------------------------------
TRADING ANALYSIS -- TRADING ANALYSIS --
RANGES OF CLOSING PRICES RANGES OF CLOSING PRICES
MAY 23, 1996 TO MAY 23, 1997 OCTOBER 21, 1992 TO MAY 23, 1997
- ---------------------------- --------------------------------
$27-$28 3.85% $14-$17 10.87%
$28-$29 18.09% $17-$20 7.44%
$29-$30 9.02% $20-$23 19.17%
$30-$31 15.66% $23-$26 19.81%
$31-$32 19.02% $26-$29 20.12%
$32-$33 22.00% $29-$32 13.76%
$33-$34 5.13% $32-$35 7.68%
$34-$35 0.00% $35-$38 1.14$
$35-$36 3.38%
$36-$37 3.85%
Source: FactSet Research Systems, Inc.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
24
CONFIDENTIAL 21
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ANTHEM, INC.
PRICE AND VOLUME DISTRIBUTION OF ACORDIA, INC. TRADES
- --------------------------------------------------------------------------------
TRADING ANALYSIS -- TRADING ANALYSIS --
RANGES OF CLOSING PRICES RANGES OF CLOSING PRICES
FEBRUARY 5, 1996 TO FEBRUARY 5, 1997 FEBRUARY 3, 1995 TO FEBRUARY 5, 1997
- ------------------------------------ ------------------------------------
$27-$28 6.86% $23-$24 3.67%
$28-$29 51.84% $24-$25 0.96%
$29-$30 7.57% $25-$26 2.12%
$30-$31 13.29% $26-$27 2.32%
$31-$32 12.46% $27-$28 11.96%
$32-$33 5.51% $28-$29 31.42%
$33-$34 2.47% $29-$30 11.02%
$30-$31 12.21%
$31-$32 11.38%
$32-$33 7.03%
$33-$34 5.53%
$34-$35 0.38%
Source: FactSet Research Systems, Inc.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
25
CONFIDENTIAL 22
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA BROKERS -- VALUATION SUMMARY
- --------------------------------------------------------------------------------
ACORDIA BROKERS VALUATION SUMMARY -- ENTERPRISE VALUE
(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA VALUE RANGE
--------------------------------------
ANALYSIS BROKERS DATA LOW HIGH
--------------------------------------------------------------------------------------------------------------
Comparable Companies Analysis $321 -- $396
Comparable Acquisition Analysis 300 -- 400
Discounted Cash Flow Analysis 325 -- 400
LBO Analysis 365 -- 415
CSFB ENTERPRISE VALUE REFERENCE RANGE $325 -- $375
==== ====
Reference Range as a multiple of:
1996A Net Income(1) $ (1.0) NM -- NM
1997E Net Income(1) 7.8 35.8x -- 42.2x
LTM Revenues 336.2 1.0 -- 1.1
LTM EBITDA 34.2 9.5 -- 11.0
--------------------------------------------------------------------------------------------------------------
(1) Adjusted for debt and equivalents equal to $45.9 million at March 31, 1997.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
26
CONFIDENTIAL 23
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARISON OF SELECTED PUBLICLY-TRADED INSURANCE BROKERS
- --------------------------------------------------------------------------------
SUMMARY OF MARKET MULTIPLES
AS OF MAY 23, 1997
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
================================================================
EQUITY ADJUSTED I/B/E/S
STOCK MARKET MARKET P/E MULTIPLES EST. 5 YR ADJ. MKT VALUE/LTM
--------------------------- -------------------------
COMPANY TICKER PRICE VALUE VALUE 1996A LTM 1997E 1998E EPS GROWTH REVENUES EBITDA EBIT
- ----------------------------------------------------------------------------------------------------------------------------------
ACORDIA, INC. ACO $35 7/8 $ 466.6 $630.6 18.1X 18.2X 17.1X 15.6X 12.0% 1.0X 6.1X 10.2X
Aon Corp. AOC 47 5/8 7,948.6 9,722.1 22.5x 26.9x 20.6x 15.1x 11.5% 2.3x 14.7x 19.2x
Arthur J. Gallagher AJG 31 7/8 521.8 446.2 12.1 11.9 11.6 10.9 8.5 1.0 5.6 6.4
EW Blanch EWB 23 7/8 298.8 316.2 15.6 14.5 12.4 10.8 14.3 2.6 7.5 8.9
Hilb, Rogal & Hamilton HRH 14 3/8 189.2 217.0 16.9 16.3 16.3 15.1 8.0 1.3 6.7 10.4
Marsh & McLennan MMC 130 3/4 10,837.5 12,033.0 20.8 19.8 18.4 15.8 10.6 2.3 12.1 14.8
Poe & Brown POBR 29 11/16 258.3 242.9 15.6 14.9 13.4 11.6 20.0 2.0 6.6 8.3
- ----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
High(1) 22.5x 26.9x 20.6x 15.8x 20.6% 2.6x 14.7x 19.2x
Mean(1) 17.2 17.4 15.4 13.2 13.2 1.9 8.9 11.3
Median(1) 16.3 15.6 14.9 13.3 13.3 2.1 7.1 9.6
Low(1) 12.1 11.9 11.6 10.8 10.8 1.0 5.6 6.4
---------------------------------------------------------------------------------------
(1) All statistics exclude Acordia.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
27
CONFIDENTIAL 24
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARABLE COMPANIES VALUATION OF ACORDIA BROKERS
- --------------------------------------------------------------------------------
COMPARABLE COMPANIES VALUATION OF ACORDIA BROKERS
(DOLLARS IN MILLIONS)
================================================================================
ACORDIA BROKERS PUBLIC MARKET RELEVANT IMPLIED
DATA MULTIPLE RANGE MULTIPLE RANGE VALUE RANGE
- ---------------------------------------------------------------------------------------------------------------------------------
C>
Net Income
1996A $ (1.0) 12.1x -- 22.5x 12.1x -- 16.9x NM -- NM
1997E 7.8 11.6 -- 20.6 11.6 -- 16.3 $ 90 -- $ 127
LTM Revenues 336.2 1.0 -- 2.6 1.0 -- 1.2 290 -- 358*
LTM EBITDA 34.2 5.6 -- 14.7 5.6 -- 7.0 145 -- 193*
LTM EBIT 1.5 6.4 -- 19.2 6.4 -- 9.0 NM -- NM*
CSFB EQUITY REFERENCE RANGE BEFORE CONTROL PREMIUM $200 -- $275
25% Control Premium $250 -- $344
35% Control Premium 270 -- 371
CSFB EQUITY REFERENCE RANGE AFTER CONTROL PREMIUM $275 -- $350
Debt and Equivalents 46 -- 46
---- ----
CSFB ENTERPRISE REFERENCE RANGE AFTER CONTROL PREMIUM $321 - $396
==== ====
- ---------------------------------------------------------------------------------------------------------------------------------
* Net of debt and equivalents equal to $45.9 million at March 31, 1997.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
28
CONFIDENTIAL 25
- --------------------------------------------------------------------------------
ANTHEM, INC.
SELECTED U.S. INSURANCE BROKERAGE ACQUISITIONS
- --------------------------------------------------------------------------------
SUMMARY OF ACQUISITION MULTIPLES(1)
1995--1997 YTD
=====================================================================
HIGH MEDIAN MEAN LOW
---------------------------------------------------------------------------------------------------------------------
PURCHASE PRICE AS A MULTIPLE OF LTM:
Net Income 24.3x 21.7x 19.3x 6.0x
Tangible Book Value 27.0 18.6 18.0 8.4
Book Value 27.0 3.9 8.3 1.7
ADJUSTED PURCHASE PRICE AS A MULTIPLE OF LTM:(2)
Revenues 2.0x 0.9x 1.0x 0.2x
EBITDA 10.2 6.9 6.9 3.5
EBIT 13.2 8.2 9.0 4.2
---------------------------------------------------------------------------------------------------------------------
(1) Transactions over $20.0 million, of which there were 12 during
the period analyzed.
(2) Equal to Purchase Price plus target company debt and preferred
stock, if any.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
29
CONFIDENTIAL 26
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARABLE ACQUISITIONS VALUATION OF ACORDIA BROKERS
- --------------------------------------------------------------------------------
Comparable Acquisitions Valuation of Acordia Brokers
(Dollars in Millions)
=====================================================================
ACORDIA COMPARABLE
BROKERS ACQUISITIONS RELEVANT IMPLIED
DATA MULTIPLE RANGE MULTIPLE RANGE VALUE RANGE
--------------------------------------------------------------------------------------------------------------
1996A Net Income $ (1.0) 6.0x -- 24.3x 20.0x -- 24.0x NM -- NM
LTM Revenues 336.2 0.2 -- 2.0 0.9 -- 1.2 $303 -- $403
LTM EBITDA 34.2 3.5 -- 10.2 6.0 -- 8.0 205 -- 273
LTM EBIT 1.5 4.2 -- 13.2 8.0 -- 12.0 NM -- NM
CSFB REFERENCE RANGE $300 -- $400
==== ====
--------------------------------------------------------------------------------------------------------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
30
CONFIDENTIAL 27
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ANTHEM, INC.
ACORDIA BROKERS - DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
* DCF analysis based on 1997 projections supplied by Acordia, Inc.
with CSFB projecting operating results for 1998-2006.
* CSFB discounted projected 10-year cash flows at discount rates of
10%, 12% and 14% based on weighted average cost of capital
("WACC") analysis for the same companies used in the comparable
companies valuation, which generated results ranging from 10% to
12%.
* CSFB has used a range of discount rates that extend above the
results of our WACC analysis to account for what we believe are
higher capital costs for Acordia, Inc. versus the larger, better
established public companies used in our analysis and the perceived
risk inherent in management's projections, which have historically
been inaccurate.
* CSFB performed DCF analysis under three scenarios:
- Base Case: 4.3% revenue growth (based on Acordia's actual 1996
internal growth rate) and margin improvement to 15.2% in 1997
(based on Acordia's 1997 pro forma projected margin) and held
constant thereafter.
- Margin Decrease Case: 4.3% revenue growth and margins decreased
by 0.8% per year until reaching 11.0% in 2002 and held constant
thereafter.
- Margin Increase Case: 4.3 % revenue growth and margins increased
by 0.8% per year until reaching 19.8% in 2003 and held constant
thereafter.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
31
CONFIDENTIAL 28
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA BROKERS -- DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
DCF VALUATION OF ACORDIA BROKERS
(DOLLARS IN MILLIONS)
=====================================================================
TERMINAL MULTIPLE OF 2006E
------------------------------------------------------------------------------------
ANALYSIS REVENUES (1) NET INCOME (2) EBITDA (3)
----------------------------------------------------------------------------------------------------------------------
Base Case $304 -- $454 $257 -- $353 $291 -- $418
Margin Decrease Case 278 -- 420 192 -- 252 233 -- 327
Margin Increase 332 -- 490 327 -- 464 354 -- 518
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
CSFB ENTERPRISE VALUE REFERENCE RANGE: $325 - $400 MILLION
----------------------------------------------------------------------------------------------------------------------
(1) Terminal multiple range of 2006E Revenues: 0.9x - 1.2x.
(2) Terminal multiple range of 2006E Net Income: 12.0x - 15.0x.
(3) Terminal multiple range of 2006E EBITDA: 5.5x - 7.0x
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
32
CONFIDENTIAL 29
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA BROKERS -- LBO ANALYSIS SUMMARY
- --------------------------------------------------------------------------------
* Since the buyer of Acordia Brokers will be a financial buyer, CSFB
has analyzed the potential returns in a highly leveraged
acquisition of Acordia Brokers
* CSFB has assumed an equity investor in a leveraged buy-out of
Acordia Brokers would require a 25% to 35% IRR on its equity
investment
* Assuming a base case similar to the DCF base case, with revenue
growth of 4.3% annually, EBITDA margins in 1997 of 15.2% growing to
19.0% by 2001 in three scenarios (i.e., Scenarios A, B and C) and
held constant in the other (i.e., Scenario D), no incremental
acquisitions and a 10% carried interest for Acordia Broker's
management, this produces returns as shown in the following table
based on various purchase price scenarios as follows:
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
33
CONFIDENTIAL 30
- --------------------------------------------------------------------------------
ANTHEM, INC.
LBO ANALYSIS OF ACORDIA BROKERS
- --------------------------------------------------------------------------------
ACORDIA BROKERS -- POTENTIAL RETURNS TO LBO INVESTOR
(DOLLARS IN MILLIONS)
==========================================================
SCENARIO
---------------------------------------------------------------------
A B C D
---------------------------------------------------------------------------------------------------------------------
ASSUMPTIONS:
Total Purchase Price $367 $392 $417 $367
Equity Contribution 35 60 85 35
Margins:
1997 15.2% 15.2% 15.2% 15.2%
2001 19.0% 19.0% 19.0% 15.2%
EXIT MULTIPLE OF EBITDA: PROJECTED RETURNS
---------------------------------------------------------------------
6.5x 49% 34% 24% 32%
7.0 53% 37% 28% 37%
7.5 57% 41% 31% 42%
8.0 60% 44% 34% 46%
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
CSFB ENTERPRISE VALUE REFERENCE RANGE: $365 -- $415 MILLION
---------------------------------------------------------------------------------------------------------------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
34
CONFIDENTIAL 31
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA HEALTH -- VALUATION SUMMARY
- --------------------------------------------------------------------------------
ACORDIA HEALTH VALUATION SUMMARY - ENTERPRISE VALUE
(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA VALUE RANGE
------------------------------------
ANALYSIS HEALTH DATA LOW HIGH
-----------------------------------------------------------------------------------------------------------------
Comparable Companies Analysis $400 -- $500
Comparable Acquisition Analysis 450 -- 550
Discounted Cash Flow Analysis 225 -- 325
CSFB ENTERPRISE VALUE REFERENCE RANGE $340 -- $440
==== ====
Reference Range as a multiple of:
1996A Net Income $ 36.0 9.4x -- 12.2x
1997E Net Income(1) 33.9 10.0 -- 13.0
LTM Net Revenues 325.8 1.0 -- 1.4
LTM EBITDA 68.9 4.9 -- 6.4
LTM EBIT 60.1 5.7 -- 7.3
-----------------------------------------------------------------------------------------------------------------
Note: Acordia Health has no debt allocated to its operations.
(1) Adjusted for non-recurring $6.0 million payment for termination
of Anthem US relationship.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
35
CONFIDENTIAL 32
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARISON OF SELECTED PUBLICLY-TRADED HEALTH INSURANCE
SERVICE COMPANIES
- --------------------------------------------------------------------------------
SUMMARY OF MARKET MULTIPLES
AS OF MAY 23, 1997
(DOLLARS IN MILLIONS EXCEPT PER SHARE)
================================================================================
I/B/E/S
EST.
EQUITY ADJUSTED P/E MULTIPLES 5 YR ADJ. MKT VALUE/LTM
STOCK MARKET MARKET ----------------------------- EPS ------------------------
COMPANY TICKER PRICE VALUE VALUE 1996A LTM 1997E 1998E GROWTH REVENUES EBITDA EBIT
- -------------------------------------------------------------------------------------------------------------------------------
ACORDIA, INC. ACO $ 35 7/8 $ 466.6 $ 630.5 18.1x 18.2x 17.1x 15.6x 12.0% 1.0x 6.1x 10.2x
HealthCare Compare HCCC 46 1/4 1,524.2 1,524.2 20.6 19.9 17.7 15.1 19.5 6.0 10.6 11.7
Health Plan Services HPS 16 5/8 249.3 285.2 22.2 22.5 15.0 11.5 19.9 1.2 9.4 16.6
CoreVel Corp CRVL 28 128.6 128.6 17.8 17.2 13.4 NM 18.5 1.1 7.5 9.7
Crawford & Co. CRD.B 16 544.0 595.1 18.6 18.0 17.1 14.2 NA 0.9 6.6 8.0
- -------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------
High(1) 22.2x 22.5x 17.7 15.1x 19.9% 1.2x 10.6x 16.6x
Mean(1) 19.8 19.4 15.8 13.6 19.3 1.1 8.5 10.7
Median(1) 19.6 19.0 16.1 14.2 19.5 1.1 8.5 10.7
Low(1) 17.8 17.2 13.4 11.5 18.5 0.9 6.6 8.0
---------------------------------------------------------------------------
(1) All statistics exclude Acordia. Revenue multiples exclude HCCC.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
36
CONFIDENTIAL 33
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARABLE COMPANIES VALUATION OF ACORDIA HEALTH
- --------------------------------------------------------------------------------
COMPARABLE COMPANIES VALUATION OF ACORDIA HEALTH
(DOLLARS IN MILLIONS)
=====================================================================
ACORDIA PUBLIC MARKET RELEVANT IMPLIED ENTERPRISE
HEALTH DATA MULTIPLE RANGE MULTIPLE RANGE VALUATION
---------------------------------------------------------------------------------------------------------------------------
Net Income
1996A $ 36.0 17.8x -- 22.2x 17.0x -- 19.0x $612 -- $684
1997E(1) 33.9 13.4 -- 17.7 13.5 -- 17.0 458 -- 576
LTM Revenues 325.8 0.9 -- 1.2 0.9 -- 1.2 293 -- 391
LTM EBITDA 68.9 6.6 -- 10.6 7.0 -- 9.0 482 -- 620
LTM EBIT 60.1 8.0 -- 16.6 8.0 -- 10.0 480 -- 601
CSFB ENTERPRISE VALUE REFERENCE RANGE $400 - $500
==== ====
---------------------------------------------------------------------------------------------------------------------------
(1) Based on Acordia, Inc.'s forecast of $52mm in pretax income and
38% tax rate.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
37
CONFIDENTIAL 34
- --------------------------------------------------------------------------------
ANTHEM, INC.
COMPARABLE ACQUISITIONS VALUATION OF ACORDIA HEALTH
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS VALUATION OF ACORDIA HEALTH
(DOLLARS IN MILLIONS)
=================================================================
ACORDIA
HEALTH COMPARABLE ACQUISITIONS RELEVANT IMPLIED
DATA MULTIPLE RANGE MULTIPLE RANGE VALUE RANGE
---------------------------------------------------------------------------------------------------------------------
1996A Net Income $ 36.0 10.6x -- 67.3x 12.0x -- 15.0x $432 -- $540
LTM Revenues 325.8 0.5 -- 9.9 0.9 -- 1.4 293 -- 456
LTM EBITDA 68.9 4.9 -- 34.5 6.5 -- 8.0 448 -- 551
LTM EBIT 60.1 4.0 -- 39.0 8.0 -- 12.0 480 -- 721
CSFB ENTERPRISE REFERENCE RANGE $450 -- $550
==== ====
---------------------------------------------------------------------------------------------------------------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
38
CONFIDENTIAL 35
- --------------------------------------------------------------------------------
ANTHEM, INC.
SELECTED INSURANCE TPA ACQUISITIONS
- --------------------------------------------------------------------------------
SUMMARY OF ACQUISITION MULTIPLES(1)
1991--1996 YTD
=====================================================================
HIGH MEAN MEDIAN LOW
---------------------------------------------------------------------------------------------------------------
PURCHASE PRICE AS A MULTIPLE OF LTM:
Net Income 67.3x 29.2x 28.8x 10.6x
Tangible Book Value 93.4 20.9 10.3 2.1
Book Value 93.4 12.6 6.1 1.8
ADJUSTED PURCHASE PRICE AS A MULTIPLE OF LTM:(2)
Revenues 9.9x 1.8x 1.1x 0.5x
EBITDA 34.5 12.6 8.6 4.9
EBIT 39.0 15.6 11.4 4.0
---------------------------------------------------------------------------------------------------------------
(1) Transactions over $20.0 million, of which there were 18 during
the period analyzed.
(2) Equal to Purchase Price plus target company debt and
preferred stock, if any.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
39
CONFIDENTIAL 36
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA HEALTH - DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
CSFB has been provided with two 5-year projections of future
revenues for Acordia's Anthem-related business:
* Anthem Planned Case: Anthem achieves its planned growth in
managed care members and traditional health insurance customers
are reduced over time. Acordia Health continues to serve
Anthem's customers, but does not earn any revenue for managed
care service which Anthem provides.
* Do Nothing/Margin Drop Case: There is no change in Acordia's
compensation or Anthem's cost, and as a result Anthem's business
shrinks substantially due to competitive factors. Acordia's
revenues fall by $57.4 million and as a result, Acordia Health's
EBITDA margin falls to 10% in 1998 and improves at 1% per year
thereafter.
ACORDIA HEALTH REVENUES PROJECTED BY ANTHEM
(DOLLARS IN MILLIONS)
=====================================================================
1997 1998 1999 2000 2001
-------------------------------------------------------------------------------------------------------------------
ANTHEM PLANNED CASE
Anthem-Related Revenues $285.9 $235.3 $215.4 $200.8 $184.9
Total Revenues 318.9 269.9 251.8 239.0 225.0
EBITDA Margin 20.1% 19.1% 18.1% 17.1% 16.1%
DO NOTHING/MARGIN DROP CASE
Anthem-Related Revenues $285.9 $226.8 $204.2 $173.5 $147.5
Total Revenues 318.9 261.5 240.6 211.7 187.6
EBITDA Margin 20.1% 10.0% 11.0% 12.0% 13.0%
-------------------------------------------------------------------------------------------------------------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
40
CONFIDENTIAL 37
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA HEALTH - DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
In addition, CSFB has projected two other scenarios of future
revenues for Acordia's Anthem-related business:
* Independent Acordia Case: Acordia and Anthem sever their business
relationship at the end of 1998, and Acordia places 100% of its
business with unaffiliated carriers.
* Slow Transition Case: Anthem achieves its planned growth unmanaged
care members but at a slower rate than currently planned.
ACORDIA HEALTH REVENUES PROJECTED BY CSFB
(DOLLARS IN MILLIONS)
=====================================================================
1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
INDEPENDENT ACORDIA CASE
Anthem-Related Revenues $285.9 $226.8 $ -- $ -- $ --
Total Revenues 318.9 261.5 274.6 288.3 302.7
EBITDA Margin 20.1% 19.1% 18.1% 17.1% 16.1%
SLOW TRANSITION CASE
Anthem-Related Revenues $285.9 $274.7 $263.5 $257.2 $241.0
Total Revenues 318.9 309.4 299.9 290.5 281.1
EBITDA Margin 20.1% 20.1% 20.1% 20.1% 20.1%
----------------------------------------------------------------------------------------------------------------
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
41
CONFIDENTIAL 38
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA HEALTH - DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
* For the Anthem Planned Case and the Independent Acordia Case, CSFB
assumed an EBITDA margin of 20.1% (based on a historical blended
EBITDA margin rate and the Anthem projections) and have reduced
this margin by 1% per year due to the uncertainties surrounding
changes in Acordia Health.
* For the Do Nothing/Margin Drop Case, CSFB projected Acordia
Health's EBITDA margin to drop to 10% in 1998 due to a projected
loss of revenue and inability to cut costs at the same rate and to
improve at 1% per year thereafter.
* For the Slow Transition Case, CSFB assumed a constant EBITDA margin
of 20.1% due to less uncertainty surrounding a gradual change in
Acordia Health's business.
* In each case, CSFB assumed that non-Anthem revenues in Acordia
Health (which represented approximately 11% of Acordia Health
revenue in 1996) grow at 5% per year.
* CSFB discounted projected 5-year cash flows at discount rates of
11%, 12% and 13% based on a WACC analysis for the same companies
used in the comparable companies valuation, which generated results
ranging from 11% to 13%.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON
42
CONFIDENTIAL 39
- --------------------------------------------------------------------------------
ANTHEM, INC.
ACORDIA HEALTH -- DCF VALUATION SUMMARY
- --------------------------------------------------------------------------------
DCF VALUATION OF ACORDIA HEALTH
(DOLLARS IN MILLIONS)
=====================================================================
TERMINAL MULTIPLE OF(1)
---------------------------------------------------------------------------------
SCENARIO REVENUES EBITDA NET INCOME
----------------------------------------------------------------------------------------------------------------------
Anthem Planned $179 -- $233 $162 -- $218 $205 -- $254
Do Nothing/Margin Drop 128 -- 173 163 -- 212 115 -- 144
Independent Acordia 232 -- 306 210 -- 285 277 -- 347
Slow Transition 234 -- 304 251 -- 338 333 -- 416
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
CSFB ENTERPRISE VALUE REFERENCE RANGE: $225 - $325 MILLION
----------------------------------------------------------------------------------------------------------------------
(1) Based on discount rates of 11.0% to 13.0% and terminal multiples of:
- 1.1x to 1.4x Revenues
- 6.0x to 8.0x EBITDA
- 16.0x to 19.0x Net Income
Note: No debt has been allocated to Acordia Health.
____ CREDIT : FIRST _______________________________________________________
SUISSE : BOSTON