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Delaware		6321		75-2044750
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

Robert A. Profusek, Esq.		Mark Gordon, Esq.		Glenn W. Reed, Esq.		Nancy L. Sanborn, Esq.		Richard A. Pollack, Esq.
Jones Day		Wachtell, Lipton		UICI		Davis Polk & Wardwell		Sullivan & Cromwell LLP
222 East 41st Street		Rosen & Katz		9151 Grapevine Highway		450 Lexington Avenue		125 Broad Street
New York, New York 10017		51 West 51st Street		North Richland Hills,		New York, New York 10017		New York, New York 10004
(212) 326-3939		New York, New York 10019		Texas 76180-5605		(212) 450-4000		(212) 558-4000
		(212) 403-1000		(817) 255-5200

Proposed

Proposed

Title of Each Class of

Amount to

Maximum Offering

Maximum Aggregate

Amount of

Securities to be Registered

be Registered

Price per Share

Offering Price

Registration Fee

Class A-1 Common Stock, par value $0.01 per share

300,000(1)

N/A

$  10,974,000

$ 1,175(3)(5)

Class A-2 Common Stock, par value $0.01 per share

4,000,000(2)

N/A

$143,240,000

$15,327(4)

Total registration fee

$16,502

(1)	Represents the maximum number of shares of class A-1 common stock estimated to be issuable to certain members of UICI’s senior management upon the completion of, or in connection with, the acquisition of UICI by affiliates of The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners. 63,000 shares of class A-1 common stock were registered in connection with the initial filing of the Registration Statement on January 20, 2006. An additional 237,000 shares of class A-1 common stock are being registered pursuant to this filing.
(2)	Represents the maximum number of shares of class A-2 common stock estimated to be issuable to UICI’s independent insurance agents upon completion of the merger. 4,000,000 shares of class A-2 common stock were registered in connection with the initial filing of the Registration Statement on January 20, 2006. No additional shares of class A-2 common stock are being registered pursuant to this filing.
(3)	Pursuant to Rules 457(c) and 457(f) under the Securities Act of 1933, the registration fee is based on the average of the high and low sales prices of UICI common stock, as traded on the NYSE on February 27, 2006 and computed based on the estimated maximum number of shares that may be exchanged for the class A-1 common stock being registered or that may be issued to certain members of UICI’s senior management in connection with the merger.
(4)	Pursuant to Rules 457(c) and 457(f) under the Securities Act of 1933, the registration fee of $15,327 was paid on January 20, 2006.
(5)	$242 was previously paid in connection with the initial filing of the Registration Statement on January 20, 2006; the difference of $933 is being covered pursuant to an overpayment of $9,431 made on January 20, 2006 resulting from the aggregate payment of $25,000 made on such date.

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		9151 Grapevine Hwy  •  North Richland Hills, Texas 76180

	•	UICI’s public stockholders will receive $37.00 in cash per share of UICI common stock and will cease to hold any equity interest in UICI, except for public stockholders who properly exercise and do not withdraw their statutory appraisal rights;
	•	shares of UICI common stock currently held by certain senior managers of UICI, which comprised less than 1% of UICI’s outstanding common stock as of the record date of the special meeting will remain outstanding and unchanged, other than to be renamed class A-1 common stock; and
	•	shares of UICI common stock beneficially owned through UICI’s agent stock accumulation plans by UICI’s independent insurance agents associated with the UGA-Association Field Services or Cornerstone America marketing divisions (which shares comprised approximately 6.9% of UICI’s outstanding common stock as of the record date of the special meeting) will be exchanged on a one-for-one basis for shares of a new class of UICI common stock to be known as the class A-2 common stock. The terms of the class A-2 common stock are described in the attached proxy statement/ prospectus. Shares withdrawn from the agent stock accumulation plans prior to the closing of the merger will be treated the same as shares owned by UICI’s public stockholders.

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	Sincerely,
	William J. Gedwed
	Chairman of the Board and Chief Executive Officer

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	•	Adopt the Agreement and Plan of Merger, dated as of September 15, 2005, by and among Premium Finance LLC, Mulberry Finance Co., Inc., DLJMB IV First Merger LLC, Premium Acquisition, Inc., Mulberry Acquisition, Inc., DLJMB IV First Merger Co Acquisition Inc. and UICI, a copy of which is attached as Annex A to this document;
	•	Approve any motion to adjourn or postpone the special meeting to another time or place, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger proposal; and
	•	Consider such other business as may properly come before the special meeting or any adjournments or postponements thereof.

	By Order of the Board of Directors,
	UICI
	PEGGY G. SIMPSON
	Corporate Secretary

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			Page
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER				1
SUMMARY				4
	Parties to the Merger			4
	The Special Meeting			5
	The Merger			6
	Recent Developments			12
	Selected Historical Financial Data of UICI			13
	Selected Historical Financial Data of Premium Acquisition, Inc., Mulberry Acquisition, Inc. and DLJMB IV First Merger Co Acquisition Inc.			15
	Selected Unaudited Pro Forma Consolidated Financial Data			16
	Comparative Unaudited Per Share Data of UICI			17
	Comparative Unaudited Per Share Data of Premium Acquisition, Inc., Mulberry Acquisition, Inc. and DLJMB IV First Merger Co Acquisition Inc.			18
RISK FACTORS				19
	Risk Factors Relating to the Merger			19
	Risk Factors Relating to Ownership of Class A-1 Common Stock and Class A-2 Common Stock			20
	Risk Factors Relating to the Business			20
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS				26
THE UICI SPECIAL MEETING				27
	Time, Place and Purpose of the Special Meeting			27
	Matters to be Considered			27
	Record Date; Quorum			27
	Required Vote			28
	Voting by Directors and Executive Officers			28
	Voting of Proxies			28
	Revocability of Proxies			29
	Solicitation of Proxies			29
	Voting by Employees Participating in Employee Stock Ownership and Savings Plan			29
PARTIES TO THE MERGER				30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PREMIUM ACQUISITION, INC., MULBERRY ACQUISITION, INC. AND DLJMB IV FIRST MERGER CO ACQUISITION INC.				32
THE MERGER				33
	Background of the Merger			33
	Recommendation of our Board of Directors; Reasons for the Merger			40
	Opinion of Morgan Stanley			42
	Opinion of New Vernon Capital			54
	Financial Projections			59
	Interests of Directors and Executive Officers in the Merger			59
	Composition of the Board of Directors and Executive Management of the Surviving Corporation			62
	Voting and Non-Compete Agreements			63
	Governmental and Regulatory Approvals			64
	Appraisal Rights			65
	Accounting Treatment			66
	Litigation Concerning the Merger			67
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES				68

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			Page
THE MERGER AGREEMENT				70
	Form and Effective Time of the Merger			70
	Consideration to be Received in the Merger			70
	Procedure for Exchange of Certificates			70
	Treatment of Stock Options, Restricted Shares and Share Credits			71
	Directors and Executive Officers of UICI Post-Closing			71
	Dropdown and Assignment of Rights under Debt Financing			71
	Representations and Warranties			72
	Conduct of Business Pending the Merger			73
	Reasonable Best Efforts; Other Covenants			75
	Financing			75
	Conditions to Completion of the Merger			77
	No Solicitation			79
	Employee Matters			80
	Termination of the Merger Agreement			81
	Termination Fees			81
	Remedies			82
	Expenses			82
	Amendments and Waivers			82
COMPARATIVE STOCK PRICES AND DIVIDENDS				83
	Market Information			83
	Dividends and Other Distributions			83
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY				84
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS				85
	Stockholders Agreement			85
	Registration Rights and Coordination Committee Agreement			88
	Management Agreement and Transaction Fee Agreement			88
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION				90
DESCRIPTION OF CAPITAL STOCK OF THE SURVIVING CORPORATION				98
	Surviving Corporation Common Stock: Class A-1 and Class A-2 Common Stock			98
	Surviving Corporation Preferred Stock			100
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS				102
2006 ANNUAL MEETING				107
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS				108
LEGAL MATTERS				109
EXPERTS				109
WHERE YOU CAN FIND MORE INFORMATION				109
MISCELLANEOUS				111

Annex A		Agreement and Plan of Merger, dated as of September 15, 2005, by and among Premium Finance LLC, Mulberry Finance Co., Inc., DLJMB IV First Merger LLC, Premium Acquisition, Inc., Mulberry Acquisition, Inc., DLJMB IV First Merger Co Acquisition Inc. and UICI
Annex B		Form of Certificate of Incorporation of Surviving Corporation
Annex C		Opinion of Morgan Stanley & Co. Incorporated
Annex D		Opinion of New Vernon Capital LLC
Annex E		Section 262 of the Delaware General Corporation Law
Form of Bylaws of the Surviving Corporation
Form of Stockholders Agreement
Opinion of Jones Day
Opinion of Jones Day as to material U.S. federal tax matters
Consent of KPMG, LLP
Consent of Morgan Stanley & Co. Incorporated
Consent of New Vernon Capital LLC
Form of Proxy Card

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Q:	What is the proposed transaction?
A:	The proposed transaction is the acquisition of UICI by affiliates of The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners through a cash merger, with UICI surviving the merger. Shares held by certain members of senior management and shares held by agents through UICI’s agent stock accumulation plans at the time of the merger will not be cashed out in the merger.
Q:	What will I receive in the merger?
A:	•   UICI’s public stockholders will receive $37.00 in cash per share of UICI common stock and will cease to hold any equity interest in UICI, except for public stockholders who properly exercise and do not withdraw their statutory appraisal rights;
	•   shares of UICI common stock currently held by certain senior managers of UICI, which comprised less than 1% of UICI’s outstanding common stock as of the record date of the special meeting, will remain outstanding and unchanged, other than to be renamed class A-1 common stock; and
	•   shares of UICI common stock beneficially owned through UICI’s agent stock accumulation plans by UICI’s independent insurance agents associated with the UGA-Association Field Services or Cornerstone America marketing divisions (which shares comprised approximately 6.9% of UICI’s outstanding common stock as of the record date of the special meeting) will be exchanged on a one-for-one basis for shares of a new class of UICI common stock to be known as the class A-2 common stock. Shares withdrawn from the agent stock accumulation plans prior to the closing of the merger will be treated the same as shares owned by UICI’s public stockholders.
	The class A-1 and class A-2 common stock will be subject to certain provisions set forth in the form of certificate of incorporation attached as Annex B to this document, which will become the certificate of incorporation of the surviving corporation at the effective time of the merger pursuant to the terms of the merger agreement.
Q:	When and where is the special meeting?
A:	The special meeting will be held at Courtyard by Marriott, DFW Airport West – Bedford, 2201 Airport Freeway, Bedford, Texas 76021 on Wednesday, March 29, 2006, at 10:00 a.m., Central Time.

Q:	What vote of our stockholders is required to adopt the merger agreement?
A:	For us to complete the merger, stockholders holding at least a majority of the shares of our common stock outstanding at the close of business on the record date must vote “FOR” the adoption of the merger agreement. Failure to vote or an abstention will have the same effect as a vote “AGAINST” adoption of the merger agreement.
Q:	What if I abstain from voting or fail to instruct my broker on how to vote on the merger proposal?
A:	Abstaining from voting or failing to instruct your bank, brokerage firm or nominee to vote your shares will have the same effect as a vote against the merger.
Q:	How does UICI’s board of directors recommend that I vote on the proposal to adopt the merger agreement?
A:	Our board of directors unanimously recommends that you vote “FOR” the adoption of the merger agreement. You should read “The Merger — Recommendation of our Board of Directors; Reasons for

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	the Merger” beginning on page 40 for a discussion of the factors that our board considered in deciding to recommend the adoption of the merger agreement.
Q:	What do I need to do now?
A:	We urge you to read this document carefully, including its annexes and the other documents incorporated into this document by reference, and to consider how the merger affects you and to vote your shares as soon as possible to ensure that your shares are represented at the special meeting. You can vote your shares before the special meeting as follows:
	•   Telephone voting, by dialing the toll-free number and following the instructions on the proxy card;
	•   Via the Internet, by going to the web address www.proxyvote.com and following the instructions on the proxy card; or
	•   Mail, by completing and returning the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.
Q:	If my shares are held in “street name” by my broker or other nominee, will my broker vote my shares for me?
A:	Yes, but only if you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting against the merger.
Q:	What does it mean if I get more than one proxy or vote instruction card?
A:	If your shares are registered differently and are in more than one account, you will receive more than one card. Please complete and return all of the proxy and vote instruction cards you receive (or submit your proxy by telephone or the Internet, if available to you) to ensure that all of your shares are voted.
Q:	How will my proxy vote my shares?
A:	The designated proxy holders will vote according to the instructions you submit on your proxy card. If you sign and return your card but do not indicate your voting instructions on one or more of the matters listed, the proxy holders will vote all uninstructed shares “FOR” these matters.
Q:	May I change my vote after I have delivered my proxy or vote instruction card?
A:	Yes. You may change your vote at any time before your proxy is voted at the special meeting. You may change your vote in any of the following ways:
	•   by sending a notice of revocation to the corporate secretary;
	•   by sending a completed proxy card bearing a later date than your original proxy card;
	•   by logging onto the internet address or by calling the telephone number, in each case, set forth on your proxy or vote instruction card, if you are eligible to do so and following the instructions on your proxy or vote instruction card; or
	•   by attending the special meeting and voting in person.
	Attending the special meeting without voting will not revoke a proxy. If you wish to revoke your proxy other than by attending the special meeting and voting in person, you must take action to revoke your proxy no later than the beginning of the special meeting.
	If your shares are held in an account at a broker or other nominee, you should contact your broker or other nominee to change your vote.
Q:	When do you expect the merger to be completed?
A:	We are working to complete the merger as quickly as possible. We anticipate that it will be completed in the first half of 2006. In order to complete the merger, we must obtain stockholder approval and satisfy

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	the other closing conditions in the merger agreement. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 77.
Q:	Do I have appraisal rights?
A:	Yes. If you deliver a written demand for appraisal to UICI before the vote on the merger proposal and do not vote in favor of the merger proposal and you otherwise comply with the requirements and procedures of Section 262 of the Delaware General Corporation Law (which we refer to as the DGCL), you are entitled to exercise appraisal rights. Appraisal rights generally entitle stockholders to receive a cash payment equal to the fair value of your common stock in connection with the merger. A detailed description of the appraisal rights and procedures available to you is included in “The Merger — Appraisal Rights” beginning on page 65. The full text of Section 262 of the DGCL is attached as Annex E to this document.
Q:	Should I send in my stock certificates now?
A:	No. Shortly after the merger is completed, you will receive a letter of transmittal with instructions informing you how to send in your stock certificates to the paying agent in order to receive the merger consideration. You should use the letter of transmittal to exchange stock certificates for the merger consideration to which you are entitled as a result of the merger. DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY.
Q:	Who can help answer my other questions?
A:	If you have more questions about the merger, need assistance in submitting your proxy or voting your shares or need additional copies of this document or the enclosed proxy card, you should contact our proxy solicitation agent for the merger, MacKenzie Partners, Inc., toll-free at (800) 322-2885 or collect at (212) 929-5500. If your broker holds your shares, you should call your broker for additional information.

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	The surviving corporation will be controlled by affiliates of The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners and their interests may conflict with the interests of other stockholders.

	The merger is subject to the receipt of consents and approvals from various governmental entities, which may impose conditions on or reduce the anticipated benefits of the merger.

	The Company may not be able to retain its key employees and independent agents.

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	The class A-1 and class A-2 common stock of the surviving corporation will not be liquid securities.

	The preferred stock, if issued, may have dividend/liquidation preferences over class A-1 common stock and class A-2 common stock.

	UICI may lose business to competitors offering competitive products at lower prices.

	Failure to accurately estimate medical claims and health care costs may have a significant impact on the Company’s business and results of operation.

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	Failure of our insurance subsidiaries to maintain their current insurance ratings could materially adversely affect UICI’s business and results of operations.

	Changes in our relationship with membership associations that make available to their members our health insurance products and/or changes in the laws and regulations governing so-called “association group” insurance could materially adversely affect UICI’s business and results of operations.

	Our domestic insurance subsidiaries are currently the subject of a multi-state market conduct examination, and an adverse finding or outcome from that examination could adversely affect our results of operations and financial condition.

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	Negative publicity regarding our business practices and about the health insurance industry in general may harm our business and adversely affect our results of operations and financial condition.

	UICI’s failure to secure and enhance cost-effective health care provider network contracts may result in a loss of insureds and/or higher medical costs and adversely affect UICI’s results of operations.

	UICI’s inability to obtain funds from its insurance subsidiaries may cause it to experience reduced cash flow, which could affect the Company’s ability to pay its obligations to creditors as they become due.

	A failure of our information systems to provide timely and accurate information could adversely affect our business and results of operations.

	Changes in government regulation could increase the costs of compliance or cause us to discontinue marketing our products in certain states.

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	The surviving corporation’s indebtedness following the completion of the merger will be higher than UICI’s existing indebtedness.

	•	require UICI to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing funds available for working capital, capital expenditures, dividends, acquisitions and other purposes;
	•	increase UICI’s vulnerability to, and limit flexibility in planning for, adverse economic and industry conditions;
	•	adversely affect UICI’s credit rating;
	•	limit UICI’s ability to obtain additional financing to fund future working capital, capital expenditures, additional acquisitions and other general corporate requirements;
	•	create competitive disadvantages compared to other companies with less indebtedness; and
	•	limit UICI’s ability to apply proceeds from an offering or asset sale to purposes other than the repayment of debt.

	We may not have enough statutory capital and surplus to continue to write business.

	Our reserves for current and future claims may be inadequate and any increase to such reserves could have a material adverse effect on our financial condition and results of operations.

	Litigation may result in financial losses or harm our reputation and may divert management resources.

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	If we fail to comply with extensive state and federal regulations, we will be subject to penalties, which may include fines and suspension and which may adversely affect our results of operations and financial condition.

	•	approval of policy forms and premium rates;
	•	standards of solvency, including risk-based capital measurements, which are a measure developed by the National Association of Insurance Commissioners and used by state insurance regulators to identify insurance companies that potentially are inadequately capitalized;
	•	licensing of insurers and their agents;
	•	restrictions on the nature, quality and concentration of investments;
	•	restrictions on transactions between insurance companies and their affiliates;
	•	restrictions on the size of risks insurable under a single policy;
	•	requiring deposits for the benefit of policyholders;
	•	requiring certain methods of accounting;
	•	prescribing the form and content of records of financial condition required to be filed; and
	•	requiring reserves for losses and other purposes.

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	Applicable insurance laws may make it difficult to effect a change of control of UICI.

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	•	Medical Claims and Health Care Costs
	•	Government Regulation
	•	Regulatory Compliance
	•	Association Group Health Insurance and Certain Relationships
	•	Litigation
	•	Competition
	•	Information Systems
	•	Pending Multi-State Market Conduct Examination
	•	Negative Publicity
	•	Provider Network Relationships
	•	Insurance Company Ratings
	•	Holding Company Structure
	•	Capital and Surplus Requirements

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	•	UICI’s public stockholders will receive $37.00 in cash per share of UICI common stock and will cease to hold any equity interest in UICI, except for public stockholders who properly exercise and do not withdraw their statutory appraisal rights;
	•	shares of UICI common stock currently held by certain senior managers of UICI (which comprised less than 1% of UICI’s outstanding common stock as of the record date of the special meeting) will remain outstanding and unchanged, other than to be renamed class A-1 common stock; and
	•	shares of UICI common stock beneficially owned through UICI’s agent stock accumulation plans by UICI’s independent insurance agents associated with the UGA-Association Field Services or Cornerstone America marketing divisions (which shares comprised approximately 6.9% of UICI’s outstanding common stock as of the record date of the special meeting) will be exchanged on a one-for-one basis for shares of a new class of UICI common stock to be known as the class A-2 common stock. The terms of the class A-2 common stock are more fully described elsewhere in this proxy statement/ prospectus. Shares withdrawn from the agent stock accumulation plans prior to the closing of the merger will be treated the same as shares owned by UICI’s public stockholders.

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	•	Telephone voting, by dialing the toll-free number and following the instructions on the proxy card;
	•	Via the Internet, by going to the web address www.proxyvote.com and following the instructions on the proxy card; or
	•	Mail, by completing and returning the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

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	•	none of the preliminary indications of interest was adequate; and
	•	the strategic assessment process should continue, but should be expanded to include a limited number of additional private equity firms.

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	•	the process should continue, but that Blackstone should be pressed to increase its proposed per share price and modify its conditions to an acceptable level of risk to the Company; and
	•	given the terms of Blackstone’s current proposal, the other bidders should have an equal opportunity to increase and modify their bids.

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	•	the specific factors described in “The Merger — Background of the Merger” beginning on page 33.
	•	its understanding of, and management’s presentations regarding, the business, operations, financial condition, earnings and future prospects of UICI;
	•	its understanding of, and management’s presentations regarding, the health/life insurance and managed care businesses, including the increasingly competitive landscape resulting from consolidation in the business and the need for increased scale in order to achieve its business plan and remain competitive, the potential effect of consolidation on UICI in the absence of the proposed transaction and the impact a failure to meet management projections could have on the Company’s prospects;
	•	the process undertaken by the Company in pursuing a transaction aimed at enhancing shareholder value;
	•	the generally favorable environment for private equity investment, the lack of substantial interest in the Company by strategic buyers and the possibility that the Company could not obtain as favorable terms as those proposed by Blackstone if it delayed or terminated the process;
	•	the fact that the merger consideration represented a premium of 19% over the closing price of UICI common stock on September 14, 2005 (the last trading day prior to the announcement of the merger), a premium ranging from 3% to 69% over the high and low trading prices of UICI common stock for the preceding 12 months and exceeded the all-time high trading price of UICI common stock;
	•	the presentations and opinions of Morgan Stanley and New Vernon Capital that, as of the date of those opinions and based upon and subject to the assumptions, qualifications and limitations set forth in those opinions, the $37.00 per share cash merger consideration to be received by holders of shares of UICI common stock pursuant to the merger agreement was fair from a financial point of view to such holders (other than holders of retained shares as to such retained shares);
	•	the desire of the Jensen family to consider monetization of a substantial portion of its holdings of UICI stock;
	•	the support for the transaction by the Jensen family stockholders, whose UICI stock ownership represented approximately 28% of the Company’s outstanding common stock on the date the merger was announced, evidenced by the execution by those stockholders of a voting agreement in favor of the transaction;
	•	the provisions of the merger agreement designed to permit the continuation of the stock accumulation plans for UICI’s independent insurance agents;
	•	the provisions of the merger agreement which give the UICI board the ability, in the event that UICI receives an unsolicited superior proposal, to furnish information to and conduct negotiations with a third party, and to enter into an agreement for a superior proposal after complying with certain requirements, including payment of either a termination fee or the reimbursement of certain expenses;
	•	the stockholder voting and non-competition agreements required by Blackstone of members of the Jensen family and the termination provisions applicable to their undertaking to support the merger;
	•	the debt and equity commitment letters available to affiliates of Blackstone, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners and the guarantees provided by the private equity firms of the payment obligations of the Merger Cos under the merger agreement demonstrating a commitment to complete the merger; and
	•	the likelihood of the merger being approved by appropriate regulatory authorities without burdensome conditions, and the satisfaction of the other conditions to the completion of the merger.

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	•	the improvement in the Company’s results of operations during 2005 and the general increase in trading prices for its common stock since 2004;
	•	the general potential for growth and increased shareholder value if UICI were to remain independent and achieve management’s forecast of accelerated future growth beginning in 2008;
	•	the fact that the receipt of cash in the merger would be a taxable event to stockholders for U.S. federal income tax purposes;
	•	the risk that the financing contemplated by the debt commitment letters may not be available on the terms of those commitment letters; and
	•	the possibility that the merger might not be completed and the resulting potential adverse consequences to the Company.

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	•	reviewed certain publicly available financial statements and other information of UICI;
	•	reviewed certain internal financial statements and other financial and operating data concerning UICI prepared by the management of UICI;
	•	analyzed certain financial projections prepared by the management of UICI;
	•	discussed the past and current operations and financial condition and the prospects of UICI with senior executives of UICI;
	•	reviewed the reported prices and trading activity for the UICI common stock;
	•	compared the financial performance of UICI and the prices and trading activity of UICI common stock with that of certain other comparable publicly-traded companies and their securities;
	•	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
	•	participated in discussions and negotiations among representatives of UICI, the Merger Cos and their financial and legal advisors;
	•	reviewed a copy of the merger agreement and certain related documents;
	•	reviewed a copy of the voting agreement;
	•	reviewed copies of the equity commitment letters from each of The Blackstone Group, Goldman Sachs Capital Partners, DLJ Merchant Banking Partners or their affiliates, each dated September 15, 2005;
	•	reviewed copies of the limited guarantees from each of The Blackstone Group, Goldman Sachs Capital Partners, DLJ Merchant Banking Partners or their affiliates, each dated as of September 15, 2005;
	•	reviewed a copy of the forward underwriting commitment letter from J.P. Morgan Securities Inc., dated September 15, 2005;
	•	reviewed a copy of the debt financing commitment letter from JP Morgan Chase Bank, N.A., Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and J.P. Morgan Securities Inc., dated September 15, 2005; and
	•	performed such other analyses and considered such other factors as Morgan Stanley deemed appropriate.

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							$37.00 As
Stock Price							Premium
Closing Price on September 13, 2005			$	31.67				16.8%
Period Ending September 13, 2005
	1 Month Volume Weighted Average		$	31.44				17.7%
	3 Month Volume Weighted Average		$	30.64				20.8%
	6 Month Volume Weighted Average		$	27.75				33.3%
	12 Month Volume Weighted Average		$	29.68				24.7%
	52-week High		$	36.40				1.6%
	52-week Low		$	21.31				73.6%

		Wall Street				Management
Multiple of Aggregate Equity Purchase Price to		Estimates				Estimates
2005 estimated earnings			9.3x				8.9x
Next twelve months estimated earnings			10.2x				8.8x
2006 estimated earnings			11.2x				8.7x

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Multiple of Aggregate Value to LTM EBITDA		5.6x
Multiple of $37.00 Price to Book Value Per Share		2.12x

			Equity Value						Equity Value
			as of 9/13/05				Supplemental Health and		as of 9/13/05
Managed Care Companies			($ in billions)				Disability Companies		($ in billions)
UnitedHealth Group							AFLAC Incorporated		$	22.51
	Incorporated		$	68.37			Torchmark Corporation		$	5.51
WellPoint, Inc.			$	44.98			UNUMProvident Corporation		$	5.72
Aetna Inc.			$	23.80			Assurant, Inc.		$	5.12
CIGNA Corporation			$	14.87			StanCorp Financial Group, Inc.		$	2.26
Coventry Health Care, Inc.			$	8.87			Delphi Financial Group, Inc.		$	1.54
Humana Inc.			$	7.9			Universal American Financial Corp.		$	1.33
WellChoice, Inc.			$	5.93			Conseco, Inc.		$	3.16
Health Net, Inc.			$	5.17
Sierra Health Services, Inc.			$	2.26

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		Relative Price Change				Relative Price Change				Relative Price Change
		from January 1, 2004 to				from January 1, 2005 to				from January 1, 2004 to
Company/ Market Index		December 31, 2004				September 13, 2005				September 13, 2005
UICI			155	%			(7	)%			138	%
S&P 500 Index			9	%			2	%			11	%
Managed Care Companies Index			48	%			34	%			98	%
Supplemental Health & Disability Companies Index			23	%			13	%			38	%

		EPS Estimate
Firm		2005				2006				Recommendation
Sandler O’Neill		$	3.98			$	3.47			Hold
Cochran, Caronia Securities		$	4.18			$	3.30			Market Perform
Dowling & Partners		$	2.95			$	3.16			Neutral
Median Analyst Estimate		$	3.98			$	3.30
UICI Management Estimate		$	4.14			$	4.26

														Stock Price
														Reaction
Fiscal Quarter		Actual EPS				Consensus Estimate				Actual Vs. Estimate				1 Day				1 Week
Q1 2004		$	0.68			$	0.58				17.2	%			+6.2	%			+14.0	%
Q2 2004		$	0.76			$	0.57				33.3	%			+0.9	%			+4.7	%
Q3 2004		$	0.71			$	0.68				4.4	%			+0.9	%			+8.1	%
Q4 2004		$	0.93			$	0.88				5.7	%			+3.1	%			(0.1	%)
Q1 2005		$	1.11			$	0.75				48.0	%			+6.0	%			+12.4	%
Q2 2005		$	1.11			$	0.80				38.8	%			+2.8	%			+8.0	%

	•	the ratio of stock price as of September 13, 2005 to estimated earnings per share (EPS) for calendar 2005, estimated EPS for the next twelve months (NTM) and estimated EPS for calendar 2006;

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	•	the ratio of price to NTM estimated EPS, as a multiple of estimated IBES long term earnings growth estimates and the ratio of price to calendar 2006 estimated earnings per share, as a multiple of estimated long term earnings growth;
	•	in the case of the managed care companies, the multiple of aggregate value (defined as public equity market value plus total book value of debt, total book value of preferred stock and minority interest) to 2005 estimated revenue and 2005 estimated earnings before interest, taxes, depreciation and amortization (EBITDA); and
	•	in the case of the supplemental health and disability companies, the ratio of stock price as of September 13, 2005 to book value per share (as of June 30, 2005).

Managed Care Companies

UICI

Wall Street

Management

Range

Mean

Median

Estimates

Estimates

Ratio of Price to 2005 Estimated EPS

15.3x - 22.5x

18.9x

18.3x

8.0x

7.7x

Ratio of Price to NTM Estimated EPS

14.7x - 19.9x

17.5x

17.3x

8.7x

7.5x

Ratio of Price to 2006 Estimated EPS

14.2x - 18.6x

16.3x

16.4x

9.6x

7.4x

NTM P/ E to Growth

0.99x - 1.47x

1.22x

1.14x

—

0.76x

2006 Estimated P/ E to Growth

0.94x - 1.42x

1.14x

1.06x

—

0.75x

Multiple of Aggregate Value to 2005 Estimated Revenue

0.5x -  1.6x

1.1x

1.1x

—

0.7x

Multiple of Aggregate Value to 2005 Estimated EBITDA

10.0x - 12.7x

11.0x

10.5x

—

4.5x

Supplemental Health and

Disability Companies

UICI

Wall Street

Management

Range

Mean

Median

Estimates

Estimates

Multiple of Price to 2005 Estimated EPS

11.4x - 20.1x

13.6x

12.0x

8.0x

7.7x

Multiple of Price to NTM Estimated EPS

10.8x - 17.3x

12.7x

11.5x

8.7x

7.5x

Multiple of Price to 2006 Estimated EPS

10.3x - 15.2x

12.0x

11.1x

9.6x

7.4x

NTM Estimated P/ E to Growth

1.03x - 1.33x

1.13x

1.10x

—

0.76x

2006 Estimated P/ E to Growth

0.98x - 1.17x

1.07x

1.06x

—

0.75x

UICI

Multiple of Price to Book Value

0.73x - 2.66x

1.60x

1.55x

2.12x

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		Discount of UICI P/ E Ratio to
						Supplemental
						Health and
		Managed Care				Disability
Period Ending September 13, 2005		Index				Index
2 year average			35.7	%			24.0	%
1 year average			38.9	%			21.7	%
6 month average			47.9	%			25.6	%
30 day average			49.4	%			25.2	%
Current, as of September 13, 2005			50.0	%			27.2	%

Implied

UICI

Median

Discount

Valuation

Managed Care Companies

NTM EPS

P/E Ratio

Range

P/E Range

Range

Wall Street Estimates

$

3.64

17.3x

40% -50%

8.7x - 10.4x

$31.49 - $37.78

Management Estimates

$

4.20

17.3x

40% -50%

8.7x - 10.4x

$36.33 - $43.60

Implied

Supplemental Health

UICI

Median

Discount

Valuation

and Disability Companies

NTM EPS

P/E Ratio

Range

P/E Range

Range

Wall Street Estimates

$

3.64

11.5x

20% - 30%

8.1x - 9.2x

$29.30 - $33.49

Management Estimates

$

4.20

11.5x

20% - 30%

8.1x - 9.2x

$33.81 - $38.64

Long-Term

Implied

UICI

Growth

Valuation

NTM EPS

Estimate

PE/G Range

P/E Range

Range

Wall Street Estimates

$

3.64

7.5% - 10.0%

1.00x - 1.20x

7.5x - 12.0x

$27.30 - $43.68

Management Estimates

$

4.20

7.5% - 10.0%

1.00x - 1.20x

7.5x - 12.0x

$31.50 - $50.40

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		Announcement
Target/Acquirer		Date				Mix of Consideration		Equity Value
								($ in millions)
PacifiCare Health Systems, Inc./ UnitedHealth Group Incorporated			07/06/05			Part Stock/Part Cash		$	8,118
American Medical Security Group, Inc./ PacifiCare Health Systems, Inc.			09/15/04			All Cash		$	502
Oxford Health Plans, Inc./ UnitedHealth Group Incorporated			04/26/04			Part Stock/Part Cash		$	4,975
Mid Atlantic Medical Services, Inc./ UnitedHealth Group Incorporated			10/27/03			Part Stock/Part Cash		$	2,695
Golden Rule Financial Corporation/ UnitedHealth Group Incorporated			09/19/03			All Cash		$	500
WellPoint Health Networks Inc./ Anthem, Inc.			10/27/03			Part Stock/Part Cash		$	15,556
Cobalt Corporation/ WellPoint Health Networks Inc.			06/03/03			Part Stock/Part Cash		$	936
Trigon Healthcare, Inc./ Anthem, Inc.			04/29/02			Part Stock/Part Cash		$	4,141
RightCHOICE Managed Care, Inc./ WellPoint Health Networks Inc.			10/18/01			Part Stock/Part Cash		$	1,342
Blue Cross and Blue Shield of Georgia, Inc./ WellPoint Health Networks Inc.			03/13/01			All Cash		$	700
John Alden Financial Corporation/ Fortis, Inc.			03/09/98			All Cash		$	575

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Premium to

Stock Price

Equity Value to

Aggregate

Value to

Summary of Precedent

1 Day

30 Days

LTM Net

NTM Net

LTM

Transactions Statistics

Prior

Prior

Income

Income

EBITDA

High

46.3

%

54.5

%

34.8x

21.2x

20.6x

Mean

20.8

%

31.0

%

18.3x

16.7x

12.1x

Median

16.0

%

29.6

%

15.6x

15.4x

10.6x

Low

(0.6

)%

4.7

%

10.5x

12.8x

8.4x

The Merger

16.8

%(1)

10.2x

(2)

5.6x

(1)	As of 9/13/05.
(2)	Based on IBES estimates.

Summary of Precedent		Long Term				NTM
Transactions Statistics		Growth Estimate				PE/LTG
High			20.0	%			1.62
Mean			15.3	%			1.15
Median			15.0	%			1.06
Low			12.0	%			0.93

						Median				Selected				Implied
Stock Price Premium		Price				Premium				Premium Range				Valuation Range
Current Price		$	31.67				16.0	%		10.0% - 20.0%				$34.84 - $38.00
12-Month Average		$	29.68							10.0% - 25.0%				$32.65 - $37.10

																		Implied
NTM P/E		EPS				LTG				PE/G Range				P/E Range				Valuation Range
Wall Street Estimates		$	3.64			7.5% - 10.0%					0.90x - 1.15x				6.8x - 11.5x			$	24.57 - $41.86
Management Estimates		$	4.20			7.5% - 10.0%					0.90x - 1.15x				6.8x - 11.5x			$	28.35 - $48.30

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EPS Estimates		2005				2006				2007				2008				2009
Management Case		$	4.14			$	4.26			$	4.56			$	5.25			$	6.03
Sensitivity Case		$	4.14			$	3.49			$	3.69			$	3.88			$	4.10
Median Wall Street Estimates		$	3.98			$	3.30

Segment Earnings			2005E				2006				2007				2008				2009				CAGR
	Self-Employed Agency		$	274.0			$	246.7			$	248.7			$	279.0			$	312.7				3.4%
	Student		$	(3.7	)		$	13.2			$	20.4			$	26.3			$	33.8				36.2%
	Star		$	7.3			$	16.2			$	18.3			$	21.1			$	24.6				35.6%
	Life		$	8.5			$	13.3			$	17.0			$	20.1			$	22.5				27.7%
	Zon Re		$	6.8			$	8.8			$	10.6			$	12.6			$	15.1				22.3%
Total			$	292.8			$	298.2			$	315.0			$	359.1			$	408.1				8.7%

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Segment Earnings							2006				2007				2008				2009				CAGR
	Self-Employed Agency						$	207.2			$	214.8			$	216.6			$	218.2				(5.5	)%
	Student						$	6.6			$	7.1			$	10.8			$	15.0				31.5	%
	Star						$	11.1			$	12.1			$	13.1			$	14.3				18.4	%
	Life						$	10.8			$	11.5			$	12.3			$	13.2				11.7	%
	Zon Re						$	6.0			$	6.3			$	6.7			$	7.0				0.9	%
Total							$	241.8			$	251.8			$	259.4			$	267.7				(2.2	)%

P/E Terminal Multiple		8.0x												9.0x												10.0x
Discount Rate			10.0%				12.5%				15.0%				10.0%				12.5%				15.0%				10.0%				12.5%				15.0%
Management Case		$	48.32			$	44.21			$	40.60			$	52.19			$	47.68			$	43.70			$	56.06			$	51.14			$	46.80
Sensitivity Case		$	34.66			$	31.89			$	29.44			$	37.24			$	34.20			$	31.51			$	39.82			$	36.50			$	33.58

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	•	reviewed public financial statements of the Company for the past ten years as filed with the SEC;
	•	reviewed certain non-public financial information prepared by Company management, including management projections;
	•	participated in discussions with senior management of the Company regarding past and current operations and financial condition and the future prospects of the Company;
	•	participated in discussions with Company management and representatives of a select list of potential strategic merger partners;
	•	participated in discussions with UICI management and representatives of potential private equity partners;
	•	reviewed values accorded certain comparable publicly traded companies relative to the value accorded the Company’s shares;

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	•	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
	•	reviewed copies of the merger agreement and the voting agreement;
	•	reviewed copies of the equity commitment letters from each of the equity investors, each dated September 15, 2005;
	•	reviewed copies of the limited guarantees from each of the equity investors, each dated September 15, 2005;
	•	reviewed the debt commitment letter (as defined in the merger agreement), dated September 15, 2005; and
	•	performed such other analyses and considered such other factors it deemed appropriate.

	•	UICI has shown significant improvement in operating results over the last 18 months. This improvement has been reflected in generally higher market prices for its common shares.
	•	The historic volatility of UICI’s results has constrained the stock prices at which any given level of earnings has been valued in the securities markets.

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	•	The unique distribution capability of UICI;
	•	The revenue opportunities afforded to UICI by its recent expansion into the small group business;
	•	The financial risks faced by UICI resulting from its recent expansion into the small group business;
	•	Increasing competition that UICI faced from major health insurance companies;
	•	Increasing competitive pressures on UICI to find ways to reduce the prices UICI’s insureds pay for medical services; and
	•	The implications of the ongoing multi-state review of UICI’s marketing practices being conducted by various state insurance regulatory authorities.

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	•	PacifiCare Health Systems, Inc./ UnitedHealth Group Incorporated
	•	American Medical Security Group, Inc./ PacifiCare Health Systems, Inc.
	•	Oxford Health Plans, Inc. / UnitedHealth Group Incorporated
	•	Mid Atlantic Medical Services, Inc./ UnitedHealth Group Incorporated
	•	Golden Rule Financial Corporation/ UnitedHealth Group Incorporated
	•	WellPoint Health Networks Inc./ Anthem, Inc.
	•	Cobalt Corporation/ WellPoint Health Networks Inc.
	•	Trigon Healthcare, Inc./ Anthem, Inc.
	•	RightCHOICE Managed Care, Inc./ WellPoint Health Networks Inc.
	•	Blue Cross and Blue Shield of Georgia, Inc./ WellPoint Health Networks Inc.
	•	John Alden Financial Corporation/ Fortis, Inc.

	•	All of the comparable transactions involved a strategic buyer, rather than a financial buyer. Consequently, New Vernon Capital believed that the prices paid reflected not only the value of the earning power purchased, but also some consideration for expected synergies. New Vernon Capital believed that no synergies are available in the proposed merger;
	•	New Vernon Capital determined that in seven of the 11 transactions reviewed over 50% of the consideration paid was stock. Given the relatively high and recently improved multiples accorded the stocks of the acquiring entities, New Vernon Capital observed that the acquirors could therefore justify a relatively high multiple for the acquired earnings; and
	•	Even in the case of the all-cash transactions, New Vernon Capital determined that a strategic buyer would relate the price it was willing to pay to its own cost of capital, which is typically lower than the cost of capital of a financial buyer.

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	•	Given UICI’s highly specialized business, New Vernon Capital noted that there were only a limited number of potential strategic partners with both the business fit and financial ability to acquire the Company. Beginning in 2004, four potential strategic partners were contacted. New Vernon Capital believed that these were the companies with the most likely strategic interest in UICI and the financial capability to execute the transaction. Each of these potential partners received extensive business and financial information regarding UICI and met with management. Indications of interest were requested by October 25, 2004. While each of the parties expressed initial interest, none of the contacted parties ultimately pursued the opportunity.
	•	Beginning in April 2005, at the direction of management, a new process of contacting potential partners was undertaken, with an emphasis on private equity investors. Initially, three large private equity firms were contacted. Eventually, the process was expanded to include three additional large private equity firms, including The Blackstone Group.
	•	In addition, the four strategic buyers originally contacted in the fall of 2004 were again invited to review UICI as a potential partner. Extensive discussions were held throughout the months of June and July with each of these parties. New Vernon Capital noted that no strategic buyers expressed interest in exploring a transaction with UICI. New Vernon Capital believed the lack of interest on the part of a strategic partner created a significant constraint on the ultimate price received.
	•	From a valuation perspective, New Vernon Capital considered that virtually all potential buyers with sufficient business interest and financial capability were contacted as part of the strategic assessment process. Each of the potential partners was provided access to the information necessary to determine whether to pursue a transaction with UICI.

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	Employment Agreements

	Certain Other Employees

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	UICI Success Bonus Award Plan

	UICI Director and Employee Stock Options and Restricted Shares

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	Indemnification and Insurance

	•	obtain “tail” directors’ and officers’ indemnification insurance policies in an amount and a scope at least as favorable as our existing policies and with a claims period of at least six years from the effective time of the merger for claims arising from facts or events that occurred at or before the effective time of the merger; or
	•	maintain in effect, for a period of six years after the effective time of the merger, our current directors’ and officers’ liability insurance policies with respect to matters occurring before the effective time of the merger or substitute policies of at least the same coverage and amount and containing terms and conditions no less advantageous to the officers and directors than our existing policies, subject to a maximum annual premium of 200% of our current premium. If the annual premium of insurance coverage exceeds 200% of our current annual premium, the surviving corporation is required to obtain a directors’ and officers’ indemnification policy with the greatest coverage available at an annual premium equal to 200% of our current annual premium.

	Board of Directors

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	Executive Officers

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	Insurance Regulatory Authorities

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	U.S. Antitrust Authorities

	•	not vote in favor of the merger agreement, or vote against the merger agreement proposal or abstain if voting by proxy;
	•	file written notice with us of an intention to exercise rights of appraisal of their shares before the special meeting; and
	•	follow the procedures set forth in Section 262.

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	•	the merger is abandoned;
	•	the stockholder fails to make a timely written demand for appraisal;
	•	neither the Company nor the stockholder files a petition in the Delaware Court of Chancery demanding a determination of the value of the stock within 120 days after the effective date of merger; or
	•	the stockholder delivers to us, within 60 days after the effective date of the merger, or thereafter with our approval, a written withdrawal of the stockholder’s demand for appraisal of the dissenting shares, although no appraisal proceeding in the Delaware Court of Chancery may be dismissed as to any stockholder without the approval of the court.

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	•	a citizen or resident of the United States for federal income tax purposes;
	•	a corporation or other entity taxable as a corporation for federal income tax purposes, created or organized under the laws of the United States or any state or the District of Columbia;
	•	a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person; or
	•	an estate, the income of which is subject to United States federal income tax regardless of its source.

	•	the amount of cash received in exchange for such common stock; and
	•	the U.S. holder’s adjusted tax basis in such common stock.

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	•	corporate organization, power, qualification and similar corporate matters;
	•	authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of governmental entities relating to, the merger agreement and related matters;
	•	capitalization;
	•	subsidiaries;
	•	documents filed with government entities, such as the SEC, and the accuracy of information contained in those documents;
	•	financial statements, reserves, financial strength ratings, reinsurance and the absence of undisclosed liabilities;
	•	absence of a material adverse effect since June 30, 2005;
	•	operation in the ordinary course of business between January 1, 2005 and the date of the merger agreement;
	•	legal proceedings;
	•	certain material contracts;
	•	matters relating to employees, labor matters, the Employee Retirement Income Security Act of 1974 and employment agreements;
	•	filing of tax returns, payment of taxes and other tax matters;
	•	environmental matters;
	•	intellectual property;
	•	title to property;
	•	permits, licenses, compliance with applicable laws and agreements with regulatory agencies;
	•	takeover statutes;
	•	interested party transactions;
	•	insurance;
	•	receipt of fairness opinions from financial advisors;
	•	the accuracy of information supplied in connection with this document;
	•	certain other regulatory matters, including with respect to the Bank Holding Company Act of 1956; and
	•	brokers’ and finder’s fees.

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	•	corporate organization, power, qualification and similar corporate matters;
	•	authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of governmental entities relating to, the merger agreement and related matters;
	•	legal proceedings;
	•	disclosure documents, documents filed with governmental entities and the accuracy of information contained in those documents;
	•	capital resources; and
	•	interim operations of each Merger Co.

	•	amend any of our organizational documents;
	•	declare or pay any dividend or distribution (other than dividends paid to us by our wholly-owned subsidiaries or payment of the regular semi-annual cash dividend declared July 28, 2005);
	•	make any substantial changes to our capital stock (including phantom equity);
	•	make any substantial changes to our compensation and benefits including:

	–	increasing the compensation or benefits payable to any of our past or present directors or officers, granting any severance or termination pay to any of our past or present directors or officers (except as required by existing agreements) to, or entering into any new employment or severance agreement with any of our past or present directors or officers,
	–	adopting, amending or taking any action to accelerate rights under any Company employee benefit plans, or
	–	granting any equity or equity-based awards to directors, officers or employees, except in each case (i) to the extent required by applicable laws, (ii) for increases in salary or wages of officers or employees in the ordinary course of business consistent with past practice, or (iii) as required by existing contracts;

	•	acquire any business organization or division thereof or any other asset, except for investments in marketable securities made in the ordinary course of business consistent with past practice in accordance with the applicable investment policies of UICI and our subsidiaries and other acquisitions in the ordinary course of business consistent with past practice for consideration not in excess of $1.0 million individually or $5.0 million in the aggregate;
	•	sell, lease, license, transfer, pledge, encumber, grant or dispose of any Company assets, including the capital stock of our subsidiaries, other than dispositions in the ordinary course of business and consistent with past practice of (i) used or excess equipment or other assets that are no longer used or

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		useable in our business, (ii) investments in marketable securities, and (iii) other dispositions for consideration not in excess of $1.0 million individually or $5.0 million in the aggregate;
	•	(i) enter into any material contracts other than in the ordinary course of business consistent with past practice, (ii) enter into any contract that would limit or otherwise restrict us or any of our subsidiaries from engaging or competing in any line of business or in any geographic area in any material respect, or (iii) terminate, cancel or amend or waive compliance with any provision of, any material contract other than in the ordinary course of business;
	•	incur, assume, guarantee or prepay any indebtedness for borrowed money (including the issuance of any debt security), other than in the ordinary course of business consistent with past practice not to exceed $5.0 million in the aggregate;
	•	make any loans, advances or capital contributions to, or investments in, any other person in excess of $1.0 million in the aggregate, other than (i) commission advances to independent agents or independent field service representatives in the ordinary course of business consistent with past practice, (ii) passive investments for the investment portfolios of subsidiaries made in debt securities in the ordinary course of business consistent with practice or (iii) loans, advances or capital contributions to wholly-owned subsidiaries;
	•	make any capital expenditure in any fiscal year, other than capital expenditures that are not, in the aggregate, in excess of 10% of the capital expenditures provided for in our budget for fiscal year 2005;
	•	change our accounting policies or procedures, other than as required by generally accepted accounting principles;
	•	forfeit, abandon, modify, waive, terminate or otherwise change any of our insurance permits, except (i) as required in order to comply with applicable laws or (ii) such modifications or waivers of insurance permits as would not, individually or in the aggregate, adversely affect the business or operations of us or any domestic insurance subsidiary in any material respect;
	•	waive, release, assign, settle or compromise any legal actions, other than in the ordinary course of business consistent with past practice and involving only the payment of monetary damages not in excess of $2.0 million with respect to any single legal action, without the imposition of equitable relief on, or the admission of any wrongdoing by, UICI or any of our subsidiaries;
	•	adopt a plan of liquidation or resolutions providing for a liquidation, dissolution, restructuring, recapitalization or reorganization;
	•	settle or compromise any material tax audit, make or change any material tax election, file any material amendment to a tax return, change any annual tax accounting period or adopt or change any material tax accounting method, enter into any material closing agreement, surrender any right to claim a material refund of taxes or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment relating to UICI or our subsidiaries;
	•	enter into, amend, waive or terminate (other than terminations in accordance with their terms) any affiliate transaction;
	•	conduct any material transaction with respect to our investments except in compliance with the applicable investment policies of UICI and our subsidiaries; or
	•	enter into or amend any reinsurance treaties or agreements ceding liabilities to third parties or commute any reinsurance treaties or agreements of UICI or any of our subsidiaries, except for (i) replacement of reinsurance treaties or agreements expiring between the date of the merger agreement and closing in the ordinary course of business consistent with past practice, (ii) commutations of reinsurance treaties or agreements in the ordinary course of business consistent with past practice and (iii) any reinsurance treaties or agreements ceding premiums not in excess of $5.0 million annually.

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	•	take all actions necessary, proper or advisable to ensure that the conditions set forth in the merger agreement are satisfied and to consummate the transactions contemplated thereby as promptly as practicable;
	•	obtain all necessary actions or nonactions, waivers, consents and approvals from governmental entities and make all necessary registrations and filings and take all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental entity, including making, as promptly as practicable, an appropriate filing of a Notification and Report Form pursuant to the HSR Act and not extending any waiting period thereunder or entering into any agreement with the Antitrust Division or the FTC not to consummate the transactions contemplated by the merger agreement, except with the prior written consent of the other parties to the merger agreement (which consent may not be unreasonably withheld or delayed);
	•	obtain all consents, approvals or waivers from, or taking other actions with respect to, third parties necessary or advisable to be obtained or taken in connection with the transactions contemplated by the merger agreement; provided that without the prior written consent of SibCo 1 (which consent may not be unreasonably withheld or delayed), neither UICI nor any of our subsidiaries may pay or commit to pay any amount of cash or other consideration, or incur or commit to incur any liability or obligation, in connection with obtaining such consent, approval or waiver;
	•	subject to first having used reasonable best efforts to negotiate a resolution of any objections underlying such lawsuits or other legal proceedings, defend and contest any lawsuits or other legal proceedings, whether judicial or administrative, challenging the merger agreement or the completion of the transactions contemplated by the merger agreement, including seeking to have any stay or temporary restraining order entered by any governmental entity vacated or reversed; and
	•	execute and deliver any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, the merger agreement.

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	•	the merger being consummated no later than June 15, 2006 in accordance with the merger agreement;
	•	the absence of certain events which are substantially similar to the events constituting a “Company Material Adverse Effect” that are described in “— Conditions to Completion of the Merger” below;
	•	after giving effect to the merger and related transactions, UICI and our subsidiaries shall not have outstanding material indebtedness or preferred stock other than (i) the debt financing pursuant to the commitment letter, (ii) the preferred stock of the surviving corporation (as described below), (iii) up to $150.0 million of indebtedness outstanding under certain secured student loan credit facilities, (iv) up to $15.5 million aggregate insurance amount of floating rate trust preferred securities with an aggregate liquidation value of up to $15.0 million issued by a Delaware statutory business trust (and the notes issued by UICI that are related thereto), and (v) other limited indebtedness in an amount up to $5.0 million or such larger amount as may be agreed by the agent of the debt financing;
	•	the receipt by the lenders of a solvency certificate from an officer of the borrower under the debt financing;
	•	the continued financial strength ratings of UICI subsidiaries, The MEGA Life and Health Insurance Company, the Mid-West National Life Insurance Company of Tennessee and The Chesapeake Life Insurance Company; and
	•	other customary conditions.

		•		JPMorgan Chase Bank, N.A.			60	%
		•		Morgan Stanley Senior Funding Inc.			30	%
		•		Goldman Sachs Credit Partners L.P.			10	%

	•	the surviving corporation having furnished such information as requested by J.P. Morgan, and having otherwise cooperated with J.P. Morgan, to facilitate the preparation of an offering memorandum or a registration statement with respect to the preferred stock;
	•	maintaining the financial strength rating of BB+ or higher with a stable outlook for the surviving corporation’s senior unsecured debt by Standard & Poor’s;

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	•	maintaining the financial strength rating of A- from A.M. Best for each of The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and The Chesapeake Life Insurance Company; and
	•	other customary conditions.

	•	the adoption of the merger agreement by the requisite vote of our stockholders;
	•	the waiting period under the HSR Act having been terminated or expired; and
	•	no law or order having been enacted or entered by a U.S. or state governmental authority that prohibits, restrains or enjoins the completion of the merger.

	•  –	the representations and warranties we made regarding financial strength ratings (unless related primarily to the debt financing or to other changes or proposed changes to our capital structure made in connection with the merger agreement or at the request of any Merger Co), capitalization, accuracy of our SEC reports, brokers and finders, and certain other regulatory matters, including with respect to the Bank Holding Company Act of 1956, shall be true and correct in all material respects on the date of the merger agreement and on the closing date of the merger, with the same effect as though such representations and warranties had been made on and as of the closing date (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case the representation and warranty shall be true and correct as of such earlier date), and

	–	our other representations and warranties set forth in the merger agreement (in each case without any materiality, material or “Company Material Adverse Effect” (as defined below) qualifications), shall be true and correct on the date of the merger agreement and on the closing date of the merger, with the same effect as though such representations and warranties had been made on and as of the closing date of the merger (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case the representation and warranty shall be true and correct as of such earlier date), other than failures to be true and correct that would not have a Company Material Adverse Effect;

	•	we have performed in all material respects all covenants required to be performed by us under the merger agreement at or before the closing date of the merger;
	•	since June 30, 2005, there will have been no “Company Material Adverse Effect,” as defined below;
	•	all consents, approvals, non-disapprovals and other authorizations of all required governmental entities will have been obtained, free of any Burdensome Condition and any other condition or limitation that would have a Company Material Adverse Effect;
	•	the proceeds of the debt financing will be available to the Company on equivalent or more favorable terms and conditions as are set forth in the commitment letter (as determined in the reasonable judgment of SibCo 1);
	•	since September 12, 2005:

	(i)	less than 25% of certain active independent insurance agents shall have withdrawn from the agent stock accumulation plans, and

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	(ii)	less than 12.5% of certain senior independent insurance agents shall have withdrawn from any agent stock accumulation plan; and

	•	no governmental entity will have taken, or informed a party or publicly disclosed that it intends to take, any action against us or any of our subsidiaries, or enacted, issued, promulgated, enforced or entered, or is reasonably likely to enact, issue, promulgate, enforce or enter, any laws or orders (whether temporary, preliminary or permanent), that would reasonably be expected to (i) lead to a limitation (including by revocation or suspension of a license, or the issuance of a cease and desist order, injunction or similar action) on the ability of the Company and our subsidiaries to conduct their respective businesses in any material respect as such businesses are conducted as of the date of the merger agreement or (ii) amount to a Burdensome Condition.

	•	changes in general political, economic or financial market conditions;
	•	changes affecting the health and life insurance industry;
	•	seasonal fluctuations in the business of the Company and our subsidiaries consistent with past fluctuations; and
	•	the death of Ronald C. Jensen on September 2, 2005.

	•	the representations and warranties of the SibCos and the Merger Cos set forth in the merger agreement (in each case without any materiality, material or “Acquiror Material Adverse Effect” (as defined below) qualifications), will be true and correct on the date of the merger agreement and on the closing date of the merger, with the same effect as though such representations and warranties had been made on and as of the closing date (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), other than failures to be true and correct that would not have an Acquiror Material Adverse Effect; and
	•	each SibCo and each Merger Co will have performed in all material respects all covenants required to be performed by it under the merger agreement at or before the closing date of the merger.

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	•	initiate, solicit, facilitate or knowingly encourage any inquiries or proposals relating to a “Takeover Proposal” (as defined below);
	•	engage in discussions or negotiations with, or furnish or disclose any non-public information relating to UICI or any of our subsidiaries to, any person regarding a Takeover Proposal;
	•	withdraw, modify or amend the recommendation of our board of directors in favor of the merger in any manner adverse to the SibCos or the Merger Cos;
	•	approve, endorse or recommend any Takeover Proposal;
	•	enter into any agreement in principle or contract relating to a Takeover Proposal; or
	•	resolve, propose or agree to do any of the foregoing.

	•	engage in discussions or negotiations with a person who has made a written Takeover Proposal not solicited in violation of the merger agreement if, before taking such action, (A) we enter into a confidentiality agreement with such person on terms and conditions not less stringent than those contained in the confidentiality agreements that we entered into with affiliates of each SibCo and MergerCo and (B) our board of directors determines in good faith (1) after consultation with its financial advisors and outside legal counsel, that such Takeover Proposal constitutes, or is reasonably likely to result in, a Superior Proposal (as defined below) and (2) after consultation with outside legal counsel, that such action is necessary to comply with its fiduciary obligations to our stockholders under applicable laws;
	•	furnish or disclose any non-public information relating to us or any of our subsidiaries to a person who has made a written Takeover Proposal not solicited in violation of the merger agreement if, before taking such action, our board of directors determines in good faith (A) after consultation with its financial advisors and outside legal counsel, that such Takeover Proposal constitutes, or is reasonably likely to result in, a Superior Proposal and (B) after consultation with its outside legal counsel, that such action is necessary to comply with its fiduciary obligations to our stockholders under applicable laws, but only so long as we (x) have caused such person to enter into a confidentiality agreement with us on terms and conditions not less stringent than those contained in the confidentiality agreement that we entered into with affiliates of each SibCo and Merger Co and (y) concurrently disclose the same

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		such non-public information to SibCo 1 if such non-public information has not previously been disclosed to SibCo 1; and
	•	withdraw, modify or amend our board of directors’ recommendation in favor of the merger in a manner adverse to the SibCos or the Merger Cos, if our board of directors has determined in good faith, after consultation with outside legal counsel, that such action is required to comply with its fiduciary obligations to our stockholders under applicable laws; provided that before any such withdrawal, modification or amendment to the recommendation of our board of directors in favor of the merger, (A) we have given SibCo 1 prompt written notice advising SibCo 1 of (x) the decision of our board of directors to take such action and (y) in the event the decision relates to a Takeover Proposal, the material terms and conditions of the Takeover Proposal, (B) we have given SibCo 1 three business days after delivery of each such notice to propose revisions to the terms of the merger agreement (or make another proposal) and have negotiated in good faith with SibCo 1 with respect to such proposed revisions or other proposal, if any, and (C) our board of directors has determined, after considering the results of such negotiations and giving effect to the proposals made by SibCo 1, if any, and after consultation with its financial advisors and outside legal counsel, to withdraw, modify or amend its recommendation of in favor of the merger.

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	•	by mutual written consent of SibCo 1 and UICI;
	•	by SibCo 1 or UICI at any time before the effective time of the merger if:

	–	the merger has not been consummated by June 15, 2006, except that the right to terminate under this clause will not be available to any party whose failure to fulfill any of its obligations has been a principal cause of, or resulted in, the failure to consummate the merger by such date;
	–	the merger agreement has been submitted to our stockholders for adoption at a stockholders meeting and the requisite stockholder vote is not obtained upon a vote taken thereon; or
	–	any law prohibits completion of the merger or any order restrains, enjoins or otherwise prohibits completion of the merger, and such order has become final and nonappealable;

	•	by SibCo 1 at any time before the effective time of the merger if:

	–	(i) our board of directors withdraws, modifies or amends its recommendation in favor of the merger in any manner adverse to SibCo 1 or the Merger Cos, (ii) our board of directors approves, endorses or recommends a Takeover Proposal, or (iii) we or our board of directors resolves or announces our intention to do any of the foregoing;
	–	we (i) materially breach our no-solicitation obligations or our obligations to hold a stockholders meeting or our board of directors or any committee thereof resolves to do any of the foregoing or (ii) materially breach our obligations to prepare this document and the breach is not cured within five business days after our receipt of written notice asserting the breach from SibCo 1;
	–	we breach any of our representations, warranties or covenants contained in the merger agreement, which breach (i) would give rise to the failure of the related conditions set forth in the merger agreement and (ii) has not been cured by us within 20 business days after our receipt of written notice of the breach from SibCo 1; or
	–	a Company Material Adverse Effect occurs and continues to occur and has not been cured by us within 20 business days after receipt of written notice of the occurrence of the event from SibCo 1; and

	•	by UICI if any SibCo or any Merger Co breaches any of its representations, warranties or covenants contained in the merger agreement, which breach (a) would give rise to the failure of a related condition in the merger agreement and (b) has not been cured by such SibCo or such Merger Co within 20 business days after such SibCo’s or such Merger Co’s receipt of written notice of such breach from us.

	•	If the merger agreement is terminated by SibCo 1 pursuant to the first two scenarios described under the third bullet point in “— Termination of the Merger Agreement” above, we will pay, or cause to be paid, the termination fee to SibCo 1 within two business days after such termination.
	•	If (A) a Takeover Proposal has been made or proposed to us or otherwise publicly announced (which has not been withdrawn (x) at least 20 business days before June 15, 2006 with respect to a termination pursuant to the first scenario under the second bullet point in “— Termination of the Merger Agreement” above or before the breach that gave rise to the termination with respect to a termination pursuant to the third scenario under the third bullet point in “— Termination of the

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		Merger Agreement” above, or (y) at least three business days before the stockholders meeting with respect to a termination pursuant to the second scenario under the second bullet point above), (B) the merger agreement is terminated by SibCo 1 or us pursuant to the first two scenarios described under the second bullet point above or by SibCo 1 pursuant to the third scenario under the third bullet point “— Termination of the Merger Agreement” above, and (C) within 12 months following the date of such termination, we enter into a contract providing for the implementation of a Takeover Proposal or consummate any Takeover Proposal (whether or not such Takeover Proposal was the same Takeover Proposal referred to in the foregoing clause (A)), we will pay, or cause to be paid, the termination fee to SibCo 1 within two business days after the date on which we enter into such contract or consummate such Takeover Proposal, as applicable.

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		Common Stock
At September 14, 2005		$	31.08
At February 27, 2006		$	36.53

			Common Stock
			High				Low
Fiscal Year Ended December 31, 2003
	1st Quarter		$	16.41			$	8.42
	2nd Quarter		$	15.65			$	9.78
	3rd Quarter		$	17.43			$	11.80
	4th Quarter		$	16.20			$	12.90
Fiscal Year Ended December 31, 2004
	1st Quarter		$	15.00			$	12.70
	2nd Quarter		$	23.81			$	14.56
	3rd Quarter		$	33.05			$	21.93
	4th Quarter		$	35.84			$	24.00
Fiscal Year Ended December 31, 2005
	1st Quarter		$	34.19			$	23.70
	2nd Quarter		$	30.70			$	21.31
	3rd Quarter		$	36.77			$	29.35
	4th Quarter		$	36.59			$	35.16
Fiscal Year Ended December 31, 2006
	1st Quarter (through February 27, 2006)		$	36.80			$	35.52

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			Common Shares
			Beneficially				Percent of
Name & Address of Beneficial Owner			Owned (1)				Common Stock
5% Stockholders:
Comerica Bank, as Trustee				2,856,921	(2)			6.13	%
	One Detroit Center Detroit, MI 48275
Barclays Global Investors, NA				3,011,700	(3)			6.46	%
	45 Fremont Street
	San Francisco, CA 94105
Paulson & Company				2,982,500	(4)			6.40	%
	590 Madison Avenue
	New York, NY 10022
Gladys M. Jensen				7,946,528	(5)			17.04	%
	6500 Beltline Road
	Suite 170
	Irving, TX 75063
OUI, Inc.				2,734,483	(6)			5.86	%
	6500 N. Beltline Road Irving, TX 75063
Executive Officers and Directors:
William J. Gedwed				46,178				*
Glenn W. Reed				80,710				*
Phillip J. Myhra				61,367				*
Troy A. McQuagge				82,623				*
William J. Truxal				55,844				*
Richard T. Mockler				11,425				*
Mural R. Josephson				5,315				*
R.H. Mick Thompson				-0-				*
Dennis C. McCuistion				832				*
All executive officers and directors (12 individuals) as a group				433,741				*

*	The amount shown is less than 1% of the outstanding shares of our common stock.

(1)	Shares beneficially owned by any holder include (a) shares (if any) held by the Trustee for the benefit of the holder under the Company’s Employee Stock Ownership and Savings Plan and (b) shares (if any) issuable upon the exercise of stock options held by such holder that are exercisable within 60 days of February 13, 2006. The shares of our common stock held by the Trustee under the Company’s Employee Stock Ownership and Savings Plan that are purchased with contributions made by the Company are subject to the vesting requirements of the Plan.
(2)	Represents shares held by Comerica Bank, as Trustee under the Company’s Employee Stock Ownership and Savings Plan.
(3)	According to the Schedule 13G/A filed on January 26, 2006 by Barclays Global Investors NA.
(4)	According to the Schedule 13G/A filed on February 14, 2006 by Paulson & Co. Inc.
(5)	According to the Schedule 13D filed on October 5, 2005 by Gladys M. Jensen, includes 3,846,528 shares owned by the estate of Ronald L. Jensen (of which Gladys M. Jensen is the independent executor), and 4,100,000 shares owned by Gladys M. Jensen outright.
(6)	According to the Schedule 13D/ A filed on October 11, 2005 by OUI, Inc.

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	Board Composition

	•	up to 8 directors nominated or designated by the Blackstone stockholders;
	•	up to 2 directors nominated or designated by the Goldman Sachs stockholders;
	•	up to 1 director nominated or designated by the DLJ stockholders;
	•	1 member of management, which we refer to as the “management director,” to be nominated by private equity investors holding a majority of the class A-1 common stock held by private equity investors; and
	•	additional directors, including directors who may be considered independent under various SEC and stock exchange definitions to the extent deemed necessary or advisable. We refer to the management directors and the independent directors collectively as the “non-investor directors.”

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	Approval Rights

	•	certain mergers, consolidations, business combinations, reorganizations or liquidations;
	•	certain acquisitions or dispositions of business or assets valued in excess of 20% of the fair market value of the total assets of the surviving corporation and its subsidiaries;
	•	certain debt and preferred stock issuances that would increase the aggregate debt and preferred stock level by an amount in excess of 20% of the fair market value of the total assets of the surviving corporation and its subsidiaries;
	•	transactions with affiliates, other than de minimis transactions on arm’s length terms; or
	•	amendments to the certificate of incorporation or bylaws with the purpose or effect of the transactions described above or that would conflict with other terms of the stockholders agreement.

	Corporate Opportunities

	Transfer Restrictions

	•	pursuant to “tag-along” sales and “drag-along” sales, as described below in “— Tag-Along Rights “— Drag-Along Rights”;
	•	after an initial public offering of the surviving corporation (and subject to the provisions of the registration rights and coordination committee agreement described below):

	•	in a registered public offering;
	•	pursuant to Rule 144 promulgated under the Securities Act; or
	•	in a distribution of shares of class A-1 common stock by a private equity investor to its general or limited partners, members, managers or shareholders; or

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	•	with the approval of the private equity investors holding a majority of the shares held by the private equity investors.

	•	to the surviving corporation;
	•	upon the death of the holder, pursuant to applicable laws of descent and distribution; or
	•	for estate planning purposes, pursuant to a transfer to the holder’s immediate family, whether directly or indirectly by means of a trust or partnership or other bona fide estate-planning vehicle the only beneficiaries of which are the holder’s immediate family.

	Tag-Along Rights

	•	before an initial public offering of the common stock of the surviving corporation, a transfer (1) of at least 1% of the outstanding shares of class A-1 common stock by the private equity investors holding a majority of the outstanding shares of class A-1 common stock held by the private equity investors in the aggregate or (2) of at least 5% of the outstanding shares of class A-1 common stock by any private equity investor, and
	•	after an initial public offering of the common stock of the surviving corporation, a transfer by a private equity investor of at least 10% of the total amount of shares of class A-1 common stock outstanding.

	Drag-Along Rights

	Information Rights

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	Preemptive Rights

	Line of Business Covenant

	Company Repurchase Right

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			Historical								Pro forma
			September 30,								September 30,
			2005				Adjustments				2005
ASSETS:
Investments			$	1,718,361			$	(113,210	)(a)		$	1,605,151
Student loans				104,816				—				104,816
Restricted cash				40,584				—				40,584
Investment income due and accrued				23,902				—				23,902
Due premiums				103,037				—				103,037
Reinsurance receivables				43,290				—				43,290
Agents’ and other receivables				28,721				—				28,721
Deferred acquisition costs				131,467				—				131,467
Property and equipment, net				85,997				—				85,997
Goodwill and other intangibles assets				80,817				—				80,817
Deferred federal income tax assets				29,124				—				29,124
Other assets				13,585				23,907	(b)			37,492
	Total assets		$	2,403,701			$	(89,303	)		$	2,314,398
LIABILITIES:
Future policy and contract benefits			$	448,914				—			$	448,914
Claims				546,373				—				546,373
Unearned premiums				188,606				—				188,606
Other policy liabilities				14,674				—				14,674
Accounts payable and accrued expenses				58,328			$	(2,261	)(c)			56,067
Cash overdraft.				977				—				977
Other liabilities				117,386				—				117,386
Federal income tax payable				24,917				616	(c)			25,533
Term loan				—				500,000	(d)			500,000
Existing notes payable				15,470				—				15,470
Student loan credit facility				145,750				—				145,750
Net liabilities of discontinued operations				7,576				—				7,576
	Total liabilities			1,568,971				498,355				2,067,326
STOCKHOLDERS’ EQUITY:
Perpetual preferred stock				—				92,366	(e)			92,366
Common stockholders’ equity				834,730				(680,024	)(f)			154,706
	Total stockholders’ equity			834,730				(587,658	)			247,072
	Total liabilities and stockholders’ equity		$	2,403,701			$	(89,303	)		$	2,314,398

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(a)	Adjustment reflects the sources and uses of cash for the transaction, resulting in a net adjustment to cash of $113.2 million reflected in the “Investments” caption of the accompanying pro forma balance sheet. Set forth below is a summary of the anticipated sources and uses of cash in the transaction:

Sources of cash:
Term loan									$	500,000
Perpetual preferred										100,000
Sponsor equity(1)										982,054
			Total sources of cash							1,582,054
Uses of cash:
Estimated cash consideration for common equity(2)										1,586,637
Fees and expenses:
	Sponsor direct merger costs:
		Capitalized financing fees			$	23,907
		Preferred stock issuance costs				7,634
		Other Sponsor direct merger costs(3)				33,709
			Total Sponsor direct merger costs							65,250
	UICI direct merger costs (net of tax of $6,210)									43,377
			Total fees and expenses							108,627
			Total uses of cash							1,695,264
			Net adjustment to cash(4)						$	(113,210	)

	(1)	Represents the total cash to be contributed by the private equity investors in the transaction.
	(2)	Represents the total estimated cash consideration at the time of completion of the merger, which is equivalent to (a) the “in-the-money” value ($8,294) of outstanding stock options plus (b) $37.00 per share times (i) the total outstanding shares of UICI common stock at September 30, 2005 (46,127,204 shares) less (ii) the number of shares held by certain members of our senior management (estimated to be less than 1% of our currently outstanding shares) and by independent agents pursuant to our agent stock accumulation plans (3,155,578 shares), who in each case have elected to retain a portion of their equity interest in the surviving corporation after the merger.
	(3)	Represents estimated other direct merger costs of the Sponsor (consisting primarily of legal, accounting, investment banking and Sponsor fees).
	(4)	Reflects a net use of cash to be funded by existing cash and short-term investments of the Company.

(b)

Adjustment reflects the capitalization of financing costs related to a $500.0 million unsecured term loan credit facility and a $75.0 million unsecured revolving credit facility to be available following the closing of the transaction. This adjustment reflects both direct and allocated financing costs and fees. The allocation of debt financing costs and fees was based upon the amount of debt financed as a percentage of total debt and preferred stock financed and sponsor equity.

		Amount				Life
Revolving credit facility		$	2,988				5
Term loan facility			20,919				6
		$	23,907

(c)	Adjustment reflects the liability ($2,261) and the related tax effect ($616) of merger related costs included in the historical balance sheet of the Company assumed to be paid at the merger date. The $2,261 liability consists of $1,761 in stock compensation plan costs and $500 in legal fees.

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(d)	Adjustment reflects the gross proceeds of the unsecured term loan credit facility in an aggregate amount of $500.0 million.
(e)	Adjustment reflects the issuance of $100.0 million liquidation value of 10% fixed rate perpetual preferred stock, less estimated expenses of issuance in the amount of $7.6 million. The allocation of preferred stock financing costs and fees was based upon the amount of preferred stock financed as a percentage of total debt and preferred stock financed and sponsor equity.

Perpetual preferred stock			$	100,000
Less — expense of issuance				(7,634	)
	Net adjustment for preferred stock issuance		$	92,366

(f)	The calculation of the pro forma adjustment to stockholders’ equity is set forth in the table below:

Sponsor equity			$	982,054
Estimated cash consideration for common equity(1)				(1,586,637	)
One-time merger costs (net of tax of $5,594)(2)				(75,441	)
	Net adjustment to stockholders’ equity		$	(680,024	)

	(1)	Represents the total estimated cash consideration at the time of completion of the merger, which is equivalent to (a) the “in-the-money” value ($8,294) of outstanding stock options plus (b) $37.00 per share times (i) the total outstanding shares of UICI common stock at September 30, 2005 (46,127,204 shares) less (ii) the number of shares held by certain members of our senior management (estimated to be less than 1% of our currently outstanding shares) and by independent agents pursuant to our agent stock accumulation plans (3,155,578 shares), who in each case have elected to retain a portion of their equity interest in the surviving corporation after the merger.
	(2)	Consists of estimated non-recurring charges directly attributable to the merger expected to be recorded as a result of the merger, as summarized below:

Total fees and expenses, net of tax			$	108,627
Less capitalized expenses:
	Capitalized financing fees			(23,907	)
	Preferred stock issuance costs			(7,634	)
Merger costs, net of tax				77,086
Less non-recurring merger costs reported in historical numbers(i)				(1,645	)
	Non-recurring merger costs, net of tax		$	75,441

	(i)	As of September 30, 2005, the Company had recorded in the historical financials an accrual for merger costs of $1,645 ($2,261 net of tax of $616), consisting of $1,761 (net of tax of $616) in acceleration of stock compensation plans and $500 in legal fees.

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			Historical Nine								Pro Forma Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2005				Adjustments				2005
			(In thousands except per share amounts)
REVENUE:
Premiums:
Health			$	1,406,226				—			$	1,406,226
Life premiums and other considerations				39,075				—				39,075
				1,445,301				—				1,445,301
Investment income				70,936				—				70,936
Other income				81,174				—				81,174
Gains on sale of investments				2,118				—				2,118
				1,599,529				—				1,599,529
BENEFITS AND EXPENSES:
Benefits, claims and settlement expenses				804,416				—				804,416
Underwriting, acquisition, and insurance expenses				478,931				—				478,931
Stock appreciation (benefit) expense				4,733				—				4,733
Other expenses				53,804			$	10,460	(a)			64,264
Interest expense				4,297				20,782	(b)			25,079
				1,346,181				31,242				1,377,423
Income from continuing operations				253,348				(31,242	)			222,106
Federal income taxes				87,876				(11,211	)(c)			76,665
Income from continuing operations before estimated non- recurring charges directly attributable to the transaction(d)			$	165,472			$	(20,031	)		$	145,441
EARNINGS PER SHARE(e):
Earnings from continuing operations per share:
	Basic		$	3.59							$	4.60
	Diluted		$	3.51							$	4.45
Weighted average shares outstanding:
	Basic			46,120								29,893
	Diluted			47,093								30,866

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			Historical								Pro Forma
			Year Ended								Year Ended
			December 31,								December 31,
			2004				Adjustments				2004
REVENUE:
Premiums:
Health			$	1,812,892				—			$	1,812,892
Life premiums and other considerations				38,008				—				38,008
				1,850,900				—				1,850,900
Investment income				85,868				—				85,868
Other income				114,467				—				114,467
Gains on sale of investments				6,671				—				6,671
				2,057,906								2,057,906
BENEFITS AND EXPENSES:
Benefits, claims and settlements expenses				1,127,058				—				1,127,058
Underwriting, acquisition, and insurance expenses				632,132				—				632,132
Stock appreciation (benefit) expense				14,307				—				14,307
Other expenses				59,843				15,000	(a)			74,843
Interest expense				3,417				27,709	(b)			31,126
				1,836,757				42,709				1,879,466
Income from continuing operations				221,149				(42,709	)			178,440
Federal income taxes				75,268				(14,948	)(c)			60,320
	Income from continuing operations before non-recurring charges directly attributable to the transaction(d)		$	145,881			$	(27,761	)		$	118,120
EARNINGS PER SHARE(e):
Earnings from continuing operations per share:
	Basic		$	3.16							$	3.59
	Diluted		$	3.07							$	3.44
Weighted average shares outstanding:
	Basic			46,131								29,893
	Diluted			47,510								31,272

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(a)	Adjustment reflects the annual sponsor monitoring fee ($11,250 for the nine months ended September 30, 2005 and $15,000 for the twelve months ended December 31, 2004). The adjustment for the nine months ended September 30, 2005 also includes the reversal of $790 of non-recurring merger costs that have been reflected in the historical results of operations of the Company.
(b)	Adjustment reflects the incremental interest expense (based on an assumed LIBOR rate of 3.82%) associated with the term loan credit facility and the revolving credit facility, calculated as follows:

											Nine Months
			Notional								Ended				Year Ended
			Principal								September 30,				December 31,
			Amount				Rate				2005				2004
Revolving credit facility				—				4.695%				—				—
Term loan credit facility			$	500,000				4.695%			$	17,606			$	23,475
Commitment fees				75,000				0.200%				113				150
Amortization of financing fees — as calculated below												3,063				4,084
	Adjustment to interest expense										$	20,782			$	27,709

	Set forth below is the supplemental calculation of the amortization of financing fees:

											Nine Months
											Ended				Year Ended
											September 30,				December 31,
			Amount				Life				2005				2004
Revolving credit facility			$	2,988				5			$	448			$	598
Term loan credit facility				20,919				6				2,615				3,486
	Total		$	23,907							$	3,063			$	4,084

(c)	Adjustment reflects the tax effects of pro forma adjustments at a 35% effective tax rate.
(d)	Estimated pre-tax non-recurring charges directly attributable to the merger that are not reflected in the pro forma consolidated income statement consist of the following:

Success bonus award plan(1)			$	22,958
Merger investment banking and legal fees(2)				52,689
Acceleration of stock compensation plans(3)				4,799
Other costs of the merger(4)				4,400
	Total non-recurring charges(5)		$	84,847

	(1)	For more information, see discussion under the caption “The Merger — Interests of Directors and Executive Officers in the Merger — UICI Success Bonus Award Plan” beginning on page 61.
	(2)	Includes legal fees in the amount of $790 that have been reversed from the historical results of operations of the Company. As of September 30, 2005, the Company had paid $290 of these fees, resulting in an accrual of $500 for legal fees.
	(3)	Includes $3,022 of non-cash expense related to acceleration of stock compensation plans.
	(4)	Represents other estimated merger costs, consisting primarily of costs for “tail” insurance coverage to be obtained for occurrences up to the acquisition date.
	(5)	Total non-recurring charges do not reflect the related tax benefit of $6,210.

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(e)	Earnings per share has been calculated as follows:

			Nine Months
			Ended				Year Ended
			September 30,				December 31,
			2005				2004
Income (loss) available to common shareholders:
Income from continuing operations			$	145,441			$	118,120
Preferred stock dividends(1)				(7,500	)			(10,000	)
Accretion of preferred stock discount(2)				(573	)			(763	)
Net income for basic earnings per share				137,368				107,357
Effect of dilutive securities:
Interest on 6% Convertible Note				—				176
	Net income for diluted earnings per share		$	137,368			$	107,533
Weighted average shares outstanding:
Basic				29,893				29,893
Effect of dilutive securities:
Employee stock options and other shares				973				1,379
Diluted				30,866				31,272
Earnings per share(3):
	Basic		$	4.60			$	3.59
	Diluted		$	4.45			$	3.44

	(1)	Adjustment reflects the dividend on $100.0 million liquidation value of 10% fixed rate perpetual preferred stock ($7.5 million and $10.0 million for the nine months ended September 30, 2005 and twelve months ended December 31, 2004, respectively).
	(2)	Amount represents the accretion of the discount on the preferred stock, assuming a ten year amortization period using a straight line method of amortization.
	(3)	Amount represents the earnings per share for the aggregate of class A-1 and class A-2 common stock.

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	Dividend Rights

	Voting Rights

	Liquidation Rights

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	Issuance Restrictions

	Transfer Restrictions

	•	the surviving corporation;
	•	upon the death of the holder, pursuant to applicable laws of descent and distribution;
	•	for estate planning purposes, pursuant to a transfer to the holder’s immediate family, whether directly or indirectly by means of a trust or partnership or other bona fide estate-planning vehicle the only beneficiaries of which the holder’s immediate family; and
	•	pursuant to the provisions in “— Required Sale of Shares” set forth below.

	Required Sale of Shares

	Redemption

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	Exchange Act Reports

	Transfer Agent

	Stock Exchange Listing

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				Surviving Corporation Class A-1 and Class A-2 Common Stock After
		UICI Common Stock		the Merger
Authorized Capital Stock:		100,000,000 shares of common stock authorized, par value $0.01 per share and 10,000,000 shares of preferred stock authorized, par value $0.01 per share.		90,000,000 shares of class A-1 common stock will be authorized, par value $0.01 per share, 20,000,000 shares of class A-2 common stock will be authorized, par value $0.01 per share and 10,000,000 shares of preferred stock will be authorized, par value $0.01 per share.
Voting Power of Capital Stock:		UICI’s certificate of incorporation provides that each share of common stock is entitled to one vote per share.		The surviving corporation’s certificate of incorporation will provide that each share of common stock is entitled to one vote per share, voting as a single class.
Board of Directors:		UICI’s certificate of incorporation and bylaws provide that the board of directors will initially include five directors. The number of directors may be changed by a resolution of the board, but may never be less than one director.		After the merger, the initial board will consist of directors affiliated with The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking, as well as a management representative, with the directors affiliated with The Blackstone Group constituting a majority of the voting power of the board. Additional directors may also be on the initial board of directors. See “The Merger — Composition of the Board of Directors and Executive Management of the Surviving Corporation” beginning on page 62. The certificate of incorporation of the surviving corporation will provide that the board will have the ability to nominate any management representative or additional director.
Removal of Directors:		UICI’s bylaws provide that at any meeting of stockholders called expressly for that purpose, any director or the entire board of directors may be removed, with or without cause, by the affirmative vote of the holders of a majority of shares then entitled to vote for the election of such director(s).		The surviving corporation’s certificate of incorporation will provide that any director or directors may be removed, with or without cause, at any time by the affirmative vote of the holders of a majority of the voting power entitled to vote for the election of directors.
Filling Vacancies of the Board of Directors:		UICI’s bylaws provide that any vacancy occurring in the board of directors may be filled by		The surviving corporation’s certificate of incorporation will provide that if the office of any director becomes vacant, the holders of a majority of the voting power entitled to vote for the election

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				Surviving Corporation Class A-1 and Class A-2 Common Stock After
		UICI Common Stock		the Merger
		the affirmative vote of a majority of the remaining directors though less than a quorum of the board. UICI’s bylaws also provide that any directorship to be filled by reason of any increase in the number of directors will be filled by either the affirmative vote of a majority of the directors of the board, or by election at an annual meeting of the stockholders called for that purpose.		of directors may fill such vacancy. The surviving corporation’s bylaws will provide that directors filling such vacancies will hold office for the unexpired term and until his or her successor is duly chosen.
Calling of Annual Meetings of Stockholders:		UICI’s bylaws provide that an annual meeting of stockholders will be held during each calendar year on such date and at such time as will be designated from time to time by the board of directors.		The surviving corporation’s bylaws will provide that annual meetings of stockholders shall be held at such place and at such time and date as the board of directors shall determine.
Calling of Special Meeting of Stockholders:		UICI’s bylaws authorize only the Chairman of the Board, the President, the board of directors or the holders of not less than one-tenth of all shares entitled to vote at the meeting to call a special meeting.		The surviving corporation’s bylaws will authorize the Chairman of the Board, the President and Chief Executive Officer, the Secretary and the board of directors to call a special meeting. Stockholders will have no right to call a special meeting.
Quorum:		UICI’s bylaws provide that the holders of a majority of the capital stock entitled to vote at a meeting of stockholders, present in person or represented by proxy, will constitute a quorum at all meetings of stockholders.		The surviving corporation’s bylaws will provide that the presence, in person or by proxy, of stockholders holding shares constituting a majority of the voting power of the surviving corporation constitute a quorum at all meetings of the stockholders.
Stockholder Action by Written Consent:		UICI’s certificate of incorporation and bylaws authorize stockholder action by written consent.		The surviving corporation’s bylaws will provide that any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

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				Surviving Corporation Class A-1 and Class A-2 Common Stock After
		UICI Common Stock		the Merger
Transfer Restrictions:		UICI’s certificate of incorporation and bylaws do not provide for any transfer restrictions.		The surviving corporation’s certificate of incorporation will provide that class A-2 common stock may not be transferred except to the surviving corporation, upon the holder’s death, or to an agent’s immediate family for estate planning purposes, or pursuant to the provisions under “Required Sale of Shares” below. The surviving corporation’s certificate of incorporation and bylaws will not provide for any transfer restrictions for class A-1 common stock.
				See “Description of Capital Stock of the Surviving Corporation — Surviving Corporation Common Stock: Class A-1 and Class A-2 Common Stock — Transfer Restrictions” beginning on page 99.
Required Sale of Shares:		UICI’s certificate of incorporation and bylaws do not provide for a required sale of common stock.		The surviving corporation’s certificate of incorporation will provide that the private equity investors may require the sale of class A-2 common stock under certain conditions in a transaction that would constitute a change of control of the surviving corporation. If holders of class A-2 common stock do not comply with the provisions relating to this required sale, their shares will be automatically redeemed by the surviving corporation for $1.00. See “Description of Capital Stock of the Surviving Corporation — Surviving Corporation Common Stock: Class A-1 and Class A-2 Common Stock — Required Sale of Shares” beginning on page 99.
				The surviving corporation’s certificate of incorporation and bylaws will not provide for any provisions relating to the mandatory sale of shares of class A-1 common stock.
				See “Description of Capital Stock of the Surviving Corporation — Surviving Corporation Common Stock: Class A-1 and Class A-2 Common Stock — Required Sale of Shares” beginning on page 99.
Redemption:		UICI’s certificate of incorporation and bylaws do not provide for redemption rights.		The surviving corporation’s certificate of incorporation will provide that in the event the agent contract of an independent agent who owns class A-2 common stock is terminated, the surviving corporation will have the right to redeem the holder’s class A-2 common stock. The surviving corporation will also have the right to redeem all class A-2 common stock immediately before a change of control.
				The surviving corporation’s certificate of incorporation will also provide that the aforementioned rights of redemption will terminate upon an initial public offering or change of control, and that, in certain cases, payment may be subject to delay or delivery of a note in lieu of cash.
				The surviving corporation’s certificate of incorporation and bylaws will not provide for any

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				Surviving Corporation Class A-1 and Class A-2 Common Stock After
		UICI Common Stock		the Merger
				right of redemption of shares of class A-1 common stock.
				See “Description of Capital Stock of the Surviving Corporation — Surviving Corporation Common Stock: Class A-1 and Class A-2 Common Stock — Redemption” beginning on page 99.
Approval Rights				The certificate of incorporation of the surviving corporation will provide that the approval of directors nominated or designated by at least two private equity investor groups is required in order to (1) enter into certain mergers, consolidations, business combinations, reorganizations or liquidations; (2) acquire or sell any business or assets having a value exceeding 20% of the fair market value of the assets of the surviving corporation (including its subsidiaries); (3) incur debt or issue preferred stock that would increase the aggregate debt and preferred stock level by an amount exceeding 20% of the fair market value of the assets of the surviving corporation (including its subsidiaries), with certain permitted exceptions; (4) transactions with affiliates other than de minimis transactions on arm’s length terms; and (5) amendments to the certificate of incorporation or bylaws of the surviving corporation that would have the effect of items (1) to (4) above or would conflict with the terms of the stockholders agreement. See “Certain Relationships and Related Party Transactions — Stockholders Agreement — Approval Rights” beginning on page 86.
Amendment to Certificate of incorporation:		UICI’s certificate of incorporation provides that the vote of a majority of outstanding shares is required to amend the certificate of incorporation.		The DGCL provides that a corporation’s certificate of incorporation may be amended upon the affirmative vote of a majority of the outstanding shares of each class entitled to vote thereon, unless the corporation’s certificate of incorporation requires a larger percentage. The surviving corporation’s certificate of incorporation will be consistent with the majority requirement under the DGCL, except as set forth above under “— Approval Rights.”
Amendments to Bylaws:		UICI’s certificate of incorporation grants the board of directors the power to adopt, alter, amend or repeal the bylaws, but provides that any such action by the board may be repealed or changed by a vote of the shares entitled to vote thereon.		The surviving corporation’s certificate of incorporation will grant the board of directors the power to make, alter and repeal the bylaws, subject to the power of the stockholders of the corporation to alter or repeal any bylaws adopted by the board, except as set forth above under “— Approval Rights.”

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	•	Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on March 15, 2005;
	•	Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2005, June 30, 2005 and September 30, 2005, filed on May 9, 2005, August 9, 2005 and November 7, 2005, respectively;
	•	Current Reports on Form 8-K, filed on June 7, 2005, July 29, 2005, September 6, 2005, September 15, 2005, September 20, 2005, November 3, 2005 and November 7, 2005.

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	•	The description of UICI common stock contained in its registration statement on Form 8-A filed on April 22, 1999 under the Exchange Act and any amendments or reports filed for purposes of updating that description.

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A-1

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Table of Contents

I.		THE MERGER							A-5
			1.1			The Merger			A-5
			1.2			Closing			A-5
			1.3			Effective Time			A-6
			1.4			Effects of the Merger			A-6
			1.5			Certificate of Incorporation			A-6
			1.6			Bylaws			A-6
			1.7			Directors and Officers			A-6
			1.8			Assignment of Rights Under Debt Financing			A-6
II.		EFFECT OF THE MERGER ON CAPITAL STOCK							A-7
			2.1			Effect of the Merger on Capital Stock			A-7
			2.2			Surrender of Certificates			A-7
			2.3			Dissenting Shares			A-9
			2.4			Adjustments to Prevent Dilution			A-9
			2.5			Treatment of Company Stock Options and Other Equity Based Awards			A-9
III.		REPRESENTATIONS AND WARRANTIES OF THE COMPANY							A-10
			3.1			Organization; Power; Qualification			A-10
			3.2			Corporate Authorization; Enforceability			A-10
			3.3			Organizational Documents			A-11
			3.4			Capitalization; Options			A-11
			3.5			Subsidiaries			A-12
			3.6			Governmental Authorizations			A-12
			3.7			Non-Contravention			A-13
			3.8			Voting			A-13
			3.9			SEC Reports; Securities Law Matters			A-13
			3.10			Financial Statements			A-14
			3.11			Reserves; Ratings; Reinsurance			A-14
			3.12			Liabilities			A-15
			3.13			Absence of Certain Changes			A-15
			3.14			Litigation			A-15
			3.15			Contracts			A-16
			3.16			Benefit Plans			A-17
			3.17			Labor Relations			A-18
			3.18			Taxes			A-19
			3.19			Environmental Matters			A-21
			3.20			Intellectual Property			A-22
			3.21			Title to Property			A-22
			3.22			Permits; Compliance with Laws			A-22
			3.23			Takeover Statutes			A-23
			3.24			Interested Party Transactions			A-24
			3.25			Information Supplied			A-24
			3.26			Opinion of Financial Advisor			A-24
			3.27			Insurance			A-24
			3.28			Certain Regulatory Matters			A-25
			3.29			Brokers and Finders			A-25

A-2

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IV.		REPRESENTATIONS AND WARRANTIES OF THE SIBCOS AND THE MERGER COS							A-25
			4.1			Organization and Power			A-25
			4.2			Corporate Authorization			A-26
			4.3			Enforceability			A-26
			4.4			Governmental Authorizations			A-26
			4.5			Non-Contravention			A-26
			4.6			Absence of Litigation			A-26
			4.7			Disclosure Documents			A-27
			4.8			Capital Resources			A-27
			4.9			Interim Operations of each Merger Co			A-27
			4.10			Brokers			A-27
V.		COVENANTS							A-27
			5.1			Conduct of Business of the Company			A-27
			5.2			Other Actions			A-30
			5.3			Access to Information; Confidentiality			A-30
			5.4			No Solicitation			A-30
			5.5			Notices of Certain Events			A-32
			5.6			Company Disclosure Documents			A-32
			5.7			Company Stockholders Meeting			A-33
			5.8			Employees; Benefit Plans			A-33
			5.9			Directors’ and Officers’ Indemnification and Insurance			A-34
			5.10			Reasonable Best Efforts			A-36
			5.11			Public Announcements			A-37
			5.12			Stock Exchange Listing			A-37
			5.13			Fees, Expenses and Conveyance Taxes			A-37
			5.14			Takeover Statutes			A-37
			5.15			Financing; Funding			A-38
			5.16			No-Action Letter			A-39
			5.17			Rule 16b-3			A-39
			5.18			Resignations			A-39
			5.19			Affiliate Termination Agreements			A-39
			5.20			BHC Act			A-39
VI.		CONDITIONS							A-39
			6.1			Conditions to Each Party’s Obligation to Effect the Merger			A-39
			6.2			Conditions to Obligations of the SibCos and the Merger Cos			A-40
			6.3			Conditions to Obligation of the Company			A-41
VII.		TERMINATION, AMENDMENT AND WAIVER							A-41
			7.1			Termination by Mutual Consent			A-41
			7.2			Termination by SibCo 1 or the Company			A-41
			7.3			Termination by SibCo 1			A-41
			7.4			Termination by the Company			A-42
			7.5			Effect of Termination			A-42
			7.6			Expenses, Etc. Following Termination			A-42
			7.7			Amendment			A-43
			7.8			Extension; Waiver			A-43
			7.9			Procedure for Termination, Amendment, Extension or Waiver			A-43

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VIII.		MISCELLANEOUS							A-43
			8.1			Certain Definitions			A-43
			8.2			Interpretation			A-46
			8.3			Survival			A-46
			8.4			Governing Law			A-47
			8.5			Submission to Jurisdiction			A-47
			8.6			Waiver of Jury Trial			A-47
			8.7			Notices			A-47
			8.8			Entire Agreement			A-48
			8.9			No Third-Party Beneficiaries			A-48
			8.10			Severability			A-48
			8.11			Rules of Construction			A-48
			8.12			Assignment			A-48
			8.13			Remedies			A-49
			8.14			Specific Performance; Maximum Recovery; No Liability of SibCos			A-49
			8.15			Counterparts; Effectiveness			A-49

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	(a) Prior to the Effective Time, the Company will form a wholly-owned limited liability company (the “LLC”), the governance and economic structure and other key provisions of which shall be reasonably acceptable to SibCo 1. From and after the formation of the LLC until the Effective Time, the Company shall maintain the LLC as a wholly-owned Subsidiary of the Company;
	(b) At the request of SibCo 1, concurrent with or immediately after the Effective Time, the Company shall transfer to the LLC any and all assets (including capital stock of Subsidiaries) and liabilities of the Company that may be transferred by the Company without obtaining consents or authorizations from any third party or Governmental Entity; and
	(c) At the Effective Time, each SibCo will assign to the LLC any and all rights and obligations of such SibCo pursuant to the Debt Financing, and the Surviving Corporation will cause the LLC to assume such rights and obligations.

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	(a) Merger Consideration.

	(i) Each share of the common stock, par value $0.01 per share, of the Company (each, a “Common Share” and collectively, the “Common Shares”) issued and outstanding immediately prior to the Effective Time, including Common Shares owned by any SibCo, any Merger Co or the Company or any wholly owned Subsidiary of any SibCo, any Merger Co or the Company or any of its wholly owned Subsidiaries, but excluding (A) Dissenting Shares, (B) Agent Shares and (C) Management Shares (the Common Shares referred to in (A)-(C), the “Excluded Common Shares” and the Common Shares referred to in (B)-(C), “Retained Shares”)), will be converted into the right to receive $37.00 in cash, without interest (the “Cash Consideration”).
	(ii) Management Shares shall not be converted into the Cash Consideration but shall instead remain outstanding, but renamed, as shares of Class A-1 common stock of the Surviving Corporation (“Class A-1 Common Stock”). Each Agent Share issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive one share of Class A-2 common stock, par value $0.01 per share, of the Surviving Corporation (“Class A-2 Common Stock,” such shares of Class A-2 Common Stock, together with the Class A-1 Common Stock remaining outstanding pursuant to this Article II, the “Stock Consideration,” and the Stock Consideration, together with the Cash Consideration, the “Merger Consideration”).
	(iii) Any Dissenting Shares will thereafter represent only the right to receive the applicable payments set forth in Section 2.3 upon compliance with the procedures set forth herein.

	(b) Cancellation of Common Shares. At the Effective Time, all Common Shares will no longer be outstanding and all Common Shares will be cancelled and retired and will cease to exist, and, subject to Section 2.3, each Certificate formerly representing any such Common Shares will thereafter represent only the right to receive the Merger Consideration, in accordance with Section 2.2.
	(c) Cancellation of Treasury Stock. Each Common Share issued and outstanding immediately prior to the Effective Time and owned by any SibCo, any Merger Co or the Company, except for any such shares held on behalf of third parties, will cease to be outstanding, will be cancelled and retired without payment of any consideration therefor and will cease to exist.
	(d) Conversion of Merger Cos Capital Stock. Each share of common stock of each of Merger Co 1, Merger Co 2 and Merger Co 3 issued and outstanding immediately prior to the Effective Time will be converted into one share of Class A-1 Common Stock; it being understood that the capitalization (including number of outstanding shares) of the Merger Cos will be adjusted prior to the Effective Time as necessary to give effect to Section 2.1(e).
	(e) Agent Share Ownership. Giving effect to this Section 2.1, the ratio (x) of the number of shares of Class A-2 Common Stock issued in respect of Agent Shares in the Merger over (y) the aggregate number of shares of Class A-1 Common Stock issued in the Merger in respect of the cancellation of the capital stock of the Merger Cos shall be equal to the ratio of (1) the product of $37 and the number of Agent Shares at the Effective Time over (2) the aggregate equity capital of the Merger Cos at the Effective Time.

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	3.1     Organization; Power; Qualification. (a) The Company and each of its Subsidiaries is a corporation, limited liability company or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each of the Company and its Subsidiaries has the requisite corporate power and authority to own, lease and operate its assets and to carry on its business as now conducted. Each of the Company and its Subsidiaries is duly qualified or licensed to do business as a foreign corporation, limited liability company or other legal entity and is in good standing in each jurisdiction where the character of the assets and properties owned, leased or operated by it or the nature of its business makes such qualification or license necessary, except where the failure to be so qualified or licensed or in good standing would not have a Company Material Adverse Effect.
	(b) Each of the Domestic Insurance Subsidiaries is (i) duly licensed or authorized as an insurance company in its jurisdiction of incorporation, (ii) duly licensed or authorized to carry on an insurance business in each other jurisdiction where it is required to be so licensed or authorized, and (iii) duly authorized in its jurisdiction of incorporation and each other applicable jurisdiction to write its lines of business as required by applicable Law, except, in each case, where the failure to be so licensed or authorized would not result in a material settlement or fine or a material change in the conduct of business by such Domestic Insurance Subsidiary as presently conducted. The Company and each of its Subsidiaries have made all material filings required under applicable insurance Laws.
	3.2     Corporate Authorization; Enforceability. (a) The Company has the requisite corporate power and authority to enter into and to perform its obligations under this Agreement and, subject to adoption of this Agreement by the Requisite Company Vote, to consummate the transactions contemplated by this Agreement. The board of directors of the Company (“Company Board”) has adopted resolutions (i) approving and declaring advisable the Merger, this Agreement and the transactions contemplated by this Agreement; (ii) declaring that it is advisable and in the best interests of the stockholders of the Company that the Company enters into this Agreement and consummates the Merger on the terms and subject to the conditions set forth in this Agreement; (iii) directing that adoption of this Agreement be

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	submitted to a vote at a meeting of the stockholders of the Company; and (iv) recommending to the stockholders of the Company that they adopt this Agreement (the “Company Board Recommendation”). The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on the part of the Company, subject to the Requisite Company Vote.
	(b) This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement by the SibCos and the Merger Cos, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws related to fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the effect of general principles of equity (such exceptions, the “Enforceability Exceptions”).
	3.3     Organizational Documents. The Company has made available to SibCo 1 correct and complete copies of the certificates of incorporation and bylaws (or the equivalent organizational documents) of the Company and each of its material Subsidiaries, in each case as in effect on the date of this Agreement (collectively, the “Company Organizational Documents”).
	3.4     Capitalization; Options. (a) The Company’s authorized capital stock consists solely of 100,000,000 Common Shares and 10,000,000 shares of preferred stock, par value $.01 per share (the “Preferred Stock”). As of the close of business on September 12, 2005 (the “Measurement Date”), 46,124,004 Common Shares were issued and outstanding, including 14,000 Company Restricted Shares, and no shares of Preferred Stock were issued or outstanding. As of the Measurement Date, 1,416,386 Common Shares were held in the treasury of the Company or by any Subsidiary. Since the Measurement Date, other than in connection with the issuance of Common Shares pursuant to the exercise of Company Stock Options outstanding as of the Measurement Date, there has been no change in the number of outstanding shares of capital stock of the Company or the number of outstanding Company Stock Options. As of the Measurement Date, 631,581 Company Stock Options to purchase 631,581 Common Shares were outstanding. As of the Measurement Date, 1,766,401 Common Shares are issuable upon the vesting of all outstanding Matching Credits. As of the Measurement Date, there were outstanding 413,617.25 share credits under the Phantom Share Credit Plans. Except as set forth in this Section 3.4, there are no shares of capital stock or securities or other rights convertible or exchangeable into or exercisable for shares of capital stock of the Company or such securities or other rights (which term, for purposes of this Agreement, shall be deemed to include “phantom” stock or other commitments that provide any right to receive value or benefits similar to such capital stock, securities or other rights). Since the Measurement Date, there have been no issuances of any securities of the Company or any of its Subsidiaries that would have been in breach of Section 5.2 if made after the date hereof. No Subsidiary of the Company owns any Common Shares.
	(b) All outstanding Common Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to any pre-emptive rights.
	(c) The Company has made available to SibCo 1 correct and complete copies of all plans of the Company providing for the issuance of Common Share awards based upon the value of Common Shares (the “Company Stock Award Plans”), which the Company has set forth on Section 3.4(c) of the Company Disclosure Letter, and all forms of options and other stock-based awards issued under those Company Stock Award Plans.
	(d) Except as set forth in this Section 3.4, there are no outstanding contractual obligations of the Company or any of its Subsidiaries (i) to issue, sell, or otherwise transfer to any Person, or to repurchase, redeem or otherwise acquire from any Person, any Common Shares, Preferred Stock, capital stock of any Subsidiary of the Company, or securities or other rights convertible or exchangeable into or exercisable for shares of capital stock of the Company or any Subsidiary of the Company or such securities or other rights or (ii) to provide any funds to or make any investment in (A) any Subsidiary of the Company that is not wholly owned by the Company or (B) any other Person.

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	(e) For purposes of this Agreement:

	(i) “Matching Credits” means any right with respect to a matching, bonus or forfeiture credit granted to a participant under any Agent Stock Accumulation Plan;
	(ii) “Agent Stock Accumulation Plan” means each of the Agents’ Total Ownership Plan I, Agents’ Total Ownership Plan II, the Agency Matching Total Ownership Plan I, the Agency Matching Total Ownership Plan II, the Initial Total Ownership Plan, the Agents’ Contribution to Equity Plan I, the Agents’ Contribution to Equity Plan II, the Matching Agency Contribution Plan I, the Matching Agency Contribution Plan II and Agents’ Stock Accumulation Plan; and
	(iii) “Phantom Share Credit Plans” means the Special Total Ownership Plan 2004, the “BOB II” Big Opportunity Bash Bonus Program II, the HMI Employee Bonus Program and the UGA Employee Long Term Bonus Program.

	3.5     Subsidiaries. A correct and complete list of all Subsidiaries of the Company and their respective jurisdictions of organization and percentage ownership by the Company is set forth in Section 3.5 of the Company Disclosure Letter. None of the Subsidiaries is deemed to be “commercially domiciled” in any jurisdiction, and the Company is not presumed to be in “control” (within the meaning of applicable Laws) of any insurance company that is not a Subsidiary of the Company. Each outstanding share of capital stock of each Subsidiary of the Company is duly authorized, validly issued, fully paid and non-assessable and not subject to any pre-emptive rights. Except as set forth in this Section 3.5, there are no shares of capital stock or securities or other rights convertible or exchangeable into or exercisable for shares of capital stock of any Subsidiary of the Company or such securities or other rights. Except as set forth in Section 3.5 of the Company Disclosure Letter, (a) each of the Subsidiaries of the Company is wholly owned by the Company, directly or indirectly, free and clear of any Liens and (b) the Company does not own, directly or indirectly, any capital stock of, or any other securities or other rights convertible or exchangeable into or exercisable for capital stock of, any Person other than the Subsidiaries of the Company.
	3.6     Governmental Authorizations. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement do not and will not require any consent, approval or other authorization of, or filing with or notification to, any international, national, federal, state, provincial or local governmental, regulatory or administrative authority, agency, commission, court, tribunal, arbitral body, self-regulated entity or similar body or any ad hoc multi-state review board, whether domestic or foreign (each, a “Governmental Entity”), other than:

	(a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware;
	(b) the filing with the Securities and Exchange Commission (the “SEC”) of (i) a proxy statement (the “Company Proxy Statement”) relating to the special meeting of the stockholders of the Company to be held to consider the adoption of this Agreement (the “Company Stockholders Meeting”) and (ii) any other filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Securities Act of 1933 (the “Securities Act”) (including any registration statement on Form S-4, if required (the “Company Registration Statement”)) and Securities Exchange Act of 1934 (the “Exchange Act”);
	(c) compliance with the New York Stock Exchange (“NYSE”) rules and regulations;
	(d) the pre-merger notification required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”);
	(e) the approvals required by the insurance Laws of the States of Texas and Oklahoma to the extent applicable to the Company or any of its Subsidiaries (the “Company Form A Approvals”) and any approvals (or non-disapprovals) related to the effect on competition in individual state insurance markets (the “Company Form E Approvals”); and

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	(f) in such other circumstances where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have a Company Material Adverse Effect.

	3.7     Non-Contravention. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement do not and will not:

	(a) contravene or conflict with, or result in any violation or breach of, any provision of the Company Organizational Documents;
	(b) contravene or conflict with, or result in any violation or breach of, any Laws or Orders applicable to the Company or any of its Subsidiaries or by which any assets of the Company or any of its Subsidiaries (“Company Assets”) are bound (assuming that all consents, approvals, authorizations, filings and notifications described in Section 3.6 have been obtained or made), except for contraventions, conflicts, violations or breaches that would not have a Company Material Adverse Effect;
	(c) result in any violation or breach of or loss of a benefit under, or constitute a default (with or without notice or lapse of time or both) under, any Company Material Contract (as defined in Section 3.15);
	(d) require any consent, approval or other authorization of, or filing with or notification to, any Person under any Company Material Contracts;
	(e) give rise to any termination, cancellation, amendment, modification or acceleration of any rights or obligations under any Company Material Contracts; or
	(f) cause the creation or imposition of any Liens on any Company Assets, except for Liens that would not have a Company Material Adverse Effect.

	3.8     Voting. (a) The Requisite Company Vote is the only vote of the holders of any class or series of the capital stock of the Company or any of its Subsidiaries necessary (under the Company Organizational Documents, the DGCL, other applicable Laws or otherwise) to approve and adopt this Agreement, the Merger and the transactions contemplated thereby.
	(b) There are no voting trusts, proxies or similar agreements, arrangements or commitments to which the Company or any of its Subsidiaries is a party or of which the Company has Knowledge with respect to the voting of any shares of capital stock of the Company or any of its Subsidiaries, other than the Voting Agreement. There are no bonds, debentures, notes or other instruments of indebtedness of the Company or any of its Subsidiaries that have the right to vote, or that are convertible or exchangeable into or exercisable for securities or other rights having the right to vote, on any matters on which stockholders of the Company may vote.
	3.9     SEC Reports; Securities Law Matters. (a) The Company has timely filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by the Company with the SEC since January 1, 2003 (collectively, the “Company SEC Reports,” and if filed prior to the date of this Agreement, the “Company Filed SEC Reports”). The Company SEC Reports (i) were prepared in all material respects in accordance with the requirements of the Securities Act, the Exchange Act and other applicable Laws and (ii) did not, at the time they were filed, or if amended or restated prior to the date of this Agreement, at the time of such later amendment or restatement, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which such statements were made, not misleading. No Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act or is otherwise required to file any forms, reports, schedules, statements or other documents with the SEC, or any securities exchange or quotation service. Each Company Stock Option and Matching Credit has been offered and issued in accordance with the registration and prospectus delivery requirements of the Securities Act or pursuant to an exemption therefrom.

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	(b) The chief financial officer and chief executive officer of the Company have made all certifications required by the Sarbanes-Oxley Act of 2002, the Exchange Act and any related rules and regulations promulgated by the SEC with respect to the Company SEC Reports, and the statements contained in such certifications were complete and correct in all material respects at the time they were made. The Company has designed and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) to ensure that information required to be disclosed in the Company SEC Reports is recorded, processed and reported, within the time periods specified in the SEC’s rules and forms, and such disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company has designed and maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board (1) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (2) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
	3.10     Financial Statements. (a) The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries included or incorporated by reference in the Company SEC Reports, including the notes thereto (collectively, including the notes thereto, the “Company Consolidated Financial Statements”):

	(i) complied in all material respects with applicable accounting requirements and the rules and regulations of the SEC;
	(ii) were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis (except as may be indicated in the notes to those financial statements); and
	(iii) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end adjustments, which were not and are not expected to be material in amount).

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	(a) Liabilities that are, and only to the extent, disclosed in the consolidated balance sheet of the Company and its Subsidiaries as of June 30, 2005 or the notes thereto set forth in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005;
	(b) Liabilities incurred since June 30, 2005 in the ordinary course of business consistent with past practice that would not have a Company Material Adverse Effect; and
	(c) Liabilities that are, but only to the extent, described in the Company Disclosure Letter.

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	(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act);
	(ii) the ten largest provider contracts measured in terms of payments received from the Company and its Subsidiaries and the ten largest insured customer contracts measured in terms of members covered;
	(iii) promissory notes, loans, agreements, indentures, evidences of indebtedness or other instruments providing for (A) the borrowing or lending of money, whether as borrower, lender or guarantor, (B) the placement of a Lien on the assets of the Company or its Subsidiaries (other than Permitted Liens), or (C) the restriction on the Company’s or any of its Subsidiaries’ ability to incur indebtedness or Liens (it being understood that (x) trade payables incurred in the ordinary course of business consistent with past practice, (y) ordinary course business funding mechanisms between the Company and its customers and providers consistent with past practice, and (z) guarantees of indebtedness by the Company and its Subsidiaries to wholly owned subsidiaries of the Company will not be considered indebtedness for purposes of this provision);
	(iv) any other Contract restricting the payment of dividends or the repurchase of stock or other equity;
	(v) collective bargaining Contracts;
	(vi) joint venture, partnership or limited liability company agreements or other similar agreements or arrangements relating to the formation, creation, operation, management or control of any joint venture, partnership or limited liability company under which the Company or any Subsidiary must share revenues, has or may have any liability to provide additional equity or debt capital or has any liability for the obligations of another Person (other than a wholly owned subsidiary);
	(vii) any Contract providing for the acquisition or disposition after the date of this Agreement, directly or indirectly (by merger or otherwise) by the Company or any of its Subsidiaries, of any entity, business, asset or capital stock or other equity interests, if the aggregate consideration (including the assumption of any debt or liabilities) exceeds $5.0 million, in each case, other than with respect to the acquisition or dispositions of marketable securities held in the Company’s and its Subsidiaries’ investment portfolios that were made in the ordinary course of business consistent with past practice;
	(viii) any treaty, agreement or other Contract for reinsurance entered into other than in the ordinary course of business consistent with past practice;
	(ix) leases for real or personal property involving annual expense in excess of $500,000;
	(x) any non-competition agreement or any other agreement or arrangement that limits or otherwise restricts the Company or any of its Subsidiaries or purports to restrict Affiliates thereof that are not controlled by the Company from engaging or competing in any line of business or in any geographic area in any material respect (other than customary exclusivity provisions or arrangements with providers of health care services entered into in the ordinary course of business consistent with past practice);
	(xi) each Contract providing for an Affiliate Transaction that is (or should be) set forth in Section 3.24 of the Company Disclosure Letter; or
	(xii) any other Contract involving the Company’s or any of its Subsidiaries’ (A) right to receive payment or other consideration or (B) obligation to make payment in excess of $2.0 million per annum or $5.0 million in the aggregate per Contract over the unexpired term thereof.

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	(a) The Company and each of its Subsidiaries are, and have at all prior times since January 1, 2002 been, in compliance with:

	(i) all applicable Laws (collectively, “Environmental Laws”) relating to (A) pollution, contamination or protection of the environment or employee health and safety, (B) emissions, discharges, disseminations, releases or threatened releases of Hazardous Substances into the air (indoor or outdoor), surface water, groundwater, soil, land surface or subsurface, or (C) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances (collectively, “Environmental Matters”); and
	(ii) all applicable Orders relating to Environmental Matters.

	(b) There are no past or present conditions, events, circumstances, facts, activities, practices, incidents, actions or omissions:

	(i) that have given rise or would reasonably be expected to give rise to any Liabilities of the Company or any of its Subsidiaries under any Environmental Laws;
	(ii) that have required or would reasonably be expected to require the Company or any of its Subsidiaries to incur any actual or potential cleanup, remediation, removal or other response costs (including the cost of coming into compliance with Environmental Laws), investigation costs (including fees of consultants, counsel and other experts in connection with any environmental investigation, testing, audits or studies), losses, Liabilities, payments, damages (including any actual, punitive or consequential damages) (A) under any Environmental Laws, contractual obligations or otherwise or (B) to third parties for personal injury or property damage, civil or criminal fines or penalties, judgments or amounts paid in settlement, in each case arising out of or relating to any Environmental Matters (collectively, “Environmental Costs”); or
	(iii) that have formed or would reasonably be expected to form the basis of any Legal Action against or involving the Company or any of its Subsidiaries arising out of or relating to any Environmental Matters.

	(c) Neither the Company nor any of its Subsidiaries is subject to any Order relating to Environmental Matters nor has received any written notice or other communication in writing (i) that any of them is or may be a potentially responsible Person or otherwise liable in connection with any waste disposal site or other location allegedly containing any Hazardous Substances; (ii) of any failure by any of them to comply with any Environmental Laws or the requirements of any Permits relating to Environmental Matters; or (iii) that any of them is requested or required by any Governmental Entity to perform any investigatory or remedial activity or other action in connection with any actual or alleged release of Hazardous Substances or any other Environmental Matters.
	(d) Neither the Company nor any of its Subsidiaries has assumed or retained, by Contract or otherwise, any obligations under any Environmental Law.
	(e) The Company has made available to SibCo 1 true and complete copies of all reports, audits, assessments or other documents containing material information concerning Environmental Matters that are in the possession or control of the Company or any of its Subsidiaries.

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	4.1     Organization and Power. Each SibCo and each Merger Co is a corporation, limited liability company or other legal entity duly organized, validly existing and in good standing under the Laws of its

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	jurisdiction of organization. Each such SibCo and each such Merger Co has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted.
	4.2     Corporate Authorization. Each SibCo and each Merger Co has all necessary corporate power and authority to enter into and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by each SibCo and each Merger Co and the consummation by each such SibCo and each such Merger Co of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of each such SibCo and each such Merger Co.
	4.3     Enforceability. This Agreement has been duly executed and delivered by each SibCo and each Merger Co and, assuming the due authorization, execution and delivery of this Agreement by the Company and each other SibCo, Merger Co 1, Merger Co 2 or Merger Co 3, as applicable, constitutes a legal, valid and binding agreement of such entity, enforceable against such entity in accordance with its terms, subject to the Enforceability Exceptions.
	4.4     Governmental Authorizations. The execution, delivery and performance of this Agreement by each SibCo and each Merger Co and the consummation by each SibCo and each Merger Co of the transactions contemplated by this Agreement do not and will not require any consent, approval or other authorization of, or filing with or notification to, any Governmental Entity other than:

	(a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware;
	(b) the filing with the SEC of any filings or reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Exchange Act;
	(c) the pre-merger notification required under the HSR Act;
	(d) the approvals required by the insurance Laws of the States of Texas and Oklahoma to the extent applicable to the Company or any of its Subsidiaries (the “Acquiror Form A Approvals”) and any approvals (or non-disapprovals) related to the effect on competition in individual state insurance markets (the “Acquiror Form E Approvals”); and
	(e) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have an Acquiror Material Adverse Effect.

	4.5     Non-Contravention. The execution, delivery and performance of this Agreement by each SibCo and each Merger Co and the consummation by each SibCo and each Merger Co of the transactions contemplated by this Agreement do not and will not:

	(a) contravene or conflict with, or result in any violation or breach of, any provision of the organizational documents of such SibCo or such Merger Co;
	(b) contravene or conflict with, or result in any violation or breach of, any Laws or Orders applicable to such SibCo or such Merger Co, or by which any assets of such SibCo or such Merger Co (“Acquiror Assets”) are bound (assuming that all consents, approvals, authorizations, filings and notifications described in Section 4.4 have been obtained or made), except as would not have an Acquiror Material Adverse Effect; or
	(c) result in any violation or breach of or loss of a benefit under, or constitute a default (with or without notice or lapse of time or both) under any Contracts to which such SibCo or such Merger Co is a party or by which any Acquiror Assets are bound, except as would not have an Acquiror Material Adverse Effect.

4.6     Absence of Litigation. As of the date of this Agreement, there is no Legal Action pending or, to the Knowledge of such SibCo or such Merger Co, threatened, against such SibCo or such Merger Co before any Governmental Entity that would or seeks to materially delay or prevent the consummation of the Merger or the transactions contemplated by this Agreement. As of the date of this Agreement, such

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	SibCo or such Merger Co is not subject to any continuing Order that would or seeks to materially delay or prevent the consummation of the Merger or any of the transactions contemplated by this Agreement.

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	(a) Organization Documents. Amend any of the Company Organizational Documents;
	(b) Dividends. Make, declare or pay any dividend or distribution on any shares of its capital stock, other than (i) dividends paid to the Company by wholly owned Subsidiaries or (ii) payment of the regular semi-annual cash dividend declared July 28, 2005 with respect to Common Shares in the amount so declared on such date;
	(c) Capital Stock. (i) Adjust, split, combine or reclassify or otherwise amend the terms of its capital stock, (ii) repurchase, redeem, purchase, acquire, encumber, pledge, dispose or otherwise transfer, directly or indirectly, any shares of its capital stock or any securities or other rights convertible or exchangeable into or exercisable for any shares of its capital stock or such securities or other rights, (iii) issue, grant, deliver or sell any shares of its capital stock or any securities or other rights convertible or exchangeable into or exercisable for any shares of its capital stock or such securities or rights, including any grants of Matching Credits or share credits(or other “phantom” equity) under the Agent Stock Accumulation Plans or the Phantom Share Credit Plans (other than pursuant to (A) the exercise of the Company Stock Options, to the extent such Company Stock Options are outstanding as of the date of this Agreement, (B) the vesting of Matching Credits under the Agent Stock Accumulation Plans, (C) the issuance of shares in exchange for vested share credits pursuant to any Agent Stock Accumulation Plan or the Phantom Share Credit Plans, and (D) the granting of Matching Credits in accordance with the terms of any Agent Stock Accumulation Plan in the ordinary course of business consistent with past practice (which is agreed to be on a one-for-one basis relative to the number of shares purchased under any such plan)), (iv) enter into any Contract, understanding or arrangement with respect to the sale, voting, pledge, encumbrance, disposition, acquisition, transfer, registration or repurchase of its capital stock or such securities or other rights; except in each case as permitted under Section 5.1(d), or (v) register for sale, resale or other transfer any Common Shares under the Securities Act on behalf of the Company or any other Person, except to the extent required by any Contract or Company Benefit Plan by which the Company or any Company Asset is bound;
	(d) Compensation and Benefits. (i) Increase the compensation or benefits payable or to become payable to any of its past or present directors or officers, (ii) grant any severance or termination pay to any of its past or present directors or officers (except as required by existing agreements, plans or policies), (iii) enter into any new employment or severance agreement with any of its past or present directors or officers, (iv) establish, adopt, enter into, amend or take any action to accelerate rights under any Company Benefit Plans or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it were in existence as of the date of this Agreement, or (v) grant any equity or equity-based awards to directors, officers or employees, except in each case (A) to the extent required by applicable Laws, (B) for increases in salary or wages of officers or employees in the ordinary course of business consistent with past practice, or (C) as required by existing Contracts;
	(e) Acquisitions. Acquire, by merger, consolidation, acquisition of equity interests or assets or otherwise, any business, corporation, partnership, limited liability company, joint venture or other business organization or division thereof or any other asset, except for (i) investments in marketable securities made in the ordinary course of business consistent with past practice in accordance with the applicable investment policies of the Company and its Subsidiaries and (ii) other acquisitions in the ordinary course of business consistent with past practice for consideration not in excess of $1.0 million individually or $5.0 million in the aggregate;
	(f) Dispositions. Sell, lease, license, transfer, pledge, encumber, grant or dispose of any Company Assets, including the capital stock of Subsidiaries of the Company, other than (i) the disposition of used or excess equipment or other assets that is no longer used or useable in the Company’s business in the ordinary course of business consistent with past practice, (ii) dispositions of investments in marketable securities made in the ordinary course of business consistent with past practice in accordance with the

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	applicable investment policies of the Company and its Subsidiaries, and (iii) other dispositions in the ordinary course of business consistent with past practice for consideration not in excess of $1.0 million individually or $5.0 million in the aggregate;
	(g) Contracts. (i) Enter into any Contract other than in the ordinary course of business consistent with past practice, that would, if entered into immediately prior to the date of this Agreement, be a Company Material Contract, (ii) enter into any Contract that would limit or otherwise restrict the Company or any of its Subsidiaries from engaging or competing in any line of business or in any geographic area in any material respect, or (iii) terminate, cancel or amend or waive compliance with any provision of, any Company Material Contract other than in the ordinary course of business;
	(h) Indebtedness; Guarantees. Incur, assume, guarantee or prepay any indebtedness for borrowed money (including the issuance of any debt security), other than in the ordinary course of business consistent with past practice not to exceed $5.0 million in the aggregate;
	(i) Loans. Make any loans, advances or capital contributions to, or investments in, any other Person in excess of $1.0 million in the aggregate, other than (i) commission advances to independent agents or independent field service representatives in the ordinary course of business consistent with past practice’ (ii) passive investments for the investment portfolios of Subsidiaries of the Company made in debt securities in the ordinary course of business consistent with past practice; or (iii) loans, advances or capital contributions to wholly owned Subsidiaries;
	(j) Capital Expenditures. Make any capital expenditure in any fiscal year, other than capital expenditures that are not, in the aggregate, in excess of 10% of the capital expenditures provided for in the Company’s budget for fiscal year 2005 (a copy of which has been provided to SibCo 1 making reference to this Section 5.1(j));
	(k) Accounting. Change its accounting policies or procedures, other than as required by GAAP;
	(l) Insurance Permits. Forfeit, abandon, modify, waive, terminate or otherwise change any of its insurance Permits, except (i) as required in order to comply with applicable Laws or (ii) such modifications or waivers of insurance Permits as would not, individually or in the aggregate, adversely affect the business or operations of the Company or any Domestic Insurance Subsidiary in any material respect;
	(m) Legal Actions. Waive, release, assign, settle or compromise any Legal Actions, other than waivers, releases, assignments, settlement or compromises in the ordinary course of business consistent with past practice, that involve only the payment of monetary damages not in excess of $2.0 million with respect to any single Legal Action, without the imposition of equitable relief on, or the admission of any wrongdoing by, the Company or any of its Subsidiaries;
	(n) Liquidation. Adopt a plan of liquidation or resolutions providing for a liquidation, dissolution, restructuring, recapitalization or reorganization;
	(o) Taxes. Settle or compromise any material tax audit, make or change any material Tax election, file any material amendment to a Tax Return, change any annual Tax accounting period or adopt or change any material Tax accounting method, enter into any material closing agreement, surrender any right to claim a material refund of Taxes or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or its Subsidiaries;
	(p) Affiliate Transactions. Enter into, amend, waive or terminate (other than terminations in accordance with their terms) any Affiliate Transaction;
	(q) Investments. Conduct any material transaction with respect to its investments except in compliance with the applicable investment policies of the Company and its Subsidiaries;
	(r) Reinsurance. Enter into or amend any reinsurance treaties or agreements ceding liabilities to third parties or commute any reinsurance treaties or agreements of the Company or any of its

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	Subsidiaries, except for (i) replacement of reinsurance treaties or agreements expiring between the date of this Agreement and Closing in the ordinary course of business consistent with past practice, (ii) commutations of reinsurance treaties or agreements in the ordinary course of business consistent with past practice and (iii) any reinsurance treaties or agreements ceding premiums not in excess of $5.0 million annually; or
	(s) Related Actions. Agree to do any of the foregoing.

	(i) initiate, solicit, facilitate or knowingly encourage any inquiries or proposals relating to a Takeover Proposal;
	(ii) engage in discussions or negotiations with, or furnish or disclose any non-public information relating to the Company or any of its Subsidiaries to, any Person regarding a Takeover Proposal;
	(iii) withdraw, modify or amend the Company Board Recommendation in any manner adverse to the SibCos or the Merger Cos;
	(iv) approve, endorse or recommend any Takeover Proposal;
	(v) enter into any agreement in principle or Contract relating to a Takeover Proposal; or
	(vi) resolve, propose or agree to do any of the foregoing.

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	(i) engage in discussions or negotiations with a Person who has made a written Takeover Proposal not solicited in violation of this Section 5.4 if, prior to taking such action, (A) the Company enters into a confidentiality agreement in compliance with clause (x) of Section 5.4(d)(ii) below and (B) the Company Board determines in good faith (1) after consultation with its financial advisors and outside legal counsel, that such Takeover Proposal constitutes, or is reasonably likely to result in, a Superior Proposal and (2) after consultation with its outside legal counsel, that such action is necessary to comply with its fiduciary obligations to the stockholders of the Company under applicable Laws;
	(ii) furnish or disclose any non-public information relating to the Company or any of its Subsidiaries to a Person who has made a written Takeover Proposal not solicited in violation of this Section 5.4 if, prior to taking such action, the Company Board determines in good faith (A) after consultation with its financial advisors and outside legal counsel, that such Takeover Proposal constitutes, or is reasonably likely to result in, a Superior Proposal and (B) after consultation with its outside legal counsel, that such action is necessary to comply with its fiduciary obligations to the stockholders of the Company under applicable Laws, but only so long as the Company (x) has caused such Person to enter into a confidentiality agreement with the Company on terms and conditions not less stringent than those contained in the Confidentiality Agreement (including the standstill provisions) and (y) concurrently discloses the same such non-public information to SibCo 1 if such non-public information has not previously been disclosed to SibCo 1; and
	(iii) withdraw, modify or amend the Company Board Recommendation in a manner adverse to the SibCos or the Merger Cos, if the Company Board has determined in good faith, after consultation with outside legal counsel, that such action is required to comply with its fiduciary obligations to the stockholders of the Company under applicable Laws; provided that prior to any such withdrawal, modification or amendment to the Company Board Recommendation, (A) the Company has given SibCo 1 prompt written notice advising SibCo 1 of (x) the decision of the Company Board to take such action and (y) in the event the decision relates to a Takeover Proposal, the material terms and conditions of the Takeover Proposal, (B) the Company has given SibCo 1 three Business Days after delivery of each such notice to propose revisions to the terms of this Agreement (or make another proposal) and has negotiated in good faith with SibCo 1 with respect to such proposed revisions or other proposal, if any, and (C) the Company Board shall have determined, after considering the results of such negotiations and

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	giving effect to the proposals made by SibCo 1, if any, and after consultation with its financial advisors and outside legal counsel, to withdraw, modify or amend the Company Board Recommendation.

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	(a) Company Stockholder Approval. This Agreement shall have been duly adopted by the Requisite Company Vote.
	(b) Antitrust. The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated.
	(c) No Injunctions or Restraints. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any Laws or Orders (whether temporary, preliminary or permanent) that restrain, enjoin or otherwise prohibit consummation of the Merger or the other transactions contemplated by this Agreement. No proceeding instituted by a Governmental Entity seeking any such Laws or Orders shall be pending.

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	(a) Representations and Warranties. (i) The representations and warranties of the Company set forth in (x) Section 3.11(b) of this Agreement shall be true and correct in all respects (unless the failure to be so true and correct is due primarily to the Debt Financing or to other changes or proposed changes to the capital structure of the Company made in connection with this Agreement or at the request of any Merger Co) and (y) Sections 3.4(a), 3.9(a), 3.28 and 3.29 of this Agreement shall be true and correct in all material respects, in each of clauses (x) and (y): (A) on the date of this Agreement and (B) on the Closing Date, with the same effect as though such representations and warranties had been made on and as of the Closing Date (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date) and (ii) the other representations and warranties of the Company set forth in this Agreement (in each case read for purposes of this Section 6.2(a)(ii) without any materiality, material or Company Material Adverse Effect qualifications), shall be true and correct: (A) on the date of this Agreement and (B) on the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), other than failures to be true and correct that would not have a Company Material Adverse Effect.
	(b) Performance of Covenants. The Company shall have performed in all material respects all covenants required to be performed by it under this Agreement at or prior to the Closing Date.
	(c) Company Material Adverse Effect. Since June 30, 2005, there shall have been no Company Material Adverse Effect.
	(d) Officers Certificate. SibCo 1 shall have received a certificate, signed by the chief executive officer or chief financial officer of the Company, certifying as to the matters set forth in Section 6.2(a), Section 6.2(b) and Section 6.2(c).
	(e) Consents. All consents, approvals, non-disapprovals and other authorizations of any Governmental Entity set forth in Section 6.2(e) of the Company Disclosure Letter shall have been obtained, free of any Burdensome Condition and any other condition or limitation that would have a Company Material Adverse Effect.
	(f) Financing. The proceeds of the Debt Financing shall be available to the Company on equivalent or more favorable terms and conditions as are set forth in the Commitment Letter (as determined in the reasonable judgment of SibCo 1).
	(g) Agent Status. Since the Measurement Date:

	(i) less than 25% of the Active Agents listed on the Active Agents List shall have effected a Qualifying Withdrawal (as defined below) from any Agent Stock Accumulation Plan; and
	(ii) less than:

	(A) 12.5% of the Senior Producers listed on the Senior Producers List shall have effected a Qualifying Withdrawal from any Agent Stock Accumulation Plan; and
	(B) 12.5% of the Senior Hierarchy Agents listed on the Senior Hierarchy Agents List shall have effected a Qualifying Withdrawal from any Agent Stock Accumulation Plan.

(h) Insurance Regulatory Action. No Governmental Entity shall have taken, or informed a party or publicly disclosed that it intends to take any action (including in respect of any action or matter disclosed in the Company Disclosure Letter) against the Company or any of its Subsidiaries, or enacted, issued, promulgated, enforced or entered, or is reasonably likely to enact, issue, promulgate, enforce or enter, any Laws or Orders (whether temporary, preliminary or permanent), that would reasonably be

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	expected to (i) lead to a limitation (including by revocation or suspension of a license, or the issuance of a cease and desist order, injunction or similar action) on the ability of the Company and its Subsidiaries to conduct their respective businesses in any material respect as such businesses are conducted as of the date of this Agreement or (ii) amount to a Burdensome Condition.

	(a) Representations and Warranties. The representations and warranties of the SibCos and the Merger Cos set forth in this Agreement (in each case read for purposes of this Section 6.3(a) without any materiality, material or Acquiror Material Adverse Effect qualifications), shall be true and correct (A) on the date of this Agreement and (B) on the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), other than failures to be true and correct that would not have a Acquiror Material Adverse Effect.
	(b) Performance of Covenants. Each SibCo and each Merger Co shall have performed in all material respects all covenants required to be performed by it under this Agreement at or prior to the Closing Date.
	(c) Officers Certificate. The Company shall have received a certificate, signed by the chief executive officer or the chief financial officer of each SibCo and each Merger Co, certifying as to the matters set forth in Section 6.3(a) and Section 6.3(b).

	(a) if the Merger has not been consummated by June 15, 2006 (the “Outside Date”), except that the right to terminate this Agreement under this clause will not be available to any party to this Agreement whose failure to fulfill any of its obligations has been a principal cause of, or resulted in, the failure to consummate the Merger by such date;
	(b) if this Agreement has been submitted to the stockholders of the Company for adoption at a duly convened Company Stockholders Meeting (or adjournment or postponement thereof in accordance with Section 5.7) and the Requisite Company Vote is not obtained upon a vote taken thereon;
	(c) if any Law prohibits consummation of the Merger; or
	(d) if any Order restrains, enjoins or otherwise prohibits consummation of the Merger, and such Order has become final and nonappealable.

	(a) if (i) the Company Board withdraws, modifies or amends the Company Board Recommendation in any manner adverse to SibCo 1 or the Merger Cos, (ii) the Company Board approves, endorses or recommends a Takeover Proposal, or (iii) the Company or the Company Board resolves or announces its intention to do any of the foregoing, in any case whether or not permitted by Section 5.4;
	(b) the Company (i) materially breaches its obligations under Sections 5.4, 5.6(c) or 5.7, or the Company Board or any committee thereof shall resolve to do any of the foregoing or (ii) (A) materially

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	breaches its obligations under Section 5.6(a) or 5.6(b) and (B) such breach is not cured within five Business Days after the Company’s receipt of written notice asserting such breach from SibCo 1;
	(c) if the Company breaches any of its representations, warranties or covenants contained in this Agreement, which breach (i) would give rise to the failure of a condition set forth in Section 6.2(a) or Section 6.2(b) and (ii) has not been cured by the Company within 20 Business Days after the Company’s receipt of written notice of such breach from SibCo 1; or
	(d) if a Company Material Adverse Effect shall occur and be continuing and has not been cured by the Company within 20 Business Days after the Company’s receipt of written notice of the occurrence of such event from SibCo 1.

	(b) The Company will pay, or cause to be paid, to SibCo 1 by wire transfer of immediately available funds an amount equal to $65 million (the “Termination Fee”):
	(i) if this Agreement is terminated by SibCo 1 pursuant to Section 7.3(a) or Section 7.3(b), in which event payment will be made within two Business Days after such termination; or
	(ii) if (A) a Takeover Proposal has been made or proposed to the Company or otherwise publicly announced (which has not been withdrawn (x) at least 20 Business Days prior to the Outside Date with respect to a termination pursuant to Section 7.2(a) or prior to the breach that gave rise to the termination with respect to a termination pursuant to Section 7.3(c), or (y) at least three Business Days prior to the Company Stockholders Meeting with respect to a termination pursuant to Section 7.2(b)), (B) this Agreement is terminated by SibCo 1 or the Company pursuant to Section 7.2(a) or Section 7.2(b) or by SibCo 1 pursuant to Section 7.3(c), and (C) within 12 months following the date of such termination, the Company enters into a Contract providing for the implementation of a Takeover Proposal or consummates any Takeover Proposal (whether or not such Takeover Proposal was the same Takeover Proposal referred to in the foregoing clause (A)), in which event payment will be made within two Business Days after the date on which the Company enters into such Contract or consummates such Takeover Proposal, as applicable. For purposes of the foregoing clause (C) only, references in the definition of the term “Takeover Proposal” to the figure “20%” will be deemed to be replaced by the figure “50%”.
	(c) Each of the Company, the SibCos and the Merger Cos acknowledges that the agreements contained in this Section 7.6 are an integral part of the transactions contemplated by this Agreement. In the event that the Company fails to pay the Termination Fee when due, the Company will (i) reimburse SibCo 1 for all reasonable costs and expenses actually incurred or accrued by SibCo 1, the Merger Cos

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	and its Affiliates (including reasonable fees and expenses of counsel) in connection with the collection under and enforcement of this Section 7.6 and (ii) pay interest on such unpaid amounts at the prime lending rate prevailing at such time, as published in the Wall Street Journal, from the date such amounts were due until the date received by SibCo 1 or the Merger Cos.

	(a) “Acquiror Material Adverse Effect” means any event, circumstance, development, change or effect that, individually or in the aggregate with all other events, circumstances, developments, changes and effects, would reasonably be expected to prevent or materially impair or materially delay the ability of any or all of the SibCos and the Merger Cos to perform their respective obligations under this Agreement or to consummate the transactions contemplated hereby.
	(b) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, such first Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract or otherwise.
	(c) “Agent Shares” means Common Shares issued or issuable pursuant to any Agent Stock Accumulation Plan and not withdrawn from any Agent Stock Accumulation Plan prior to the Closing.

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	(d) “Business Day” means any day, other than Saturday, Sunday or a U.S. federal holiday, and will consist of the time period from 12:01 a.m. through 12:00 midnight Eastern time.
	(e) “Code” means the Internal Revenue Code of 1986, as amended.
	(f) “Company Material Adverse Effect” means any event, circumstance, development, change or effect that, individually or in the aggregate with all other events, circumstances, developments, changes and effects, has had or would reasonably be expected to have a material adverse effect on the business, properties, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, or would reasonably be expected to prevent or materially impair or materially delay the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated hereby; provided, however, that none of the following, alone or in combination, will be deemed to constitute, nor will any of the following be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect, except to the extent such event, circumstance, change or effect has had a disproportionate effect on the Company and its Subsidiaries as compared to other Persons in the health and life insurance industry: any event, circumstance, change or effect resulting from or relating to (i) changes in general political, economic or financial market conditions, (ii) changes affecting the health and life insurance industry, or (iii) seasonal fluctuations in the business of the Company and its Subsidiaries consistent with past fluctuations; and, provided, further, that the death of Ronald C. Jensen on September 2, 2005 will not be deemed to constitute, and will not be taken into account in determining whether there has been or would reasonably be expected to be, a Company Material Adverse Effect.
	(g) “Contracts” means any contracts, agreements, licenses, notes, bonds, mortgages, indentures, commitments, leases or other instruments or obligations, whether written or oral.
	(h) “Domestic Insurance Subsidiary” means each of The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee, The Chesapeake Life Insurance Company and Fidelity First Insurance Company.
	(i) “Hazardous Substances” means (i) any substance that is listed, classified or regulated under any Environmental Laws; (ii) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material, molds, or radon; or (iii) any other substance that is the subject of regulatory action, or that could give rise to liability, under any Environmental Laws.
	(j) “Insurance Regulatory Authority” shall mean, with respect to any Domestic Insurance Subsidiary, the Governmental Entity of such Domestic Insurance Subsidiary’s state of domicile with which such Domestic Insurance Subsidiary is required to file its annual financial statement prepared in accordance with SAP.
	(k) “Knowledge” means, when used with respect to the SibCos, the Merger Cos or the Company, the actual knowledge of the Persons set forth in Section 8.1(i) of the Company Disclosure Letter or the Acquiror Disclosure Letter, as applicable.
	(l) “Laws” means any domestic or foreign laws, statutes, ordinances, rules (including rules of common law), regulations, codes, executive orders or legally enforceable requirements enacted, issued, adopted, promulgated or applied by any Governmental Entity.
	(m) “Liens” means any liens, pledges, security interests, claims, options, rights of first offer or refusal, charges or other encumbrances.
	(n) “Management Shares” means Common Shares beneficially owned by any of the individuals listed or identified on Exhibit 2.1(a)(i).
	(o) “Orders” means any orders, judgments, injunctions, awards, decrees or writs handed down, adopted or imposed by, including any consent decree, settlement agreement or similar written agreement with, any Governmental Entity.

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	(p) “Permitted Liens” means: (i) Liens disclosed with particularity in the June 30, 2005 balance sheet of the Company Consolidated Financial Statements or securing liabilities reflected on the June 30, 2005 balance sheet of the Company Consolidated Financial Statements; (ii) Liens for Taxes, assessments and similar charges that are not yet due and payable or are being contested in good faith; (iii) mechanic’s, materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business consistent with past practice or that are not yet due and payable or are being contested in good faith; (iv) in the case of leased or subleased properties and assets, Liens and other matters affecting the lessors’ or prior lessors’ interests in such properties and assets; and (v) other Liens and matters that do not, individually or in the aggregate, materially adversely affect the current use or value (and, in the case of owned property or assets, the ownership) of such property or asset as currently used by the owner, lessor or lessee thereof.
	(q) “Person” means any individual, corporation, limited or general partnership, limited liability company, limited liability partnership, trust, association, joint venture, Governmental Entity and other entity and group (which term will include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act).
	(r) “Qualifying Withdrawal” means any withdrawal of Common Shares from any Agent Stock Accumulation Plan other than a “partial withdrawal” or a “special ATOP distribution and withdrawal” (as such terms are defined with respect to, or provided for under, the Company’s UGA Agent Stock Accumulations Plans) or a “partial withdrawal” or a “special ACE distribution and withdrawal” (as such terms are defined with respect to, or provided for under, the Company’s Cornerstone America Agent Stock Accumulation Plans).
	(s) “Representatives” means, when used with respect to any Merger Co or the Company, the directors, officers, employees, consultants, accountants, legal counsel, investment bankers, agents and other representatives of such Merger Co or the Company, as applicable, and its Subsidiaries.
	(t) “Requisite Company Vote” means the adoption of this Agreement by the holders of a majority of the Common Shares entitled to vote thereon, voting together as a single class.
	(u) “SAP” means, with respect to any Domestic Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance Laws or regulations of the Insurance Regulatory Authority in the jurisdiction of the domicile of such Domestic Insurance Subsidiary, for the preparation of financial statements and other financial reports by insurance companies of the same type as such Domestic Insurance Subsidiary. Statutory accounting practices shall be deemed to be applied on a “consistent basis” when the practices applied in a current period are comparable in all material respects to the practices applied in a preceding period.
	(v) “Subsidiary” means, when used with respect to any SibCo, any Merger Co or the Company, any other Person (whether or not incorporated) that such SibCo, such Merger Co or the Company, as applicable, directly or indirectly owns or has the power to vote or control 50% or more of any class or series of capital stock or other equity interests of such Person.
	(w) “Superior Proposal” means a written Takeover Proposal that relates to more than 50% of the voting power of the capital stock of the Company or of the assets of the Company and its Subsidiaries taken as a whole, (i) which the Company Board determines, in its good faith judgment, after receiving the advice of its financial advisors and outside legal counsel, and after taking into account all aspects of the Takeover Proposal (including its terms and conditions, the Person making the Takeover Proposal, any regulatory concerns and other considerations), is on terms and conditions more favorable from a financial point of view to the stockholders of the Company (in their capacity as stockholders) than those contemplated by this Agreement (after giving effect to any adjustments to the terms and conditions of this Agreement proposed by the SibCos and the Merger Cos in response thereto), (ii) the conditions to the consummation of which are all, in the good faith judgment of the Company Board, reasonably capable of being satisfied without undue delay, and (iii) for which financing, to the extent required, is

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	then committed or, in the good faith judgment of the Company Board after consultation with its financial advisors and outside legal counsel, is reasonably likely to be available.
	(x) “Takeover Proposal” means, any proposal or offer relating to (i) a merger, consolidation, share exchange or business combination involving the Company or any of its Subsidiaries representing 20% or more of the assets of the Company and its Subsidiaries, taken as a whole, (ii) a purchase, sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related transactions, of 20% or more of the assets of the Company and its Subsidiaries, taken as a whole, (iii) a purchase or sale of shares of capital stock or other securities, in a single transaction or series of related transactions, representing 20% or more of the voting power of the capital stock of Company or any of its Subsidiaries, including by way of a tender offer or exchange offer, (iv) a reorganization, recapitalization, liquidation or dissolution of the Company or (v) any other transaction having a similar effect to those described in clauses (i) — (iv), in each case other than the transactions contemplated by this Agreement.
	(y) “Taxes” means (i) any and all federal, state, provincial, local, foreign and other taxes, levies, fees, imposts, duties, and similar governmental charges (including any interest, fines, assessments, penalties or additions to tax imposed in connection therewith or with respect thereto) including (x) taxes imposed on, or measured by, income, franchise, profits or gross receipts, and (y) ad valorem, value added, capital gains, sales, goods and services, use, real or personal property, capital stock, license, branch, payroll, estimated, withholding, employment, social security (or similar), unemployment, compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes, and customs duties, and (ii) any transferee liability in respect of any items described in the foregoing clause (i).
	(z) “Tax Returns” means any and all reports, returns, declarations, claims for refund, elections, disclosures, estimates, information reports or returns or statements required to be supplied to a taxing authority in connection with Taxes, including any schedule or attachment thereto or amendment thereof.
	(aa) “Treasury Regulations” means the Treasury regulations promulgated under the Code.

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	If to any of the SibCos or the Merger Cos, to:
	Premium Finance LLC 345 Park Avenue, 31st Floor New York, NY 10154 Facsimile: 212-583-5722 Attention: Chinh Chu
	with a copy (which will not constitute notice to the SibCos or the Merger Cos) to:
	Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019

	Facsimile: (212) 403-2000 Attention:	Steven A. Cohen, Esq.  Mark Gordon, Esq.

	Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 Facsimile: (212) 558-3588 Attention: Richard A. Pollack, Esq.
	and
	Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Facsimile: (212) 450-3599 Attention: Nancy L. Sanborn, Esq.

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	If to the Company, to:
	UICI 9151 Grapevine Highway North Richland Hills, TX 76180 Facsimile: (817) 255-5334 Attention: William J. Gedwed
	with a copy (which will not constitute notice to the Company) to:
	Jones Day 222 East 41st Street New York NY 10017 Facsimile: (212) 755-7306 Attention: Robert A. Profusek, Esq.

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	UICI

	By:	/s/ William J. Gedwed

	Name: William J. Gedwed

	Title:	President and CEO

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	PREMIUM FINANCE LLC

	By:	Blackstone Management

	Associates IV L.L.C., as
	Sole Member

	By:	/s/ Chinh Chu

	Name: Chinh Chu

	Title:	Member

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	MULBERRY FINANCE CO., INC.

	By:	/s/ Adrian M. Jones

	Name: Adrian M. Jones

	Title:	President

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	DLJMB IV FIRST MERGER LLC

	By:	MBP IV PLAN

	INVESTORS, L.P., a
	Member

	By:	DLJ LBO Plans

	Management Corporation,
	its General Partner

	By:	/s/ Kamil M. Salame

	Name: Kamil M. Salame

	Title:	Managing Director

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	PREMIUM ACQUISITION, INC.

	By:	/s/ Chinh Chu

	Name: Chinh Chu

	Title:	Chief Executive Officer

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	MULBERRY ACQUISITION, INC.

	By:	/s/ Adrian M. Jones

	Name: Adrian M. Jones

	Title:	President

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	DLJMB IV FIRST MERGER CO
	ACQUISITION, INC.

	By:	/s/ Christopher Hojlo

	Name: Christopher Hojlo

	Title:	Vice President

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	(i) in the case of the Corporation entering into any merger, consolidation or other business combination, reorganization, or liquidation or consummation of a similar transaction (other than any such transaction between or among the Corporation and one or more wholly-owned (directly or indirectly) Subsidiaries of the Corporation, which transactions would not adversely affect the rights of any Investor Group);
	(ii) acquiring or disposing of (in each case, including by merger, business combination, reorganization or other similar transaction), in a single transaction or a series of related transactions, any business or assets for consideration having a value (valuing any non-cash consideration at fair market value as determined by the Board in good faith) in excess of 20% of the fair market value of the total assets of the Corporation and its Subsidiaries, taken as a whole, as of immediately prior to such transaction or series of transactions (as determined by the Board in good faith);
	(iii) (A) incurring any indebtedness for borrowed money or issuing any debt securities (other than indebtedness or debt securities owed between or among the Corporation and/or one or more wholly-owned Subsidiaries) or (B) issuing to any third party any preferred stock (1) that the Corporation is required on a date certain, or can be required by the holder at the option of the holder, to redeem or repurchase, or with respect to which the Corporation is required to pay cash dividends or (2) of a type other than the types of preferred stock set forth in clause (1), to the extent that the aggregate liquidation value of all such preferred stock described in this clause (2) exceeds $50 million in the aggregate, if, in the cases of either of clause (A) or (B) and in the aggregate for all transactions described in clauses (A) and (B), the amount of such new indebtedness or the liquidation value of such preferred stock exceeds 20% of the fair market value of the total assets of the Corporation and its Subsidiaries, taken as a whole, as of immediately prior to such incurrence or issuance (as determined by the Board in good faith);
	(iv) entering into or effecting any agreement or transaction between or among the Corporation and/or any of its Subsidiaries, on the one hand, and any Affiliates of either the Corporation or any Stockholder, on the other hand, other than de minimis transactions on arm’s length terms; and

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	(v) effecting any amendment to this Certificate of Incorporation or the Bylaws with the purpose or effect of facilitating any actions referred to in clauses (i)-(iv) or that otherwise would directly conflict with the terms of the Stockholders Agreement.

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		Column B: Percent of
		outstanding shares of
Column A: Percent of Original Sponsor Shares		Class A-1 Common Stock				Column C: Number of Director designees
greater than 50%			Any			4 plus the number of Non-Investor Directors
greater than 45% and less than or equal to 50%			Any			4 plus the number of Non-Investor Directors
greater than 40% and less than or equal to 45%			Any			3 plus (75% of the number of Non- Investor Directors)
greater than 35% and less than or equal to 40%			Any			3 plus (50% of the number of Non- Investor Directors)
greater than 30% and less than or equal to 35%			Any			3 plus (25% of the number of Non- Investor Directors)
greater than the Original GS Percentage and less than or equal to 30%			Any			2 plus (25% of the number of Non- Investor Directors)
greater than the Original DLJ Percentage and less than or equal to the Original GS Percentage			Any			2
greater than or equal to 5% and less than or equal to the Original DLJ Percentage		greater than or equal to 3%				1
greater than or equal to 5% and less than or equal to the Original DLJ Percentage			less than 3%			0
less than 5%			Any			0

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	1585 Broadway
	New York, NY 10036

	i)	reviewed certain publicly available financial statements and other information of UICI;
	ii)	reviewed certain internal financial statements and other financial and operating data concerning UICI prepared by the management of UICI;
	iii)	analyzed certain financial projections prepared by the management of UICI;
	iv)	discussed the past and current operations and financial condition and the prospects of UICI with senior executives of the Company;
	v)	reviewed the reported prices and trading activity for UICI Common Stock;
	vi)	compared the financial performance of UICI and the prices and trading activity of UICI Common Stock with that of certain other comparable publicly-traded companies and their securities;

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	vii)	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
	viii)	participated in discussions and negotiations among representatives of UICI, the Merger Cos and their financial and legal advisors;
	ix)	reviewed a copy of the Merger Agreement and certain related documents;
	x)	reviewed a copy of the Voting Agreement;
	xi)	reviewed copies of equity commitment letters from each of the Sponsors or their affiliates, each dated September 15, 2005 (collectively, the “Equity Commitment Letters”);
	xii)	reviewed copies of limited guarantees from each of the Sponsors or their affiliates, each dated as of September 15, 2005 (collectively, the “Guarantees”);
	xiii)	reviewed a copy of the forward underwriting commitment letter from J.P. Morgan Securities Inc. dated September 15, 2005 (the “Forward Underwriting Commitment Letter”); and
	xiv)	reviewed a copy of the debt financing commitment letter from JP Morgan Chase Bank, N.A., Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and J.P. Morgan Securities Inc. dated September 15, 2005 (the “Debt Commitment” and, together with the Equity Commitment Letters and the Forward Underwriting Commitment Letter, collectively, the “Financing Letters”); and
	xv)	performed such other analyses and considered such other factors as we have deemed appropriate.

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	Very truly yours,
	MORGAN STANLEY & CO. INCORPORATED

	By:

	Paul Adams
	Managing Director

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799 Central Avenue  •  Suite 350  •  Highland Park, Illinois 60035	Phone 847-861-6016	Fax 847-861-6035

	(i)	reviewed public financial statements of the Company for the past 5 years as filed with the Securities and Exchange Commission;
	(ii)	reviewed certain non-public financial information prepared by Company management, including management projections;
	(iii)	participated in extensive discussions with senior management of the Company regarding past and current operations and financial condition and the future prospects of the Company;
	(iv)	participated in numerous discussions with Company management and representatives of a select list of potential strategic merger partners;
	(v)	participated in numerous discussions with Company management and representatives of a select list of potential private equity merger partners;

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	(vi)	reviewed values accorded certain other comparable publicly traded companies relative to the value accorded the Company’s shares;
	(vii)	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
	(viii)	reviewed copies of the Merger Agreement and, the Voting Agreement;
	(ix)	reviewed copies of the equity commitment letters from each of the Equity Investors, each dated September 15, 2005 (collectively, the “Equity Commitment Letters”);
	(x)	reviewed copies of the limited guarantees from each of the Equity Investors, each dated September 15, 2005 (collectively, the “Guarantees”);
	(xi)	reviewed the debt Commitment Letter (as defined in the Merger Agreement) dated September 15, 2005 (together with the Equity Commitment Letters, collectively, the “Financing Letters”); and
	(xii)	performed such other analyses and considered such other factors we have deemed appropriate.

	Very truly yours,
	NEW VERNON CAPITAL LLC

	By:

	Thomas H. Patrick
	Chairman

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	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or

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	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of

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determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

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Item 20.	Indemnification of Directors and Officers

	•	to the extent a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith;
	•	the indemnification and advancement of expenses provided for pursuant to Section 145 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise; and
	•	the corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145.

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Item 21.	Exhibits and Financial Statement Schedules

(a)	Exhibits

Exhibit
Number				Exhibit Description
	2	.1†		Agreement and Plan of Merger, dated as of September 15, 2005, by and among Premium Finance LLC, Mulberry Finance Co., Inc., DLJMB IV First Merger LLC, Premium Acquisition, Inc., Mulberry Acquisition, Inc., DLJMB IV First Merger Co Acquisition Inc. and UICI (attached as Annex A to the accompanying proxy statement/ prospectus).
	3	.1		Certificate of Incorporation, as amended (filed as Exhibit 4.1(i)(a) to Registration Statement on Form S-8, File No. 333-85113, filed August 13, 1999 and incorporated herein by reference).
	3	.2		Amended and Restated By-Laws, as amended as of July 30 (filed as Exhibit 3.2 to the Form 10-Q dated June 30, 2003, File No. 001-14953, filed August 19, 2003 and incorporated herein by reference).
	3	.3		Form of Certificate of Incorporation of the surviving corporation (attached as Annex B to the accompanying proxy statement/ prospectus).
	3	.4		Form of Bylaws of the surviving corporation.
	4	.1		Form of Stockholders Agreement.
	5	.1		Opinion of Jones Day.
	8	.1		Opinion of Jones Day as to material U.S. federal tax matters.
	10	.1		Voting Agreement, dated September 15, 2005, between UICI and the stockholders named therein (filed as Exhibit 99.1 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.2		Non-Compete Agreement, dated as of September 15, 2005, between UICI and Jeffrey James Jensen (filed as Exhibit 10.1 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.3		Non Compete Agreement, dated as of September 15, 2005, between UICI and Jami Jill Jensen (filed as Exhibit 10.2 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.4		Non-Compete Agreement, dated as of September 15, 2005, between UICI and Janet Jarie Jensen (filed as Exhibit 10.3 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.5		Non-Compete Agreement, dated as of September 15, 2005, between UICI and James Joel Jensen (filed as Exhibit 10.4 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.6		Non-Compete Agreement, dated as of September 15, 2005, between UICI and Julie Jean Jensen (filed as Exhibit 10.5 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.7		Non-Compete Agreement, dated as of September 15, 2005, between UICI and Gladys M. Jensen (filed as Exhibit 10.6 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.8		Term Sheet for New Employment Agreement for William J. Gedwed (filed as Exhibit 10.7 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).

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Exhibit
Number				Exhibit Description
	10	.9		Term Sheet for New Employment Agreement for William J. Truxal (filed as Exhibit 10.8 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.10		Term Sheet for New Employment Agreement for Troy A. McQuagge (filed as Exhibit 10.9 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.11		Term Sheet for New Employment Agreement for Philip J. Myhra (filed as Exhibit 10.10 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	10	.12		UICI Success Award Bonus Plan (filed as Exhibit 10.11 to UICI’s Current Report on Form 8-K filed September 20, 2005 and incorporated herein by reference).
	23	.1		Consent of KPMG LLP.
	23	.2		Consent of Jones Day (included in Exhibit 5.1 to this Registration Statement).
	23	.3		Consent of Jones Day (included in Exhibit 8.1 to this Registration Statement).
	24	.1*		Powers of Attorney for Mural R. Josephson and Richard T. Mockler.
	24	.2*		Power of Attorney for R.H. Mick Thompson.
	24	.3*		Powers of Attorney for William J. Gedwed, Mark D. Hauptman and Glenn W. Reed.
	24	.4*		Power of Attorney for Dennis C. McCuistion.
	99	.1		Consent of Morgan Stanley & Co. Incorporated.
	99	.2		Consent of New Vernon Capital LLC.
	99	.3*		Consent of Chinh E. Chu to be named as a director of UICI.
	99	.4*		Consent of Matthew Kabaker to be named as a director of UICI.
	99	.5*		Consent of Adrian M. Jones to be named as a director of UICI.
	99	.6*		Consent of Nathaniel Zilkha to be named as a director of UICI.
	99	.7*		Consent of Kamil M. Salame to be named as a director of UICI
	99	.8		Form of Proxy Card for Special Meeting of Stockholders.

*	Previously filed.

†	Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar attachments to the Agreement and Plan of Merger have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.

(b)	Financial Statement Schedules

(c)	Opinions

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Item 22.	Undertakings

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial, bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

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	UICI

	By:	/s/ Mark D. Hauptman

	Mark D. Hauptman
	Vice President, Chief Financial Officer and Chief Accounting Officer

Signature				Title		Date
* William J. Gedwed				President, Chief Executive Officer and Director		February 28, 2006
* Mark D. Hauptman				Vice President, Chief Financial Officer and Chief Accounting Officer		February 28, 2006
* Glenn W. Reed				Executive Vice President, General Counsel and Director		February 28, 2006
* Dennis C. McCuistion				Director		February 28, 2006
* Mural R. Josephson				Director		February 28, 2006
* R.H. Mick Thompson				Director		February 28, 2006
* Richard T. Mockler				Director		February 28, 2006
*By:		/s/ Glenn W. Reed   Glenn W. Reed for himself and as Attorney-in-Fact

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Exhibit
Number				Exhibit Description
	3	.4		Form of Bylaws of the Surviving Corporation
	4	.1		Form of Stockholders Agreement
	5	.1		Opinion of Jones Day
	8	.1		Opinion of Jones Day as to material U.S. federal tax matters
	23	.1		Consent of KPMG, LLP.
	99	.1		Consent of Morgan Stanley & Co. Incorporated.
	99	.2		Consent of New Vernon Capital LLC.
	99	.8		Form of Proxy Card for Special Meeting of Stockholders.