INScompanies Blog

Purchase mildly accretive to earnings in 2005

Expected to add up to 140,000 PP0 lives in 30 states in 2005

More than 95% of revenues from purchased Pacific Life business overlaps with combined PacifiCare/AMS health plan markets

CYPRESS, Calif., November 29, 2004 — PacifiCare Health Systems, Inc. (NYSE: PHS) and Pacific Life Insurance Company jointly announced today that they have signed a definitive agreement whereby PacifiCare will purchase Pacific Life’s group health insurance business. The business includes medical, dental and life coverage for small and large group employers, and is distributed through a network of approximately 30,000 brokers and agents in 30 states. Although the financial terms of the purchase were not disclosed, the transaction is structured as a coinsurance arrangement that is expected to result in PacifiCare’s acquisition of up to 140,000 medical members. At closing, Pacific Life will cede to PacifiCare all future premiums received for its existing group health business, and PacifiCare will assume all future claim liability. PacifiCare will also obtain renewal rights for the acquired membership.

As part of the transaction, PacifiCare will also obtain assets necessary to support and preserve the continuity of the acquired business, as well as the right to offer employment to the approximately 700 Pacific Life employees who currently provide service and support to the group insurance business.

Approximately 55% of the revenue from the acquired membership is generated in states that overlap with PacifiCare’s current eight core health plan markets, and more than 95% of the revenue is generated from membership that resides in states that will overlap with PacifiCare’s health plan operations after completion of its previously announced acquisition of American Medical Security Group (AMS). PacifiCare will finance the Pacific Life transaction through internally generated cash, and the companies anticipate a closing date in early 2005, subject to approval from the California Insurance Commissioner and compliance with provisions of the Hart-Scott-Rodino Act.

The purchase of Pacific Life’s group health business complements PacifiCare’s recently announced acquisition of AMS, and demonstrates the company’s renewed focus on the individual and small group markets, which it believes are the market segments offering the most potential for commercial membership growth in the coming years.

PacifiCare’s Chairman and Chief Executive Officer, Howard Phanstiel, stated, “This investment is a logical follow-on to our recently announced acquisition of American Medical Security Group. It deepens our penetration and significantly enhances our distribution capabilities in the important small group market, and further improves the size and scale of our geographic presence. And, just as AMS’s overlap with PacifiCare’s current eight core operating markets gives us the opportunity to build more cost effective proprietary networks, Pacific Life’s significant additional overlap allows us to extend the benefits of our existing lower cost networks to the membership acquired from them.”

The transaction is also consistent with PacifiCare’s strategy of diversification through the expansion of its full-service commercial portfolio balanced against a growing Medicare Advantage business. Based on PacifiCare’s most recent forecast’s for 2004 operating results, the completion of the AMS acquisition is expected to lower the portion of PacifiCare’s gross margin generated from Medicare Advantage from approximately 39% to 35%, and it is anticipated that the purchase of Pacific Life’s group health business will result in an additional reduction to approximately 32%. Despite the significant overlap with PacifiCare’s current eight core markets, this transaction will also expand the company’s geographic presence, and further increase the portion of total membership outside the State of California, from approximately 48% subsequent to the AMS acquisition, to approximately 50%.

Additionally, access to an expanded network of insurance agents and brokers is expected to provide new opportunities for PacifiCare to distribute its other products.

Brad Bowlus, president of PacifiCare’s Health Plan division said, “We are very excited about meeting with the agents and brokers in Pacific Life’s network to discuss opportunities to expand the distribution of products such as our popular SignatureFreedom plans, Medicare Supplement coverage, HSA products and, eventually, even Medicare Advantage.”

Based in Newport Beach, California, Pacific Life’s strength continues to be in providing life insurance and annuities to individuals, businesses, and pension plans. Pacific Life’s Life Insurance Division and Annuities and Mutual Funds Division are among the leaders in the industry, ranking seventh1 and eighth2 respectively in sales nationwide.

Thomas Sutton, chairman and chief executive officer of Pacific Life said, “With today’s increasingly competitive health insurance market, Pacific Life made the decision to focus on its core business of providing life insurance products, individual annuities, and other investment products and services to individuals, businesses, and pension plans. PacifiCare provides a great

fit for Pacific Life’s group health business not only because of their strength in the managed health care industry, but also because of their commitment to the small group market and their focus on member satisfaction.”

“We anticipate that, including all integration expenses, this transaction will be mildly accretive. I would estimate about two to three cents in incremental 2005 EPS, depending on the timing of the close in early 2005,” said Greg Scott, PacifiCare’s executive vice president and chief financial officer.

PacifiCare will hold a conference call to discuss the transaction at 4:30 PM Eastern time on Monday, November 29th. To access the call, dial (888) 459-7564, passcode “PacifiCare.”

Risk Factors Regarding Forward-Looking Statements
The statements in this news release, including those made by Howard Phanstiel, Greg Scott, Brad Bowlus and Thomas Sutton that are not historical facts are forward-looking statements within the meaning of the Federal securities laws, and may involve a number of risks and uncertainties. Such forward-looking statements include, but are not limited to, the ability to execute growth strategies, the perceived benefits of the acquisition, the ability to diversify PacifiCare’s business, expectations about the timing and receipt of regulatory approvals, and the effects on PacifiCare’s earnings in 2005. These risks and uncertainties include, but are not limited to, the ability to implement certain growth or diversification strategies; our ability to consummate the purchase; risks that integration may be more difficult or costly than expected; revenue following the transaction and other actual results associated with the acquisitions that could differ from the perceived benefits; membership retention may be less than anticipated; profitability of the purchased business could be less than expected; and required regulatory approvals for the transaction may not be obtained on a timely basis or may be subject to certain conditions, and other items found in documents filed by PacifiCare with the Securities and Exchange Commission.

PacifiCare Health Systems and American Medical Security Group and their respective officers and directors may be deemed to be participants in the solicitation of proxies from shareholders of American Medical Security Group, Inc. with respect to the transactions contemplated by the merger agreement between PacifiCare and American Medical Security Group. Information regarding the companies’ officers and directors is included in their respective Definitive Proxy Statements for their 2004 Annual Meetings of Stockholders filed with the Securities and Exchange Commission in April 2004. These documents are available free of charge at the Securities and Exchange Commission web site at www.sec.gov, from PacifiCare at pacificare.com and from AMS at eAMS.com. Investors and security holders may obtain more detailed information about who may be deemed participants in the solicitation of proxies by reading American Medical Security Group’s proxy statement regarding the proposed merger. The proxy statement contains important information about the merger and the transactions contemplated by the Merger Agreement. Investors and securities holders of American Medical Security Group may obtain a free copy of American Medical Security Group’s proxy statement and other documents filed with the Securities and Exchange Commission at the Commission’s web site at www.sec.gov. American Medical Security Group’s proxy statement and these other documents may also be obtained for free from American Medical Security Group at eAMS.com.

PacifiCare Health Systems is one of the nation’s largest consumer health organizations with more than 3 million health plan members and approximately 10 million specialty plan members nationwide. PacifiCare offers individuals, employers and Medicare beneficiaries a variety of consumer-driven health care and life insurance products. Currently, more than 99 percent of PacifiCare’s commercial health plan members are enrolled in plans that have received Excellent Accreditation by the National Committee for Quality Assurance (NCQA). PacifiCare’s specialty operations include behavioral health, dental and vision, and complete pharmacy and medical management through its wholly owned subsidiary, Prescription Solutions. More information on PacifiCare Health Systems is available at www.pacificare.com.

Founded in 1868, Pacific Life provides life insurance products, individual annuities, mutual funds, group employee benefits, and offers to individuals, businesses, and pension plans a variety of investment products and services. A FORTUNE 500® company, Pacific Life counts 25 of the 50 largest U.S. companies as clients3 and is a member of IMSA (Insurance Marketplace Standards Association), whose membership promotes ethical market conduct for individual life insurance and annuities.

1 LIMRA International, Confidential Sales Survey of Participating Life Insurance Companies, 3rd Qtr. 2004. Based on new annualized premium.
2 Finetre Corporation, published sales figures as of 9/30/04.
3 Data compiled by Pacific Life using the 2004 FORTUNE 500 list, as of April 2004.
 
Contact
Tyler Mason
PHS Media Relations
Tyler.mason@phs.com
(714) 226-3530 Dan Yarbrough
PHS Investor Relations
Dan.yarbrough@phs.com
(714) 226-3540 Tennyson Oyler
PL Media Relations
TOyler@PacificLife.com
(949) 219-3248

Sep 27, 2004 
The Deal: PacifiCare Health Systems has agreed to acquire American Medical Security Group Inc. for $502 million. Under the terms of the deal, PacifiCare will pay $32.75 for each outstanding share of American Medical Security. PacifiCare will also assume about $30.2 million in debt. The deal is expected to close early in 2005.

Discussion: American Medical Security offers health insurance products to individuals and small businesses. Company products include group life, dental, prescription drug, accidental death, and disability coverage. The company offers coverage through approximately 60 PPO networks operating in more than 30 states and the District of Columbia.

PacifiCare Health Systems offers commercial health and Medicare HMOs, PPOs, and POS plans. The company is one of the largest Medicare HMOs in the United States. PacifiCare offers specialty health coverage, including behavioral health, dental, vision coverage, and pharmacy benefits management. PacifiCare operates in US eight states, primarily on the West Coast and in the Southwest, and also offers coverage plans in Guam and the Philippines.

The acquisition is part of a PacifiCare strategy to become a more diversified consumer-health company. The deal will also extend the company’s geographical reach, providing a client base beyond the Western states.

Weekly Corporate Growth Report,  Sep 27, 2004 

Newport Beach, CA. (Nov. 7, 2006) – Pacific Life Insurance Company is introducing Pacific Select Exec III (form # P04SE2), a flexible premium variable life insurance policy that offers a wide variety of portfolio investment options, riders, and services. All the choices offered by variable life put the buyer in the driver’s seat when it comes to choosing what they want from their life insurance.

Whether a client wants to focus primarily on death benefit protection or split their focus between death benefit protection and supplementing retirement income, Pacific Select Exec III has features to help including:

44 available investment options.

Five asset allocation models offered by the Portfolio Optimization service. The asset allocation models give the client exposure to as many as sixteen asset class styles depending on the model chosen.

A range of optional riders, available at additional cost, offering guarantees including the Short Term No Lapse Guarantee rider, Overloan Protection rider, Minimum Earnings Benefit rider and the Guaranteed Minimum Distribution rider.1

“With so many Americans focusing on retirement, our Guaranteed Minimum Distribution rider is an increasingly popular option for clients to include with their variable life policy. And Pacific Life is one of just a handful of companies that offer this feature on a life insurance policy,” explains Alyce Peterson, vice president marketing services. “A client has an opportunity to guarantee a minimum amount when he or she gets ready to take distributions from their variable policy.”

Ms Peterson explained that with people living longer, overfunding a variable life insurance policy can give added flexibility to someone’s overall retirement strategy. “Distributions from a variable life insurance policy in the form of policy withdrawals and loans2 are not subject to the same restrictions as qualified plans and IRAs. This means that a client can use his policy’s cash value to supplement and add income in early retirement (prior to age 59 1/2) or in the later years of retirement when outliving retirement income is a concern,” Peterson continued. “With a variable life insurance policy, a client is not forced to take the money out at 70 ½ and not penalized if he or she dies before taking distributions, as the death benefit is generally income tax-free.”3

Founded in 1868, Pacific Life provides life insurance products, individual annuities, mutual funds, group employee benefits, and offers to individuals, businesses, and pension plans a variety of investment products and services.4 A FORTUNE 500® company, Pacific Life counts more than half of the 100 largest U.S. companies as clients5 and is a member of IMSA (Insurance Marketplace Standards Association), whose membership promotes ethical market conduct for individual life insurance and annuities.

 1 Riders have costs, limitations and other requirements that must be met in order to be effective. For additional detailed information about these riders refer to the prospectus available at www.PacificLife.com. Rider availability varies by state.

2 Withdrawals and other distributions from non-Modified Endowment Contract (non-MEC) policies in the first 15 years may be taxable to the extent they occur in conjunction with (or during the two years immediately prior to) a reduction in benefits. After 15 years, withdrawals and other distributions up to the policy cost basis are not taxable. Policy loans are not taxable for a non-MEC policy provided that it remains in force until the death(s) of the insured(s). Withdrawals, policy loans and other distributions from a MEC policy are subject to other rules and are generally taxable as “income first.” If prior to the policy cost basis are not taxable. Policy loans are not taxable for a non-MEC policy provided that it remains in force until the death(s) of the insured(s). Withdrawals, policy loans and other distributions from a MEC policy are subject to other rules and are generally taxable as “income first.” If prior to the death(s) of the insured(s), the policy (MEC or non-MEC) is surrendered or lapses with an outstanding policy loan balance, the policy owner will be subject to income taxes to the extent the cash surrender value plus the amount of the outstanding loans exceeds the policy cost basis. Withdrawals, policy loans, and other distributions will reduce policy values and may reduce death benefits.

3 For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)( i.e. the “transfer- for- value rule”); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).

4 Product availability and features may vary by state.

5 Data compiled by Pacific Life using the FORTUNE 500 ® list, as of April 2006
Pacific Life Insurance Company is licensed to issue individual life insurance and annuity products in all states except New York. Product availability and features may vary by state. Variable life insurance and annuity products issued by Pacific Life and shares of the Pacific Select Fund are distributed by Pacific Select Distributors, Inc. (member NASD & SIPC), a subsidiary of Pacific Life, and are available through licensed third party broker dealers.

Investors should carefully consider a variable life insurance policy’s risks, charges and limitation and expenses as well as the risk, fees, expenses and investment objectives of the underlying investment options. This and other information about Pacific Life is in prospectuses available from your registered representative or by calling (800) 800-7681. Read the prospectus carefully before investing or sending money.

Media Contact:
Tennyson Oyler
(949) 219-3248 For Immediate Release

Newport Beach, CA. (April 6, 2006) – In response to the desire of variable life insurance buyers for long-term performance and protection from potential stock market volatility, Pacific Life Insurance Company recently introduced three new riders. These innovative riders are now available with the company’s popular single life variable universal life insurance products.1

The-Minimum Earnings Benefit rider-MEB (form #R06MEB) and the Guaranteed Minimum Distribution rider – GMD (form #R06GMD) provide new choices and benefits to buyers who are attracted to the upside potential of variable universal life but want protection from prolonged downturns in the market. The Long Term Performance rider – LTP (form #R06LTP) maximizes the potential long term cash value accumulation of a client’s variable universal life insurance policy.

Alyce Peterson, vice president, marketing services for the Life Insurance Division of Pacific Life, explained that the MEB and GMD riders address the concerns of clients who want life insurance death benefit and the upside potential of the equities market yet are concerned about potential downsides in the long-term. “These riders provide unique guarantees that can limit downside when accumulating cash value in a policy or when taking policy loans and withdrawals from the cash value,”2 she commented.

Designed for clients with the long-term strategy of over funding a variable life policy to shorten the premium-paying years or to supplement retirement income, the Long Term Performance rider can increase a policy’s long-term cash value.

Peterson explained that a life insurance policy with LTP will have higher accumulated value and lower cash surrender value in the first 10 years than the same policy without LTP. “As long as the policyowner holds onto the policy for 10 years or more and pays the minimum premium required, they will accumulate higher policy cash values with LTP,” continued Peterson.

All three riders have costs, limitations and other requirements that must be met in order to be effective. For additional detailed information about these riders refer to the prospectus available on this Web site.

Founded in 1868, Pacific Life provides life insurance products, individual annuities, mutual funds, group employee benefits, and offers to individuals, businesses, and pension plans a variety of investment products and services. A FORTUNE 500® company, Pacific Life counts more than half of the 100 largest U.S. companies as clients3 and is a member of IMSA (Insurance Marketplace Standards Association), whose membership promotes ethical market conduct for individual life insurance and annuities.

1 Riders available only with new sales on Policy Form Nos. P04SE2, P04MVP
2 Withdrawals and policy loans will reduce policy values and may reduce death benefit.
3 Data compiled by Pacific Life using the FORTUNE 500 ® list, as of April 2005
Pacific Life Insurance Company is licensed to issue individual life insurance and annuity products in all states except New York. Product availability and features may vary by state. Variable life insurance and annuity products issued by Pacific Life and shares of the Pacific Select Fund are distributed by Pacific Select Distributors, Inc. (member NASD & SIPC), a subsidiary of Pacific Life, and are available through licensed third party broker dealers.

Investors should carefully consider the underlying fund investment objectives, risks, charges and limitations and expenses of a variable universal life insurance policy and an annuity contract. This and other information about Pacific Life is in prospectuses available from your registered representative or by calling (800) 800-7681. Read the prospectus carefully before investing or sending money.

MKTG-287
Media Contact:
Tennyson Oyler
(949) 219-3248 For Immediate Release

Fitch Ratings-Chicago-October 19, 2005: Fitch Ratings affirms Pacific Life Insurance Company’s (Pacific Life) primary servicer rating of ‘CPS1′, its master servicer rating of ‘CMS2+’, and its special servicer rating of ‘CSS2′. Each of the ratings considers the experienced management and loan servicing team and the financial strength of Pacific Life. The primary servicer rating reflects Pacific Life’s proven ability to service loans in commercial mortgage-backed security (CMBS) transactions. The master servicer rating considers Pacific Life’s CMBS reporting capabilities and the company’s excellent interaction with Fitch’s CMBS performance analytics group. The special servicer rating reflects Pacific Life’s ability to work out and resolve commercial mortgage loans and real estate owned properties in CMBS transactions. The ratings also reflect Pacific Life’s continued commitment to a detailed quality control plan and its strong cash management procedures.

As of Sept. 30, 2005, Pacific Life’s total servicing portfolio consisted of 725 loans totaling $9.9 billion, of which approximately $3.9 billion was CMBS. As of the same date, Pacific Life was named master servicer on 16 CMBS transactions, overseeing three primary servicers who serviced five loans totaling $116 million, and was named special servicer on 13 CMBS transactions totaling $1.5 billion.

Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 4, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information about Fitch commercial mortgage servicer ratings or rating criteria, refer to the report titled ‘Commercial Mortgage Servicer Rating Criteria’, dated April 11, 2002, available on the Fitch Ratings web site at ‘www.fitchratings.com’.

Contact: Richard Carlson +1-312-606-2373 or Britt Johnson +1-312-606-2341, Chicago.

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, ‘www.fitchratings.com’. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.

Media Relations: Sandro Scenga +1-212-908-0278, New York.
 
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