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PacifiCare Health Systems Announces Completion of Acquisition of Pacific Life's Group Health Insurance Operations

Posted on: Tuesday, 26 April 2005, 21:00 CDT

CYPRESS, Calif., April 26 /PRNewswire-FirstCall/ -- PacifiCare Health Systems Inc. announced that it has received all clearances necessary to complete its previously disclosed acquisition of Pacific Life's group health insurance operations on Wednesday, April 27.

The transaction is structured as a coinsurance arrangement, whereby Pacific Life will cede to PacifiCare all future premiums received for its group health operations, and PacifiCare will assume all future incurred claim liability. PacifiCare will also obtain renewal rights for the acquired membership.

Also as part of the transaction, PacifiCare will obtain assets necessary to support and preserve the continuity of the acquired business as well as the approximately 700 Pacific Life employees who currently provide service and support to the group health insurance operations. Financial terms of the purchase were not disclosed.

"The purchase of Pacific Life's group health operations complements PacifiCare's recent acquisition of American Medical Security Group Inc. (AMS) and demonstrates the company's expanding focus on the individual and small- group markets, which we believe offer the most potential for commercial- membership growth in the coming years," said Howard Phanstiel, chairman and chief executive officer of PacifiCare.

According to Brad Bowlus, president and CEO of PacifiCare's Health Plans division, the transaction is consistent with PacifiCare's strategy of diversification through the expansion of its full-service commercial portfolio and further broadens the company's nationwide presence.

"Acquiring Pacific Life's group health insurance operations will provide opportunities for new sales with access to nearly 30,000 brokers and agents with a wide breadth of experience, thus expanding distribution and cross- selling capabilities for PacifiCare products, including our popular PacifiCare SignatureFreedom(SM), HSAs, and Secure Horizons Medicare Supplement and, eventually, Medicare Advantage plans," said Bowlus.

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 benefit management through its wholly owned subsidiary, Prescription Solutions. More information on PacifiCare Health Systems is available at http://www.pacificare.com/.

Risk Factors Regarding Forward-Looking Statements

The statements in this news release 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, 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; 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 other items found in documents filed by PacifiCare with the Securities and Exchange Commission.

PacifiCare Health Systems Inc.

CONTACT: Tyler Mason, PHS Media Relations, +1-714-226-3530,Tyler.mason@phs.com, or Dan Yarbrough, PHS Investor Relations,+1-714-226-3540, Dan.yarbrough@phs.com, both of PacifiCare Health SystemsInc.

Web site: http://www.pacificare.com/

Source: PRNewswire-FirstCall

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