UICI Securities Litigation

On and after December 16, 1999, the following actions (collectively, the "Litigation") were filed in the United States District Court for the Northern District of Texas, Dallas Division, as securities class actions on behalf of purchasers of UICI ("UICI" or the "Company") during a defined period of time:

• Silver v. UICI, et al., 3-99CV-2860-X;
• Rinderknecht v. UICI, et al., 3-99CV-2888-H; and
• Uzelac v. UICI, et al., 3-00CV-0329-X.

The operative complaint (the "Complaint") is the Second Consolidated Amended Class Action Complaint, filed April 2, 2001. The Complaint alleges claims for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder.

On March 27, 2000, the Court appointed John Rinderknecht, Dennis L. Miga, Lloyd E. Wedblad, and Zarven & Roxy Alemian JT as lead plaintiffs under §21D(a)(3)(B) of the Exchange Act and approved Lead Plaintiffs' selection of Milberg Weiss Bershad Hynes & Lerach LLP, and Berger & Montague, P.C. as co-lead counsel pursuant to §21D(a)(3)(B)(v) of the Exchange Act and Stanley Mandel & Iola, L.L.P. as liaison counsel.

The proposed settlement creates a fund in the amount of $16,000,000 (the "Settlement Fund") and will include interest that accrues on the Settlement Fund prior to distribution. Based on Lead Plaintiffs' estimate of the number of shares entitled to participate in the settlement, the average distribution per share would be approximately $2.50 before deduction of court-approved fees and expenses. However, your actual recovery from this fund will depend on a number of variables including the number of Claimants, the number of shares you purchased or sold, the expense of administering the claims process, and the timing of your purchases and sales, if any.

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