SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
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Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-12
AMERICAN MEDICAL SECURITY GROUP, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ]
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underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it was
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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[American Medical Security Group, Inc. LOGO]
February 2002
[AMS Logo] FORWARD-LOOKING STATEMENT
Some of the statements made during this presentation may be forward-looking
statements subject to inherent risks and uncertainties that may cause actual
results to differ materially from the company's expectitations. Please refer to
the cautionary statement contained in written materials distributed with this
presentation and the various reports filed by the company with the SEC for
discussions of risk factors affecting the company and its business. The company
assumes no obligation to update forward-looking statements included in this
presentation.
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[AMS Logo] AMS OVERVIEW
[Map of the United States] - Specializes in providing
AMS Markets healthcare benefit plans
for small-employer groups,
Alabama Arizona-1 Arkansas individuals & families
Colorado-1 Delaware Florida-1,2
Georgia-1 Illinois-1,2 Indiana-1 - PPO model
Iowa Kansas-1 Louisiana
Maryland Michigan-2 Mississippi-2 - 2001 Revenues: $876.6 million
Missouri-1 Nebraska-1 Nevada
New Mexico-2 North Carolina-2 North Dakota - 557,716 health members at 12/31/2001
Ohio-1,2 Oklahoma-1,2 Pennsylvania-1,2
South Carolina South Dakota Tennessee-1,2
Texas-1,2 Utah-2 Virginia-1
West Virginia Wisconsin-1,3 Washington DC
1- Regional Sales Office located in this state
2- District Sales Office located in this state
3- Headquarters located in Green Bay, Wisconsin
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[AMS Logo] FEBRUARY 4 EARNINGS HIGHLIGHTS
o Net income of $0.30 per share in 4Q 2001
o $0.25 in 3Q 2001
o $0.10 in 2Q 2001
o $0.05 in 1Q 2001 (excluding $0.41 non-recurring litigation charge)
o Guidance of $1.15 - 1.25 per share for full-year 2002
o Health segment loss ratio improves for 5th consecutive quarter
o Lowest point in more than 2 years
o New product lines reaching markets
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[AMS Logo] AMS OVERVIEW
o Strategies
o Grow individual MedOne business
o Continue to improve small group business performance
o Rollout new product lines
o Grow dental business
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[AMS Logo]
BUSINESSES
Revenue Contribution Changes (% of all AMS revenues)
[Bar Chart]]
2000 2001 2003 (projected)
63% Small Group 54% Small Group 46% Small Group
25% MedOne 36% MedOne 44% MedOne
9% Specialty 10% Specialty 10% Specialty
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[AMS Logo]
Small Group
Small Group Medical, Dental, Life and STD
associated with group members
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[AMS Logo] SMALL GROUP COMPONENT
o Small-employer groups, ranging in size from 2 to 50 employees
o Average group size is 6 employees
o Distribution through 25,000 independent agents
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[AMS Logo] SMALL GROUP COMPONENT
o Improving performance of small group business
o Several quarters of aggressive rate action
o Premiums increasing faster than claim costs
o Industry finally overcomes impact of Health Insurance Portability &
Accountability Act (HIPAA)
o Double-digit health care inflation compounds HIPAA
o Medicare cost-shifting makes matters worse
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SMALL GROUP COMPONENT
[AMS Logo]
o New group product rollout
o Extremely strong agent reception
o Employers can tailor coverage to meet their needs
o Aggressive efforts to invigorate new member growth
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[AMS Logo] SMALL GROUP COMPONENT
o Increase small group profitability by:
o Focusing on core markets
o Introducing new products
o Higher deductibles, copays, etc.
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[AMS Logo]
MedOne
MedOne Medical, and Life
associated with MedOne members
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[AMS Logo] MEDONE COMPONENT
o Product for individuals and their families
o No employer coverage
o Self-employed
o Temporary coverage
o Sold through independent agents
o Higher profit potential than small group
o More flexibility in underwriting and pricing
o Better risk selection
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[AMS Logo] MEDONE COMPONENT
o Well-positioned in softening economy
o Layoffs
o Small employers dropping coverage
o New MedOne product rollout
o Individuals have a greater stake in health care costs
o Elect higher deductibles and co-pays
o Builds on success of Affordable One
o Improving competitive environment
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[AMS Logo] MEDONE COMPONENT
o MedOne Revenues
o Up 24% in 2001 from 2000
o MedOne Membership
o 45% of total 2001 membership vs. 34% in 2000
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[AMS Logo] MEDONE COMPONENT
o Increase revenues & profitability:
o Expand number of agents
o Introduce new product
o Create additional regional/national distribution relationships
o Provide agents with power of Internet
o eAMS.com secured agent site
o Electronic quoting and enrollment
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[AMS Logo]
Specialty Business
Stand-Alone Dental and Self-Funded
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[AMS Logo] SPECIALTY BUSINESS
o Consists of:
o Dental business
o 167,000 stand-alone dental members
o 79,000 additional members bundled to group plans
o Self-funded business
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[AMS Logo] SPECIALTY BUSINESS
o Increase Profitability by:
o Expanding dental business
o Increase sales & marketing activity
o New product
o Selectively developing self-funded business
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[AMS Logo]
FINANCIAL HIGHLIGHTS
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[AMS Logo] EARNINGS PER SHARE
(*excluding non-recurring charge)
[Line Graph]
Quarter 3 2000 $(0.09)
Quarter 4 2000 $ 0.01
Quarter 1 2001 $ 0.05*
Quarter 2 2001 $ 0.10
Quarter 3 2001 $ 0.25
Quarter 4 2001 $ 0.30
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[AMS Logo] ANNUAL EARNINGS PER SHARE
(*excluding non-recurring charge)
[Bar Chart]
2000 Actual 2001 Actual 2002 Company guidance as of 2/4/02
$0.18 $0.70* $1.15 - $1.25
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[AMS Logo] OTHER FINANCIAL DATA
As Of
12/31/99 12/31/00 12/31/01
Book Value per Share $14.86 $15.77 $16.30
Tangible Book Value per Share $7.69 $8.24 $8.85
Debt to Total Capital Ratio 16.2% 15.7% 14.9%
Cash Flow from Operations $26.4 $(3.2) $17.6
Capital Adequacy (RBC) 339% 389% 486% est.
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[AMS Logo] FINANCIAL HIGHLIGHTS
SMALL CAP VALUE
o Investment Considerations
o Growing MedOne business
o Small group market turnaround
o Profitable dental business
o Strong systems and back office
o Low debt to total capital ratio - 14.9%
o Book value of $16.30 per share on 12/31/2001
o Tangible book value of $8.85 per share on 12/31/2001
o Closing price of $11.48 on 2/1/2002
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[AMS Logo] COBALT CORPORATION
o 45% Shareholder
o January 18: Files Schedule 13D with SEC
o Discussions with AMS regarding the repurchase of a portion of its
shares at market prices
o Investment no longer "strategic asset"
o July 2001: Hired investment banker to respond to inquiries from
purchasers
o AMS in discussions with Cobalt to resolve these issues favorably
for shareholders
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[AMS Logo] PROXY SOLICITATION
The directors and executive officers of American Medical Security Group, Inc.
("AMS") and certain other persons may be deemed to be participants in
solicitation by AMS of proxies from its shareholders in connection with AMS'
2002 Annual Meeting of Shareholders. Information concerning such participants
was filed by AMS with the Securities and Exchange Commission (the "SEC") on
January 22, 2002.
SHAREHOLDERS OF AMS ARE ADVISED TO READ AMS' PROXY STATEMENT IN CONNECTION WITH
ITS SOLICITATION OF PROXIES FROM ITS SHAREHOLDERS WHEN IN BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders of AMS and other
interested parties may obtain, free of charge, copies of AMS' proxy statement,
and any other documents filed by AMS with the SEC, at the SEC's Internet web
site at www.sec.gov. When available, definitive proxy statements and other
documents may also be obtained by contacting AMS: Cliff Bowers, American Medical
Security, P.O. Box 19032, Green Bay, WI 54307-9032. (920) 661-2766
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[AMS Logo] CAUTIONARY STATEMENT
This presentation contains certain "forward-looking" statements (within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995) with respect to strategic business plans, earnings and
changes in business mix. Such statements are subject to inherent risks and
uncertainties that may cause actual results to differ materially from those
contemplated. Risk factors that may affect actual results include:
o Inability to successfully implement the Company's business plan, attain
new business sales goals, retain existing customers and maintain
acceptable profit margins
o Unexpected increases in medical costs and increased utilization of
medical services and prescription drugs resulting from bioterrorism
concerns or otherwise
o Competitive practice and demand for the Company's products
o Changes in the Company's relationship with key sales agents and the
ability of the Company to expand its distribution network
o Developments in health care reform and changes in insurance and health
care regulations and other regulatory issues
o General economic conditions affecting consumer spending and the
Company's investment performance
o Outcome of commercial and other litigation
o Other factors referred to in the Company's reports filed with the
Securities and Exchange Commission from time to time
This presentation reflects expectations of the Company as of February 4, 2002.
The Company undertakes no obligation to update this information as a result of
new information or future events.
Information in this presentation related to the Company's major business
products is provided in addition to previously disclosed information. In this
presentation, historical and forward-looking data reflecting the Company's
health and life insurance segment businesses have been allocated to major
business products based on the underlying customer base.
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[American Medical Security Group, Inc. Logo]