8-K 1 0001.txt AMERICAN MEDICAL SECURITY GROUP, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): FEBRUARY 21, 2001 AMERICAN MEDICAL SECURITY GROUP, INC. (Exact name of Registrant as specified in its charter) WISCONSIN 1-13154 39-1431799 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 3100 AMS BOULEVARD, GREEN BAY, WISCONSIN 54313 (Address of principal executive offices) (Zip Code) (920) 661-1111 (Registrant's telephone number, including area code) -------------- ITEM 9. REGULATION FD DISCLOSURE American Medical Security Group, Inc. (the "Company") has developed an investor financial presentation that will be available on its website - AMSchoices.com. The presentation describes the Company's current businesses, strategies and financial highlights. It also includes projected changes in the mix of revenue contributions from the Company's major businesses anticipated by 2003. The content of the presentation will form the base of future presentations the Company expects to make at financial forums, including health care conferences sponsored by various financial institutions. The presentation is prepared in summary fashion and contains information that should be read in conjunction with the Company's reports filed with the Securities and Exchange Commission from time to time. Following is the content of the presentation. AMERICAN MEDICAL SECURITY RX for Good Health FEBRUARY 2001 AMERICAN CAUTIONARY STATEMENT MEDICAL SECURITY ----------------- Rx for Good Health This presentation is a summary of previously disclosed historical financial data as of December 31, 2000, unless otherwise indicated, and expectations of the Company held as of February 21, 2001. The Company undertakes no obligation to update this information as a result of new information or future events. 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. See the last page of this presentation for risk factors that may affect actual results. 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. 2 AMERICAN FINANCIAL HIGHLIGHTS MEDICAL SECURITY ----------------- Rx for Good Health -- Investment Considerations - Growing MedOne business - Leader in small group market - Profitable dental business - Strong systems and back office - High book value - Book value of $15.77 per share on 12/31/2000 - Tangible book value of $8.24 per share on 12/31/2000 - Effective action plans in place - Low debt to equity ratio - 18.3% 3 AMERICAN AMS OVERVIEW MEDICAL SECURITY ----------------- Rx for Good Health [Map of the United States] - Specializes in providing Current markets served: healthcare benefit plans for small-employer groups, Alabama Arizona Arkansas individuals & families Colorado Delaware Georgia Illinois Indiana Iowa - PPO model Kansas Louisiana Michigan Mississippi Missouri Nebraska - 2000 Revenues: Nevada New Mexico North Carolina $989.9 million North Dakota Ohio Oklahoma Pennsylvania South Carolina South Dakota - 516,856 medical members Tennessee Texas Utah at 12/31/2000 Virginia West Virginia Wisconsin Washington DC 4 AMERICAN AMS OVERVIEW MEDICAL SECURITY ----------------- Rx for Good Health -- Preferred Provider Organization (PPO) Model - Open access to health care providers - PPOs have gained market share over HMOs - Less litigation risk - Less potential impact from legislation 5 AMERICAN AMS OVERVIEW MEDICAL SECURITY ----------------- Rx for Good Health --Only public company exclusively focused on small-group and individual market --Average group size is 6 employees --Dedicated to Independent Agent --24-hour, world-class customer service --Efficient back office, low-cost G & A 6 AMERICAN AMS OVERVIEW MEDICAL SECURITY ----------------- Rx for Good Health -- Ongoing Action Plans - Maintain prices in line with claim costs - Rapidly expand MedOne product sales - Individuals & Families - Focus small group sales in core markets - Continue efforts to reduce drug claim costs 7 AMERICAN AMS OVERVIEW MEDICAL SECURITY ----------------- Rx for Good Health --Ongoing Action Plans (continued) - Enhance claims cost management programs - Introduce Affordable Series products - Greater member participation in medical care costs - Strengthen Specialty Business - Dental - Leverage Internet in all businesses 8 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health BUSINESSES 9 AMERICAN BUSINESSES MEDICAL SECURITY ----------------- Rx for Good Health -- Health Business - MedOne Component - MedOne Medical, and Life and STD associated with MedOne members - Small Group Component - Small Group Medical, and Dental, Life and STD associated with group members -- Specialty Business - Self-Funded and Network Revenue and Dental, Life and STD not associated with group or MedOne members -- Corporate - Revenue and Expenses not associated with the other segments 10 AMERICAN BUSINESSES MEDICAL SECURITY ----------------- Rx for Good Health --Revenue Contributions in 2000 (% of all AMS revenues) [Pie Chart] 63% Small Group 25% MedOne 9% Specialty 3% Corporate 11 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health HEALTH BUSINESS MedOne and Small Group 12 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health MedOne MedOne Medical, and Life and STD associated with MedOne members 13 AMERICAN MedOne Component MEDICAL SECURITY ----------------- Rx for Good Health -- Product for individuals and their families - No employer coverage - Self-employed -- Sold through Independent Agents -- Higher profit potential than small group - Plan features higher deductibles, copays, etc. - More flexibility in underwriting and pricing - Better risk selection 14 AMERICAN MedOne Component MEDICAL SECURITY ----------------- Rx for Good Health -- 2000 Revenues - Up 24% from 1999 -- 2000 Membership - 34% of total membership vs. 23% in 1999 15 AMERICAN MedOne Component MEDICAL SECURITY ----------------- Rx for Good Health -- Significantly increase revenues & profitability by: - Expanding number of local agents - Creating additional regional/national distribution relationships - Developing e-business efficiencies - Increasing number of e-agency relationships 16 AMERICAN MedOne Component MEDICAL SECURITY ----------------- Rx for Good Health --Revenue Contribution Growth (% of all AMS revenues) MedOne [Pie Chart] [Pie Chart] 25% MedOne 50% MedOne 2000 2003 (projected) 17 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health SMALL GROUP Small Group Medical, and Dental, Life and STD associated with group members 18 AMERICAN SMALL GROUP COMPONENT MEDICAL SECURITY ----------------- Rx for Good Health --Small-employer groups, ranging in size from 2 to 50 employees --Average group size is 6 employees -- Distribution through 17,500 Independent Agents 19 AMERICAN SMALL GROUP COMPONENT MEDICAL SECURITY ----------------- Rx for Good Health -- Increase Small Group profitability by: - Focusing on core markets - Enhancing underwriting - Developing new products -Higher deductibles, copays, etc. - Strengthening claims cost management - Providing agents with power of Internet -eAMS.com secured agent site 20 AMERICAN SMALL GROUP COMPONENT MEDICAL SECURITY ----------------- Rx for Good Health --Revenue Contribution Change (% of all AMS revenues) Small Group [Pie Chart] [Pie Chart] 63% Small Group 41% Small Group 2000 2003 (projected) 21 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health SPECIALTY BUSINESS Self-Funded and Network Revenue, and Dental, Life and STD not associated with group or MedOne members 22 AMERICAN SPECIALTY BUSINESS MEDICAL SECURITY ----------------- Rx for Good Health --Consists of: - Stand-Alone Dental Business - Owned Provider Networks leased to third parties - Self-Funded Business 23 AMERICAN SPECIALTY BUSINESS MEDICAL SECURITY ----------------- Rx for Good Health -- Increase Profitability by: - Expanding stand-alone dental - Increase sales & marketing activity - Grow non-AMS provider network members -- Selectively develop self-funded business 24 AMERICAN SPECIALTY BUSINESS MEDICAL SECURITY ----------------- Rx for Good Health --Revenue Contribution Change (% of all AMS revenues) Specialty [Pie Chart] [Pie Chart] 9% Specialty 8% Specialty 2000 2003 (projected) 25 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health TOTAL REVENUE CONTRIBUTION CHANGES 26 AMERICAN BUSINESSES MEDICAL SECURITY ----------------- Rx for Good Health --Revenue Contribution Changes (% of all AMS revenues) [Pie Chart] [Pie Chart] 63% Small Group 41% Small Group 25% MedOne 50% MedOne 9% Specialty 8% Specialty 3% Corporate 1% Corporate 2000 2003 (projected) 27 AMERICAN MEDICAL SECURITY ----------------- Rx for Good Health FINANCIAL HIGHLIGHTS 28 AMERICAN CONDENSED CONSOLIDATED STATEMENTS OF INCOME MEDICAL SECURITY (IN MILLIONS) ----------------- Rx for Good Health
Three months ended Twelve months ended December 31, December 31, ------------------ --------------------- 2000 1999 2000 1999* ------------------ --------------------- REVENUES: Insurance premiums $ 230.7 $ 262.9 $ 951.1 $ 1,056.1 Investment and other income 9.4 9.9 38.8 41.3 ------------------ --------------------- Total revenues 240.1 272.8 989.9 1,097.4 EXPENSES: Medical and other benefits 174.4 205.8 724.6 841.3 SG&A and other expenses 64.9 66.0 259.2 274.0 ------------------ --------------------- Total expenses 239.3 271.8 983.8 1,115.3 ------------------ --------------------- Pre-tax income (loss) 0.8 1.0 6.1 (17.9) After-tax income (loss) $ 0.1 $ 0.5 $ 2.7 $ (12.2) ================== ===================== EPS $ 0.01 $ 0.03 $ 0.18 $ (0.74)
* EXCLUDES NONRECURRING CHARGE 29 AMERICAN CONDENSED CONSOLIDATED BALANCE SHEETS MEDICAL SECURITY (IN MILLIONS) Rx for Good Health
December 31, 2000 1999 ------------------- ASSETS: Cash and invested assets $ 285.0 $ 293.5 Goodwill and intangibles 107.5 111.4 Other assets 79.4 98.2 -------------------- Total assets $ 471.9 $ 503.1 ==================== LIABILITIES AND SHAREHOLDERS' EQUITY: Medical and other benefits payable $ 145.3 $ 169.1 Notes payable 41.2 42.5 Other liabilities 64.2 71.2 -------------------- Total liabilities 250.7 282.8 Shareholders' equity 221.2 220.3 -------------------- Total liabilities and shareholders' equity $ 471.9 $ 503.1 ====================
30 AMERICAN OTHER FINANCIAL DATA MEDICAL SECURITY ----------------- Rx for Good Health AS OF ------------------------------- 12/31/98 12/31/99 12/31/00 ------------------------------- Book Value per Share $15.93 $14.86 $15.77 Tangible Book Value $8.95 $7.69 $8.24 per Share Debt to Equity Ratio 20.8% 18.4% 18.3% Risk-Based Capital 447% 339% 389% 31 AMERICAN FINANCIAL HIGHLIGHTS MEDICAL SECURITY ----------------- Rx for Good Health -- Projected Earnings per Share - 1Q 2001 $0.05 - Full year 2001 $0.35 - $0.45 32 AMERICAN FINANCIAL HIGHLIGHTS MEDICAL SECURITY ----------------- Rx for Good Health -- Investment Considerations - Growing MedOne business - Leader in small group market - Profitable dental business - Strong systems and back office - High book value - Book value of $15.77 per share on 12/31/2000 - Tangible book value of $8.24 per share on 12/31/2000 - Effective action plans in place - Low debt to equity ratio - 18.3% 33 AMERICAN CAUTIONARY FACTORS MEDICAL SECURITY ----------------- Rx for Good Health Risks and uncertainties that may affect future results - Inability to successfully implement the Company's business plan, attain new business sales goals (particularly for MedOne and dental products) and maintain acceptable profit margins - Rising medical costs and increased utilization of medical services and prescription drugs - Competitive practice and demand for the Company's products - Changes in the Company's relationship with key sales agents and the ability of the Company to expand its distribution network for MedOne products - Developments in health care reform and changes in insurance and health care regulations and other regulatory issues - General economic conditions affecting consumer spending and the Company's investment performance - Outcome of commercial and other litigation - Other factors referred to in the Company's reports filed with the Securities and Exchange Commission from time to time 34 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: FEBRUARY 21, 2000 AMERICAN MEDICAL SECURITY GROUP, INC. /S/ GARY D. GUENGERICH -------------------------------------------------- Gary D. Guengerich Executive Vice President & Chief Financial Officer