SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 2002
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UICI
(Exact name of registrant as specified in its charter)
Delaware 001-14953 75-2044750
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(State or other jurisdiction of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 392-6700
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Not Applicable
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
As previously disclosed, in December 1999 and February 2000,
the Company and certain of its executive officers were named as
defendants in three securities class action lawsuits alleging, among
other things, that the Company's periodic filings with the SEC
contained untrue statements of material facts and/or failed to disclose
all material facts relating to the condition of the Company's credit
card business, in violation of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder. The three cases were
subsequently consolidated as Herbert R. Silver, et al. v. UICI et al,
which is pending in U.S. District Court for the Northern District of
Texas. Plaintiffs purport to represent a class of persons who purchased
UICI common stock from February 10,1999 through December 9, 1999.
Following a mediation held on May 23, 2002, the parties to the
Herbert R. Silver, et al. v. UICI et al securities class action
litigation have entered into a memorandum of understanding, pursuant to
which the parties have agreed, without admitting or denying liability
and provided that certain conditions are satisfied, to fully and
finally resolve the litigation. The Company believes that the terms of
the settlement as contemplated by the memorandum of understanding will
not have a material adverse effect upon the financial condition or
results of operations of the Company. Funding of the settlement amount
was completed on July 15, 2002 in accordance with the terms of the
memorandum of agreement. Final settlement is subject to execution and
delivery of definitive settlement and release documentation (the terms
of which have not yet been negotiated), completion of confirmatory
discovery, preliminary approval by the U.S. District Court of the terms
of the settlement, notice of settlement to the plaintiff class, and
final, binding, and non-appealable approval by the U.S. District Court.
There can be no assurance that these conditions will in fact be
satisfied.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this report are "forward-looking statements" within the
meaning of the Private Securities Litigation Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially from those included in the forward-looking
statements. These forward-looking statements involve risks and uncertainties
including, but not limited to, the following: changes in general economic
conditions, including the performance of financial markets, and interest rates;
competitive, regulatory or tax changes that affect the cost of or demand for the
Company's products; health care reform; the ability to predict and effectively
manage claims related to health care costs; and reliance on key management and
adequacy of claim liabilities.
The Company's future results will depend in large part on accurately predicting
health care costs incurred on existing business and upon the Company's ability
to control future health care costs through product and benefit design,
underwriting criteria, utilization management and negotiation of favorable
provider contracts. Changes in mandated benefits, utilization rates, demographic
characteristics, health care practices, provider consolidation, inflation, new
pharmaceuticals/technologies, clusters of high-cost cases, the regulatory
environment and numerous other factors are beyond the control of any health plan
provider and may adversely affect the Company's ability to predict and control
health care costs and claims, as well as the Company's financial condition,
results of operations or cash flows. Periodic renegotiations of hospital and
other provider contracts coupled with continued consolidation of physician,
hospital and other provider groups may result in increased health care costs and
limit the Company's ability to negotiate favorable rates. Recently, large
physician practice management companies have experienced extreme financial
difficulties, including bankruptcy, which may subject the Company to increased
credit risk related to provider groups and cause the Company to incur
duplicative claims expense. In addition,
the Company faces competitive pressure to contain premium prices. Fiscal
concerns regarding the continued viability of government-sponsored programs such
as Medicare and Medicaid may cause decreasing reimbursement rates for these
programs. Any limitation on the Company's ability to increase or maintain its
premium levels, design products, implement underwriting criteria or negotiate
competitive provider contracts may adversely affect the Company's financial
condition or results of operations.
The Company's Academic Management Services Corp. business could be adversely
affected by changes in the Higher Education Act or other relevant federal or
state laws, rules and regulations and the programs implemented thereunder may
adversely impact the education credit market. In addition, existing legislation
and future measures by the federal government may adversely affect the amount
and nature of federal financial assistance available with respect to loans made
through the U.S. Department of Education. Finally the level of competition
currently in existence in the secondary market for loans made under the Federal
Loan Programs could be reduced, resulting in fewer potential buyers of the
Federal Loans and lower prices available in the secondary market for those
loans.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit 99.1 Press release distributed on July 22, 2002 disclosing
preliminary agreement to settle Herbert R. Silver, et al. v.
UICI et al securities class action litigation
SIGNATURES
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 hereunto duly authorized.
UICI
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(Registrant)
Date July 22, 2002 By /s/ Mark D. Hauptman
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Mark D. Hauptman
Vice President and Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release distributed on July 22, 2002 disclosing
preliminary agreement to settle Herbert R. Silver, et al. v.
UICI et al securities class action litigation