Event Brief of PacifiCare Health Systems Purchase of Pacific Life's Group Health Insurance BusinessConference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Dan Yarbrough, PacifiCare Health Systems, Inc., Director, IR . Howard Phanstiel, PacifiCare Health Systems, Inc., Chairman & CEO . Greg Scott, PacifiCare Health Systems, Inc., EVP & CFO . Brad Bowlus, PacifiCare Health Systems, Inc., EVP, President & CEO, PacifiCare Health Plans

OVERVIEW

Earlier this afternoon, Co. announced that PHS and Pacific Life have signed a definitive agreement whereby PHS will purchase Pacific Life's group health insurance business. After taking into account all integration costs expected to be incurred in 2005, the deal will still be accretive to PHS' shareholders in the first year, to the tune of $0.02-0.03 per share. Q&A Focus: Impacts of the transaction, AMS deal, and Medicare.

PRESENTATION SUMMARY

S1. Opening Comments (H.P.) 1. Transaction Highlights: 1. Earlier this afternoon, Co. announced that PHS and Pacific Life have signed a definitive agreement whereby PHS will purchase Pacific Life's group health insurance business. 2. PHS expects this purchase to: 1. Add up to 140,000 new small- and large-group PPO members,

which equates to a commercial membership increase of about 6%, based on Co.'s reported 09/30/2004 membership. 2. Increase commercial members more than 13% related to the recently announced acquisition of American Medical Security Group (AMS). 2. Transaction Background:

1. The purchase of Pacific Life's group health business is a

logical follow-on to the AMS acquisition, and will serve to

leverage the expanded small-group capabilities that Co. will

obtain from AMS. 2. The timing of this transaction, following so closely on the heels of the AMS acquisition, suggests that Co. has contemplated their joint integration for some time.

3. Importance of the Transaction: 1. While each acquisition stands alone with respect to its own financial merits, their combination with PHS' existing individual and small-group business, which has recently experienced rapid organic growth in its own right, now puts Co. on the map in the individual and small-group marketplace.

2. As the health-care industry continues to focus on more

affordable consumer-directed health plans such as HSA, PHS continues to think that this is where Co. will have the best

opportunities for commercial growth in the coming years. 3. The Pacific Life transaction expands both the size and scale of PHS' geographic presence, as the membership is spread over 30 states. 4. More than 55% of Pacific Life's health division revenues are generated from PHS' current eight core markets. 1. This overlap increases to more than 95% after considering a combined PHS and AMS. 2. This significant overlap will provide opportunities to extend the benefits of PHS' existing lower-cost provider networks to the members acquired from Pacific Life. 5. Because PHS has product offerings that are similar to and compatible with those offered by Pacific Life, Co. believes this transaction will allow it to offer consumers more lower-cost choices to meet their specific healthcare needs. 1. Access to Pacific Life's network of some 30,000 brokers and agents will give PHS expanded distribution capabilities for these products, including the popular SignatureFreedom plan and HSA. 2. This will also benefit Co.'s senior business, starting with Medicare supplemental insurance, then broadening to Medicare

Advantage in the eight core states, and eventually even stand-alone Medicare Part D insurance, to the extent that PHS can elect to participate in that program. 6. This purchase also further diversifies PHS' product portfolio as Co. seeks to maintain a balance between its commercial and Medicare Advantage business. 4. Outlook:

1. Based on the most recent forecasts for full-year 2004 operating results, subsequent to closing both the AMS and Pacific Life transactions, PHS would expect the pro forma portion of total GM that will come from Medicare Advantage to be around 32%. 1. This is down from an estimate of approx. 35% before the

Pacific Life transaction and 39% prior to AMS. 2. PHS also expects the Pacific Life transaction, in conjunction with the AMS acquisition, to increase the portion of total membership that comes from outside California from about 43% to about 50%. 3. While PHS continues to believe that other similar blocks of business will become available for purchase over the next five years, Co. currently intends to take a breather with respect to this type of acquisition, as it focuses on the integration phase ahead.

S2. Financial Details (G.S.) 1. Highlights: 1. As Pacific Life is not a publicly-traded co., and due to the relatively small size of the …