A.M. Best Affirms Ratings and Upgrades One Rating of Universal American Financial Corp.'s Subsidiaries; Revises Outlook to Stable.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--May 20, 2004

A.M. Best Co. has affirmed the financial strength ratings of B++ (Very Good) for various Universal American Financial Corp. (Universal American) (NASDAQ: UHCO) (Rye Brook, New York) subsidiaries. The companies affected are Constitution Life Insurance Company (Texas), Pennsylvania Life Insurance Company (Pennsylvania), American Progressive Life & Health Insurance Company of New York (New York), American Pioneer Life Insurance Company (Florida) and Penncorp Life Insurance Company (Canada). Additionally, A.M. Best has affirmed the financial strength rating of B+ (Very Good) of Union Bankers Insurance Company (Union Bankers) (Texas). A.M. Best has also upgraded the financial strength rating to B++ (Very Good) from B+ (Very Good) of Pyramid Life Insurance Company (Kansas). The outlook for all ratings has been revised to stable from positive.

The revised outlook is based on Universal American's pending acquisition of Heritage Health Systems, Inc. (Heritage), a senior managed care system. Universal American is acquiring Heritage for $98 million. The acquisition will be financed by cash held at the holding company and a new credit facility. A.M. Best believes the acquisition does not put pressure on Universal American's balance sheet. However, A.M. Best does believe the acquisition is a significant event in the future direction of the organization.

The acquisition is Universal American's first venture into the Medicare Advantage market, which has distinct differences from its current Medicare supplement focus. The Heritage model, which is successfully operating in Beaumont and Houston, Texas, is expected to be expanded into other selected parts of the country over time. This leads to the uncertainties associated with new markets, which have different competitors and unique features. It will take time to see how successfully Universal American's revised strategy is executed and how smoothly Heritage is integrated into the rest of the organization. Historically, Universal American has been successful in its strategy of purchasing and integrating newly acquired companies, but those earlier acquisitions were very similar to its existing operations. A.M. Best will be monitoring the growth and any potential capital needs of future expansion plans of Universal American.

The upgrading of Pyramid Life's rating is based on A.M. Best's opinion that Pyramid Life has been fully integrated into and is core to Universal American's senior health insurance strategy.

The rating affirmation and outlook revision of Union Bankers is based on the company experiencing noticeable statutory strain over the past year since it has begun writing final expense life business.

For current Best's Ratings, independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites, please visit http://www.ambest.com/health/.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.