Cobalt Corporation & American Medical Security Group Announce Plans For Share Repurchase by AMS; Secondary Public Offering of AMS Shares by Cobalt.

Business Editors

MILWAUKEE--(BUSINESS WIRE)--March 20, 2002

Cobalt Corporation (NYSE:CBZ) and American Medical Security Group, Inc. (NYSE: AMZ) (AMS) announced today that they have entered into an agreement by which AMS will repurchase 1,400,000 of its shares from Cobalt for $18.2 million or $13.00 per share. In addition, Cobalt Corporation has announced that it plans to sell at least 3,000,000 of its AMS shares in an underwritten secondary offering.

Currently, Cobalt Corporation, through its wholly owned subsidiary, Blue Cross & Blue Shield United of Wisconsin, owns 6,309,525, or approximately 45%, of the outstanding AMS shares. Following the repurchase, Cobalt will own 4,909,525, or approximately 39%, of the approximately 12,555,000 then outstanding AMS shares. Assuming a successful secondary offering by Cobalt, if the minimum of 3,000,000 AMS shares were sold, Cobalt would own approximately 1,909,000 shares, or approximately 15% of the approximately 12,555,000 shares then outstanding.

According to AMS, the share repurchase will require no additional financing. The share repurchase is expected to close promptly following the receipt of necessary consents.

Cobalt expects the secondary public offering of its AMS shares will take place in the second quarter of 2002.

"This agreement is in the best interest of both companies," said Thomas R. Hefty, Cobalt's President, Chairman and CEO. "However, AMS is no longer a strategic asset of Cobalt, and this agreement allows us to reduce our position in an orderly fashion."

Samuel V. Miller, AMS Chairman, President & CEO, stated, "We believe these transactions are in the best long-term interest of all AMS shareholders."

As part of the agreement, Cobalt Corporation will withdraw the slate of directors it had nominated for election to AMS' board. In addition, the AMS board of directors has appointed Thomas R. Hefty and Kenneth L. Evason, nominated by Cobalt, to serve as directors on the AMS board of directors, effective as of the date the share repurchase is closed.

Cobalt has agreed to certain standstill provisions and to vote in favor of the slate of directors nominated by the AMS board of directors, and has also agreed not to present any new AMS shareholder proposals or nominate for election to the company's board of directors any additional directors for a period as specified in the agreement.

Cobalt Corporation is the Blue Cross and Blue Shield licensee for the state of Wisconsin. It is one of the leading, publicly traded health care companies in the nation, offering a diverse portfolio of complementary insurance and managed care products to employer, individual, insurer and government customers. Headquartered in Milwaukee and formed by the combination of Blue Cross & Blue Shield United of Wisconsin and United Wisconsin Services, Inc., Cobalt Corporation serves 2.9 million lives in 50 states.

American Medical Security Group, through its operating subsidiaries, markets health care benefits and insurance products to small businesses, families and individuals. Insurance products of American Medical Security Group are underwritten by United Wisconsin Life Insurance Company. The company serves customers nationwide through partnerships with professional, independent agents and quality health care providers. It provides medical and dental coverage for 557,716 members.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the shares nor shall there be any sale of the shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Cautionary Statement: This release contains forward-looking statements with respect to the financial condition, results of operations and business of Cobalt Corporation. Such forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such forward-looking statements. Factors that may cause actual results or events to differ materially from those contemplated by such forward-looking statements include rising health care costs, business conditions, and competition in the managed care industry, developments in health care reform and other regulatory issues.