Fitch Ratings Upgrs Ratings Of Sierra Health Services Units.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 18, 2002

Fitch Ratings has upgraded to 'BBB' from 'BBB-' the insurer financial strength rating on the Sierra Insurance Group (SIG), which includes the following operating companies: California Indemnity Insurance Company, Commercial Casualty Insurance Company, Sierra Insurance Company of Texas, and CII Insurance Company. The Rating Outlook is Stable.

At the same time, Fitch has upgraded to 'BBB-' from 'BB+' the insurer financial strength ratings on Health Plan of Nevada (HPN) and Sierra Health & Life Insurance Company (SHL). The Rating Outlook is Positive.

The rated companies are wholly owned subsidiaries of Sierra Health Services, Inc., a publicly traded diversified managed care holding company (NYSE: SIE). The SIG companies operate in the workers' compensation insurance business in California, Nevada, Colorado, Texas and five other selected markets. HPN and SHL are core operating companies in SIE's managed care division, and provide health insurance & managed care products and services primarily in the southern Nevada market.

Today's rating actions follow the completion of Fitch's review of SIE, and reflect the considerable progress SIE has made relative to the following issues:

-- High Financial Leverage: Outstanding debt has been reduced from a high of
$283 million at June 30, 2000, to approximately $133 million at Dec. 31, 2001,
excluding the sale/leaseback financing obligation of $73 million. Debt
reduction in 2001 has primarily been driven by improved operating cash flow,
the sale of non-core assets and the restructuring of the outstanding debt
issued by CII Financial, Inc. (CII), an intermediate holding company and parent
to SIG. At year-end 2001, SIE's adjusted financial leverage was 50%.

-- Texas Operating Losses: The significant operating losses in SIE's Texas HMO
operation have been eliminated following the company's decision to exit the
Texas HMO market. As of Jan. 1, 2002, SIE had approximately 5,400 members
remaining in the Texas HMO, which will be shut down in April 2002. Fitch
believes that SIE is adequately reserved for the run out of the existing
business.

-- Refinance Risk: CII successfully completed an exchange offer for $42 million
of the $47 million of outstanding subordinated debentures that were due in
September 2001. Under the terms of the offer, CII purchased approximately $27
million principal amount of old debentures for cash and issued approximately
$15 million principal amount of new 9.5% coupon senior debentures due September
2004. The remaining $5 million of old debentures were fully paid at maturity.

The rating on SIG continues to reflect good balance sheet fundamentals with strong asset quality and good capitalization. In 2001, operating performance at SIG was in line with expectations due to significant premium price increases taken in 2000 and 2001. While the company did experience negative reserve development in 2001, recent accident year results have been better than peers. The rating also reflect the company's concentrated exposure to the California workers' compensation market, which accounted for 72% of direct written premiums in 2001. SIG has taken significant pricing action in the California market, and is making good progress expanding into the Nevada market, where the company is getting favorable pricing.

The ratings on HPN and SHL continue to reflect SIE's dominant market share in the southern Nevada health care market, with strong and profitable competitive positions in the Medicare risk and commercial segments. Statutory capital levels at HPN and SHL, which were negatively impacted by the capital needs of the parent company to fund the operating losses at the Texas health plan operations and reduce outstanding debt, did improve in 2001 in line with Fitch expectations. The Positive Rating Outlook reflects Fitch's expectation that a continuation of stable operating performance, additional improvements in statutory capital levels, and further progress reducing outstanding debt at the parent level will likely lead to another upgrade within the next year.

SIE is a publicly held, diversified managed care holding company based in Las Vegas, NV, with operations primarily in managed care, health insurance, and workers' compensation insurance. HPN is a for-profit, federally qualified HMO. HPN operates as a mixed group/network model HMO and was organized in 1981 in the state of Nevada. SHL is a stock life insurance company. Members of the SIG Intercompany Reinsurance Pool are: California Indemnity Insurance Co., Commercial Casualty Insurance Co., CII Insurance Co. and Sierra Insurance Company of Texas.

Entity/Issue/Type/                       Action    Rating/Outlook

California Indemnity Insurance Co.
Commercial Casualty Insurance Co.
CII Insurance Co.
Sierra Insurance Company of Texas
--Insurer financial strength             Upgraded  'BBB'/Stable.

Health Plan of Nevada
Sierra Health & Life Insurance Company
--Insurer financial strength             Upgraded  'BBB-'/Positive.