Sierra Health Services Closes Transaction to Sell Its Workers' Compensation Subsidiary.

Business Editors/Health/Medical Writers

LAS VEGAS--(BUSINESS WIRE)--April 1, 2004

Sierra Health Services Inc. (NYSE:SIE) announced that effective March 31, 2004, and after receipt of applicable regulatory approval, it has closed the transaction to sell its workers' compensation subsidiary, California Indemnity Insurance Co. Inc. (CIIC) to Folksamerica Holding Co. Inc. Folksamerica is a subsidiary of White Mountains Insurance Group Ltd. (NYSE:WTM), a Bermuda-based insurance holding company. CIIC and its subsidiaries were engaged in writing workers' compensation insurance in nine western and mid-western states. CIIC's subsidiaries include Commercial Casualty Insurance Co., Sierra Insurance Company of Texas and CII Insurance Co.

Sierra received $13.7 million in cash at the closing, subject to potential adjustments of the closing date balance sheet. The deal also includes a contingent payment of up to $62.0 million, plus accrued interest, payable to Sierra in January of 2010. The contingent payment can be increased or decreased depending on favorable or adverse claim and expense development from the date of closing through Dec. 31, 2009, and other offsets based on certain agreements between the parties.

As of the closing, a third-party claims administrator (TPA), GAB Robins, has been engaged to administer claims for a period of 15 years. The GAB Robins Group of companies provides a worldwide comprehensive network of loss adjusting, third-party administration and managed care services. Under the terms of this agreement, GAB Robins will provide certain claims services for CIIC and its related subsidiaries. Pursuant to the terms of the agreement among GAB Robins, Sierra and Folksamerica, Sierra will be responsible for this administrator's costs and for providing certain transition services for varying terms to CIIC. Folksamerica will reimburse Sierra for these costs from an account consisting of the unallocated loss adjustment expense (ULAE) reserves and accrued liabilities as of the closing, a percentage of premiums earned after the closing, plus accrued interest on the ULAE reserves.

"We are very pleased to have closed this transaction with Folksamerica," said Anthony M. Marlon, M.D., chairman and chief executive officer of Sierra. "The sale of our workers' compensation business allows us to direct our attention to our core managed care operations, which make a significant contribution to our profitability."

Sierra's Nevada-based workers' compensation TPA, Nevada Administrators, will continue to operate as a subsidiary of the parent company and is not included as part of the Folksamerica transaction.

Sierra Health Services Inc. is a Las Vegas-based diversified health care services company that operates health maintenance organizations, indemnity insurers, military health programs, preferred provider organizations and multi-specialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. For more information, visit the company's Web site at www.sierrahealth.com.

Folksamerica is a multi-line broker market reinsurer and a wholly owned subsidiary of White Mountains Insurance Group Ltd. With $1 billion in capital, the company ranks among the top U.S. broker market reinsurance companies. Additional items of interest are available at White Mountains' Web site located at www.whitemountains.com.

Statements in this news release that are not historical facts are forward looking and based on management's projections, assumptions and estimates; actual results may vary materially. Forward-looking statements are subject to certain risks and uncertainties, which include but are not limited to: 1) potential adverse changes in government regulations, contracts and programs, including TRICARE, Medicare, Medicaid and legislative proposals to eliminate or reduce ERISA pre-emption of state laws that would increase potential managed care litigation exposure; 2) competitive forces that may affect pricing, enrollment and benefit levels; 3) unpredictable medical costs, malpractice exposure, reinsurance costs and inflation; 4) impact of economic conditions; 5) changes in healthcare and workers' compensation reserves; and 6) our failure to obtain an extension on the Medicare Social HMO contract. Further factors concerning financial risks and results may be found in documents filed with the Securities and Exchange Commission and which are incorporated herein by reference.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Sierra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Sierra or its business or operations. Sierra assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.