Disclosures Regarding Mid-West/the Alliance’s Business Relationship
Introduction
Set forth below is information concerning the Alliance for Affordable Services (the “Alliance”) and Mid-West National Life Insurance Company of Tennessee (“Mid-West”) and a description of the relationships between the two organizations.
More About the Alliance
The Alliance is a membership organization founded in 1981. The Alliance is organized under the laws of the District of Columbia and has its principal place of business at Mangrove Office Building, 17757 U.S. Highway 19, North, Suite 260, Clearwater, Florida 33764. The Alliance is governed by a board of directors, the members of which are elected annually by Members of the Alliance. Members of the Alliance are entitled to vote on the selection of members of the board of directors at the annual meeting of the Alliance. The Alliance provides a variety of benefits to its Members. Alliance Members are required to pay monetary dues. The Alliance has no direct or indirect ownership in UICI or Specialized Association Services, Inc. (“SAS").
More About Mid-West
Mid-West is a Tennessee domiciled life and health insurance company with an administrative office located in North Richland Hills, TX. Mid-West is licensed to issue health, life and annuity insurance policies to consumers in all states except Maine, New Hampshire, New York, and Vermont. Mid-West is a wholly owned subsidiary of UICI, a Delaware corporation.
UICI is a public company that files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may inspect and copy such reports, proxy statements and other information at the public reference facilities maintained by the Securities and Exchange Commission at:
| Room 1204 |
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Citicorp Center |
| Judiciary Plaza |
OR |
500 West Madison Street |
| 450 Fifth Street, N. W. |
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Chicago, IL 60661 |
| Washington, D.C. 20549 |
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You may call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the public reference facilities. This material may also be obtained from the Securities and Exchange Commission's worldwide web site at
http://www.sec.gov. Shares of UICI common stock are traded on the New York Stock Exchange under the symbol "UCI." UICI maintains a website at
www.uici.net.
Relationships Between Mid-West and Affiliates and the Alliance
The Alliance and Mid-West entered into an agreement effective September 1999, pursuant to which the Alliance has made available to its Members certain health insurance products offered by Mid-West. The agreement with Mid-West requiring the Alliance to continue as the master
policyholder and to make Mid-West insurance products available to Members of the Alliance may only be terminated by Mid-West or by the Alliance upon not less than one (1) year’s advance notice to the other party.
The salesperson that a prospective member or prospective insured speaks with about Alliance membership and Mid-West insurance products serves both as a licensed insurance agent of Mid-West and as a field representative for new Members for the Alliance, for which he or she will receive compensation. The health insurance premiums derived from the sale of health
insurance go to Mid-West and the membership dues derived from the sale of memberships go the Alliance. The salesperson acts on behalf of Mid-West (and not the Alliance) when discussing, explaining, and describing Mid-West health insurance products and premiums. The salesperson acts on behalf of the Alliance (and not Mid-West) when discussing, explaining, and
describing other Alliance benefits. The Alliance pays an affiliate of UICI for enrolling new Members and pays Mid-West for ongoing membership marketing and administrative services and for certain Alliance Member benefits obtained from Mid-West or its affiliates.
Ronald L. Jensen serves as Chairman of UICI, and he, together with members of his immediate family and trusts in which he may have an interest, holds in the aggregate approximately 16.4% of the issued and outstanding capital stock of UICI. SAS (which is controlled by Mr. Jensen's adult children) has entered into an agreement with the Alliance to provide certain administrative services, including billing, administrative, fulfillment and benefit procurement services. The Alliance pays SAS for these services. SAS has no ownership interest in
the Alliance. A subsidiary of UICI also sells new membership leads to the field representatives and video and print services to the Alliance and SAS. Neither UICI nor Mid-West has any ownership interest in SAS or in the Alliance.
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