XNYS:UAM Universal American Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

XNYS:UAM Fair Value Estimate
Premium
XNYS:UAM Consider Buying
Premium
XNYS:UAM Consider Selling
Premium
XNYS:UAM Fair Value Uncertainty
Premium
XNYS:UAM Economic Moat
Premium
XNYS:UAM Stewardship
Premium
 

Use these links to rapidly review the document
TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q

(Mark One)    

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission file Number: 001-35149



UNIVERSAL AMERICAN CORP.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  27-4683816
(I.R.S. Employer
Identification No.)

Six International Drive, Suite 190, Rye Brook, New York 10573
(Address of principal executive offices and zip code)

(914) 934-5200
(Registrant's telephone number, including area code)



         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o   Accelerated filer ý   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

Class of Common Stock   Outstanding at July 20, 2012
Non-voting, par value $0.01 per share
Voting, par value $0.01 per share
  3,300,000 shares
85,155,449 shares

   


Table of Contents


TABLE OF CONTENTS

 
  Item   Description   Page  

PART I

       

Financial Information

     

    1  

Financial Statements:

     

       

Consolidated Balance Sheets

    3  

       

Consolidated Statements of Comprehensive Income—Three Months

    4  

       

Consolidated Statements of Comprehensive Income (Loss)—Six Months

    5  

       

Consolidated Statements of Stockholders' Equity

    6  

       

Consolidated Statements of Cash Flows

    7  

       

Notes to Consolidated Financial Statements

    8  

    2  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    30  

    3  

Quantitative and Qualitative Disclosures About Market Risk

    44  

    4  

Controls and Procedures

    45  

PART II

       

Other Information

     

    1  

Legal Proceedings

    46  

    1A  

Risk Factors

    46  

    2  

Unregistered Sales of Equity Securities and Use of Proceeds

    46  

    3  

Defaults Upon Senior Securities

    46  

    4  

Mine Safety Disclosures

    46  

    5  

Other Information

    46  

    6  

Exhibits

    47  

       

Signatures

    48  

1


Table of Contents

        As used in this quarterly report on Form 10-Q, except as otherwise indicated, references to the "Company," "UAM," "we," "our," and "us" are to (i) Universal American Corp., a Delaware corporation (formerly known as Universal American Spin Corp., "New Universal American") and its subsidiaries following the closing of the sale of our Part D business on April 29, 2011 (the "Part D Transaction") and (ii) Universal American Corp., a New York corporation (now known as Caremark Ulysses Holding Corp., "Old Universal American") and its subsidiaries prior to the closing of the Part D Transaction on April 29, 2011.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

        This report, including, without limitation, the information set forth or incorporated by reference under Part II, Item 1A "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other risks and uncertainties set forth in this report and oral statements made from time to time by our executive officers contains "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. Statements in this report that are not historical facts are hereby identified as forward-looking statements and are intended to be covered by the safe harbor provisions of the PSLRA. They can be identified by the use of the words "believe," "expect," "predict," "project," "potential," "estimate," "anticipate," "should," "intend," "may," "will" and similar expressions or variations of such words, or by discussion of future financial results and events, strategy or risks and uncertainties, trends and conditions in the Company's business and competitive strengths, all of which involve risks and uncertainties.

        Where, in any forward-looking statement, we or our management expresses an expectation or belief as to future results or actions, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Our actual results may differ materially from our expectations, plans or projections. We warn you that forward-looking statements are only predictions and estimates, which are inherently subject to risks, trends and uncertainties, many of which are beyond our ability to control or predict with accuracy and some of which we might not even anticipate. We give no assurance that we will achieve our expectations and we do not assume responsibility for the accuracy and completeness of the forward-looking statements. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements as a result of many factors, including the risk factors described or incorporated by reference in Part II, Item 1A of this report. We caution readers not to place undue reliance on these forward-looking statements that speak only as of the date made.

        We undertake no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in these forward-looking statements are reasonable at the time made, any or all of the forward-looking statements contained in this report and in any other public statements that are made may prove to be incorrect. This may occur as a result of inaccurate assumptions as a consequence of known or unknown risks and uncertainties. All of the forward- looking statements are qualified in their entirety by reference to the factors discussed or incorporated by reference under the caption "Risk Factors" under Part II, Item 1A of this report. We caution that these risk factors may not be exhaustive. We operate in a continually changing business environment that is highly complicated, regulated and competitive and new risk factors emerge from time to time. We cannot predict these new risk factors, nor can we assess the impact, if any, of the new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur. You should carefully read this report and the documents that we incorporate by reference in this report in its entirety. It contains information that you should consider in making any investment decision in any of our securities.

2


Table of Contents


PART I

ITEM 1—FINANCIAL STATEMENTS


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares)

 
  June 30,
2012
  December 31,
2011
 
 
  Unaudited
  As adjusted
 

ASSETS

             

Investments:

             

Fixed maturities available for sale, at fair value (amortized cost: 2012, $1,114,283; 2011, $1,200,674)

  $ 1,152,460   $ 1,222,948  

Short-term investments

    26,977      

Other invested assets

    2,634     1,561  
           

Total investments

    1,182,071     1,224,509  

Cash and cash equivalents

    296,173     63,539  

Accrued investment income

    8,816     10,297  

Deferred policy acquisition costs

    104,453     106,391  

Reinsurance recoverables—life

    548,239     559,274  

Reinsurance recoverables—health

    118,645     122,269  

Due and unpaid premiums

    42,492     32,510  

Present value of future profits and other amortizing intangible assets

    42,953     17,401  

Goodwill and other indefinite lived intangible assets

    247,210     77,459  

Income taxes receivable

    23,277     51,175  

Other assets

    109,249     88,572  
           

Total assets

  $ 2,723,578   $ 2,353,396  
           

LIABILITIES AND STOCKHOLDERS' EQUITY

             

LIABILITIES

             

Reserves and other policy liabilities—life

  $ 553,421   $ 561,889  

Reserves for future policy benefits—health

    418,427     417,990  

Policy and contract claims—health

    163,746     173,674  

Premiums received in advance

    141,994     17,072  

Series A mandatorily redeemable preferred shares

    40,000     40,000  

Loan payable

    139,119      

Amounts due to reinsurers

    7,455     9,204  

Deferred income taxes payable

    30,611     34,709  

Other liabilities

    153,113     145,723  
           

Total liabilities

    1,647,886     1,400,261  
           

Commitments and contingencies (Note 9)

             

STOCKHOLDERS' EQUITY

             

Preferred stock (Authorized: 40 million shares)

         

Common stock—voting (Authorized: 400 million shares; issued and outstanding: 2012, 85.2 million shares; 2011, 78.2 million shares)

    852     782  

Common stock—non-voting (Authorized: 60 million shares; issued and outstanding: 3.3 million shares)

    33     33  

Additional paid-in capital

    827,092     738,029  

Accumulated other comprehensive income

    19,107     11,166  

Retained earnings

    228,608     203,125  
           

Total stockholders' equity

    1,075,692     953,135  
           

Total liabilities and stockholders' equity

  $ 2,723,578   $ 2,353,396  
           

   

See Notes to unaudited Consolidated Financial Statements.

3


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended June 30, 2012 and 2011

(Unaudited)

(in thousands, per share amounts in dollars)

 
  2012   2011  
 
   
  As adjusted
 

Revenues:

             

Net premium and policyholder fees earned

  $ 489,128   $ 559,101  

Net investment income

    10,536     11,878  

Fee and other income

    41,048     4,664  

Net realized gain on investments

    1,350     1,991  
           

Total revenues

    542,062     577,634  
           

Benefits, claims and expenses:

             

Claims and other benefits

    407,616     459,641  

Change in deferred acquisition costs

    654     517  

Amortization of present value of future profits

    2,226     1,129  

Commissions

    11,178     14,790  

Reinsurance commissions and expense allowances

    1,602     1,550  

Interest expense

    1,751     582  

Other operating costs and expenses

    108,482     92,650  
           

Total benefits, claims and expenses

    533,509     570,859  
           

Income from continuing operations before income taxes

    8,553     6,775  

Provision for income taxes

    3,901     3,064  
           

Income from continuing operations

    4,652     3,711  
           

Discontinued operations:

             

Income from discontinued operations, net of income taxes

        550  

Expenses of transactions, net of income taxes

        (9,397 )
           

Loss from discontinued operations

        (8,847 )
           

Net income (loss)

  $ 4,652   $ (5,136 )
           

Earnings (loss) per common share:

             

Basic:

             

Continuing operations

  $ 0.05   $ 0.05  

Discontinued operations

        (0.11 )
           

Net income (loss)

  $ 0.05   $ (0.06 )
           

Diluted:

             

Continuing operations

  $ 0.05   $ 0.05  

Discontinued operations

        (0.11 )
           

Net income (loss)

  $ 0.05   $ (0.06 )
           

Comprehensive income

  $ 8,573   $ 9,685  
           

Weighted average shares outstanding:

             

Weighted average common shares outstanding

    87,619     79,792  

Less weighted average treasury shares

        (1,083 )
           

Basic weighted shares outstanding

    87,619     78,709  

Weighted average common equivalent of preferred shares outstanding

        1,310  

Effect of dilutive securities

    1     195  
           

Diluted weighted shares outstanding

    87,620     80,214  
           

   

See Notes to unaudited Consolidated Financial Statements.

4


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

(in thousands, per share amounts in dollars)

 
  2012   2011  
 
   
  As adjusted
 

Revenues:

             

Net premium and policyholder fees earned

  $ 985,769   $ 1,139,266  

Net investment income

    21,791     24,980  

Fee and other income

    57,995     6,072  

Net realized gain on investments

    8,261     1,996  
           

Total revenues

    1,073,816     1,172,314  
           

Benefits, claims and expenses:

             

Claims and other benefits

    809,632     948,877  

Change in deferred acquisition costs

    1,938     2,394  

Amortization of present value of future profits

    3,647     2,301  

Commissions

    22,825     33,494  

Reinsurance commissions and expense allowances

    3,425     (1,645 )

Interest expense

    2,936     582  

Other operating costs and expenses

    186,330     179,332  
           

Total benefits, claims and expenses

    1,030,733     1,165,335  
           

Income from continuing operations before income taxes

    43,083     6,979  

Provision for income taxes

    17,671     2,006  
           

Income from continuing operations

    25,412     4,973  
           

Discontinued operations:

             

Loss from discontinued operations, net of income taxes

        (31,348 )

Expenses of transactions, net of income taxes

        (10,524 )
           

Loss from discontinued operations

        (41,872 )
           

Net income (loss)

  $ 25,412   $ (36,899 )
           

Earnings (loss) per common share:

             

Basic:

             

Continuing operations

  $ 0.30   $ 0.07  

Discontinued operations

        (0.53 )
           

Net income (loss)

  $ 0.30   $ (0.46 )
           

Diluted:

             

Continuing operations

  $ 0.30   $ 0.06  

Discontinued operations

        (0.52 )
           

Net income (loss)

  $ 0.30   $ (0.46 )
           

Comprehensive income (loss)

  $ 33,353   $ (22,237 )
           

Weighted average shares outstanding:

             

Weighted average common shares outstanding

    85,531     78,777  

Less weighted average treasury shares

        (2,095 )
           

Basic weighted shares outstanding

    85,531     76,682  

Weighted average common equivalent of preferred shares outstanding

        2,768  

Effect of dilutive securities

    223     585  
           

Diluted weighted shares outstanding

    85,754     80,035  
           

   

See Notes to unaudited Consolidated Financial Statements.

5


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

(in thousands)

 
   
  Common Stock    
  Accumulated
Other
Comprehensive
(Loss) Income
   
   
   
 
 
  Preferred
Stock
Series A
  Additional
Paid-in
Capital
  Retained
Earnings
  Treasury
Stock
   
 
 
  Voting   Non-Voting   Total  

2011

                                                 

Balance at January 1, 2011, as previously reported

  $ 42   $ 786   $   $ 801,155   $ (2,469 ) $ 734,598   $ (31,418 ) $ 1,502,694  

Adoption of ASU 2010-26

                        (32,544 )       (32,544 )
                                   

Balance at January 1, 2011, as adjusted

    42     786         801,155     (2,469 )   702,054     (31,418 )   1,470,150  

Net loss

                          (36,899 )       (36,899 )

Other comprehensive income

                    14,662             14,662  

Changes in connection with the Part D Transaction:

                                                 

Separation from Old Universal American

                        (440,868 )       (440,868 )

Conversion of Series A Preferred Stock

    (42 )   9     33                      

Settlement of equity awards to employees and directors

          15           (25,032 )         (9,685 )         (34,702 )

Treasury shares retired

          (34 )         (35,429 )       (7,023 )   42,486      

Other activity:

                                                 

Net issuance of common stock

          6           4,570                       4,576  

Stock-based compensation

                      1,891                       1,891  

Treasury shares purchased, at cost

                                        (10,821 )   (10,821 )

Treasury shares reissued

                      (76 )               (247 )   (323 )

Dividends to stockholders

                        104         104  
                                   

Balance at June 30, 2011

  $   $ 782   $ 33   $ 747,079   $ 12,193   $ 207,683   $   $ 967,770  
                                   

2012

                                                 

Balance at January 1, 2012, as adjusted

  $   $ 782   $ 33   $ 738,029   $ 11,166   $ 203,125   $   $ 953,135  

Net income

                        25,412         25,412  

Other comprehensive income

                    7,941             7,941  

Net issuance of common stock

        5         5,994                 5,999  

Issuance of shares in connection with the acquisition of APS Healthcare

        65         76,688                 76,753  

Stock-based compensation

                6,381                 6,381  

Dividends to stockholders

                        71         71  
                                   

Balance at June 30, 2012

  $   $ 852   $ 33   $ 827,092   $ 19,107   $ 228,608   $   $ 1,075,692  
                                   

   

See Notes to unaudited Consolidated Financial Statements.

6


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

(in thousands)

 
  2012   2011  
 
   
  As adjusted
 

Operating activities:

             

Net income (loss)

  $ 25,412   $ (36,899 )

Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities, net of balances acquired:

             

Loss from discontinued operations

        41,872  

Deferred income taxes

    1,356     3,070  

Realized gains on investments

    (8,261 )   (1,996 )

Amortization of present value of future profits

    3,647     2,301  

Amortization of debt issuance costs

    483     31  

Net amortization of bond premium

    2,875     4,005  

Depreciation expense

    4,658     5,217  

Changes in operating assets and liabilities:

             

Deferred policy acquisition costs

    1,938     2,393  

Reserves and other policy liabilities—life

    (8,468 )   (187,980 )

Reserves for future policy benefits—health

    (3,250 )   (14,641 )

Policy and contract claims—health

    (18,401 )   (88,726 )

Reinsurance balances

    12,910     218,500  

Due and unpaid/advance premium, net

    114,940     (52,847 )

Income taxes payable/receivable

    24,508     (86,441 )

Other, net

    4,975     (3,574 )
           

Cash provided by (used for) operating activities from continuing operations

    159,322     (195,715 )

Cash used for operating activities from discontinued operations

        (176,400 )
           

Cash provided by (used for) operating activities

    159,322     (372,115 )
           

Investing activities:

             

Proceeds from sale, maturity, call, paydown or redemption of fixed maturity investments

    858,036     718,527  

Cost of fixed maturity investments acquired

    (766,258 )   (510,517 )

Change in short-term investments

    (26,977 )    

Purchase of business, net of cash acquired

    (137,747 )    

Cash received at closing of Part D Transaction

        20,504  

Purchase of fixed assets

    (4,213 )   (3,899 )

Other investing activities

    18,308     5,376  
           

Cash (used for) provided by investing activities from continuing operations

    (58,851 )   229,991  

Cash used for investing activities from discontinued operations

        (87,863 )
           

Cash (used for) provided by investing activities

    (58,851 )   142,128  
           

Financing activities:

             

Net proceeds from issuance of common and preferred stock, net of tax effect

    5,999     4,576  

Cost of treasury stock purchases

        (11,069 )

Dividends paid to stockholders

    (13,514 )   (209 )

Principal payment on loan payable

    (10,881 )    

Proceeds from the issuance of loan payable

    150,000      

Settlement of equity awards to employees and directors

    6,381     (33,545 )

Issuance of mandatorily redeemable preferred stock

        40,000  

Payment of debt issue costs

    (5,822 )   (1,103 )

Contributions to discontinued operations

        (36,015 )
           

Cash provided by (used for) financing activities from continuing operations

    132,163     (37,365 )

Cash provided by financing activities from discontinued operations

        224,956  
           

Cash provided by financing activities

    132,163     187,591  
           

Net increase (decrease) in cash and cash equivalents

    232,634     (42,396 )

Less: net increase in cash and cash equivalents from discontinued operations

        39,307  
           

Net increase (decrease) in cash and cash equivalents from continuing operations

    232,634     (3,089 )

Cash and cash equivalents of continuing operations at beginning of period

    63,539     23,224  
           

Cash and cash equivalents of continuing operations at end of period

  $ 296,173   $ 20,135  
           

   

See Notes to unaudited Consolidated Financial Statements.

7


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND COMPANY BACKGROUND

        Except as otherwise indicated, references to the "Company," "UAM," "we," "our," and "us" are to (i) Universal American Corp., a Delaware corporation (formerly known as Universal American Spin Corp., "New Universal American") and its subsidiaries following the closing of the sale of our Part D business on April 29, 2011 and (ii) Universal American Corp., a New York corporation (now known as Caremark Ulysses Holding Corp., "Old Universal American") and its subsidiaries prior to the closing of the Part D Transaction on April 29, 2011.

        New Universal American is a specialty health and life insurance holding company with an emphasis on providing a broad array of health insurance and managed care products and services to the growing senior population. Collectively, our health plans and insurance company subsidiaries are licensed to sell Medicare Advantage products, life, accident and health insurance and annuities in all fifty states and the District of Columbia. We currently sell Medicare Coordinated Care Plan products, which we call HMOs, Medicare coordinated care products built around contracted networks of providers, which we call PPOs, Medicare Advantage private fee-for-service products, known as PFFS Plans. We discontinued marketing and soliciting Traditional insurance products, consisting of Medicare supplement products, fixed benefit accident and sickness insurance and senior life insurance after June 1, 2012.

        In 2011, Universal American formed a new subsidiary, Collaborative Health Systems, or CHS, to work with physicians and other healthcare professionals to form Accountable Care Organizations, or ACOs, under the Medicare Shared Savings Program. Nine of our ACOs were approved for participation in the program by the Centers for Medicare & Medicaid Services, effective April 1, 2012, with an additional seven ACOs approved effective July 1, 2012. We estimate that these sixteen ACOs currently include approximately 1,700 participating physicians covering approximately 150,000 Original Medicare beneficiaries covering portions of eleven States both within and outside our current Medicare Advantage footprint, including Southeast Texas and upstate New York. CHS will provide these ACOs with care coordination, analytics and reporting, technology and other administrative capabilities to enable participating physicians to deliver better care, improved health and lower healthcare costs for their Medicare fee-for-service patients. CHS is also working with additional physician groups and other healthcare professionals to form new ACOs to participate in the Shared Savings Program's January 1, 2013 start date.

        On March 2, 2012, we completed our acquisition of APS Healthcare, Inc. ("APS Healthcare"), a provider of specialty healthcare solutions primarily to Medicaid Agencies. For further discussion of this transaction, see Note 4, Business Combinations.

        New Universal American, a Delaware corporation, was formed on December 22, 2010 as a wholly-owned subsidiary of Old Universal American. On December 30, 2010, Old Universal American entered into agreements consisting of: (i) an agreement and plan of merger, or Merger Agreement, with CVS Caremark Corporation, or CVS Caremark, and Ulysses Merger Sub, L.L.C., an indirect wholly-owned subsidiary of CVS Caremark or Merger Sub, to provide for the purchase of Old Universal American's Medicare Part D Business by CVS Caremark for approximately $1.4 billion through the merger of Merger Sub with and into Old Universal American, with Old Universal American continuing as the surviving corporation and a wholly-owned subsidiary of CVS Caremark and (ii) a separation agreement, or Separation Agreement, with New Universal American, to provide for the separation of Old Universal American's Medicare Part D Business from its remaining businesses, which included the

8


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

1. ORGANIZATION AND COMPANY BACKGROUND (Continued)

Medicare Advantage and Traditional Insurance businesses. The sale of the Medicare Part D Business to CVS Caremark and related transactions are referred to as the "Part D Transaction." Prior to the closing of the Part D Transaction, New Universal American conducted no business activities.

        On April 29, 2011, the parties consummated the Part D Transaction and shareholders of Old Universal American received $14.00 in cash and one share of our common stock for each share owned by them. At the closing of the Part D Transaction, Old Universal American separated all of its businesses other than its Medicare Part D Business, transferred those businesses to the Company, became a wholly-owned subsidiary of CVS Caremark, changed its name to Caremark Ulysses Holding Corp., and de-registered its shares with the Securities and Exchange Commission and de-listed its shares on the New York Stock Exchange (NYSE). The net assets transferred to CVS Caremark at the closing of the Part D Transaction amounted to $440.9 million and were recorded as an adjustment to retained earnings.

        At the closing of the Part D Transaction, the Company changed its name from Universal American Spin Corp. to Universal American Corp. and issued $40.0 million of Series A Preferred Stock. Its shares began trading on the NYSE under the ticker symbol "UAM" on May 2, 2011. The Company now owns the businesses and assets that previously comprised Old Universal American's Senior Managed Care—Medicare Advantage and Traditional Insurance segments and certain portions of the Corporate & Other segment.

        The Part D Transaction is accounted for as a reverse spin-off and historical financial statements of Old Universal American will be used as the basis for our historical financial statements for purposes of our ongoing Securities and Exchange Commission filings with the Medicare Part D Business of Old Universal American reclassified to discontinued operations.

2. BASIS OF PRESENTATION

        We have prepared the accompanying Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, for interim reporting in accordance with Article 10 of the Securities and Exchange Commission's Regulation S-X. Accordingly, they do not include all of the disclosures normally required by U.S. GAAP or those normally made in an annual report on Form 10-K. For the insurance and HMO subsidiaries, U.S. GAAP differs from statutory accounting practices prescribed or permitted by regulatory authorities. We have eliminated all material intercompany transactions and balances. The interim financial information in this report is unaudited, but in the opinion of management, includes all adjustments, including normal, recurring adjustments necessary to present fairly the financial position and results of operations for the periods reported. The results of operations for the three months and six months ended June 30, 2012 and 2011 are not necessarily indicative of the results to be expected for the full year.

        Use of Estimates:    The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported by us in our Consolidated Financial Statements and the accompanying Notes. Critical accounting policies require significant subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates are based on information available at the time the estimates are made, as well as anticipated future events. Actual results could differ

9


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2. BASIS OF PRESENTATION (Continued)

materially from these estimates. We periodically evaluate our estimates, and as additional information becomes available or actual amounts become determinable, we may revise the recorded estimates and reflect the revisions in operating results. In our judgment, the accounts involving estimates and assumptions that are most critical to the preparation of our financial statements are policy related liabilities and expense recognition, deferred policy acquisition costs, goodwill and other intangible assets, investment valuation, revenue recognition, and income taxes. There have been no changes in our critical accounting policies during the current quarter.

        Significant Accounting Policies:    For a description of existing significant accounting policies, see Note 3—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2011.

3. RECENTLY ISSUED AND PENDING ACCOUNTING PRONOUNCEMENTS

        Deferred Acquisition Costs:    On September 29, 2010, the FASB issued ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, which amended FASB ASC Topic 944, Financial Services—Insurance. ASU 2010-26 clarifies the definition of acquisition costs that are eligible for deferral. Acquisition costs are to include only those costs that are directly related to the successful acquisition or renewal of insurance contracts; incremental direct costs of contract acquisition that are incurred in transactions with either independent first parties or employees; and advertising costs meeting the capitalization criteria for direct-response advertising. The determination of deferability must be made on a contract-level basis.

        This guidance is effective for fiscal years beginning after December 15, 2011, and interim periods within those years. This guidance may be applied prospectively upon the date of adoption, with retrospective application permitted, but not required. The Company adopted this guidance retrospectively on January 1, 2012, resulting in a write down of the Company's deferred acquisition costs of $35.1 million, as of the date of adoption, relating to those costs which no longer meet the revised guidance as summarized above.

        Retrospective application of accounting principles should be applied as if the change had been made as of the beginning of the earliest period presented. In the case of our Quarterly Reports on Form 10-Q to be filed in 2012, that would be January 1, 2011 and for our Annual Report on Form 10-K for the year ended December 31, 2012 that would be January 1, 2010. The reduction in DAC from our retrospective adoption affected the accounting of our 2009 life insurance and annuity reinsurance transaction. This change resulted in the recognition of a pre-tax gain on the transaction of $17.6 million, which we have deferred and are amortizing over the estimated remaining life of the ceded block of business. The cumulative effect of the retrospective adoption of this guidance, with consideration to the impact on the transaction noted above, reduced stockholders' equity by $32.2 million as of January 1, 2012 and by $32.5 million as of January 1, 2011. For the three month period ended June 30, 2011, the adoption of ASU 2010-26 decreased net income by $0.2 million or less than $0.01 per diluted share, and for the six month period ended June 30, 2011, net income increased by $0.2 million or less than $0.01 per diluted share.

        Other Comprehensive Income:    In June 2011, the FASB issued ASU, No. 2011-05, Comprehensive Income, which provides amended disclosure requirements for the presentation of comprehensive

10


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3. RECENTLY ISSUED AND PENDING ACCOUNTING PRONOUNCEMENTS (Continued)

income. The amended guidance eliminates the option to present components of other comprehensive income (OCI) as part of the statement of changes in equity. Under the amended guidance, all changes in OCI are to be presented either in a single continuous statement of comprehensive income or in two separate but consecutive financial statements. We adopted this guidance effective January 1, 2012. There was no impact to our financial position or results of operations upon adoption, as the amendments relate only to changes in financial statement presentation.

        In December 2011, ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, was issued by the FASB to defer the effective date in ASU 2011-05 pertaining to reclassification adjustments out of accumulated other comprehensive income until the FASB is able to reconsider and redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. No other requirements in ASU 2011-05 are affected by ASU 2011-12.

        We adopted the provisions of ASU 2011-05 as of January 1, 2012, after considering the deferral in ASU 2011-12, and have included single continuous statements of comprehensive income (loss) for the three-months and six-months ended June 30, 2012 and 2011. There was no impact to our financial position or results of operations upon adoption, as the amendments relate only to changes in financial statement presentation.

        Fair Value Disclosures:    In May 2011, the FASB issued amended guidance and disclosure requirements for fair value measurements. We adopted this guidance effective January 1, 2012. Implementation did not have any impact on our financial position or results of operations.

4. BUSINESS COMBINATION

    Acquisition of APS Healthcare

        On March 2, 2012, we acquired 100% of the outstanding voting stock of APS Healthcare, a provider of specialty healthcare solutions primarily to Medicaid Agencies. APS Healthcare offers a broad range of healthcare solutions, including case management and care coordination, clinical quality and utilization review, and behavioral health services that enable its customers to improve the quality of their care and reduce healthcare costs

        The purchase price for the transaction was (i) $224.5 million, which is net of a provisional adjustment of $3.0 million, plus (ii) up to $50 million in potential performance based consideration. The consideration comprised $147.8 million in cash to retire APS Healthcare's outstanding indebtedness and other liabilities and approximately $76.7 million in Universal American common stock. The potential performance based consideration is payable in cash in March 2014 to the extent APS Healthcare's financial results exceed certain thresholds. We do not anticipate that any performance based consideration will be paid.

        To fund the equity portion of the purchase price, at closing, Universal American issued 6,504,461 shares of its common stock to funds affiliated with GTCR and other former equity holders of APS Healthcare, representing approximately 7.4% of Universal American's outstanding common stock.

11


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4. BUSINESS COMBINATION (Continued)

        To fund the cash portion of the purchase price, at closing, Universal American entered into a new $225 million Credit Facility with a group of lenders led by Bank of America Merrill Lynch, consisting of a $150 million term loan and a $75 million revolving credit facility, which was undrawn at closing.

        During the six months ended June 30, 2012, we recognized $3.7 million of acquisition related costs. These costs are included in the line item "Other operating costs and expenses" at the consolidated statements of comprehensive income (loss). We also incurred $5.8 million of costs in connection with the new credit facility. These costs have been deferred and will be amortized over the life of the term loan.

        As of June 30, 2012 the purchase price allocation remains preliminary and could change materially in subsequent periods. The fair value estimates were made in the first quarter of 2012 and remain unchanged as of June 30, 2012. The pending provisional items primarily relate to finalization of the purchase price adjustment. Any subsequent changes to the purchase price allocation during the measurement period that result in material changes to our consolidated financial results will be adjusted retrospectively.

        The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:

 
  March 2,
2012
 
 
  (in thousands)
 

Cash

  $ 9,991  

Other current assets

    55,787  

Deferred tax asset

    13,484  

Property, plant and equipment, net

    9,623  

Amortizing intangible assets

    29,200  

Other assets

    560  
       

Total identifiable assets acquired

    118,645  
       

Other current liabilities

    50,101  

Claims payable

    8,473  

Other liabilities

    5,332  
       

Total liabilities assumed

    63,906  
       

Net identifiable assets acquired

    54,739  

Goodwill

    169,752  
       

Net assets acquired

  $ 224,491  
       

12


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4. BUSINESS COMBINATION (Continued)

        The value of the amortizing intangible assets was assigned as follows:

Description
  Estimated
Life
  Amount
(in millions)
 

Customer Relationships

    5   $ 15.0  

Software Platform

    8     8.0  

Provider Network

    5     2.4  

Trade name

    4     3.8  
             

Total Amortizing Intangibles

        $ 29.2  
             

        The goodwill has not yet been assigned to a segment, pending our evaluation of our reporting segments following the acquisition of APS Healthcare. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of APS Healthcare. None of the goodwill is expected to be deductible for tax purposes.

        The fair value of accounts receivable acquired was $43.2 million, with the gross contractual amount being $43.4 million. We expect that $0.2 million will be uncollectible.

        The operating results generated by APS Healthcare from March 2, 2012, the date of acquisition, were not material to our consolidated results of operations.

        The unaudited consolidated pro forma results of operations, assuming that operating results for APS Healthcare were included for the entire three and six month periods ended June 30, 2012 and 2011 are as follows:

 
  Three months ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
 

Total revenues

  $ 542,062   $ 654,425   $ 1,126,217   $ 1,325,423  
                   

Income from continuing operations before income taxes

  $ 9,383   $ 8,650   $ 46,848   $ 9,428  
                   

Income from continuing operations

  $ 5,162   $ 4,898   $ 27,741   $ 6,537  
                   

        These amounts have been determined after applying our accounting policies and adjusting the results of APS Healthcare to reflect the changes in depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied on January 1, 2011, and elimination of APS Healthcare's acquisition related costs, together with the related tax effects. These amounts also include adjustment of our results to reflect the cost of the new credit facility and additional stock based compensation that would have been charged assuming the acquisition took place on January 1, 2011, and elimination of our acquisition related costs, together with the related tax effects. The pro forma information presented above is for disclosure purposes only and is not necessarily indicative of the results of operations that would have occurred had we consummated the acquisition on the date assumed, nor is the pro forma information intended to be indicative of our future results of operations.

13


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. INVESTMENTS

        The amortized cost and fair value of fixed maturity investments are as follows:

 
  June 30, 2012  
Classification
  Amortized
Cost
  Gross
Unrealized
Gains
  Gross
Unrealized
Losses
  Gross
Unrealized
OTTI(1)
  Fair Value  
 
  (in thousands)
 

U.S. Treasury securities and U.S. Government obligations

  $ 34,525   $ 247   $ (3 ) $   $ 34,769  

Government sponsored agencies

    16,688     1,458             18,146  

Other political subdivisions

    82,956     2,607             85,563  

Corporate debt securities

    473,779     24,483     (2,238 )       496,024  

Foreign debt securities

    80,753     1,521     (474 )       81,800  

Residential mortgage-backed securities

    280,016     12,710     (33 )       292,693  

Commercial mortgage-backed securities

    75,573     3,536     (645 )       78,464  

Other asset-backed securities

    69,993     1,974     (2,141 )   (4,825 )   65,001  
                       

  $ 1,114,283   $ 48,536   $ (5,534 ) $ (4,825 ) $ 1,152,460  
                       

 

 
  December 31, 2011  
Classification
  Amortized
Cost
  Gross
Unrealized
Gains
  Gross
Unrealized
Losses
  Gross
Unrealized
OTTI(1)
  Fair Value  
 
  (in thousands)
 

U.S. Treasury securities and U.S. Government obligations

  $ 42,055   $ 1,031   $   $   $ 43,086  

Government sponsored agencies

    17,185     1,662             18,847  

Other political subdivisions

    105,092     3,079     (153 )       108,018  

Corporate debt securities

    534,990     17,279     (5,591 )       546,678  

Foreign debt securities

    78,359     841     (3,784 )       75,416  

Residential mortgage-backed securities

    265,448     12,828     (17 )       278,259  

Commercial mortgage-backed securities

    78,506     1,931     (641 )       79,796  

Other asset-backed securities

    79,039     2,137     (3,340 )   (4,988 )   72,848  
                       

  $ 1,200,674   $ 40,788   $ (13,526 ) $ (4,988 ) $ 1,222,948  
                       

(1)
Other-than-temporary impairments. Represents unrealized losses on previously impaired securities.

        At June 30, 2012, gross unrealized losses on mortgage-backed and asset-backed securities totaled $7.6 million, consisting primarily of unrealized losses of $7.0 million on subprime residential mortgage loans, as discussed below, and $0.6 million related to obligations of commercial mortgage-backed securities. The fair value of a majority of the subprime securities is depressed due to the deterioration of collectability of the underlying mortgage cash flows. The fair value of the other securities is depressed primarily due to changes in interest rates. We have evaluated these holdings, with input from our investment managers, and do not believe further other-than-temporarily impairment to be warranted.

14


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. INVESTMENTS (Continued)

        The amortized cost and fair value of fixed maturity investments at June 30, 2012 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 
  Amortized
Cost
  Fair Value  
 
  (in thousands)
 

Due in 1 year or less

  $ 45,039   $ 45,620  

Due after 1 year through 5 years

    258,831     268,429  

Due after 5 years through 10 years

    291,205     307,466  

Due after 10 years

    93,626     94,787  

Mortgage and asset-backed securities

    425,582     436,158  
           

  $ 1,114,283   $ 1,152,460  
           

        The fair value and unrealized losses as of June 30, 2012 and December 31, 2011 for fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are shown below:

 
  Less than 12 Months   12 Months or Longer   Total  
June 30, 2012
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
 
 
  (in thousands)
 

U.S. Treasury securities and U.S. Government obligations

  $ 5,494   $ (3 ) $   $   $ 5,494   $ (3 )

Government sponsored agencies

                         

Other political subdivisions

                         

Corporate debt securities

    42,138     (640 )   14,646     (1,598 )   56,784     (2,238 )

Foreign debt securities

    16,571     (224 )   8,429     (250 )   25,000     (474 )

Residential mortgage-backed securities

    5,554     (7 )   514     (26 )   6,068     (33 )

Commercial mortgage-backed securities

            1,087     (645 )   1,087     (645 )

Other asset-backed securities

    89     (66 )   19,185     (6,900 )   19,274     (6,966 )
                           

Total fixed maturities

  $ 69,846   $ (940 ) $ 43,861   $ (9,419 ) $ 113,707   $ (10,359 )
                           

Total number of securities in an unrealized loss position

                                  40  
                                     

15


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. INVESTMENTS (Continued)

 
  Less than 12 Months   12 Months or Longer   Total  
December 31, 2011
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
  Fair
Value
  Gross
Unrealized
Losses and
OTTI
 
 
  (in thousands)
 

U.S. Treasury securities and U.S. Government obligations

  $   $   $   $   $   $  

Government sponsored agencies

                         

Other political subdivisions

            6,104     (153 )   6,104     (153 )

Corporate debt securities

    112,656     (5,370 )   12,024     (221 )   124,680     (5,591 )

Foreign debt securities

    58,035     (3,687 )   2,382     (97 )   60,417     (3,784 )

Residential mortgage-backed securities

            637     (17 )   637     (17 )

Commercial mortgage-backed securities

    875     (1 )   1,965     (640 )   2,840     (641 )

Other asset-backed securities

    10,321     (122 )   23,191     (8,206 )   33,512     (8,328 )
                           

Total fixed maturities

  $ 181,887   $ (9,180 ) $ 46,303   $ (9,334 ) $ 228,190   $ (18,514 )
                           

Total number of securities in an unrealized loss position

                                  83  
                                     

Subprime Residential Mortgage Loans

        We hold securities with exposure to subprime residential mortgages, or mortgage loans to borrowers with weak credit profiles. The significant decline in U.S. housing prices and relaxed underwriting standards by some subprime loan originators have led to higher delinquency and loss rates, resulting in a significant reduction in the market valuation of these securities sector wide.

        As of June 30, 2012, we held subprime securities with par values of $22.0 million, an amortized cost of $21.4 million and a fair value of $14.4 million representing approximately 1.0% of our cash and invested assets, with collateral comprised substantially of first lien mortgages in senior or senior mezzanine level tranches, with an average Standard & Poor's, or equivalent, rating of A+.

        The following table presents our exposure to subprime residential mortgages by vintage year.

Vintage Year
  Amortized
Cost
  Fair
Value
  Gross
Unrealized
Losses & OTTI
 
 
  (in thousands)
 

2003

  $ 109   $ 53   $ (56 )

2004

    126     95     (31 )

2005

    14,154     12,121     (2,033 )

2006

    7,000     2,157     (4,843 )
               

Totals

  $ 21,389   $ 14,426   $ (6,963 )
               

16


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. INVESTMENTS (Continued)

        We continuously review our subprime holdings stressing multiple variables, such as cash flows, prepayment speeds, default rates and loss severity, and comparing current base case loss expectations to the loss required to incur a principal loss, or breakpoint. Our base case analysis suggests that implied losses from current market pricing for these securities remain significantly higher than our base case loss expectations. Based on the analysis of the remaining subprime holdings at June 30, 2012, we do not believe these holdings require recognition of additional other-than-temporarily impairment.

        Gross realized gains and gross realized losses included in the consolidated statements of comprehensive income (loss) are as follows:

 
  For the three
months ended
June 30,
  For the six
months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
  (in thousands)
 

Realized gains:

                         

Fixed maturities

  $ 1,683   $ 2,816   $ 9,478   $ 5,589  

Other

    44         44     2  
                   

    1,727     2,816     9,522     5,591  
                   

Realized losses:

                         

Fixed maturities, excluding OTTI

    (377 )   (825 )   (1,261 )   (3,595 )
                   

    (377 )   (825 )   (1,261 )   (3,595 )
                   

Net realized gains

  $ 1,350   $ 1,991   $ 8,261   $ 1,996  
                   

6. FAIR VALUE MEASUREMENTS

        We carry fixed maturity investments and equity securities at fair value in our Consolidated Financial Statements. These fair value disclosures consist of information regarding the valuation of these financial instruments followed by the fair value measurement disclosure requirements of Fair Value Measurements and Disclosures Topic, ASC 820-10.

    Fair Value Disclosures

        The following section applies the ASC 820-10 fair value hierarchy and disclosure requirements to our financial instruments that we carry at fair value. ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels, numbered 1, 2, and 3.

            Level 1 observable inputs reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date. We currently have no Level 1 securities.

            Level 2 observable inputs, other than quoted prices included in Level 1, reflect the asset or liability or prices for similar assets and liabilities. Most debt securities and some preferred stocks are model priced by vendors using observable inputs and we classify them within Level 2.

17


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. FAIR VALUE MEASUREMENTS (Continued)

            Level 3 valuations are derived from techniques in which one or more of the significant inputs, such as assumptions about risk, are unobservable. Generally, Level 3 securities are less liquid securities such as highly structured or lower quality asset-backed securities, known as ABS, and private placement equity securities. Because Level 3 fair values, by their nature, contain unobservable market inputs, as there is no observable market for these assets and liabilities, we must use considerable judgment to determine the Level 3 fair values. Level 3 fair values represent our best estimate of an amount that we could realize in a current market exchange absent actual market exchanges.

        The following table presents our assets that are carried at fair value by hierarchy levels, as of June 30, 2012:

June 30, 2012
  Total   Level 1   Level 2   Level 3  
 
  (in thousands)
 

Assets:

                         

Fixed maturities, available for sale

  $ 1,152,460   $   $ 1,149,922   $ 2,538  
                   

        In many situations, inputs used to measure the fair value of an asset or liability position may fall into different levels of the fair value hierarchy. In these situations, we will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value.

    Determination of fair values

        The valuation methodologies used to determine the fair values of assets and liabilities under the "exit price" notion of ASC 820-10 reflect market participant objectives and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. We determine the fair value of our financial assets and liabilities based upon quoted market prices where available. The following is a discussion of the methodologies used to determine fair values for the financial instruments listed in the above table.

    Valuation of Fixed Maturities

        We have engaged an investment advisor to manage a portion of our portfolio, perform investment accounting and provide valuation services. Securities prices are obtained by the advisor from independent pricing vendors, which are chosen based on their ability to support and price specified asset classes following the procedures outlined in the valuation policy reviewed and approved by us. The following are examples of typical inputs used by third party pricing vendors:

    reported trades,

    benchmark yields,

    issuer spreads,

    bids,

    offers, and

    estimated cash flows and prepayment speeds.

18


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. FAIR VALUE MEASUREMENTS (Continued)

        Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, third party pricing services will normally derive the security prices through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recent reported trades, the third party pricing services may use matrix or model processes to develop a security price where the pricing services develop future cash flow expectations based upon collateral performance, discounted at an estimated market rate. The pricing for mortgage-backed and asset-backed securities reflects estimates of the rate of future prepayments of principal over the remaining life of the securities. The pricing services derive these estimates based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral.

        The investment advisor uses their own rules-based pricing system to evaluate the prices it receives from various pricing vendors to ensure the data adheres to certain vendor-to-vendor and day-to-day variance tolerances. Exceptions to the rules are monitored, investigated and challenged, as needed. We review and test the security pricing procedures used to value our fixed maturity portfolio on an ongoing basis. Our procedures include review of the investment valuation policy and understanding of the procedures used to obtain investment valuations and review of pricing controls at our investment advisor, including their Statements on Standards for Attestation Engagements 16 controls review report. We also test the prices provided by the advisor monthly by comparing the data to another independent pricing source and monitoring the change in prices from month to month and upon sale of the security. Significant changes or variances are investigated and explained. To date, we have not modified any price provided by the advisor.

        We have also reviewed the advisor's pricing services' valuation methodologies and related sources, and have evaluated the various types of securities in our investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Based on the results of this evaluation and investment class analysis, we classified each price into Level 1, 2, or 3. We classified most prices provided by third party pricing services into Level 2 because the inputs used in pricing the securities are market observable.

        Due to a general lack of transparency in the process that brokers use to develop prices, we have classified most valuations that are based on broker's prices as Level 3. We may classify some valuations as Level 2 if we can corroborate the price. We have also classified internal model priced securities, primarily consisting of private placement asset-backed securities, as Level 3 because this model pricing includes significant non-observable inputs.

19


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. FAIR VALUE MEASUREMENTS (Continued)

        The following table provides a summary of changes in the fair value of our Level 3 financial instruments:

 
  Fixed
Maturities
 
 
  (in thousands)
 

Fair value as of December 31, 2011

  $ 2,620  

Sales

    (34 )

Unrealized losses included in AOCI(1)(2)

    (6 )
       

Fair value as of March 31, 2012

    2,580  

Sales

    (36 )

Unrealized losses included in AOCI(1)(2)

    (6 )
       

Fair value as of June 30, 2012

  $ 2,538  
       

(1)
AOCI: Accumulated other comprehensive income.

(2)
Unrealized losses represent losses from changes in values of Level 3 financial instruments only for the periods in which the instruments are classified as Level 3.

7. OTHER COMPREHENSIVE INCOME

        The components of accumulated other comprehensive income are as follows:

 
  June 30,
2012
  December 31,
2011
 
 
  (in thousands)
 

Continuing Operations:

             

Net unrealized gains on investments

  $ 43,008   $ 27,266  

Gross unrealized OTTI

    (4,825 )   (4,988 )

Long-term claim reserve adjustment

    (8,787 )   (5,100 )

Deferred tax

    (10,289 )   (6,012 )
           

Total accumulated other comprehensive income

  $ 19,107   $ 11,166  
           

20


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7. OTHER COMPREHENSIVE INCOME (Continued)

        The components of other comprehensive income and the related tax effects for each component for the three and six months ended June 30, 2012 are as follows:

 
  Three months ended June 30,  
 
  2012   2011  
 
  Before Tax
Amount
  Tax
Expense
  Net of Tax
Amount
  Before Tax
Amount
  Tax
Expense
  Net of Tax
Amount
 
 
  (in thousands)
 

From continuing operations:

                                     

Net unrealized gain arising during the period

  $ 8,056   $ 2,819   $ 5,237   $ 12,412   $ 4,345   $ 8,067  

Reclassification adjustment for gains included in net income

    1,350     472     878     1,991     697     1,294  
                           

Net unrealized gain

    6,706     2,347     4,359     10,421     3,648     6,773  

Long-term claim reserve adjustment

    (673 )   (235 )   (438 )            
                           

Other comprehensive income from continuing operations

    6,033     2,112     3,921     10,421     3,648     6,773  
                           

From discontinued operations:

                                     

Cash flow hedge

                12,381     4,333     8,048  
                           

Total other comprehensive income

  $ 6,033   $ 2,112   $ 3,921   $ 22,802   $ 7,981   $ 14,821  
                           

 

 
  Six months ended June 30,  
 
  2012   2011  
 
  Before Tax
Amount
  Tax
Expense
  Net of Tax
Amount
  Before Tax
Amount
  Tax
Expense
  Net of Tax
Amount
 
 
  (in thousands)
 

From continuing operations:

                                     

Net unrealized gain arising during the period

  $ 24,166   $ 8,458   $ 15,708   $ 10,859   $ 3,802   $ 7,057  

Reclassification adjustment for gains included in net income

    8,261     2,891     5,370     1,996     701     1,295  
                           

Net unrealized gain

    15,905     5,567     10,338     8,863     3,101     5,762  

Long-term claim reserve adjustment

    (3,687 )   (1,290 )   (2,397 )            
                           

Other comprehensive income from continuing operations

    12,218     4,277     7,941     8,863     3,101     5,762  
                           

From discontinued operations:

                                     

Cash flow hedge

                13,693     4,793     8,900  
                           

Total other comprehensive income

  $ 12,218   $ 4,277   $ 7,941   $ 22,556   $ 7,894   $ 14,662  
                           

21


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

8. STOCK-BASED COMPENSATION

        In April 2011, we established the Universal American Corp. 2011 Omnibus Equity Award Plan (the "2011 Equity Plan"). The 2011 Equity Plan is the sole active plan for providing equity compensation to eligible employees, directors and other third parties. We issue shares upon the exercise of options granted under these plans. Detailed information for activity in our stock-based incentive plans can be found in Note 17—Stock-Based Compensation in the Notes to the Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2011.

        The compensation expense for our continuing operations that has been included in other operating costs and expenses for these plans and the related tax benefit for the three and six months ended June 30, 2012 were as follows:

 
  Three Months
Ended June 30,
 
 
  2012   2011  
 
  (in thousands)
 

Stock-based compensation expense by type:

             

Part D Transaction—stock options

  $   $ 5,851  

Part D Transaction—restricted stock awards

        2,795  
           

Part D Transaction—subtotal

        8,646  

Stock options

    1,291     449  

Restricted stock awards

    1,114     1,093  
           

Total stock-based compensation expense

    2,405     10,188  

Tax benefit recognized(1)

    455     3,566  
           

Stock-based compensation expense, net of tax

  $ 1,950   $ 6,622  
           

 

 
  Six Months Ended
June 30,
 
 
  2012   2011  
 
  (in thousands)
 

Stock-based compensation expense by type:

             

Part D Transaction—stock options

  $   $ 5,851  

Part D Transaction—restricted stock awards

        2,795  
           

Part D Transaction—subtotal

        8,646  

Stock options

    2,326     1,927  

Restricted stock awards

    2,742     2,398  
           

Total stock-based compensation expense

    5,068     12,971  

Tax benefit recognized(1)

    895     4,540  
           

Stock-based compensation expense, net of tax

  $ 4,173   $ 8,431  
           

(1)
Tax benefit recognized includes the estimated effect of non-deductible compensation costs.

22


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

8. STOCK-BASED COMPENSATION (Continued)

Stock Option Awards

        We recognize compensation cost for share-based payments to employees, directors and other third parties based on the grant date fair value of the award, which we amortize over the grantees' service period in accordance with the provisions of Compensation—Stock Compensation Topic, ASC 718-10. We use the Black-Scholes valuation model to value stock options.

        We estimated the fair value for options granted during the period at the date of grant using a Black-Scholes option pricing model with the following range of assumptions:

 
  For options granted in
2012

Weighted-average grant date fair value

  $3.30 - $4.04

Risk free interest rates

  0.35% - 0.90%

Dividend yields

  0.0%

Expected volatility

  44.71% - 47.08%

Expected lives of options (in years)

  2.5 - 3.75

        We did not capitalize any cost of stock-based compensation. Future expense may vary based upon factors such as the number of awards granted by us and the then-current fair value of such awards.

        A summary of option activity for the six month period ended June 30, 2012 is set forth below:

Options
  Options
(in thousands)
  Weighted
Average
Exercise
Price
 

Outstanding, January 1, 2012

    2,576   $ 9.33  

Granted

    2,875     11.12  

Exercised

    (2 )   9.33  

Forfeited or expired

    (223 )   10.18  
           

Outstanding, June 30, 2012

    5,226   $ 10.28  
           

        The total intrinsic value of stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during the six months ended June 30, 2012 and 2011 was approximately $0.1 million and $6.2 million, respectively.

        We received proceeds of approximately $0.1 million and $8.0 million from the exercise of stock options during the six months ended June 30, 2012 and 2011, respectively.

        As of June 30, 2012, the total compensation cost related to non-vested option awards not yet recognized was $17.0 million, which we expect to recognize over a weighted average period of 3.3 years.

    Restricted Stock Awards

        In accordance with our 2011 Equity Plan, we may grant restricted stock to employees, directors and other third parties. We have issued restricted stock which vests ratably over a four-year period. We value restricted stock awards at an amount equal to the market price of our common stock on the date

23


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

8. STOCK-BASED COMPENSATION (Continued)

of grant. We recognize compensation expense for restricted stock awards on a straight line basis over the vesting period.

        A summary of non-vested restricted stock award activity for the six months ended June 30, 2012 is set forth below:

Non-vested Restricted Stock
  Shares
(in thousands)
  Weighted
Average
Grant-Date
Fair Value
 

Non-vested, January 1, 2012

    248   $ 12.67  

Granted

    936     11.18  

Vested

    (108 )   12.35  

Forfeited

    (41 )   11.44  
           

Non-vested, June 30, 2012

    1,035   $ 11.41  
           

        The total fair value of shares of restricted stock vested during the six months ended June 30, 2012 and 2011 was $1.2 million and $4.8 million, respectively.

    Performance Shares

        In connection with our acquisition of APS Healthcare, we issued an aggregate 207,500 Performance Shares to senior management of APS Healthcare. These shares vest 33.3% on each of March 15, 2013, March 15, 2014 and March 15, 2015, subject to the executive's continued employment on each vesting date and the achievement of certain financial performance thresholds by the APS Healthcare business. These awards contain a performance condition, as defined in ASC 718-10, Compensation—Stock Compensation. ASC 718-10 requires that compensation cost on such awards must be recognized over the requisite service period if it is probable that the performance condition will be satisfied, with the estimate of likelihood trued up periodically by a cumulative catch-up adjustment recorded to expense at the time of the true up. At June 30, 2012, we have not recorded any compensation cost related to the Performance Shares.

    Tax Benefits of Stock-Based Compensation

        ASC 718-10 requires us to report the benefits of tax deductions in excess of recognized compensation cost of equity awards as a financing cash flow. We recognized $4.1 million and $2.6 million of financing cash flows for these excess tax deductions for the six months ended June 30, 2012 and 2011 respectively.

9. COMMITMENTS AND CONTINGENCIES

    Legal Proceedings

        We are subject to a variety of legal proceedings, investigations, audits, claims and litigation, including claims under the False Claims Act and claims for benefits under insurance policies and claims by members, providers, customers, employees, regulators and other third parties. In some cases, plaintiffs seek punitive damages. While the outcome of these matters is currently not determinable, we

24


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

9. COMMITMENTS AND CONTINGENCIES (Continued)

do not currently expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

    Government Regulations

        Laws and regulations governing Medicare, Medicaid and other state and federal healthcare and insurance programs are complex and subject to significant interpretation. As part of the recent healthcare reform legislation, CMS and other regulatory agencies have been exercising increased oversight and regulatory authority over our Medicare and other businesses. Compliance with such laws and regulations is subject to CMS audit, other governmental review and investigation and significant and complex interpretation. According to CMS, we are a high-risk Medicare Advantage sponsor. As a result, CMS continues to audit our Medicare Advantage plans with regularity to ensure we are in compliance with applicable laws, rules and regulations. There can be no assurance that we will be found to be in compliance with all such laws, rules and regulations in connection with these audits, reviews and investigations. Failure to be in compliance can subject us to significant regulatory action including significant fines, penalties, cancellation of contracts with governmental agencies or operating restrictions on our business, including, without limitation, suspension of our ability to market to and enroll new members in our Medicare plans, exclusion from Medicare and other state and federal healthcare programs and inability to expand into new markets.

10. BUSINESS SEGMENT INFORMATION

        As of June 30, 2012, our business segments are based on product and consist of

    Senior Managed Care—Medicare Advantage and,

    Traditional Insurance.

        Our remaining segment, Corporate & Other, includes the activities of our holding company, along with our remaining senior administrative services operations and the operations of APS Healthcare since its acquisition on March 2, 2012.

        We closed the Part D Transaction on April 29, 2011 (See Note 1—Organization and Company Background). The sale eliminated all of the business operations of our Medicare Part D segment and certain debt service expenses of our Corporate & Other segment. Their current and historical results are reported as discontinued operations (See Note 12—Discontinued Operations).

        We report intersegment revenues and expenses on a gross basis in each of the operating segments but eliminate them in the consolidated results. These intersegment revenues and expenses affect the amounts reported on the individual financial statement line items, but we eliminate them in consolidation and they do not change income before taxes. The most significant items eliminated are intersegment revenue and expense relating to commissions earned by agency subsidiaries in our Corporate & Other segment from insurance subsidiaries in our Traditional segment and for services provided by APS Healthcare to our Senior Managed Care—Medicare Advantage segment.

25


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

10. BUSINESS SEGMENT INFORMATION (Continued)

        Financial data by segment, with a reconciliation of segment revenues and segment income (loss) before income taxes to total revenue and income from continuing operations before income taxes in accordance with U.S. generally accepted accounting principles is as follows:

 
  Three months ended June 30,  
 
  2012   2011  
 
  Revenues   Income(loss)
before
Income Taxes
  Revenues   Income(loss)
before
Income Taxes
 
 
  (in thousands)
 

Senior Managed Care—Medicare Advantage

  $ 397,257   $ 10,713   $ 503,011   $ 20,347  

Traditional Insurance

    66,706     5,375     69,013     1,601  

Corporate & Other

    78,901     (8,885 )   4,484     (17,164 )

Intersegment revenues

    (2,152 )       (865 )    

Adjustments to segment amounts:

                         

Net realized gains(1)

    1,350     1,350     1,991     1,991  
                   

Total

  $ 542,062   $ 8,553   $ 577,634   $ 6,775  
                   

 

 
  Six months ended June 30,  
 
  2012   2011  
 
  Revenues   Income(loss)
before
Income Taxes
  Revenues   Income(loss)
before
Income Taxes
 
 
  (in thousands)
 

Senior Managed Care—Medicare Advantage

  $ 823,388   $ 39,935   $ 1,022,067   $ 26,753  

Traditional Insurance

    136,765     9,808     143,918     2,238  

Corporate & Other

    108,405     (14,921 )   5,166     (24,008 )

Intersegment revenues

    (3,003 )       (833 )    

Adjustments to segment amounts:

                         

Net realized gains(1)

    8,261     8,261     1,996     1,996  
                   

Total

  $ 1,073,816   $ 43,083   $ 1,172,314   $ 6,979  
                   

(1)
We evaluate the results of operations of our segments based on income before realized gains and losses and income taxes. We believe that realized gains and losses are not indicative of overall operating trends.

11. OTHER DISCLOSURES

        Income Taxes:    Our effective tax rate on income from continuing operations was 45.6% for the second quarter of 2012 compared to 45.2% for the second quarter of 2011. State income taxes and permanent items, primarily relating to non-deductible executive compensation and non-deductible interest on the mandatorily redeemable preferred stock drove the effective rate for both periods in excess of the 35% federal rate. The second quarter of 2012 and 2011 also included non-recurring tax benefits of $0.1 million and $0.4 million, respectively, related to state income tax refunds.

26


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

11. OTHER DISCLOSURES (Continued)

        For the six months ended June 30, 2012, our effective tax rate on income from continuing operations was 41.0% compared to 28.7% for the same period in 2011. State income taxes and permanent items, relating to non-deductible executive compensation, APS Healthcare transaction costs and non-deductible interest on the mandatorily redeemable preferred stock drove the 2012 effective rate in excess of the 35% federal rate. 2012 and 2011 also included non-recurring tax benefits of $0.1 million and $0.8 million, respectively, related to state income tax refunds which drove the lower effective rate in 2011.

        Reinsurance:    We evaluate the financial condition of our reinsurers and monitor concentrations of credit risk to minimize our exposure to significant losses from reinsurer insolvencies. We are obligated to pay claims in the event that a reinsurer to whom we have ceded an insured claim fails to meet its obligations under the reinsurance agreement. We are also obligated to pay claims on the traditional business of Pennsylvania Life Insurance Company, the company that was sold to CVS Caremark as part of the Part D Transaction, in the event that any of the third party reinsurers to whom Pennsylvania Life has ceded an insured claim fails to meet their obligations under the reinsurance agreement. We are not aware of any instances where any of our reinsurers have been unable to pay any policy claims on any reinsured business.

        As of June 30, 2012, all of our primary reinsurers, as well as the primary first party reinsurers of Pennsylvania Life's traditional business, were rated "A-" (Excellent) or better by A.M. Best with the exception of one reinsurer. For that reinsurer, which is not rated, a trust containing assets at 106% of reserves is maintained. The reserves amounted to approximately $153 million as of June 30, 2012.

        Restructuring Charges:    During 2011, we undertook several initiatives to realign our organization and consolidate certain functions to increase efficiency and responsiveness to customers and reduce costs, in order to meet the challenges and opportunities presented by the sale of our Part D business, our decision to discontinue selling new Traditional insurance products, closure of our career agency operations, the current economic environment and anticipated effects of healthcare reform.

        We incurred total restructuring charges of $37.7 million during the year ended December 31, 2011, which were recorded as restructuring costs and intangible asset impairment in our consolidated statements of comprehensive income (loss). A summary of our restructuring liability balance as of June 30, 2012 follows:

 
  Segment   January 1
Balance
  Charge to
Earnings
  Cash
Paid
  Non-cash   June 30
Balance
 
 
  (in thousands)
 

2012

                                   

Workforce reduction

  Corporate & Other   $ 3,995   $   $ (1,342 ) $   $ 2,653  

Facility consolidation

  Corporate & Other     250             (102 )   148  

Facility consolidation

  Traditional     443             (54 )   389  
                           

Total

      $ 4,688   $   $ (1,342 ) $ (156 ) $ 3,190  
                           

        For further discussion of these restructuring initiatives, see Note 20 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011.

27


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

11. OTHER DISCLOSURES (Continued)

        Principal and Interest Payments on Term Loan:    During the six months ended June 30, 2012, we made principal payments totaling $10.9 million. No principal payments were made in the first quarter of 2012. During the three and six months ended June 30, 2012, we made interest payments of $1.0 million and $1.1 million, respectively.

        Earnings per Common Share Computation:    Prior to the Part D Transaction, we calculated earnings per common share using the two-class method. This method requires that we allocate net income between net income attributable to participating preferred stock and net income attributable to common stock, based on the dividend and earnings participation provisions of the preferred stock. Basic earnings per share excludes the dilutive effects of stock options outstanding during the periods and is equal to net income attributable to common stock divided by the weighted average number of common shares outstanding for the periods. The participating preferred stock was cancelled in connection with the Part D Transaction on April 29, 2011.

        For the three and six month periods ended June 30, 2011, we allocated earnings between common and participating preferred stock as follows:

 
  Three months
ended
June 30,
2011
  Six months
ended
June 30,
2011
 
 
  (in thousands)
 

Net loss attributable to common stock

  $ (5,052 ) $ (35,111 )

Undistributed loss allocated to participating preferred stock

    (84 )   (1,788 )
           

Net loss

  $ (5,136 ) $ (36,899 )
           

12. DISCONTINUED OPERATIONS

        As discussed in Note 1—Organization and Company Background, we sold our Medicare Part D business to CVS Caremark on April 29, 2011.

        In accordance with ASC 360, effective with the closing of Part D Transaction on April 29, 2011, the results of operations and cash flows related to our Medicare Part D business and related corporate items are reported as discontinued operations for all periods presented. In addition, because the Part D Transaction is considered a "reverse spin-off" for accounting purposes, for financial statement presentation, there is no gain or loss on the separation of the disposed net assets and liabilities. Rather, the carrying amounts of the net assets and liabilities of our former Medicare Part D segment and related corporate accounts are removed at their historical cost with an offsetting reduction to stockholders' equity. As of April 29, 2011, we incurred a $440.9 million reduction in stockholders' equity from the separation, representing the net assets transferred to CVS Caremark upon the closing of the Part D Transaction.

28


Table of Contents


UNIVERSAL AMERICAN CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. DISCONTINUED OPERATIONS (Continued)

        Summarized financial information for our discontinued operations, including expenses of the transaction for the three and six month periods ended June 30 is presented below:

 
  Three months
ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
 

Net premium and policyholder fees earned

  $   $ 167,711   $   $ 815,370  

Net realized loss on investments

        (11,685 )       (11,925 )

Other income

        18,501         18,535  
                   

Total revenues

        174,527         821,980  
                   

Benefits, claims and expenses:

                         

Claims and other benefits

        169,573         807,161  

Amortization of present value of future profits

        1,337         5,348  

Expenses of transactions

        14,457         16,191  

Other operating costs and expenses

        16,971         72,299  
                   

Total benefits, claims and expenses

        202,338         900,999  
                   

Loss from discontinued operations before income taxes

        (27,811 )       (79,019 )

Benefit for income taxes

        (18,964 )       (37,147 )
                   

Loss from discontinued operations

  $   $ (8,847 ) $   $ (41,872 )
                   

        There were no assets or liabilities of discontinued operations as of June 30, 2012 or December 31, 2011.

        For additional details, see Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011.

29


Table of Contents

ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

        The following discussion and analysis presents a review of our financial condition as of June 30, 2012 and our results of operations for the three and six months ended June 30, 2012 and 2011. As used in this report, except as otherwise indicated, references to the "Company," "UAM," "we," "our," and "us" are to (i) Universal American Corp., a Delaware corporation (formerly known as Universal American Spin Corp., "New Universal American") and its subsidiaries following the closing of the Part D Transaction on April 29, 2011 and (ii) Universal American Corp, a New York corporation (now known as Caremark Ulysses Holding Corp., "Old Universal American") and its subsidiaries prior to the closing of the Part D Transaction on April 29, 2011.

        You should read the following analysis of our consolidated results of operations and financial condition in conjunction with the consolidated financial statements and related consolidated footnotes included elsewhere in this quarterly report on Form 10-Q as well as the Consolidated Financial Statements and related consolidated Footnotes and the Management's Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the year ended December 31, 2011 filed on March 1, 2012. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause our actual results to differ materially from management's expectations. Factors that could cause such differences include those set forth or incorporated by reference under Part II, Item 1A—Risk Factors.

Overview

        Through our health insurance, and managed care subsidiaries, we primarily serve the growing Medicare population by providing Medicare Advantage and Medicare Supplement insurance products. In addition, with the acquisition of APS Healthcare, we now provide a variety of healthcare services, including case management and care coordination, clinical quality and utilization review and behavioral health services to Medicaid agencies and other third parties. Approximately 25% of the over 65 year old population in the United States is currently enrolled in Medicare Advantage plans. In addition, we believe there is an opportunity to address the high cost of healthcare for the remaining 75% of the Medicare population enrolled in traditional fee-for-service Medicare and have joined with primary-care provider groups, multi-specialty provider groups, health systems and other healthcare providers to participate in the Medicare Shared Savings Program (the "Shared Savings Program") through Accountable Care Organizations ("ACOs"). In addition, all payers of healthcare costs, from the Federal and state governments to corporations and individuals, are incurring rising healthcare costs and we believe we can apply our capabilities and experience in controlling these costs while improving health outcomes.

Recent Developments

    Accountable Care Organizations

        On April 10, 2012, the Centers for Medicare & Medicaid Services (CMS) announced that they had selected the first 27 ACOs across the country to participate in the Shared Savings Program. Further, in July 2012, CMS selected another 89 ACOs to participate.

        The Shared Savings Program was created as part of the Affordable Care Act to better coordinate care for Medicare patients through ACOs and will reward ACOs that lower the rate of growth in healthcare costs for Medicare fee-for-service beneficiaries (i.e. those not enrolled in a Medicare Advantage plan) while meeting performance standards on quality of care and placing patient care first. ACOs are groups of doctors and other healthcare providers working together to provide high quality

30


Table of Contents

services and care for their patients. Provider participation in an ACO is purely voluntary and Medicare beneficiaries retain their current ability to seek treatment from any provider they wish. Beneficiaries with fee-for-service Medicare will still have the right to use any doctor or hospital who accepts Medicare, at any time.

        Universal American's new subsidiary, Collaborative Health Systems, also known as CHS, partnered with sixteen groups of physicians to form ACOs under the Shared Savings Program. We estimate that these sixteen ACOs currently include approximately 1,700 participating physicians covering approximately 150,000 Original Medicare beneficiaries covering portions of eleven States both within and outside our current Medicare Advantage footprint, including Southeast Texas and upstate New York. CHS will provide these ACOs with care coordination, analytics and reporting, technology and other administrative capabilities to enable participating physicians to deliver better care, improved health and lower healthcare costs for their Medicare fee-for-service patients. CHS is also working with additional physician groups and other healthcare professionals to form new ACOs to participate in the Shared Savings Program's January 1, 2013 start date.

    APS Healthcare Acquisition

        On March 2, 2012, we completed our acquisition of APS Healthcare, Inc., also known as APS Healthcare, a provider of specialty healthcare solutions primarily to Medicaid Agencies. APS Healthcare offers a broad range of healthcare solutions, including case management and care coordination, clinical quality and utilization review, and behavioral health services that enable its customers to improve the quality of care and reduce healthcare costs. APS Healthcare is headquartered in White Plains, New York. For further discussion of this transaction, see note 4, Business Combinations.

    Sale of Medicare Part D Business

        On April 29, 2011, we completed the sale of our Medicare Part D Business to CVS Caremark. For further discussion, see note 1, Organization and Company Background and note 12, Discontinued Operations.

Healthcare Reform

        In March 2010, President Obama signed into law The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010 (which we collectively refer to as the "Affordable Care Act") which enacts significant changes to various aspects of the U.S. health insurance industry. In June 2012, the United States Supreme Court upheld substantially all of the Affordable Care Act. Notwithstanding the decision, there are many important provisions of the legislation that will require additional guidance and clarification in the form of regulations and interpretations in order to fully understand the impact of the legislation on our overall business, which we expect to occur over the next several years.

        Certain significant provisions of the Affordable Care Act that will impact our business include, among others, reduced Medicare Advantage reimbursement rates, implementation of quality bonus for Star Ratings, stipulated minimum medical loss ratios, shortened annual enrollment period, non-deductible federal premium taxes assessed to health insurers, coding intensity adjustments with mandatory minimums and a limitation on the federal tax deductibility of compensation earned by individuals. Due to the complexity of the health reform legislation, including implementation regulations that are yet to be promulgated, lack of interpretive guidance and gradual implementation, the impact of the health reform legislation is difficult to predict and not yet fully known. In addition, notwithstanding the Supreme Court's June 2012 decision upholding substantially all of the health reform legislation, pending efforts in the United States Congress to repeal, amend or restrict funding

31


Table of Contents

for various aspects of the Affordable Care Act and the 2012 presidential election create additional uncertainty about the ultimate impact of the health reform legislation. In addition, financing for the reforms contained in the Affordable Care Act will come, in part, from additional taxes and fees on our business as well as reductions in payments to us, which could negatively impact our business and results of operations. The Health Care Reform Legislation is discussed more fully under Risk Factors set forth or incorporated by reference in Part II, Item 1A in this report.

Membership

        The following table presents our membership in our Medicare Advantage segment as of June 30, 2012 and 2011.

 
  As of June 30,  
Membership
  2012   2011  
 
  (in thousands)
 

HMO

    56.7     61.4  

PPO

    17.0     21.0  

Network PFFS

    44.9     55.0  

Non-network PFFS (Rural)

    19.3     30.7  
           

Total Membership

    137.9     168.1  
           

Results of Operations—Consolidated Overview

        The following table reflects income (loss) before taxes from each of our segments and contains reconciliations to reported net income:

 
  Three months ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands, except per share amounts)
 

Senior Managed Care—Medicare Advantage(1)

  $ 10,713   $ 20,347   $ 39,935   $ 26,753  

Traditional Insurance(1)

    5,375     1,601     9,808     2,238  

Corporate & Other(1)

    (8,885 )   (17,164 )   (14,921 )   (24,008 )

Net realized gains on investments(1)

    1,350     1,991     8,261     1,996  
                   

Income before provision for income taxes(1)

    8,553     6,775     43,083     6,979  

Provision for income taxes

    3,901     3,064     17,671     2,006  
                   

Income from continuing operations

    4,652     3,711     25,412     4,973  

Loss from discontinued operations(2)

        (8,847 )       (41,872 )
                   

Net income (loss)

  $ 4,652   $ (5,136 ) $ 25,412   $ (36,899 )
                   

Per share data (diluted):

                         

Income from continuing operations

  $ 0.05   $ 0.05   $ 0.30   $ 0.06  

Loss from discontinued operations(2)

        (0.11 )       (0.52 )
                   

Net income (loss)

  $ 0.05   $ (0.06 ) $ 0.30   $ (0.46 )
                   

(1)
We evaluate the results of operations of our segments based on income before realized gains (losses) and income taxes. We believe that realized gains and losses are not indicative of overall operating trends. This differs from U.S. GAAP, which includes the effect of realized gains (losses) and income taxes in the determination of net income. The schedule above reconciles our segment income before income taxes to net income in accordance with U.S. GAAP.

32


Table of Contents

(2)
Includes after-tax transaction costs of $9.4 million or $0.12 per diluted share, and $10.5 million or $0.13 per diluted share, for the three and six months ended June 30, 2011, respectively (See Note 12—Discontinued Operations).

    Three months ended June 30, 2012 and 2011

        Income from continuing operations for the three months ended June 30, 2012 was $4.7 million, or $0.05 per diluted share, compared to $3.7 million or $0.05 per diluted share for the three months ended June 30, 2011. Income from continuing operations for the quarter ended June 30, 2012 includes realized investment gains, net of taxes, of $0.9 million, or $0.01 per diluted share, compared with $1.3 million, or $0.02 per diluted share for the same period in 2011. Our effective tax rate on income from continuing operations was 45.6% for the second quarter of 2012 compared to 45.2% for the second quarter of 2011. State income taxes and permanent items, primarily relating to non-deductible executive compensation and non-deductible interest on the mandatorily redeemable preferred stock, drove the effective rate for both periods in excess of the 35% federal statutory rate. The second quarter of 2012 and 2011 also included non-recurring tax benefits of $0.1 million and $0.4 million, respectively, related to state income tax refunds.

        Our Senior Managed Care—Medicare Advantage segment generated income before income taxes of $10.7 million for the three months ended June 30, 2012, a decrease of $9.6 million compared to the three months ended June 30, 2011. The second quarter of 2012 included $5.3 million of start-up costs relating to the development of CHS and its affiliated ACOs. The decrease in earnings was also driven by a 23% decrease in the member months for the quarter compared to the second quarter 2011 and a higher medical expense ratio of 83.9% in the second quarter 2012 compared to 82.8% in the second quarter 2011. The second quarter of 2012 included favorable prior period items of $2.3 million compared to favorable prior period items of $5.6 million in the second quarter of 2011.

        Our Traditional Insurance segment generated income before income taxes of $5.4 million for the three months ended June 30, 2012, an increase of $3.8 million compared to the three months ended June 30, 2011. The increase in earnings is driven primarily by the decrease in commissions and general expenses, net of allowances resulting from a smaller block of business in force and the decision to cease marketing Traditional insurance products effective in June 2012.

        The loss before income taxes from our Corporate & Other segment decreased by $9.6 million for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. This was due primarily to reductions in stock-based compensation and other operating expenses, net of debt service costs.

    Six months ended June 30, 2012 and 2011

        Income from continuing operations for the six months ended June 30, 2012 was $25.4 million, or $0.30 per diluted share, compared to $5.0 million or $0.06 per diluted share for the six months ended June 30, 2011. Income from continuing operations for the six months ended June 30, 2012 includes realized investment gains, net of taxes, of $5.4 million, or $0.06 per diluted share, generated primarily as investments at our Pyramid Life Insurance Company subsidiary were liquidated to raise $80.2 million of cash to settle surplus note principal and interest paid to Universal American Corp. in March, compared with $1.3 million, or $0.02 per diluted share for the same period of 2011. For the six months ended June 30, 2012, our effective tax rate on income from continuing operations was 41.0% compared to 28.7% for the same period in 2011. State income taxes and permanent items, relating to non-deductible executive compensation, APS Healthcare transaction costs and non-deductible interest on the mandatorily redeemable preferred stock drove the 2012 effective rate in excess of the 35% federal rate. 2012 and 2011 also included non-recurring tax benefits of $0.1 million and $0.8 million, respectively, related to state income tax refunds which drove the lower effective rate in 2011.

33


Table of Contents

        Our Senior Managed Care—Medicare Advantage segment generated income before income taxes of $39.9 million for the six months ended June 30, 2012, an increase of $13.2 million compared to the six months ended June 30, 2011. The increase in earnings was driven by an improvement in the medical expense ratio from 83.9% in the first half of 2011 to 82.5% in the first half of 2012 and improved expense efficiency as a result of our expense reduction initiatives. This was partially offset by a 24% decrease in the member months for the first half of 2012 compared to the first half of 2011. The first half of 2012 included favorable prior period items of $11.6 million compared to favorable prior period items of $1.2 million in the first half of 2011. The first half of 2012 also included $9.4 million of start-up costs relating to the development of CHS and its affiliated ACOs.

        Our Traditional Insurance segment generated income before income taxes of $9.8 million for the six months ended June 30, 2012; an increase of $7.6 million compared to the six months ended June 30, 2011. The increase in earnings is driven primarily by the decrease in commissions and general expenses, net of allowances resulting from a smaller block of business in force and the decision to cease marketing Traditional insurance products effective in June 2012 as well as improved profitability on our block of Medicare Supplement business.

        The loss before income taxes from our Corporate & Other segment decreased by $10.4 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011. This was due primarily to reductions in stock-based compensation and other operating expenses, net of debt service costs.

Segment Results—Senior Managed Care—Medicare Advantage

 
  Three months ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
  (in thousands)
 

Net premiums

  $ 391,367   $ 495,546   $ 811,393   $ 1,006,798  

Net investment income

    5,839     6,836     11,910     14,113  

Fee and other income

    51     629     85     1,156  
                   

Total revenue

    397,257     503,011     823,388     1,022,067  
                   

Medical expenses

    328,492     410,222     669,250     844,281  

Amortization of intangible assets

    782     1,078     1,564     2,077  

Commissions and general expenses

    57,270     71,364     112,639     148,956  
                   

Total benefits, claims and other deductions

    386,544     482,664     783,453     995,314  
                   

Segment income before income taxes

  $ 10,713   $ 20,347   $ 39,935   $ 26,753  
                   

        Our Senior Managed Care—Medicare Advantage segment includes the operations of our Medicare coordinated care HMO, PPO, network-based PFFS and non-network (Rural) PFFS Plans (collectively, the "Plans"), which provides coverage to Medicare beneficiaries in 36 states. Our HMOs offer coverage to Medicare beneficiaries primarily in Southeastern Texas, the area surrounding Dallas/Ft. Worth, 16 counties in Oklahoma and three counties in Indiana. The segment also includes start-up costs for our new ACOs managed under our new subsidiary, CHS.

        Membership.    Membership in our Medicare Advantage plans declined by 30,000 members from June 30, 2011 to June 30, 2012 principally as a result of lower sales during the 2012 Annual Coordinated Election Period, disenrollment and service area reductions.

34


Table of Contents

    Three months ended June 30, 2012 and 2011

        Our Senior Managed Care—Medicare Advantage segment generated income before income taxes of $10.7 million for the three months ended June 30, 2012, a decrease of $9.6 million compared to the three months ended June 30, 2011. The second quarter of 2012 included $5.3 million of start-up costs relating to the development of CHS and its affiliated ACOs. The decrease in earnings was also driven by a 23% decrease in the member months for the quarter compared to the second quarter 2011 and a higher medical expense ratio of 83.9% in the second quarter 2012 compared to 82.8% in the second quarter 2011. The second quarter of 2012 included favorable prior period items of $2.3 million compared to favorable prior period items of $5.6 million in the second quarter of 2011.

        Net Premiums.    Net premiums for the Senior Managed Care—Medicare Advantage segment decreased by $104.2 million compared to the three months ended June 30, 2011, primarily due to the decline in membership that resulted in lower member months.

        Medical expenses.    Medical expenses decreased by $81.7 million compared to the second quarter of 2011, as a result of the decrease in member months partially offset by an increase in the medical expense ratio for retained members. The medical expense ratio increased to 83.9% for the second quarter of 2012 from 82.8% for the same period in 2011. Excluding the prior period items discussed above, the medical expense ratio for the second quarter of 2012 was 84.4%.

        Commissions and general expenses.    Commissions and general expenses for the three months ended June 30, 2012 decreased $14.1 million compared to the three months ended June 30, 2011. This was primarily as the result of the decreased level of membership and the execution of our expense reduction plans, partially offset by $5.3 million investment in the continued development of ACOs. Excluding the ACO development costs, the ratio of commissions and general expenses to net premiums decreased to 13.3% in the second quarter 2012 from 14.4% in the second quarter of 2011, primarily as a result of execution of our expense reduction plans and higher premiums per member.

    Six months ended June 30, 2012 and 2011

        Our Senior Managed Care—Medicare Advantage segment generated income before income taxes of $39.9 million for the six months ended June 30, 2012, an increase of $13.2 million compared to the six months ended June 30, 2011. The increase in earnings was driven by an improvement in the medical expense ratio from 83.9% in the first half of 2011 to 82.5% in the first half of 2012 and improved expense efficiency as a result of our expense reduction initiatives. This was partially offset by a 24% decrease in the member months for the first half of 2012 compared to the first half of 2011. The first half of 2012 included favorable prior period items of $11.6 million compared to favorable prior period items of $1.2 million in the first half of 2011. The first half of 2012 also included $9.4 million of start-up costs relating to the development of CHS and its affiliated ACOs.

        Net Premiums.    Net premiums for the Senior Managed Care—Medicare Advantage segment decreased by $195.4 million compared to the six months ended June 30, 2011, primarily due to the decline in membership that resulted in lower member months. Our ongoing chart review process resulted in an $11.4 million favorable premium adjustment related to 2011 risk scores recorded during the first half of 2012 compared to a $3.1 million favorable adjustment of 2010 risk scores recorded during the first half of 2011.

        Medical expenses.    Medical expenses decreased by $175.0 million compared to the first half of 2011, as a result of the decrease in member months and an improvement in the medical expense ratio for retained members. The medical expense ratio improved to 82.5% for the first half of 2012 from 83.9% for the same period in 2011. Excluding the prior period items discussed above, the medical expense ratio for the first half of 2012 was 83.5%

35


Table of Contents

        Commissions and general expenses.    Commissions and general expenses for the six months ended June 30, 2012 decreased $36.3 million compared to the six months ended June 30, 2011.This was primarily as the result of the decreased level of membership and the execution of our expense reduction plans, partially offset by $9.4 million investment in the development of CHS and its affiliated ACOs. Excluding the ACO development costs, the ratio of commissions and general expenses to net premiums decreased to 12.7% in the first half of 2012 from 14.8% in the first half of 2011, primarily as a result of execution of our expense reduction plans and higher premiums per member.

Segment Results—Traditional Insurance

 
  Three months ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
  (in thousands)
 

Net premiums

  $ 61,391   $ 63,506   $ 125,782   $ 132,368  

Net investment income

    4,620     4,995     9,794     10,733  

Other income

    695     512     1,189     817  
                   

Total revenue

    66,706     69,013     136,765     143,918  
                   

Policyholder benefits

    47,153     49,430     97,075     104,605  

Change in deferred acquisition costs

    654     516     1,938     2,394  

Commissions and general expenses, net of allowances

    13,524     17,466     27,944     34,681  
                   

Total benefits, claims and other deductions

    61,331     67,412     126,957     141,680  
                   

Segment income before income taxes

  $ 5,375   $ 1,601   $ 9,808   $ 2,238  
                   

    Three months ended June 30, 2012 and 2011

        Our Traditional Insurance segment generated income before income taxes of $5.4 million for the three months ended June 30, 2012; an increase of $3.8 million compared to the three months ended June 30, 2011. The increase in earnings is driven primarily by the decrease in commissions and general expenses, net of allowances resulting from a smaller block of business in force and the decision to cease marketing Traditional insurance products effective in June 2012.

        The following tables detail premium for the segment by major lines of business:

Premium

 
  Three months ended June 30,  
 
  2012   2011  
 
  Gross   Ceded   Net   Gross   Ceded   Net  
 
  (in thousands)
 

Senior market

  $ 57,407   $ (12,451 ) $ 44,956   $ 60,951   $ (14,767 ) $ 46,184  

Specialty health

    14,025     (1,840 )   12,185     15,377     (2,189 )   13,188  

Life insurance and annuity

    13,780     (9,530 )   4,250     15,501     (11,367 )   4,134  
                           

Total premium

  $ 85,212   $ (23,821 ) $ 61,391   $ 91,829   $ (28,323 ) $ 63,506  
                           

        Net Premiums.    Net premium declined by $2.1 million, or 3.3%, from the second quarter of 2011. This is primarily the result of the continued effect of lapsation on our Medicare supplement and specialty health in-force business, partially offset by an increase in our retained senior life block of business.

36


Table of Contents

        In conjunction with the sale of our Part D business, the traditional business of Pennsylvania Life Insurance Company was reinsured by one of our subsidiaries in order to retain that business at New Universal American. Under the reinsurance agreement, the net premium of Pennsylvania Life is recorded as gross premium on New Universal American, resulting in a decrease in both direct and ceded premium in the quarter ended June 30, 2012 as compared to 2011.

        Policyholder benefits.    Policyholder benefits declined by $2.3 million, or 4.6%, compared to the second quarter of 2011. This decline was principally due to the overall decline of insurance in-force in the senior market and specialty health lines of business. For the three months ended June 30, 2012, the Medicare supplement policyholder benefit ratio improved to 72.3%, compared with 74.9% for the same period last year, due to a lower average claim trend. Specialty health's benefit ratio increased to 101.5%, compared with 97.0% for the same period last year, due to increased severity of claims.

        Commissions and general expenses, net of allowances.    The following table details the components of commission and general expenses, net of allowances:

 
  Three months ended
June 30,
 
 
  2012   2011  
 
  (in thousands)
 

Direct commissions

  $ 5,262   $ 6,501  

Other operating costs

    6,656     10,184  

Reinsurance commissions and allowances

    1,606     781  
           

Commissions and general expenses, net of allowances

  $ 13,524   $ 17,466  
           

        Total commissions and general expenses, net of allowances, decreased by $3.9 million compared to the second quarter of 2011. As a result of our reinsurance agreement with Pennsylvania Life, amounts which were reported as direct commissions and other operating costs prior to the sale of the Part D business on April 29, 2011, are now reported as reinsurance commissions and allowances on business assumed from Pennsylvania Life. Direct commission expense decreased $1.2 million compared to the same period in the prior year. This decrease was partially offset by a corresponding change in reinsurance commissions and allowances due to the new reinsurance agreement noted above. The remaining decrease in commissions is due to the decline in the amount of business in force. Other operating costs decreased $3.5 million for the quarter ended June 30, 2012, compared to the second quarter of 2011. This decrease was partially offset by a corresponding change in reinsurance allowances, as discussed above, with the balance of the decline attributed to lower costs required to run a smaller book of business in force.

    Six months ended June 30, 2012 and 2011

        Our Traditional Insurance segment generated income before income taxes of $9.8 million for the six months ended June 30, 2012; an increase of $7.6 million compared to the six months ended June 30, 2011. The increase in earnings is driven primarily by the decrease in commissions and general expenses, net of allowances resulting from a smaller block of business in force and the decision to cease marketing Traditional insurance products effective in June 2012 as well as improved profitability on our block of Medicare Supplement business.

37


Table of Contents

        The following tables detail premium for the segment by major lines of business:

Premium

 
  Six Months ended June 30,  
 
  2012   2011  
 
  Gross   Ceded   Net   Gross   Ceded   Net  
 
  (in thousands)
 

Senior market

  $ 118,802   $ (26,135 ) $ 92,667   $ 128,904   $ (31,238 ) $ 97,666  

Specialty health

    28,081     (3,526 )   24,555     31,085     (4,375 )   26,710  

Life insurance and annuity

    27,649     (19,089 )   8,560     33,163     (25,171 )   7,992  
                           

Total premium

  $ 174,532   $ (48,750 ) $ 125,782   $ 193,152   $ (60,784 ) $ 132,368  
                           

        Net Premiums.    Net premium declined by $6.6 million, or 5.0%, from the first half of 2011. This is primarily the result of the continued effect of lapsation on our Medicare supplement and specialty health in-force business, partially offset by an increase in our retained senior life block of business.

        In conjunction with the sale of our Part D business, the traditional business of Pennsylvania Life Insurance Company was reinsured by one of our subsidiaries in order to retain that business at New Universal American. Under the reinsurance agreement, the net premium of Pennsylvania Life is recorded as gross premium on New Universal American, resulting in a decrease in both direct and ceded premium in the six months ended June 30, 2012 as compared to 2011.

        Policyholder benefits.    Policyholder benefits declined by $7.5 million, or 7.2%, compared to the first half of 2011. This decline was principally due to the overall decline of insurance in-force in the senior market and specialty health lines of business. For the six months ended June 30, 2012, the Medicare supplement policyholder benefit ratio improved to 74.1%, compared with 76.9% for the same period last year, due to a lower average claim trend. Specialty health's benefit ratio increased slightly to 96.7%, compared with 95.9% for the same period last year.

        Commissions and general expenses, net of allowances.    The following table details the components of commission and general expenses, net of allowances:

 
  Six Months ended
June 30,
 
 
  2012   2011  
 
  (in thousands)
 

Direct commissions

  $ 10,638   $ 15,984  

Other operating costs

    13,907     21,757  

Reinsurance commissions and allowances

    3,399     (3,060 )
           

Commissions and general expenses, net of allowances

  $ 27,944   $ 34,681  
           

        Total commissions and general expenses, net of allowances, decreased by $6.7 million compared to the first half of 2011. As a result of our reinsurance agreement with Pennsylvania Life, amounts which were reported as direct commissions and other operating costs prior to the sale of the Part D business on April 29, 2011, are now reported as reinsurance commissions and allowances on business assumed from Pennsylvania Life. Direct commission expense decreased $5.3 million compared to the same period in the prior year. This decrease was partially offset by a corresponding change in reinsurance commissions and allowances due to the new reinsurance agreement noted above. The remaining decrease in commissions is due to the decline in the amount of business in force. Other operating costs decreased $7.9 million for the six month period ended June 30, 2012, compared to the same period in 2011. This decrease was partially offset by a corresponding change in reinsurance allowances, as

38


Table of Contents

discussed above, with the balance of the decline attributed to lower costs required to run a smaller book of business in force.

    Segment Results—Corporate & Other

        The following table presents the primary components comprising the loss before income taxes for the segment:

 
  Three months
ended
June 30,
  Six months ended
June 30,
 
 
  2012   2011   2012   2011  
 
  (in thousands)
  (in thousands)
 

Debt service

  $ 2,205   $ 616   $ 3,569   $ 617  

Stock-based compensation expense

    1,120     10,188     2,566     12,971  

Other parent company expense, net of revenue

    4,963     6,220     7,802     10,080  

Net loss—Senior Administrative Services & APS Healthcare

    597     140     984     340  
                   

Segment loss before income taxes

  $ 8,885   $ 17,164   $ 14,921   $ 24,008  
                   

        Corporate & Other includes the results of APS Healthcare since it was acquired on March 2, 2012.

    Three months ended June 30, 2012 and 2011

        The loss before income taxes from our Corporate & Other segment decreased by $9.6 million for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. This was due primarily to reductions in stock-based compensation and other operating expenses, net of debt service costs.

        Debt service represents interest expense and the amortization of capitalized loan origination fees associated with the new credit facility entered into in connection with our acquisition of APS Healthcare on March 2, 2012 and dividends on the Mandatorily Redeemable Preferred Stock, which was issued on April 29, 2011.

        Stock-based compensation expense declined $9.1 million primarily as a result of $8.6 million incurred in the quarter ended June 30, 2011 related to the accelerated vesting of equity awards in connection with the Part D Transaction and the Medicare Advantage and Traditional segments being charged for the stock-based compensation expense of their employees for the first time in 2012, which amounted to $0.9 million.

        Other parent company expense, net of revenue was $1.3 million lower in the second quarter of 2012 compared to the same period in 2011 primarily due to reimbursement from CVS Caremark for certain services provided under a transition services agreement in connection with the Part D Transaction.

    Six months ended June 30, 2012 and 2011

        The loss before income taxes from our Corporate & Other segment decreased by $10.4 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011. This was due primarily to reductions in stock-based compensation and other operating expenses, net of debt service costs.

        Debt service represents interest expense and the amortization of capitalized loan origination fees associated with the new credit facility entered into in connection with our acquisition of APS Healthcare on March 2, 2012 and dividends on the Mandatorily Redeemable Preferred Stock, which was issued on April 29, 2011.

39


Table of Contents

        Stock-based compensation expense declined $10.4 million primarily as a result of $8.6 million incurred in the period ended June 30, 2011 related to the accelerated vesting of equity awards in connection with the Part D Transaction and the Medicare Advantage and Traditional segments being charged for the stock-based compensation expense of their employees for the first time in 2012, which amounted to $1.9 million.

        Other parent company expense, net of revenue was $2.3 million lower for the six months ended June 30, 2012 compared to the same period in 2011 primarily due to insurance recoveries in 2012 related to litigation settled in prior years and reimbursement from CVS Caremark for certain services provided under a transition services agreement in connection with the Part D Transaction, partially offset by $3.7 million of costs incurred in connection with the acquisition of APS Healthcare.

Liquidity and Capital Resources

        Sources and Uses of Liquidity to the Parent Company, Universal American Corp.    We require cash at our parent company to support the growth of our insurance, HMO and other subsidiaries, fund potential growth through acquisitions of other companies or blocks of business, and pay the operating expenses necessary to function as a holding company, as applicable insurance department regulations require us to bear our own expenses.

        The parent company's sources and uses of liquidity are derived primarily from the following:

    surplus note payments and dividends from and capital contributions to our insurance and HMO subsidiaries;

    the cash flows of our other subsidiaries, including APS Healthcare and our management service organization;

    the funding of CHS and other growth initiatives;

    payment of dividends to shareholders and holders of our mandatorily redeemable preferred stock;

    payment of debt principal, interest and fees required under our 2012 Credit Facility; and

    payment of certain corporate overhead costs and public company expenses.

        As of June 30, 2012, we had $148.2 million of unregulated cash and investments at the parent holding company.

        Insurance and HMO subsidiaries—Surplus Note, Dividends and Capital Contributions.    We require cash at our insurance and HMO subsidiaries to meet our policy-related obligations and to pay operating expenses, including the cost of administration of the policies, and to maintain adequate capital levels. Excess capital can be used by the insurance and HMO subsidiaries to make dividend payments to their respective holding companies, subject to certain restrictions, and from there to our parent company.

        Our insurance subsidiaries are required to maintain minimum amounts of statutory capital and surplus as required by regulatory authorities and each currently exceeds its respective minimum requirement at levels we believe are sufficient to support their current levels of operation. Our HMO subsidiaries are also required by regulatory authorities to maintain minimum amounts of capital and surplus and each currently is at or exceeds this minimum requirement.

        At June 30, 2012, we held cash, cash equivalents and short term investments totaling $323.2 million and fixed maturity securities that could readily be converted to cash with carrying values of $1.2 billion at our insurance and HMO subsidiaries. We believe that this level of liquidity is sufficient to meet our obligations and pay expenses.

40


Table of Contents

        In 2007, our wholly-owned subsidiary, The Pyramid Life Insurance Company issued $60.0 million of surplus notes payable to our parent company, bearing interest at an average fixed rate of 7.5%. On March 29, 2012, after receiving regulatory approval, the parent company received $80.2 million in cash from Pyramid, representing payment in full on the surplus notes, including $60 million of principal and $20.2 million of interest.

        Capital contributions to and dividends from our Insurance and HMO subsidiaries are made through their respective holding companies. We did not make any capital contributions to our insurance subsidiaries during the first six months of 2012. In the first half of 2012, our insurance companies paid $28.4 million of dividends to their holding company. We made capital contributions of $100,000 in each of March and June 2012 to our HMO subsidiary, SelectCare of Oklahoma, Inc. Our HMO subsidiaries did not pay a dividend in the first half of 2012. In July 2012, SelectCare of Texas, Inc. paid a dividend of $23.9 million to its holding company

        APS Healthcare cash flows.    The primary sources of liquidity for APS Healthcare are fees from health plans, state agencies and related organizations for performing a range of healthcare services. The primary uses of liquidity are the payments for salaries and expenses associated with providing these services. We believe the sources of cash for APS Healthcare will exceed scheduled uses of cash and result in amounts available to dividend to our parent company.

        Management service organization cash flows.    The primary sources of liquidity for these subsidiaries are fees collected from clients for performing administrative, marketing and management services. The primary uses of liquidity are the payments for salaries and expenses associated with providing these services. We believe the sources of cash for these subsidiaries will exceed scheduled uses of cash and result in amounts available to dividend to our parent company.

        Investments.    We invest primarily in fixed maturity securities of the U.S. Government and its agencies, U.S. state and local governments, mortgage-backed securities and corporate fixed maturity securities with investment grade ratings of BBB- or higher by S&P or Baa3 or higher by Moody's Investor Service. As of June 30, 2012, approximately 99% of our fixed maturity investments had investment grade ratings from S&P or Moody's.

        Cash and cash equivalents and short term investments represent approximately 22% of our portfolio at June 30, 2012 and 9% at December 31, 2011. In the aggregate, approximately 47% of our cash and invested assets at June 30, 2012 are held in securities backed by the U.S. government or its agencies, as compared with 34% at December 31, 2011. These increases were primarily driven by the early receipt of approximately $180 million of July CMS premium on June 29, 2012. The average credit quality of our total investment portfolio was AA at June 30, 2012 and AA- at December 31, 2011.

        The net yields on our cash and invested assets decreased to 3.2% for the six months ended June 30, 2012, from 3.7% for the six months ended June 30, 2011. The overall decrease in yield is primarily due to a change in the mix of assets.

        2012 Credit Facility.    In connection with the acquisition of APS Healthcare, on March 2, 2012, we entered into a new credit facility (the "2012 Credit Facility") consisting of a five-year $150 million senior secured term loan and a $75 million senior secured revolving credit facility.

        The 2012 Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants. Negative covenants include, among others, limitations on the incurrence of indebtedness, limitations on the incurrence of liens and limitations on acquisition, dispositions, investments and restricted payments. In addition, the 2012 Credit Facility contains certain financial covenants relating to minimum risk-based capital, consolidated leverage ratio, and consolidated debt service ratio. As of June 30, 2012, we were in compliance with all financial covenants.

41


Table of Contents

        The 2012 Credit Facility bears interest at rates equal to, at the Company's election, the reserve-adjusted eurodollar rate or the base rate, plus an applicable margin that varies based on the Company's consolidated leverage ratio from 1.75% to 2.50%, in the case of eurodollar loans, and from 0.75% to 1.50% in the case of base rate loans. The Company will also be required to pay a commitment fee on unused availability under the Revolving Facility from time to time, that will vary based on the Company's consolidated leverage ratio, from 0.40% to 0.50%. Effective June 30, 2012, the interest rate on the term loan portion of the 2012 Credit Facility was 2.49%, based on a spread of 225 basis points above Libor. We had not drawn on the revolving loan facility as of the date of this report.

        The 2012 Credit Facility contains customary events of default. Upon the occurrence and during the continuance of an event of default, the Lenders may declare the outstanding advances and all other obligations under the 2012 Credit Facility immediately due and payable. The Company's obligations under the Credit Agreement are secured by a first priority security interest in 100% of the capital stock of the Company's material subsidiaries and are also guaranteed by certain of our subsidiaries.

        For additional information on Liquidity and Capital Resources, please refer to our annual report on Form 10-K for the year ended December 31, 2011, filed by Universal American on March 1, 2012.

    Critical Accounting Policies

        There have been no changes in our critical accounting policies during the first half of 2012 other than the retrospective adoption of ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, as discussed in Note 3—Recently Issued and Pending Accounting Pronouncements. For a description of our significant accounting policies, see Note 3—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2011.

Policy and Contract Claims—Accident and Health Policies

        The following table presents the components of the change in our liability for policy and contract claims—health for the six months ended June 30, 2012:

 
  June 30,
2012
 
 
  (in thousands)
 

Balance at beginning of year

  $ 173,674  

Less reinsurance recoverable

    (5,184 )
       

Net balance at beginning of year

    168,490  
       

Balances acquired

    8,472  
       

Incurred related to:

       

Current Year

    808,217  

Prior Year Development

    (1,429 )
       

Total Incurred

    806,788  
       

Paid related to:

       

Current Year

    671,698  

Prior Year

    153,480  
       

Total paid

    825,178  
       

Net balance at end of period

    158,572  

Plus reinsurance recoverable

    5,174  
       

Balance at end of period

  $ 163,746  
       

42


Table of Contents

        Commencing with the filing of this quarterly report on Form 10-Q, we have retrospectively reclassified certain liability balances for claims incurred but not reported within the consolidated balance sheets from policy and contract claims—health to reserves for future policy benefits—health. We believe that this change better presents the proper classification of this liability. This reclassification had no effect on total assets, total liabilities, stockholders' equity, net income or earnings per share as previously reported.

        The liability for policy and contract claims—health decreased by $9.9 million at June 30, 2012 from December 31, 2011. The ending liability includes $7.4 million for newly acquired APS Healthcare. The decrease in the liability was primarily attributable to lower reserves for our Medicare Advantage business due to a decline in membership partially offset by higher amounts of pending claims and the acquired claim reserves from APS Healthcare.

        The medical cost amount, noted as "prior year development" in the table above, represents (favorable) or unfavorable adjustments as a result of prior year claim estimates being settled or currently expected to be settled, for amounts that are different than originally anticipated. This prior year development occurs due to differences between the actual medical utilization and other components of medical cost trends, and actual claim processing and payment patterns compared to the assumptions for claims trend and completion factors used to estimate our claim liabilities.

        During the six months ended June 30, 2012, claim reserves settled, or are currently expected to be settled, for $1.4 million less than estimated at December 31, 2011. Prior period development represents less than 0.1% of the incurred claims recorded in 2011.

Sensitivity Analysis

        The following table illustrates the sensitivity of our accident and health IBNR payable at June 30, 2012 to identified reasonably possible changes to the estimated weighted average completion factors and healthcare cost trend rates. However, it is possible that the actual completion factors and healthcare cost trend rates will develop differently from our historical patterns and therefore could be outside of the ranges illustrated below.

Completion Factor(1):   Claims Trend Factor(2):  
(Decrease) Increase in
Factor
  Increase (Decrease) in
Net Health IBNR
  (Decrease) Increase in
Factor
  (Decrease) Increase in
Net Health IBNR
 
($ in thousands)
 
  (3 )% $ 462     (3 )% $ (7,277 )
  (2 )%   308     (2 )%   (4,851 )
  (1 )%   154     (1 )%   (2,426 )
  1 %   (154 )   1 %   2,426  
  2 %   (308 )   2 %   4,851  
  3 %   (462 )   3 %   7,277  

(1)
Reflects estimated potential changes in medical and other expenses payable, caused by changes in completion factors for incurred months prior to the most recent three months.

(2)
Reflects estimated potential changes in medical and other expenses payable, caused by changes in annualized claims trend used for the estimation of per member per month incurred claims for the most recent three months.

Effects of Recently Issued and Pending Accounting Pronouncements

        A summary of recent and pending accounting pronouncements is provided in Note 3—Recently Issued and Pending Accounting Pronouncements.

43


Table of Contents

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        In general, market risk to which we are subject relates to changes in interest rates that affect the market prices of our fixed income securities.

Investment Interest Rate Sensitivity

        Our profitability could be affected if we were required to liquidate fixed income securities during periods of rising and/or volatile interest rates. We attempt to mitigate our exposure to adverse interest rate movements through a combination of active portfolio management and by staggering the maturities of our fixed income investments to assure sufficient liquidity to meet our obligations and to address reinvestment risk considerations. Our investment policy is to balance our portfolio duration to achieve investment returns consistent with the preservation of capital and to meet payment obligations of policy benefits and claims.

        Some classes of mortgage-backed securities are subject to significant prepayment risk. In periods of declining interest rates, individuals may refinance higher rate mortgages to take advantage of the lower rates then available. We monitor and adjust our investment portfolio mix to mitigate this risk.

        We regularly conduct various analyses to gauge the financial impact of changes in interest rate on our financial condition. The ranges selected in these analyses reflect our assessment as being reasonably possible over the succeeding twelve-month period. The magnitude of changes modeled in the accompanying analyses should not be construed as a prediction of future economic events, but rather, be treated as a simple illustration of the potential impact of such events on our financial results.

        The sensitivity analysis of interest rate risk assumes an instantaneous shift in a parallel fashion across the yield curve, with scenarios of interest rates increasing and decreasing 100 and 200 basis points from their levels as of June 30, 2012, and with all other variables held constant. The following table summarizes the impact of the assumed changes in market interest rates. Due to the current low interest rate environment, when estimating the effect of market interest rate decreases on fair value we have set an interest rate floor of 0% and have not allowed interest rates to go negative.

June 30, 2012   Effect of Change in Market Interest Rates on Fair Value
of Fixed Income Portfolio as of June 30, 2012
 
Fair Value of
Fixed Income Portfolio
  200 Basis
Point Decrease
  100 Basis
Point Decrease
  100 Basis
Point Increase
  200 Basis
Point Increase
 
(in millions)
 
$ 1,152.5   $ 42.8   $ 33.0   $ (46.0 ) $ (94.7 )

Debt

        We pay interest on our term loan based on LIBOR over one, two, three or six month interest periods. Due to the variable interest rate, we would be subject to higher interest costs if short-term interest rates rise. We regularly conduct various analyses to gauge the financial impact of changes in interest rates on our financial condition. The ranges selected in these analyses reflect our assessment as being reasonably possible over the succeeding twelve-month period. The magnitude of changes modeled in the accompanying analyses should not be construed as a prediction of future economic events, but rather, be treated as a simple illustration of the potential impact of such events on our financial results.

        The sensitivity analysis of interest rate risk assumes scenarios involving increases or decreases in LIBOR of 100 and 200 basis points from their levels as of and for the six months ended June 30, 2012,

44


Table of Contents

and with all other variables held constant. The following table summarizes the impact of changes in LIBOR.

 
   
   
  Effect of Change in LIBOR on Pre-tax Income
for the six months ended June 30, 2012
 
 
   
  Weighted
Average
Balance
Outstanding
 
Description of Floating Rate Debt
  Weighted
Average
Interest Rate
  200 Basis
Point
Decrease(1)
  100 Basis
Point
Decrease(1)
  100 Basis
Point
Increase
  200 Basis
Point
Increase
 
 
   
  (in millions)
 

Loan payable(1)

    2.51 % $ 97.3   $ 0.1   $ 0.1   $ (0.5 ) $ (1.0 )

(1)
The initial borrowing under the loan payable was $150 million on March 2, 2012 and the balance was $139 million as of June 30, 2012. There was no loan payable balance prior to March 2, 2012. This caused the daily weighted average balance outstanding for the first six months of the year to be $97 million, as shown above. Additionally, the LIBOR rate from March to June on our Loan payable was approximately 25 basis points and, for the purposes of this illustration, decreases in monthly rates over this period have been limited to this rate.

        As noted above, we have floating rate debt outstanding of $139 million as of June 30, 2012, which is exposed to rising interest rates. We had approximately $296 million of cash and cash equivalents along with $29 million of short-term investments as of June 30, 2012.

        The magnitude of changes reflected in the above analysis regarding interest rates should not be construed as a prediction of future economic events, but rather as an illustration of the potential impact of such events on our financial results.

ITEM 4—CONTROLS AND PROCEDURES

    Disclosure Controls and Procedures

        We maintain disclosure controls and procedures that are designed to ensure that we record, process, summarize and report the information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 within the time periods specified in the SEC's rules and forms, and that we accumulate this information and communicate it to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

    Inherent Limitations on Effectiveness of Controls

        Our disclosure controls and procedures and our internal controls over financial reporting may not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system must reflect the fact that there are resource constraints, and we must consider the benefits of controls relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that we have detected all control issues and instances of fraud, if any, within Universal American. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The individual acts of some persons or collusion of two or more people can also circumvent controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

45


Table of Contents

    Evaluation of Effectiveness of Controls

        We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2012. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2012, at a reasonable assurance level, to timely alert management to material information required to be included in our periodic filings with the Securities and Exchange Commission.

    Changes in Internal Control over Financial Reporting

        There were no changes in our internal controls over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


PART II

ITEM 1—LEGAL PROCEEDINGS

        For information relating to litigation affecting us, see Note 11—Commitments and Contingencies in Part I—Item 1 of this report, which is incorporated into this Part II—Item 1—Legal Proceedings by reference.

ITEM 1A—RISK FACTORS

        There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on March 1, 2012, as modified by the changes to those risk factors included in other reports we filed with the SEC subsequent to March 1, 2012.

ITEM 2—UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

        None.

ITEM 3—DEFAULTS UPON SENIOR SECURITIES

        None.

ITEM 4—MINE SAFETY DISCLOSURES

        None.

ITEM 5—OTHER INFORMATION

        None.

46


Table of Contents


ITEM 6—EXHIBITS

        Each exhibit identified below is filed as a part of this report.

31.1   Certification of Chief Executive Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2

 

Certification of Chief Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934.

32.1

 

Certification of the Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS—XBRL

 

Instance Document.

101.SCH—XBRL

 

Taxonomy Extension Schema Document.

101.CAL—XBRL

 

Taxonomy Extension Calculation Linkbase Document.

101.LAB—XBRL

 

Taxonomy Extension Label Linkbase Document.

101.PRE—XBRL

 

Taxonomy Extension Presentation Linkbase Document.

101.DEF—XBRL

 

Taxonomy Extension Definition Linkbase Document.

47


Table of Contents


SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    UNIVERSAL AMERICAN CORP.

July 26, 2012

 

/s/ RICHARD A. BARASCH

Richard A. Barasch
Chief Executive Officer

July 26, 2012

 

/s/ ROBERT A. WAEGELEIN

Robert A. Waegelein
Co-President and Chief Financial Officer
(Principal Accounting Officer)

48



XNYS:UAM Universal American Corp Quarterly Report 10-Q Filling

Universal American Corp XNYS:UAM Stock - Get Quarterly Report SEC Filing of Universal American Corp XNYS:UAM stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

Content Partners
XNYS:UAM Universal American Corp Quarterly Report 10-Q Filing - 6/30/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Popularity |  Our Choices |  Most Recent Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: XNYS:UAM Universal American Corp Quarterly Report 10-Q Filing - 3/31/2012  |  Next: XNYS:UAN CVR Partners LP Insider Activity 3 Filing - 1/4/2012