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TYPE: 8-K
SEQUENCE: 1
DESCRIPTION: COVENTRY HEALTH CARE FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 1999
COVENTRY HEALTH CARE, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-29676 52-2073000
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
6705 Rockledge Drive, Suite 900
Bethesda, Maryland 20817
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (301) 581-0600
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events - Amendment Waiving Rights to Indemnity Business
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On May 19, 1999, Coventry Health Care, Inc. ("Coventry") entered into an
agreement with Principal Life Insurance Company ("Principal Life") under which
Coventry waived its rights to reinsure and renew Principal Life's health
insurance indemnity business located in Coventry's service area in exchange for
$20 million in cash. A copy of the press release that was issued announcing
the transaction is attached as Addendum A to this Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COVENTRY HEALTH CARE, INC.
Date: June 2, 1999 By: /s/ Dale B. Wolf
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Dale B. Wolf
Executive Vice President and
Chief Financial Officer
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Addendum A
[COVENTRY HEALTH CARE LOGO] News Release
6705 Rockledge Drive, Suite 900
Bethesda, MD 20817-1850
(301) 581-0600
FOR IMMEDIATE RELEASE Contact: Dale B. Wolf
Chief Financial Officer
(301) 581-0600, #2209
Investor Relations
(301) 581-0600, #2778
COVENTRY HEALTH CARE
AMENDS AGREEMENT WITH PRINCIPAL LIFE
Bethesda, Maryland (May 19, 1999) Coventry Health Care, Inc. (Nasdaq/NM:CVTY)
today announced that it has amended its agreement with Principal Life Insurance
Company (Principal Life) and thereby waived its rights to reinsure and renew
Principal Life's health insurance indemnity business located in Coventry's
service area. Coventry will receive $20 million in cash in exchange for
waiving these rights. This transaction is expected to close on or about June
1, 1999. The amendment has no impact on the Company's existing management
services agreement with Principal Life.
On April 1, 1998, Coventry Health Care entered into an agreement, as
part of the Company's merger with Principal Health Care, to manage that portion
of Principal Life's health insurance indemnity business located in Coventry's
markets through December 31, 1999. After that time Coventry would reinsure and
renew the business on the books of its subsidiary, Coventry Health and Life
Insurance Company.
"We decided that fully integrating this book of indemnity business did
not fit with Coventry's long-term strategic plan," said Dale B. Wolf, chief
financial officer of Coventry. "Reinsuring Principal Life's indemnity business
would have required us to diffuse our focus and divert available capital from
our core managed care business."
Coventry Health Care is a managed health care company operating health
plans under the names Principal Health Care, HealthAmerica, HealthAssurance,
HealthCare USA, Group Health Plan and Southern Health. The Company provides a
full range of managed care products and services including HMO, PPO, POS,
Medicare Risk and Medicaid to 1.4 million members in a broad cross section of
employer and government-funded groups in 15 markets throughout the Midwest,
Mid-Atlantic and Southeast United States. More information on Coventry is
available on the Internet at http://www.cvty.com.
This press release contains forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements relate to future events or future financial performance
and may be significantly impacted by certain risks and uncertainties described
herein and in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.
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