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As filed with the Securities and Exchange Commission on April 15, 1998
Registration No. 333-42937
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UICI
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(Exact name of registrant as specified in its charter)
Delaware 75-2044750
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(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 392-6700
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Vernon R. Woelke Vernon R. Woelke
4001 McEwen Drive, Suite 200 4001 McEwen Drive, Suite 200
Dallas, Texas 75244 Dallas, Texas 75244
(972) 392-6700 (972) 392-6700
(Name, address, including zip code and telephone number, (Copies of Communications to)
including area code, of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: X
___
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item ll(A) (1)
of this Form, check the following box:
___
If this Form is filed to register additional securities for an offering
pursuant to the Rule 462 (b) under the Securities Act, please check the
following box and list the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
___
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:
___
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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PROSPECTUS
912,017 SHARES
UICI
COMMON STOCK
The shares offered hereby (the "Shares") consist of 912,017 shares of
common stock, par value $0.01 per share (the "Common Stock"), of UICI, a
Delaware corporation (the "Company"). The Shares may be offered from time to
time by certain stockholders (the 'Selling Stockholders') identified herein. See
"Selling Stockholders and Plan of Distribution." The Company will not receive
any part of the proceeds from the sales of the Shares. All expenses of
registration incurred in connection herewith are being borne by the Company, but
all selling and other expenses incurred by the Selling Stockholders will be
borne by the Selling Stockholders.
The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus. The Shares
may be offered and sold from time to time by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest to the Selling
Stockholders, directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares as principals. The distribution
of the Shares may be effected in one or more transactions that may take place
through the Nasdaq Stock Market, including block trades or ordinary broker's
transactions, or through privately negotiated transactions, or through
underwritten public offerings, or through a combination of any such methods of
sale, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specially negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with such sales. See "Selling Stockholders and Plan
of Distribution".
The Company's Common Stock trades on the NASDAQ National Market tier of
The NASDAQ Stock Market under the symbol UICI. On April 14, 1998, the closing
sale price of the Common Stock was $34 5/8 per share.
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April 17, 1998.
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No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained or
incorporated by reference in this Prospectus, in connection with the offering
contained herein and, if given or made, such information must not be relied upon
as having been authorized by the Company or the Selling Stockholders. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
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Selling Stockholders and Plan of
Available Information.............................. 2 Distribution...................................... 10
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Incorporation of Certain Documents
by Reference..................................... 3 Description of Capital Stock....................... 11
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The Company........................................ 4 Experts............................................ 12
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Risk Factors....................................... 6 Legal Matters...................................... 12
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Use of Proceeds.................................... 9
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
and information statements filed by the Company may be inspected and copied at
the Public Reference Section of the Commission at 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W., Washington D.C.
20549 at prescribed rates. The Company's securities are quoted on the NASDAQ
National Market. Reports and other information about the Company may be
inspected at the offices maintained by the National Association of Securities
Dealers, Inc., NASDAQ Reports Section, 1735 K Street, N.W., Washington, D.C.
20006. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding the Company; the address
of such site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Act"), with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Any statements contained herein concerning the provisions of any
document are not necessarily complete and, in each
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instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. Copies of the
Registration Statement, including all exhibits thereto, may be obtained from the
Commission's principal office in Washington D.C. upon payment of the fees
prescribed by the Commission or may be examined without charge at the offices of
the Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company
with the Commission are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997, filed on March 26, 1998.
(b) The Company's Quarterly Reports on Form 10-Q for quarters ended
March 31, 1997 filed on May 15, 1997, June 30, 1997 filed on August 13, 1997,
and September 30, 1997 filed on November 13, 1997.
(c) The registration statement on Form 8-A filed on March 17, 1986,
which discusses the terms of the Common Stock as updated by Quarterly Report on
10-Q for quarter ended June 30, 1996 filed on August 13, 1996.
Each document filed subsequent to the date of this Prospectus by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
Any statement contained in a document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any or all such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests for copies should be
directed to: Investor Relations, UICI, 4001 McEwen Drive, Suite 200, Dallas,
Texas 75244-5082, (telephone number (972) 392-6700).
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THE COMPANY
UICI and subsidiaries (the "Company") is a diversified financial
services company which offers insurance and financial services to niche consumer
markets. The Company also provides technology and outsourcing solutions to the
insurance and health services community.
The Company issues health insurance policies to the self-employed and
student markets. For the self-employed market, which includes self-employed
individuals and individuals who work for small businesses with five or fewer
employees, the Company offers a range of health insurance products. Catastrophic
hospital and basic hospital-medical expense plans are tailored to an insured's
individual needs and include managed care options such as a Preferred Provider
Organization ("PPO") plan as well as other coverage modifications. The Company
markets these products through "dedicated" agency sales forces, consisting of
over 5,000 independent contractors who primarily sell the Company's products.
For the student market, the Company offers tailored insurance programs which
generally provide single school year coverage to individual students primarily
at universities but also at public and private schools for kindergarten through
grade 12. In this market, the Company sells its products through in-house
account executives who focus on colleges and universities on a national basis.
Health insurance premiums were $653.9 million in 1997, or 68% of the Company's
total revenues.
The Company issues life and annuity insurance products to selected
niche markets and acquires blocks of life insurance and annuity policies from
other insurers on an opportunistic basis. The life and annuity insurance
policies issued by the Company are marketed through a dedicated agency sales
force. In addition, the Company assists individuals with no, or troubled, credit
experience in obtaining a nationally recognized credit card. This product is
marketed through a sales force of independent contractors. The Company also
offers a variety of services and technologies focused on lower cost associated
with healthcare administration. The Company has acquired a real estate
organization that is focused on the development, acquisition and management of
institutional quality multifamily communities in the Southeast, Southwest and
Midwest areas of the United States.
Through a series of acquisitions, the Company entered the student loan
business in 1997 where its goal is to provide financial solutions for college
students and the educational institutions they attend. In order to accomplish
this goal, the Company offers an integrated package of student loans, student
loan servicing, and student insurance.
Also in 1997, the Company acquired a provider of motor club services to
motorists. The Company markets and provides over 450,000 members with benefits
such as road and towing assistance, trip routing, emergency travel assistance,
and accident related indemnity benefits.
At its inception in 1984, the Company's business consisted solely of
coinsurance of health and term life insurance policies sold by United Group
Association, Inc. ("UGA Inc.") agents to the self-employed market and issued by
subsidiaries of AEGON USA, Inc. (together with its subsidiaries, "AEGON").
Principally through acquisitions of insurance companies and blocks of life
insurance and annuity policies, and the development of the underwriting and
administrative capabilities to issue insurance policies directly, the percentage
of the Company's total revenues in 1997 relating to the coinsurance business
decreased to 21% from 72% in 1986 (although in absolute terms such revenues
continued to increase over prior years).
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On April 1, 1996 the Company acquired AEGON's underwriting, claims
management and administrative capabilities related to products coinsured by the
Company. In connection with this transaction, UGA Inc. agents began to market
health insurance products of the Company rather than the coinsured product. See
"Health Insurance -- Coinsurance Arrangements." Effective January 1, 1997, the
Company acquired the agency force ("UGA") and certain assets of UGA Inc. for a
price equal to the net book value of the tangible assets acquired and assumed
certain agent commitments of $3.9 million. UGA Inc. is owned 100% by the
Company's President and Chairman of the Board ("Chairman"). The tangible assets
acquired consist primarily of agent debit balances, a building, and related
furniture and fixtures having a net book value of $13.1 million, which
approximates fair market value of the tangible assets. The elimination of the
sharing of business with AEGON and the acquisition of the agency force are
expected to have a positive impact on the long term future of the Company.
The Company's principal subsidiaries through which the business of the
Self-Employed Agency Division, Student Insurance Division and the Life Insurance
and Annuity Division are conducted are The MEGA Life and Health Insurance
Company ("MEGA"), which is wholly-owned by the Company, Mid-West National Life
Insurance Company of Tennessee ("Mid-West"), in which the Company owns 99% of
the outstanding stock, and The Chesapeake Life Insurance Company ("Chesapeake"),
in which the Company owns 78% of the outstanding stock. MEGA is an insurance
company domiciled in Oklahoma and is licensed to issue health, life and annuity
insurance policies in all states except New York. Mid-West is an insurance
company domiciled in Tennessee and is licensed to issue health, life and annuity
insurance policies in Puerto Rico and all states except Maine, New Hampshire,
New York, and Vermont. Chesapeake is an insurance company domiciled in Oklahoma
and is licensed to issue health and life insurance policies in all states except
New Jersey, New York and Vermont. The claims paying ability rating of MEGA and
Mid-West were upgraded to AA- from A+ by Duff & Phelps Credit Rating Co. in
February 1998. MEGA is currently rated "A (Excellent)," Mid-West is currently
rated "A- (Excellent)," and Chesapeake is currently rated "B++ (Very Good)" by
A.M. Best. A.M. Best's ratings currently range from "A++ (Superior)" to "F
(Liquidation)." A.M. Best's ratings are based upon factors relevant to
policyholders, agents, insurance brokers and intermediaries and are not directed
to the protection of investors.
The business of the Credit Services Division is conducted primarily
through United Credit National Bank and Specialized Card Services, Inc., both
wholly-owned subsidiaries, and United Membership Marketing Group, LLC ("UMMG"),
in which the Company owns 88% of the outstanding equity.
The Company entered the student loan business in May 1997 through the
formation of Educational Finance Group, LLP ("EFG") in which it acquired a 63.6%
interest for $20.0 million and contributing its student marketing operations. In
November 1997, EFG acquired a campus-based student loan servicing business for a
purchase price of $22.5 million. In December 1997, the Company exchanged 922,956
shares of its stock for 100% of the stock of ELA Corp. ("ELA"), a company which
markets student loans.
The motor club business is conducted through National Motor Club of
America, Inc. ("Motor Club") which is licensed to do business in 47 states.
Motor Club was acquired in August 1997 in a $40.0 million cash transaction.
Effective January 1, 1997, the Company acquired the remaining interest of its
subsidiaries Insurdata Incorporated ("Insurdata") and UICI Insurance
Administrators, Incorporated ("UAI"), formerly Insurnational Insurance
Administrators Inc., based on a
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predetermined formula price of $15.1 million. The Company acquired a majority
interest in Insurdata and UAI in October 1995.
In November 1996, the Company acquired through a privately negotiated
stock exchange agreement 100% of Amli Realty Co. ("ARC"). ARC is a full-service
real estate organization whose principal investment is a 11% equity interest in
Amli Residential Properties Trust, a publicly traded real estate investment
trust. The Company, including ARC, has a 14% equity interest in Amli Residential
Properties Trust.
The Company's principal executive offices are located at 4001 McEwen
Drive, Suite 200, Dallas, Texas 75244. Its telephone number is (972) 392-6700.
RISK FACTORS
The following information, in addition to the other information
contained in this Prospectus, should be considered carefully by prospective
purchasers of the Common Stock in evaluating the Company, its business and an
investment in the shares of Common Stock offered hereby. Certain statements set
forth herein or incorporated by reference herein from the Company's filings that
are not historical facts are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act. Actual results may differ
materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following:
HEALTH CARE REFORM
Many proposals have been introduced in Congress and various state
legislatures to reform the present health care system. Some of these proposals
are specifically directed at the small group health care market, which could
affect the Company's principal business. At the state level, a number of states
have passed or are considering legislation that would limit the differentials in
rates that carriers could charge between new business and renewal business and
with respect to similar demographic groups. Legislation also has been adopted or
is being considered that would make health insurance available to all small
groups by requiring coverage of all employees and their dependents, by limiting
the applicability of pre-existing conditions exclusions, by requiring carriers
to offer a basic plan exempt from certain mandated benefits as well as a
standard plan and by establishing a mechanism to spread the risk of high risk
employees to all small group carriers.
At the federal level, several competing proposals have been introduced
or passed in Congress. One law which was introduced by Senators Nancy Kassebaum
and Edward Kennedy (the "Kassebaum-Kennedy legislation") was passed in 1996. The
Kassebaum-Kennedy legislation builds upon state initiatives by guaranteeing
"group-to-individual" portability. Under the legislation, any person governed by
a group insurance plan for at least eighteen months will, on leaving the group
plan, have the right to buy an individual policy from any insurance company
selling individual health insurance policies in that person's state regardless
of whether that person has a preexisting condition. This provision could result
in the Company insuring individuals who under the Company's current underwriting
standards would not be insured by the Company, which could have a material
adverse effect on the Company.
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The Company is unable to predict when or whether any federal or state
proposals, or some combination thereof, will be enacted or, if enacted, the
likely impact on the Company. It is possible, however, that the enactment of
such health care reform legislation could adversely affect the Company's results
of operations. The Company has ceased issuing or coinsuring insurance in the
self-employed market in several states as a result of legislative developments.
INCREASING HEALTH CARE COSTS
The Company's profitability from health insurance depends in large part
on its ability to predict and effectively manage claims related to health care
costs. The aging of the population and other demographic characteristics and
advances in medical technology continue to contribute to rising health care
costs. Government-imposed limitations on Medicare and Medicaid reimbursements
also have caused the private sector to bear a greater share of increasing health
care costs. Changes in health care practices, inflation, new technologies, major
epidemics, natural disasters and numerous other factors affecting the delivery
and cost of health care are beyond any company's control and may limit the
Company's ability to predict and control health care costs and claims.
REGULATION
The Company's insurance subsidiaries, and the manner in which their
businesses are conducted, are subject to extensive regulation in their
domiciliary states and the other states in which they do business. Such
regulation is primarily intended to protect policyholders rather than investors.
Federal regulation, such as the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), also affects the manner in which the Company's insurance
subsidiaries conduct their business. Certain of the Company's subsidiaries, and
the manner in which their businesses are conducted, are also subject to
regulation not directly related to the business of insurance, including
regulation of student loans and the marketing of credit cards.
Compliance with legal or regulatory restrictions limits the ability of
the Company's subsidiaries to conduct their operations. A failure to comply may
subject the affected subsidiary to a loss or suspension of a right to engage in
certain businesses or business practices, criminal or civil fines, an obligation
to make restitution or pay refunds or other sanctions, which could adversely
affect the manner in which the Company's subsidiaries conduct their businesses
and the Company's results of operations.
State and federal regulation is continually changing and the Company is
unable to predict whether or when any such changes will be adopted. It is
possible, however, that the adoption of such changes could adversely affect the
manner in which the Company's subsidiaries conduct their business and the
Company's results of operations.
RELIANCE ON KEY MANAGEMENT
The Company relies on its senior management, including Mr. Ronald L.
Jensen, Chairman of the Board, President and Chief Executive Officer, and the
executives who are responsible for the business of the Company's various
divisions. Such executives are given substantial responsibility for their
respective divisions. The loss of the services of any of these persons could
have a material adverse effect on the Company's results of operations.
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CONFLICTS OF INTERESTS WITH MR. JENSEN AND JENSEN-OWNED COMPANIES
Mr. Jensen owns approximately 18% of the Common Stock as of the date of
this Prospectus. The Company depends on certain relationships with other
companies owned by Mr. Jensen. The interests of Mr. Jensen, and companies in
which Mr. Jensen owns an interest may conflict with the interests of the
Company, including with respect to the amount of compensation payable by the
Company and the freedom of Mr. Jensen and such companies to engage in other
activities, and with respect to any negotiations of, disputes under, or breaches
of, any such agreements or arrangements. Certain officers and employees of the
Company, in addition to Mr. Jensen, also serve as officers or directors of, or
provide services to other companies in which Mr. Jensen owns an interest.
Mr. Jensen, and other companies in which Mr. Jensen owns an interest
have engaged in a number of financial and other transactions with the Company.
The Board has adopted a policy that all material transactions in which there may
be a conflict of interest between the Company and Mr. Jensen are reviewed and
approved by a majority of the independent members of the Board.
CONTROL BY JENSEN FAMILY
Mr. Jensen beneficially owns approximately 18% of the outstanding
Common Stock and remains the Company's largest stockholder. In addition, his
adult children, directly and through Onward and Upward, Inc., own approximately
13% of the Common Stock. Accordingly, Mr. Jensen can be expected to have the
ability to control the direction of the Company.
COMPETITION
The Company operates in highly competitive industries. The Company's
insurance divisions compete with large national insurers, regional insurers and
specialty insurers, many of which are larger and have substantially greater
financial resources or higher A.M. Best ratings than the Company. In addition to
claims paying ratings, insurers compete on the basis of price, breadth and
flexibility of coverage, ability to attract and retain agents and the quality
and level of agent and policyholder services provided. The Company's other
divisions compete with financial services companies, managed care consultants,
and third party administrators, among others. Many of the competitors may have
greater financial resources, broader product lines or greater experience in
particular lines of business. The Institutional Technology and Outsourcing
Division has only recently been formed and therefore competes with other
companies with significantly greater experience in highly competitive markets.
There can be no assurance that the Institutional Technology and Outsourcing
Division will be successful competing in such markets.
ADEQUACY OF CLAIMS LIABILITIES
The liability for claims established by the Company are estimates of
amounts needed to pay reported and unreported claims based on facts and
circumstances known at the time the liabilities are established. Liabilities are
based on historical claims information, industry statistics and other factors.
The establishment of appropriate liabilities is an inherently uncertain process,
and there can be no assurance that the ultimate liability will not materially
exceed the Company's claims liability and have a material adverse effect on the
Company's results of operations and financial condition. Due to the inherent
uncertainty of estimating claims liabilities, it has been necessary, and may in
the future be necessary, to revise estimated future liabilities as reflected in
the Company's claims liability. When
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the Company acquires blocks of insurance policies or insurers owning such
blocks, the Company's assessment of the adequacy of transferred policy
liabilities is subject to similar uncertainties. The Company has not had a
revision in claims liabilities in the last five years which resulted in
recording an increase in the liability for prior years.
CERTAIN RISKS ASSOCIATED WITH CREDIT CARD BUSINESS
There are certain risks associated with the credit card business. The
primary risk involves the possibility of future economic downturns causing an
increase in credit losses. The Company currently targets the market of
individuals with no, or troubled, credit experience, for which market there is
generally limited historical loss information available. Accordingly, the
Company has experienced, and expects to continue to experience, higher credit
losses than industry averages. While the Company does not directly bear the risk
of credit losses on securitized credit card loans, certain risks are associated
with the securitized loans, including the risk of early amortization upon the
occurrence of certain events, which could accelerate the need for funding. The
Company's ability to sustain the recent rate of growth in its credit card
portfolio is dependent upon the success of its marketing programs.
RISKS ASSOCIATED WITH STUDENT LOAN BUSINESS
The Company has certain risks associated with the Student Loan
business. The changes in the Higher Education Act or other relevant federal or
state laws, rules and regulations and the programs implemented thereunder may
adversely impact the education credit market. In addition, existing legislation
and future measures to reduce the federal budget deficit may adversely affect
the amount and nature of federal financial assistance available with respect to
loans made through the U.S. Department of Education. Finally, the level of
competition currently in existence in the secondary market for loans made under
the Federal Loan Programs could be reduced, resulting in fewer potential buyers
of the Federal Loans and lower prices available in the secondary market for
those loans.
INVESTMENT PORTFOLIO
The Company's investment portfolio primarily consists of fixed maturity
securities such as investment grade publicly traded debt securities and mortgage
and asset backed securities, including collateralized mortgage obligations. At
December 31, 1997, approximately 73% and 12% of the Company's invested assets
were fixed maturity securities and short term investments, respectively. Fixed
maturity securities were approximately 73% fixed income and 27% mortgage and
asset backed securities. Certain risks are inherent in connection with fixed
income securities, including loss upon default and price volatility in reaction
to changes in interest rates and general market factors. Certain additional
risks are inherent with mortgage-backed securities, including the risks
associated with reinvestment of proceeds due to prepayments of such obligations.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders.
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SELLING STOCKHOLDERS AND PLAN
OF DISTRIBUTION
In December 1997, the Company acquired through a negotiated merger
agreement 100% of ELA Corp. ("ELA"). The Company issued 922,956 shares of its
Common Stock for all of the outstanding Common Stock of ELA, of which 566 were
subsequently cancelled pursuant to post closing adjustment as per agreement. ELA
provides marketing and pre-disbursement servicing of college student loans made
under the Federal Family Education Loan Program. The 912,017 shares offered
hereby consist of the Common Stock issued by the Company to the stockholders of
ELA pursuant to the merger agreement.
The following table sets forth as of April 14, 1998, information
regarding the beneficial ownership of the Company's Common Stock held by each
Selling Stockholder who may sell the Shares pursuant to this Prospectus as of
such date, the number of Shares offered hereunder by each such Selling
Stockholder and the net ownership of shares of Common Stock, if all such Shares
so offered are sold by each Selling Stockholder.
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Beneficial Ownership Beneficial Ownership
Before Offering After Offering
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Shares
Name of Selling Offered Percentage
Stockholder Shares(1) Percentage Hereby Shares of UICI
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Marcus A. Katz 465,129 1% 465,129 -0- (3)
Cary S. Katz 260,569(2) (3) 260,569(2) -0- (3)
Ryan D. Katz 186,319 (3) 186,319 -0- (3)
RK Trust #2 32,564 (3) 32,564 -0- (3)
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(1) Except as otherwise noted, all shares are beneficially owned and sole
voting and investment power is held by party named.
(2) Includes 32,564 shares held by RK Trust #2. Cary S. Katz is the
trustee of RK Trust #2 .
(3) Less than 1%.
Except as described below, none of the selling stockholders have held
within the most three years any position, office or other material relationship
with the Company or its affiliates. Prior to the Company's acquisition of ELA,
the selling stockholders were stockholders of ELA and, in the case of Marcus A.
Katz, Cary S. Katz, and Ryan D. Katz, officers and directors of ELA and have
been employed by the Company.
Each of the Selling Stockholders may sell his, her or its Shares
directly or through broker-dealers or underwriters who may act solely as agents,
or who may acquire shares as principals. The Shares may be sold from time to
time by the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest to the Selling Stockholders. The distribution of the
Shares may be effected in one or more transactions that may take place through
the Nasdaq Stock Market, including
10
<PAGE> 12
block trades or ordinary broker's transactions, or through privately negotiated
transactions, or through an underwritten public offering, or through a
combination of any such methods of sale, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Stockholders in connection with such
sales. Broker/dealers may agree with the Selling Stockholders to sell a
specified number of shares at a stipulated price per Share and, to the extent
such broker/dealer is unable to do so acting as agent for the Selling
Stockholders, to purchase as principal any unsold Shares at the price required
to fulfill the respective broker/dealer's commitment to the Selling
Stockholders. Broker/dealers who acquire Shares as principals may thereafter
resell such Shares from time to time in transactions (which may involve cross
and block transactions and which may involve sales to and through other
broker/dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
will such resales may pay to or receive commissions from the purchasers of such
Shares. The Selling Stockholders also may sell some or all of the Shares
directly to purchasers without the assistance of any broker/dealer.
The Company is bearing all costs relating to the registration of the
Shares. Any commissions or other fees payable to broker/dealers in connection
with any sale of the Shares will be borne by the Selling Stockholders or other
party selling such Shares.
The Selling Stockholders must comply with the requirements of the Act
and the Exchange Act and the rules and regulations thereunder in the offer and
sale of the Shares. In particular, during such times as the Selling Stockholders
may be deemed to be engaged in a distribution of the Common Stock, and therefore
be deemed to be underwriters, under the Act, they must comply with Rules l0b-6
and 10b-7 under the Exchange Act, and will, among other things:
(a) not engage in any stabilization activities in connection with the
Company's securities;
(b) furnish each broker/dealer through which Shares may be offered
such copies of this Prospectus, as amended from time to time, as
may be required by such broker/dealer; and
(c) not bid for or purchase any securities of the Company or attempt
to induce any person to purchase any securities of the Company
other than as permitted under the Exchange Act.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $0.01 per share and 10,000,000 shares of
Preferred Stock par value $0.01 per share.
As of April 14, 1998, the Company had outstanding 46,228,941 shares of
Common Stock.
Common Stock
11
<PAGE> 13
The Company has not paid cash dividends on its Common Stock to date.
The Company currently intends to retain all future earnings to finance continued
expansion and operation of its business and subsidiaries. Any decision as to the
payment of dividends to the stockholders of the Company will be made by the
Company's Board of Directors and will depend upon the Company's future results
of operations, financial condition, capital requirements and such other factors
as the Board of Directors considers appropriate.
Transfer Agent
The Transfer Agent and registrar for the Common Stock is UICI.
EXPERTS
The consolidated financial statements of UICI appearing in UICI's
Annual Report (Form 10-K) for the year ended December 31, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Robert B. Vlach, General Counsel of the Company. Mr. Vlach is the
beneficial owner of 24,217 shares of Common Stock.
12
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
OTHER EXPENSES
Item 14. Other Expenses of Issuance and Distribution (1)
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee: 9,246
Accounting fees and expenses: 7,500
Legal fees and expenses: 10,000
Blue Sky fees and expenses: 1,000
Miscellaneous: 1,000
-------
$28,746
</TABLE>
(1) All amounts are estimates other than the Commission's
registration fee. No portion of these expenses will be borne
by the Selling Stockholders.
INDEMNIFICATION
Item 15. Indemnification of Directors and Officers
(a) The General Corporation Law of Delaware (Section 145) gives
Delaware corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by reason
of being or having been such directors or officers, subject to specified
conditions and exclusions; gives a director or officer who successfully defends
an action the right to be so indemnified; and authorizes the Company to buy
directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-laws, agreement, vote of stockholders or otherwise.
(b) Article 8.08 of the By-Laws of the Company provides for
indemnification of, and the advancement of expenses which may become subject to
indemnification under the By-Laws to, directors and officers and any person who
served at the Company's request as a director or officer of another corporation.
The indemnification and advancement of expenses provisions contained in the
By-Laws are not exclusive of any other rights.
13
<PAGE> 15
EXHIBITS SCHEDULES
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
- ------- ---------------------- ------
<S> <C> <C>
2.1 Plan of Reorganization of United Group Insurance Company, as subsidiary
of United Group Companies, Inc. and Plan and Agreement of Merger of
United Group Companies, Inc. into United Insurance Companies, Inc.
filed as Exhibit 2-1 to the Registration Statement on Form S-1, File
No. 33-2998, filed with the Securities and Exchange Commission on
January 30, 1986 and incorporated by reference herein.
3.1(A) Certificate of Incorporation of UICI, as amended, filed as Exhibit 3.1
to the Form 10-Q dated June 30, 1996, filed on August 13, 1996, File
No. 0-14320, and incorporated by reference herein.
3.2(A)* Restated By-Laws of UICI
4.1 Refer to Exhibits 3.1 and 3.2 to this Registration Statement
5.1* Opinion of Robert B. Vlach, Esquire
10.32* Agreement dated December 6, 1997 by and between UICI, UICI Acquisition
Corp, ELA Corp., and Marcus A Katz, Cary S. Katz, Ryan D. Katz, and RK
Trust #2.
23 Consent of Ernst & Young LLP
23.2* Consent of Robert B. Vlach, Esquire (contained in his opinion filed as
Exhibit 5.1 to this Registration Statement).
24.1* Powers of Attorney (included on signature page of this Registration
Statement).
27 Financial Data Schedule.
</TABLE>
- -------------
*Previously filed.
14
<PAGE> 16
UNDERTAKINGS
Item 17. Undertaking.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions set forth or described in Item 15
(except as set forth in paragraphs (c) and (d) therein) of this Registration
Statement, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding, or claims to the extent covered by contracts of
insurance) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement;
Provided, however, that paragraphs (a)(i) and
(a)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the
information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed by the
registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
Registration Statement.
15
<PAGE> 17
(b) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
16
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas and State of Texas
on April 15, 1998.
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.
UICI
By /s/ Vernon R. Woelke
---------------------------
Vernon R. Woelke
Vice President
Pursuant to the requirements of Securities Exchange Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement has been signed below
by the following persons in the capabilities indicated on April 15, 1998.
<TABLE>
<S> <C>
/s/ Ronald L. Jensen* Chairman of the Board, President
- --------------------------------------- (Principal Executive Officer) and Director
Ronald L. Jensen
/s/ Warren B. Idsal Vice President (Principal Financial Officer
- --------------------------------------- and Principal Accounting Officer)
Warren B. Idsal
/s/ Vernon R. Woelke Vice President, Treasurer and Director
- ---------------------------------------
Vernon R. Woelke
/s/ Richard J. Estell* Executive Vice President and Director
- ---------------------------------------
Richard J. Estell
/s/ Gary L. Friedman* Director
- ---------------------------------------
Gary L. Friedman
/s/ J. Michael Jaynes* Director
- ---------------------------------------
J. Michael Jaynes
/s/ Charles T. Prater* Vice President and Director
- ---------------------------------------
Charles T. Prater
- -----------------
* By Power of Attorney
/s/ Vernon R. Woelke
- ---------------------------------------
Vernon R. Woelke
(Attorney-in-Fact)
</TABLE>
17
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
2.1 Plan of Reorganization of United Group Insurance Company, as subsidiary
of United Group Companies, Inc. and Plan and Agreement of Merger of
United Group Companies, Inc. into United Insurance Companies, Inc.
filed as Exhibit 2-1 to the Registration Statement on Form S-1, File
No. 33-2998, filed with the Securities and Exchange Commission on
January 30, 1986 and incorporated by reference herein.
3.1(A) Certificate of Incorporation of UICI, as amended, filed as Exhibit 3.1
to the Form 10-Q dated June 30, 1996, filed on August 13, 1996, File
No. 0-14320, and incorporated by reference herein.
3.2(A)* Restated By-Laws of UICI
4.1 Refer to Exhibits 3.1 and 3.2 to this Registration Statement
5.1* Opinion of Robert B. Vlach, Esquire
10.32* Agreement dated December 6, 1997 by and between UICI, UICI Acquisition
Corp, ELA Corp., and Marcus A Katz, Cary S. Katz, Ryan D. Katz, and RK
Trust #2.
23 Consent of Ernst & Young LLP
23.2* Consent of Robert B. Vlach, Esquire (contained in his opinion filed as
Exhibit 5.1 to this Registration Statement).
24.1* Powers of Attorney (included on signature page of this Registration
Statement).
27 Financial Data Schedule.
</TABLE>
- -------------
*Previously filed.
<PAGE> 1
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 6, 1998, in Post-Effective Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-42937) and related Prospectus of UICI
for the Registration of 912,017 shares of its common stock.
ERNST & YOUNG LLP
Dallas, Texas
April 14, 1998
18
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<DEBT-HELD-FOR-SALE> 831,460
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 14,555
<MORTGAGE> 27,023
<REAL-ESTATE> 32,193
<TOTAL-INVEST> 1,133,766
<CASH> 15,932
<RECOVER-REINSURE> 78,696
<DEFERRED-ACQUISITION> 99,611
<TOTAL-ASSETS> 1,579,383
<POLICY-LOSSES> 745,845
<UNEARNED-PREMIUMS> 105,696
<POLICY-OTHER> 19,751
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 50,202
0
0
<COMMON> 462
<OTHER-SE> 535,828
<TOTAL-LIABILITY-AND-EQUITY> 1,579,383
703,340
<INVESTMENT-INCOME> 84,174
<INVESTMENT-GAINS> 4,014
<OTHER-INCOME> 164,301
<BENEFITS> 449,657
<UNDERWRITING-AMORTIZATION> 21,001
<UNDERWRITING-OTHER> 346,468
<INCOME-PRETAX> 135,846
<INCOME-TAX> 43,396
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,504
<EPS-PRIMARY> 1.91
<EPS-DILUTED> 1.91
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
