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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 2000
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UICI
(Exact name of registrant as specified in its charter)
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Delaware 0-14320 75-2044750
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(State or other jurisdiction of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (972) 392-6700
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
On February 28, 2000, UICI (the "Company") announced that United Credit
National Bank (the "Bank") (an indirect wholly-owned, except for directors'
qualifying shares, subsidiary of the Company) had agreed to the issuance by the
Office of the Comptroller of the Currency of a Consent Order, which will govern
for the indefinite future the capitalization, funding activities, growth and
operations of the Bank, a special purpose national bank headquartered in Sioux
Falls, South Dakota. A summary of the Consent Order is contained in the press
release filed as an exhibit hereto, the terms of which are incorporated by
reference herein.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
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Exhibit Page
Number Description of Exhibit Number
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99.1 Press release announcing that United Credit National Bank has agreed to
the issuance by the Office of the Comptroller of the Currency of a
Consent Order
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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.
UICI
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(Registrant)
Date March 3, 2000 By /s/ Gregory T. Mutz
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Gregory T. Mutz
President and Chief Executive Officer
Date March 3, 2000 By /s/ William Benac
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William Benac
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 News Release February 28, 2000
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EXHIBIT 99.1
[UICI LOGO]
Contact: Matthew R. Cassell
Vice President
UICI
News Release 4001 McEwen, Suite 200
Dallas, Texas 75244
Phone: (972) 392-6700
(For Immediate Release)
UICI ANNOUNCES AGREEMENT OF UNITED CREDIT NATIONAL BANK UNIT TO THE ISSUANCE OF
A CONSENT ORDER BY THE OFFICE OF THE COMPTROLLER OF THE CURRENCY
Dallas, TX February 28, 2000: UICI (the "Company") (NYSE: Symbol "UCI") today
announced that United Credit National Bank (an indirect, wholly owned subsidiary
of UICI) had agreed to the issuance of a Consent Order by the U.S. Office of the
Comptroller of the Currency (the "OCC"). The terms of the Consent Order will
govern for the indefinite future the capitalization, funding activities, growth
and operations of United Credit National Bank (the "Bank"), a special purpose
national bank headquartered in Sioux Falls, South Dakota.
The Consent Order requires the Bank within thirty days to submit to the
OCC for approval a near term and three year capital plan, the terms of which
will demonstrate the ability of the Bank to maintain Tier I capital at levels no
less than 10% of risk weighted adjusted assets and 7% of actual adjusted total
assets. The capital plan will also set forth the Bank's plans and projections
for the maintenance and sources of adequate capital in future periods.
To immediately supplement the capital of the Bank and in order to
maintain combined Tier I and Tier II capital at the Bank at a level in excess of
10% of total risk-weighted assets (as disclosed in the Bank's December 31, 1999
Call Report as currently filed with the OCC), United CreditServ, Inc. (the
Bank's direct parent and a wholly owned subsidiary of UICI) contributed
$10,065,000 in cash to the capital of the Bank on February 25, 2000. The OCC is
currently conducting an ongoing examination of the operations and capital
adequacy of the Bank, following the previous announcement by UICI in December
1999 of significant losses in the fourth quarter of 1999 attributable to charges
to the credit card loan loss reserves at the Bank.
A liquidity and capital assurances agreement, dated May 15, 1998,
provides that, upon demand by the Bank, UICI will purchase certificates of
deposit issued by the Bank to assure sufficient liquidity to meet the Bank's
funding demands and will contribute capital to the Bank sufficient for the Bank
to comply with its stated policy of maintaining Tier I capital at a level equal
to at least 10% of total risk-weighted assets and a total risk-based capital
ratio of at least 12%. Total risk-based capital includes both Tier I and Tier II
capital.
Under the terms of the Consent Order, the Bank is prohibited from
accessing the brokered deposit market and from soliciting or accepting deposits
over the Internet. The Bank
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had, as of February 21, 2000, voluntarily suspended soliciting or accepting
brokered deposits. As of February 28, 2000, the Bank has $310 million of
certificates of deposits outstanding, the majority of which are scheduled to
mature over the next 12 months. At February 28, 2000, the Bank held
approximately $125 million in cash, cash equivalents and short term U.S.
Treasury securities.
The Consent Order requires the Bank, until further notice from the OCC,
to cease all activities with American Credit Educators, Inc. (ACE) and American
Fair Credit Association, Inc. (AFCA), independent marketing associations through
which the Bank has marketed its credit card programs to customers with limited
or impaired credit records. The Consent Order further requires the Bank, until
further notice from the OCC, to cease all transactions with affiliated parties
(including UICI but excluding Specialized Card Services, Inc., the servicer of
the Bank's credit card accounts), and to conduct an immediate review of all
agreements with all third parties to assess whether such agreements are on terms
fair and reasonable to the Bank. The Bank, in particular, has engaged
PricewaterhouseCoopers LLP to independently review the terms of all agreements
between the Bank and Specialized Card Services, Inc. (an indirect wholly owned
subsidiary of UICI and the servicer of the Bank's credit card accounts).
The Bank is further prohibited under the terms of the Consent Order
from introducing new products or services, without accompanying policies and
procedures reviewed and approved by the OCC providing for, among other things,
appropriate risk management, internal control, management information and data
processing systems. Under the terms of the Consent Order, the Bank is generally
prohibited from increasing its assets in the future unless the OCC has approved
a capital plan submitted by the Bank and the Bank is in compliance with the
capital plan.
Separately, UICI announced that UICI and the Bank had been named as
party defendants in separate suits filed in U.S. District Court in Colorado by
American Credit Educators, Inc. (ACE) and American Fair Credit Association, Inc.
(AFCA), the independent marketing associations through which the Bank formerly
marketed its credit card programs. In the suits, ACE and AFCA have alleged,
among other things, that UCNB has breached its marketing agreements with ACE and
AFCA. ACE and AFCA are each controlled by Phillip A. Gray, the former head of
UICI's credit card operations. Neither UICI nor the Bank has yet answered the
complaints. UICI believes that UICI and the Bank have significant counterclaims
and meritorious defenses to the allegations, and UICI intends to vigorously
pursue the counterclaims and assert those defenses.
CORPORATE PROFILE:
UICI, headquartered in Dallas, Texas, is a diversified financial services
company offering financial services, health administrative services and
insurance through its various subsidiaries and divisions to niche consumer and
institutional markets. UICI provides health insurance through its insurance
subsidiaries, UGA-Association Field Services and Cornerstone Marketing of
America; enrollment, billing and collection claims administration and risk
management services for healthcare payors and providers through UICI
Administrators; credit cards for individuals with no credit or troubled credit
histories through United CreditServ; financial services and products for
college, undergraduates and graduate students, including providing
federally-guaranteed student loans through the Educational Finance Group; and
manages blocks of life insurance and life insurance products to select markets
through its OKC Division. UICI also holds a 44% interest in HealthAxis.com,
Inc., a leading web-based insurance retailer providing fully integrated,
end-to-end, web-enabled solutions for health insurance distribution and
administration.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this press release are "forward looking statements" within
the meaning of the Private Securities Litigation Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially. Such risks, uncertainties and other factors
include, but are not limited to, changes in general economic conditions; changes
in the regulatory environment; levels of competition (including managed health
care competition in the health industry); availability of, and volatility of
interest rates associated with, funding sources to originate student loans and
credit card receivables; and other factors described in detail in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
UICI press releases and other company information are available at UICI's
website located at www.uici.net.
