ACORDIA INC /DE/, SC 14D9, 1997-06-06

ACORDIA INC /DE/
SC 14D9, 1997-06-06
INSURANCE AGENTS, BROKERS & SERVICE

Previous: ACORDIA INC /DE/, SC 13E3, 1997-06-06

Next: VIMRX PHARMACEUTICALS INC, 424B3, 1997-06-06

<PAGE> 1

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

SCHEDULE 14D-9

SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934

------------------------

ACORDIA, INC.
(NAME OF SUBJECT COMPANY)

ACORDIA, INC.
(NAME OF PERSON(S) FILING STATEMENT)

COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)

------------------------

004929 105
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------

ERNEST J. NEWBORN, JR.,
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ACORDIA, INC.
120 MONUMENT CIRCLE
INDIANAPOLIS, INDIANA 46204
(317) 488-6666
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S) FILING STATEMENT)

WITH COPIES TO:

JONATHAN L. FREEDMAN, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-6092
(212) 259-8000

================================================================================
<PAGE> 2

ITEM 1. SECURITY AND SUBJECT COMPANY

The name of the subject company is Acordia, Inc., a Delaware corporation
(the "Company" or "Acordia"). The address of the principal executive offices of
the Company is 120 Monument Circle, Indianapolis, Indiana 46204. The title of
the class of equity securities to which this statement relates is the common
stock, par value $1.00 per share, of the Company (the "Common Stock").

ITEM 2. TENDER OFFER OF THE BIDDER

This statement (the "Statement") relates to a tender offer by AICI
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned
subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual insurance
company ("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1"), dated June 6, 1997, to purchase any and all of the
outstanding shares (the "Shares") of Common Stock at a price of $40.00 per Share
(such amount, or any greater amount per Share paid pursuant to the Offer, being
referred to as the "Per Share Amount"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 6, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"), copies of which are filed hereto
as Exhibits (a)(1) and (a)(2), respectively, and are incorporated herein by
reference.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 2, 1997 (the "Merger Agreement"), by and among the Company, Parent
and the Purchaser. The Merger Agreement provides that, among other things, as
soon as practicable following the completion of the Offer, upon the terms and
subject to the conditions (or the waiver of such conditions, if permissible,)
contained in the Merger Agreement and in accordance with the relevant provisions
of the Delaware General Corporation Law (the "Delaware Law"), the Purchaser will
be merged with and into the Company (the "Merger") and the Company will be the
surviving corporation (the "Surviving Corporation"). At the effective time of
the Merger (the "Effective Time"), each Share then outstanding (other than
Shares held by Parent, the Purchaser or any other wholly-owned subsidiary of
Parent and Shares held by stockholders who perfect their dissenters' rights
under Section 262 of the Delaware Law) will be converted into the right to
receive $40.00 in cash or any higher price per Share paid in the Offer. A copy
of the Merger Agreement is filed as Exhibit (c)(1) to this Schedule 14D-9 and is
incorporated herein by reference.

Based on information in the Offer to Purchase, the principal executive
offices of both the Parent and the Purchaser are located at 120 Monument Circle,
Indianapolis, Indiana, 46204.

ITEM 3. IDENTITY AND BACKGROUND

(a) Name and Address of the Company. The name and address of the Company,
which is the person filing this statement, is set forth in Item 1 above. All
information contained in this Statement or incorporated herein by reference
concerning the Purchaser, Parent or their officers, directors, representatives
or affiliates, or actions or events with respect to any of them, was provided by
the Purchaser or Parent, respectively, and the Company takes no responsibility
for such information.

(b) Material Contracts, Etc. Each material contract, agreement,
arrangement, and understanding and each actual or potential conflict of interest
between the Company or any of its affiliates and (i) the Company, its executive
officers, directors or affiliates or (ii) Parent, its executive officers,
directors or affiliates, is set forth below.

(b)(1) Certain Contracts, Etc. Certain contracts, agreements, arrangements
and understandings between the Company or its affiliates and certain of its
directors and executive officers are described under the captions "Common Stock
Ownership of Certain Beneficial Owners and Management", "Executive Compensation"
and "Compensation Committee Report to Stockholders" on pages 7 through 16 of the
Company's Proxy Statement dated April 11, 1997 for the Company's 1997 Annual
Meeting of Stockholders (the "1997 Annual Meeting Proxy Statement"), a copy of
which was previously sent to stockholders. A copy of such portion of the 1997
Annual Meeting Proxy Statement is filed as Exhibit (c)(2) hereto and is
incorporated herein by reference.
<PAGE> 3

Directors and Officers. Three of the Company's directors, including the
Chairman of the Board, are officers or employees of Parent: Dwane R. Houser,
Parent's Chairman of the Board; L. Ben Lytle, Parent's President and Chief
Executive Officer and the Company's Chairman of the Board; and Patrick M.
Sheridan, Parent's Executive Vice President and Chief Financial Officer. A
fourth director, Michael L. Smith is Chief Operating and Chief Financial Officer
of American Health Network, a subsidiary of Parent. The executive officers and
directors of Parent beneficially own, in the aggregate, 188,886 Shares
(excluding shares subject to unexercised stock options). Messrs. Houser, Lytle
and Sheridan beneficially own 8,449 Shares, 105,000 Shares and 60,000 Shares,
respectively, of such Shares(excluding shares subject to unexercised stock
options). Schedule I to the Offer to Purchase sets forth the amount and nature
of such beneficial ownership for each executive officer and director of Parent
and the Purchaser. As of the date hereof, Parent owned 8,693,056 Shares
representing 66.8% of the issued and outstanding Shares.

Stock Options. The Company has granted options to purchase Shares to
certain of its executive officers and directors pursuant to the Company's 1992
Stock Compensation Plan (the "1992 Plan") and its Directors Stock Compensation
Plan. At the Effective Time, each executive officer or director who holds a then
outstanding stock option to purchase Shares granted under such plans, whether or
not then exercisable, shall, upon surrender thereof to the Company or its
designee, receive from the Company the difference between the Per Share Amount
and the exercise price per Share for the Shares covered by such option, net of
any applicable tax withholding.

Restricted Stock. Pursuant to the 1992 Plan, the Company has granted stock
to certain executive officers of the Company which is subject to restrictions on
transfer which are to lapse over time. All such restrictions will lapse, subject
to the purchase of Shares by the Purchaser pursuant to the Offer, and the
executive officers will be permitted to tender such Shares pursuant to the
Offer.

Stock Accounts. Pursuant to the Company's Directors Deferred Compensation
Plan, certain non-employee directors of the Company have deferred a portion of
the compensation payable to them by the Company. A portion of such deferred
compensation has been credited to bookkeeping accounts established pursuant to
such plans which are denominated in Shares and a portion of such compensation
has been credited to bookkeeping accounts which are denominated in cash. At the
Effective Time, such Plan will be terminated, the value of such accounts will be
calculated, based on the Per Share Amount in the case of the accounts which are
denominated in Shares, and such amounts will be paid to such directors in cash
at or immediately after the Effective Time; provided, however, that to the
extent that the value of a participant's accounts exceed $30,000 at the
Effective Time, 50% of such value will be paid at or immediately after the
Effective Time and the remaining 50%, plus earnings on such amount (as
determined pursuant to such Plan), will be paid in 1998.

Stock Grants. Pursuant to the Company's Directors Stock Compensation Plan,
certain directors of the Company have been granted Shares. Such Shares may be
tendered pursuant to the Offer.

401(k) Plan Accounts. The executive officers of the Company are eligible to
participate in the Company's 401(k) Long Term Savings Investment Plan (the
"401(k) Plan"). The 401(k) Plan is a tax-qualified plan which allows the
executive officers to make salary-deferral elections (pursuant to Section 401(k)
of the Internal Revenue Code of 1986, as amended) and after-tax contributions
and provides for Company matching contributions. One of the investment
alternatives available under the 401(k) Plan permits the investment of amounts
held under the 401(k) Plan in Shares. Each participant in the 401(k) Plan will
have the right to direct the trustee of the 401(k) Plan as to how to respond to
the Offer with respect to the Shares held in the participant's account under the
401(k) Plan. The Pension Committee of the Company will direct such trustee as to
how to respond to the Offer with respect to any Shares held under the 401(k)
Plan for which such trustee has not received a specific direction from a
participant. The pension committee has indicated to the Company that it intends
to direct such trustee to tender all Shares held under the 401(k) Plan pursuant
to the Offer.

Employment and Transaction Agreements. In the event Ernest J. Newborn,
Jr.'s and John J. O'Connor's Transaction Agreements (as described below), are
extended to December 31, 1998, then the term of the employment agreements of
Ernest J. Newborn, Jr. and John J. O'Connor's, respectively, will be extended
for one year, expiring on December 31, 1998.

2
<PAGE> 4

The agreements with Messrs. Newborn and O'Connor each provide for a base
annual salary; currently $140,000 for Mr. Newborn and $105,000 for Mr. O'Connor.

Each agreement further provides that if the executive is terminated (i) for
Cause (as defined in such agreements) by the Company, (ii) voluntarily, or (iii)
by reason of death, the Company will pay the executive his salary through the
date of termination. The employment agreements of Messrs. Newborn and O'Connor
further provide that if the executive is terminated without Cause, the Company
will pay the executive the greater of twelve months' salary or the remaining
salary through the end of the employment agreement term.

The employment agreements of Messrs. Newborn and O'Connor provide that they
will remain in effect in the event of a Change of Control of the Company (as
defined in such agreements). If, following a Change of Control of the Company,
(i) the executive's duties, responsibilities, or compensation are substantially
reduced or executive is assigned to any duties substantially inconsistent with
his position, duties or responsibilities with the Company immediately prior to
the Change in Control, (ii) the executive's salary is materially reduced as
compared to his salary immediately prior to the Change in Control, (iii) the
Company fails to obtain the assumption of its obligations to perform the
agreement by any successor, or (iv) the Company's long-term strategic plan is
materially changed or abandoned such that the maximum potential payout of
incentive compensation to the executive is substantially reduced, the executive
shall be entitled to receive the same severance package as is payable upon
termination without Cause. The acquisition of the Shares pursuant to the Offer
and the Merger will constitute a Change of Control for purposes of such
agreements. The employment agreements also provide that each executive is
eligible to participate in all employee benefit, stock options, bonus and
executive perquisite programs provided by the Company to employees in similar
positions. Messrs. Newborn and O'Connor are also subject to certain restrictions
under their agreements, prohibiting them from engaging in competition with the
Company or any of its subsidiaries and from divulging any confidential or
proprietary information obtained by them while in the employ of the Company. A
breach of any such restriction will entitle the Company to seek injunctive
relief.

In addition to the Transaction Agreements described in the 1997 Annual
Meeting Proxy Statement, the Company entered into Transaction Agreements with
Messrs. Newborn and O'Connor, as well as with Daniel W. Kendall, which provide
for additional compensation in the event of a Change of Control or Termination
as a result of a Change in Control (as defined with respect to the Transaction
Agreements described in the 1997 Annual Meeting Proxy Statement). The
acquisition of the Shares pursuant to the Offer and the Merger will result in a
Change in Control for purposes of the Transaction Agreements. In the case of
Messrs. Newborn and O'Connor, the Transaction Agreements do not replace the
Employment Agreements discussed above. Each Transaction Agreement expires at the
same time as the Transaction Agreements described in the 1997 Annual Meeting
Proxy Statement.

The Transaction Agreement for Mr. O'Connor provides that, in lieu of
severance under his Employment Agreement, he will be treated as an employee for
a 12-month period following Termination as a result of a Change in Control and
he will receive compensation equal to 12 months' salary, reduced by any amount
paid under his Employment Agreement. The Transaction Agreement for Mr. Kendall
provides that, in the event of a Termination as a result of a Change in Control,
he will be treated as an employee for a period ending on October 31, 1998 and
will receive compensation equal to 12 months' salary from the date of any such
Termination until October 31, 1998. The Transaction Agreements between the
Company and Messrs. Kendall, Newborn and O'Connor provide that, in the event of
a Change in Control, each such executive will receive medical coverage during
the severence period and that each such executive will be paid annual and
long-term incentive opportunities at target levels for 1997 ($50,000 above
target level in the case of Mr. Newborn). Mr. Kendall will receive continued
pension accruals and service credit for purposes of post-retirement medical
benefits until October 31, 1998, and Mr. O'Connor will receive pension accruals
for 12 months following Termination as a result of a Change in Control. Under
the Transaction Agreements, awards previously made under the Company 1992 Stock
Compensation Plan will vest upon a Change in Control.

Agreements with Parent. The Company, through one or more of the operating
subsidiaries (each an "Acordia Company" and collectively, the "Acordia
Companies"), markets insurance products underwritten

3
<PAGE> 5

by Parent or its affiliates and/or performs administrative services in
connection with those insurance products. In connection therewith, each such
Acordia Company has entered into a marketing and agency agreement and/or an
administrative services agreement with Parent or an affiliate insurer.

The marketing and agency agreement provides that the Acordia Company is
appointed as an agent of Parent (or its affiliated insurer) to solicit new
applications and renewal applications for insurance coverage marketed by it and
underwritten by Parent or such affiliated insurer. The administrative services
agreement provides that the Acordia Company shall perform the following
administrative services with regard to insurance contracts underwritten by
Parent or an affiliated insurer: premium billing and collection, adjustment and
settlement of claims, customer service correspondence and general clerical and
administrative functions. In some cases, the administrative services agreement
also provides for the administration of Parent or its affiliated insurers'
health maintenance organizations and other managed care businesses. Parent or
the affiliated insurer may, at its discretion, grant underwriting authority to
the Acordia Company in accordance with the insurer's underwriting guidelines and
the terms of the administrative services agreement. As compensation for these
services, Parent or the affiliated insurer pays the Acordia Company a fee
primarily based on a percentage of the earned premium. Additionally, Parent and
its affiliated insurers permit the Acordia Company to charge insureds a monthly
administrative fee pursuant to the administrative services agreement. Parent and
its affiliated insurers paid an aggregate of approximately $290,992,000 to the
Company pursuant to these agreements for the year ended December 31, 1996.

In January 1997, Parent and the Company, as a part of strategic
developments within Parent, decided that the wholesale marketing and
distribution functions for Parent's products outside of Indiana, Kentucky and
Ohio should be performed by Parent. Parent agreed to pay the Company a one-time
cancellation fee of $6.0 million, one-half of which was paid during the first
quarter of 1997, and the remainder of which will be paid during the second
quarter of 1997.

In February 1997, the Company and Parent announced the planned
consolidation of their claims processing sites in Indiana, Kentucky and Ohio
into one central site located in Indiana. The consolidation of the Indiana sites
is virtually complete.

Management Agreement. In June 1992, the Company entered into a management
agreement with Parent pursuant to which Parent agreed to provide to the Company
the services of certain senior management employees. Effective December 31,
1996, the Company has terminated such management agreement. Prior to the
termination of the management agreement, the Company reimbursed Parent for all
allocated expenses incurred by Parent in connection with the furnishing of the
services rendered pursuant to the management agreement. The Company paid fees
for management services plus allocated expenses to Parent in the amount of
approximately $180,000 for the year ended December 31, 1996.

Inter-Company Services Agreement. The Company is a party to The Anthem
Inter-Company Services Agreement (the "Inter-Company Agreement") among Parent
and its subsidiaries pursuant to which the parties thereto are entitled to
provide and receive certain administrative and systems services including
financial and payroll, legal, auditing, investment, information services, data
processing, actuarial, marketing and human resources services. Pursuant to the
Inter-Company Agreement, the Company pays Parent or its affiliate rendering such
services either for the actual costs and expenses which Parent or such affiliate
incurs in providing such services or a reasonable charge basis. In consideration
of services under the Inter-Company Agreement, the Company paid to Parent fees
aggregating approximately $95,244,000 for the year ended December 31, 1996.

Tax Sharing and Indemnification Agreements. Effective January 1, 1989 (or
such later date as a subsidiary first became included in Parent's consolidated
tax return), the Company and its subsidiaries were included in Parent's state
and federal consolidated income tax returns and were parties to a federal and a
state income tax sharing agreement with Parent. The tax sharing agreements
provided for the allocation of tax liability among Parent and its affiliates.
Effective October 29, 1992, the Company and its subsidiaries were not eligible
to be included in Parent's federal and most state income tax returns for periods
following the October 1992 date since Parent retained less than 80% of the
voting power and the total value of the stock of the Company. The Company and
Parent file together with respect to a few consolidated combined state tax

4
<PAGE> 6

returns. The Company and Parent have entered into a tax indemnification
agreement, pursuant to which Parent has agreed to indemnify the Company with
respect to any federal or state income taxes related to periods prior to the
October 1992 date when the Company was a member of Parent's consolidated group
for federal income tax purposes and reflected on the Company's consolidated
balance sheet dated December 31, 1991 or accrued in the ordinary course of
business consistent with past practices from December 31, 1991 until the October
1992 date.

Sublease Agreement. In June 1992, the Company entered into a sublease
agreement with Parent pursuant to which the Company subleases certain office
space and related equipment located at 120 Monument Circle, Indianapolis,
Indiana. For the year ended December 31, 1996, the Company made rental payments
to Parent in the amount of $698,000.

Registration Rights Agreements. In connection with the Company's initial
public offering of the Common Stock, the Company and Parent entered into a
Registration Rights Agreement pursuant to which the Company granted to Parent
certain rights with respect to registration under the Securities Act of 1933, as
amended, of shares of Common Stock currently held or hereafter acquired by
Parent.

Future Transactions with Affiliates. The Company's Board of Directors (the
"Board" or "Board of Directors") has adopted a resolution to the effect that
transactions between the Company or any of its subsidiaries on the one hand, and
Parent and any of its affiliates (other than the Company and its subsidiaries)
on the other hand (except transactions in the ordinary course of business or in
an amount less than $1,000,000), must be approved by either a committee of
disinterested directors of the Company or by a vote of the disinterested members
of the Board of Directors. Any loans to officers, directors, stockholders, or
affiliates of the Company will be approved by a majority of the disinterested
directors of the Company and will be for bona fide business purposes. No such
loans have been made to date.

Miscellaneous. Parent has informed the Company that beginning in October
1995, the Parent's Board of Directors authorized the purchase of up to two
million Shares of Common Stock. Purchases were made from time to time in the
open market at prevailing prices or in privately negotiated transactions. Since
October 1995, Parent has purchased 487,488 shares of Common Stock. Parent has
made no open market purchases of Common Stock since June 1996.

In July 1995, the State of Kentucky legislature issued a comprehensive
health care reform bill. The new legislation, which was effective January 1,
1996, created a statewide voluntary health care purchasing alliance (the
"Alliance") and guaranteed that every Kentucky resident had access to health
care benefits. Membership in the Alliance is mandatory for state workers, public
school employees, and voluntary for employees of state universities, counties
and cities. The Company is a third party administrator for Parent products
offered through the Alliance.

(b)(2) The Merger Agreement. The summary of the Merger Agreement contained
in the Offer to Purchase and the following summary do not purport to be complete
and are each qualified in their entirety by reference to the Merger Agreement.
Capitalized terms used and not otherwise defined in this summary have the same
meaning as in the Merger Agreement.

The Offer. Pursuant to the Merger Agreement, the Purchaser is obligated to
commence the Offer no later than five business days following the public
announcement of the Merger Agreement. The obligation of the Purchaser to
commence the Offer and to accept for payment and to pay for any Shares tendered
pursuant to the Offer are subject only to the conditions specified in "THE
TENDER OFFER -- Certain Conditions of the Offer" in the Offer to Purchase.

5
<PAGE> 7

Certain Conditions of the Offer," (E) extends the Expiration Date (as defined in
the Merger Agreement) of the Offer (except as required by law or the applicable
rules and regulations of the Securities and Exchange Commission (the
"Commission") and except that the Expiration Date may be extended for up to
forty business days in the aggregate in the event any condition to the Offer is
not satisfied), or (F) amends any term of the Offer in any manner materially
adverse to holders of Shares.

The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time the Purchaser will be merged with and
into the Company in accordance with Delaware Law. The Company will continue as
the Surviving Corporation and as a wholly owned subsidiary of the Parent
following consummation of the Merger.

Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto. The
representations and warranties will not survive the consummation of the Merger
or the termination of the Merger Agreement.

Covenants. The Company's covenants include, among other things, operating
in the ordinary course. In addition, the Company has agreed to convene a meeting
of the Company's stockholders to vote upon the Merger, unless a vote of
stockholders is not required by Delaware Law. If such a meeting is required for
consummation of the Merger, the Company will prepare and file with the
Commission a proxy statement or information statement for such a meeting to vote
upon the Merger.

Stock Options; Great American Warrants. As soon as practicable, upon the
written request of the Purchaser, the Company and the Purchaser have agreed to
take such actions as are reasonably required to provide that at the earlier of
the purchase of Shares pursuant to the Offer and the effective time of the
Merger, each holder of a then outstanding stock option, whether or not
exercisable, or a then outstanding Great American Warrant (as defined in the
Offer to Purchase) will receive from the Company the difference between the Per
Share Amount and the exercise price of such stock option or Great American
Warrant, as the case may be, net in either case of any applicable tax
withholding.

Other Offers. From the date of the Merger Agreement until the termination
thereof, the Company has agreed that it and its subsidiaries will not, and the
Company shall use reasonable efforts to cause the officers, directors, employees
or other agents of the Company and its subsidiaries not to, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below) or (ii) subject to the fiduciary duties
of the Board of Directors under applicable law as advised by counsel to the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any subsidiary or afford access to the properties,
books or records of the Company or any subsidiary to, any person or entity that
may be considering making, or has made, an Acquisition Proposal; provided,
however, that nothing contained in the Merger Agreement shall prevent the
Company, the Company's directors or the Company Special Committee from
furnishing nonpublic information to, or affording access to the properties,
books or records of the Company or any subsidiary to, or entering into
discussions or agreements with, any person or entity in connection with an
unsolicited Acquisition Proposal by such person or entity or recommending an
unsolicited Acquisition Proposal to the stockholders of the Company, if and only
to the extent that (1) the Company's directors or the Company Special Committee,
as the case may be, determine in good faith after consultation with outside
legal counsel that such action is necessary to comply with their fiduciary
duties to the stockholders of the Company under applicable law and (2) prior to
furnishing any such nonpublic information to, or entering into discussions or
negotiations with, such person or entity, the Company's directors or the Company
Special Committee, as the case may be, receive from such person or entity an
executed confidentiality agreement with customary terms. The Company has agreed
to promptly notify Parent after receipt of any Acquisition Proposal or any
indication that any person or entity is considering making an Acquisition
Proposal or any request for nonpublic information relating to the Company or any
subsidiary or for access to the properties, books or records of the Company or
any subsidiary by any person or entity that may be considering making, or has
made, an Acquisition Proposal and will keep Parent fully informed of the status
and details of any such Acquisition Proposal, indication or request. For
purposes hereof, "Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
Company or any subsidiary or the acquisition of any equity interest in, or a

6
<PAGE> 8

substantial portion of the assets of, the Company or any subsidiary, other than
the transactions contemplated by the Merger Agreement.

Directors' and Officers' Indemnification and Insurance. The Certificate of
Incorporation of the Surviving Corporation will contain provisions no less
favorable to the Company's directors and officers with respect to
indemnification than such provisions in the Company's Certificate of
Incorporation (the "Certificate of Incorporation"), and such provisions will not
be amended, repealed or otherwise modified for six years after the consummation
of the Merger in a manner that would materially adversely affect the rights of
the Company's existing directors and officers with respect to actions or events
at or prior to the effective time of the Merger. In addition, the Company and,
following the Merger, the Surviving Corporation have agreed to indemnify the
existing directors and officers of the Company in connection with any action or
omission to act in their capacity as directors and officers of the Company for a
period of six years after the later of the consummation of the Merger and the
date of the Merger Agreement. Parent has agreed to maintain directors' and
officers' liability insurance policies containing substantially comparable terms
and conditions to the Company's existing policies to cover the acts and
omissions of the Company's current directors and officers occurring on or prior
to the consummation of the Merger for a period of six years after the
consummation of the Merger (or for such lesser period as can be purchased for a
premium not exceeding 200% of the last intercompany allocation made by Parent to
the Company with respect to directors' and officers' insurance).

Conditions to Obligations of Each Party to Effect the Merger. Conditions
to the obligations of each party to effect the Merger include, (i) the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
by the Company's stockholders to the extent required by, and in accordance with,
Delaware Law and the Certificate of Incorporation and Bylaws; (ii) the
Purchaser's or its permitted assignee's purchase of all Shares validly tendered
and not withdrawn pursuant to the Offer; (iii) the taking of all actions and
making of all filings with, and the approval of, any governmental body, agency,
official or authority required to permit the consummation of the Merger; and
(iv) the absence of the issuance of any order and of the existence of any
statute, rule or regulation restraining or prohibiting the consummation of the
Merger or the effective operation of the business of the Company and its
subsidiaries after the consummation of the Merger.

Additional Condition to Obligations of Parent and the Purchaser. The
obligation of Parent and the Purchaser to effect the Merger is also subject to
the condition that the Company shall have in all material respects performed all
of its obligations under the Merger Agreement.

Termination. The Merger Agreement may be terminated at any time prior to
the consummation of the Merger, whether prior to or after approval by the
Company's stockholders:

(i) by mutual written consent of the Company and Parent, if such
termination is also approved by a majority of the Independent Directors;

(ii) by either the Company or Parent, if the consummation of the
Merger shall not have occurred on or before October 31, 1997; provided,
however, that the right to terminate the Merger Agreement pursuant to this
clause (ii) shall not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the primary cause of, or
resulted in, the failure of the consummation of the Merger to occur on or
before such date;

(iii) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable;

(iv) by Parent, if the Purchaser shall have (a) terminated the Offer
without having accepted any Shares for payment thereunder by reason of the
failure to satisfy any condition under "THE TENDER OFFER -- Certain
Conditions of the Offer" in the Offer to Purchase or (b) failed to pay for
Shares pursuant to the Offer within 90 days following the commencement of
the Offer, unless such failure to pay for Shares shall have been caused by
or resulted directly from the failure of Parent or the Purchaser to perform
in any material respect any material covenant or agreement of either of
them contained in the

7
<PAGE> 9

Merger Agreement or the material breach by Parent or the Purchaser of any
material representation or warranty of either of them contained in the
Merger Agreement;

(v) by the Company, upon approval of the Board of Directors and a
majority of the Independent Directors, if the Purchaser shall have (a)
failed to commence the Offer within five business days following the date
of the initial public announcement of the Offer, (b) terminated the Offer
without having accepted any Shares for payment thereunder by reason of the
failure to satisfy any condition set forth under "THE TENDER
OFFER -- Certain Conditions of the Offer" in the Offer to Purchase or (iii)
failed to pay for Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares shall have
been caused by or resulted directly from the failure of the Company to
perform in any material respect any material covenant or agreement of it
contained in the Merger Agreement or the material breach by the Company of
any material representation or warranty of it contained in the Merger
Agreement; or

(vi) by the Company, upon approval of the Board of Directors and a
majority of the Independent Directors, if any representation or warranty of
Parent and the Purchaser in the Merger Agreement shall not be true and
correct in any material respect, as if such representation or warranty was
made as of such time on or after the date of the Merger Agreement; or
Parent or the Purchaser shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of Parent or the Purchaser to be performed or
complied with by it under the Merger Agreement.

Expenses. All costs and expenses incurred in connection with the Merger
Agreement are to be paid by the party incurring them.

(b)(3) Indemnification of Directors. The Company is a Delaware corporation.
Section 145 of the Delaware Law provides that a corporation may indemnify any
person who was or is, or is threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was director,
officer, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the indemnified
person in connection with such action, suit or proceeding, provided such
officer, director, employee or agent acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the corporation's best
interest and, with respect to any criminal action or proceedings, had no
reasonable cause to believe that his or her conduct was unlawful. A Delaware
corporation has the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted in good faith
and in a manner the person reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification is permitted
without judicial approval if the officer or director is adjudged to be liable to
the corporation. To the extent that a director, officer, employee or agent is
successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to above, or in the defense of any claim, issue or matter
therein, the corporation must indemnify him or her against the expenses
(including attorney's fees) that such officer, director, employee or agent
actually and reasonably incurred.

Section 102(b)(7) of the Delaware Law enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director to the corporation or its stockholders for
violations of the director's fiduciary duty, except (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware Law
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
a director derived an improper personal benefit.

8
<PAGE> 10

Article Ten of the Certificate of Incorporation provides that a director of
the Company shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director, to the fullest
extent permitted by the Delaware Law, as it exists or may thereafter be amended.

Article Eleven of the Certificate of Incorporation provides that, to the
fullest extent permitted by Delaware Law, as it exists or may thereafter be
amended, the Company may indemnify persons for monetary damages and/or payment
of corporate debts.

Both Articles Ten and Eleven state that if either such article is repealed
or modified, it shall not adversely affect any right or protection of a director
of the corporation existing or arising out of facts or incidents prior to the
time of such repeal or modification.

The Merger Agreement contains certain provisions regarding the
indemnification and insurance of directors described under the heading "The
Merger Agreement -- Directors' and Officers' Indemnification and Insurance."

(b)(4) Other Arrangements and Interests. William W. Rosenblatt, a director
of the Company, is a partner at the law firm Dewey Ballantine, which provides
legal services to the Company and is representing the Company in this
transaction.

ITEM 4. THE SOLICITATION OR RECOMMENDATION

(a) Recommendation of the Board of Directors. At the May 31, 1997
telephonic meeting of the Board of Directors, the Board, based upon, among other
things, the unanimous recommendation of a special committee of the Board
consisting of the directors of the Company who are unaffiliated with Parent or
the Company's management (the "Company Special Committee"), determined that the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, upon the terms and subject to the conditions set forth in the
Merger Agreement are fair to, and in the best interests of, the Company and its
stockholders other than Parent and the Purchaser (the "Public Stockholders") and
approved the Offer, the Merger and the Merger Agreement. THE BOARD AND THE
PURCHASER (WITH MESSRS. LYTLE, SHERIDAN, HOUSER AND SMITH, WHO ARE DIRECTORS
AND/OR OFFICERS OF PARENT AND/OR PARENT'S SUBSIDIARIES, ABSTAINING) RECOMMENDS
THAT THE PUBLIC STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES TO THE PURCHASER PURSUANT TO THE OFFER.

A copy of a letter to all stockholders of the Company communicating the
recommendation of the members of the Board of Directors (except for Messrs.
Lytle, Sheridan, Houser and Smith, who are directors and/or officers of Parent
and/or one of Parent's subsidiaries who abstained) is filed as Exhibit (a)(5)
and is incorporated herein by reference.

(b)(1) Background of the Transaction. The Company was organized and
initially capitalized by Parent in September 1989. In October 1992, the Company
completed its initial public offering. Following the initial public offering,
Parent owned 63.3% of the Company's outstanding Common Stock (62.5% on a fully
diluted basis). Beginning in October 1995, Parent's Board of Directors
authorized the purchase of up to two million Shares. Purchases have been made
from time to time in the open market at prevailing prices or in privately
negotiated transactions. Parent has made no open market purchases of the Common
Stock since June 1996. See Schedule II to the Offer to Purchase. Since October
1995, Parent has acquired 487,488 additional Shares which, in addition to the
acquisition by the Company of its Shares in a privately negotiated purchase, has
resulted in Parent's ownership increasing to 66.8% (54.7% on a fully diluted
basis).

The Company has grown through the acquisition of insurance brokerage
companies and third party administrators, through the creation of new Acordia
companies and the expansion of existing Acordia companies. From 1992 through the
present, a significant portion of the Company's revenues have been derived from
commissions on Parent's products and revenues and from the provision of various
administrative services to Parent and its affiliates. Commissions and fees to
the Company from entities affiliated with Parent were $291.0 million and $233.1
million in 1996 and 1995, respectively. See "-- Interests of Certain Persons;

9
<PAGE> 11

Stockholdings of Certain Officers and Directors; and Related Transactions" in
the Offer to Purchase. Because of the high percentage of the Company's revenues
derived from the sale and servicing of Parent's life and health products, the
Company has stated that it is inevitable that industry forces affecting Parent
will also affect the Company.

In addition, certain of the Company's and Parent's management has been at
times overlapping. L. Ben Lytle, the President and Chief Executive Officer of
Parent and Chairman of the Board of the Company, served as Chief Executive
Officer of the Company from the time the Company began operations through
November 1996, and as President from March 1993 through November 1994. Patrick
M. Sheridan, Executive Vice President, Chief Financial Officer and a Director of
the Company, served as Executive Vice President and Chief Financial Officer of
the Company from August 1989 through August 1996. See "-- Interests of Certain
Persons; Stockholdings of Certain Officers and Directors; and Related
Transactions" in the Offer to Purchase.

In 1995 the Company and Parent, as part of their continuing strategic
initiatives, began looking at ways to reduce the administration and marketing
expense portion of the total healthcare premium dollar in light of the intense
competition and changes occurring in the healthcare industry. During 1996,
Parent also redefined its strategic direction to focus on its healthcare
mission, in line with its assessment of the opportunities presented by the
changing dynamics of the healthcare industry, and began divesting itself of
businesses not directly supportive of the healthcare mission. Although Parent
and the Company agreed with respect to the cancellation of the administration
and wholesale distribution functions for Parent's products outside of Indiana,
Kentucky and Ohio, as described in part below, no agreement could be reached
with respect to any modification in the arrangements regarding these functions
in Indiana, Kentucky and Ohio. The business conducted in these states represents
a material portion of the Company's operations. Discussions regarding cost
issues continued into 1997 in the context of the ongoing business relationships
between the Company and Parent and its affiliated insurers under various
administrative and marketing arrangements. Although these discussions addressed
a variety of topics and several possible alternatives, including a going private
transaction, they were not understood by either party to be, and were not
intended as, proposals regarding the acquisition by Parent of the remaining
equity interest of the Company, and these discussions did not result in
negotiations between the Company and Parent regarding any such acquisition.

The timing of Parent's strategic review of its ownership relationship with
the Company has also been affected by a recent, comprehensive codification of
statutory accounting principles for insurers undertaken by the National
Association of Insurance Commissioners ("NAIC"). While the codification has not
yet been completed, Parent anticipates that the resulting changes may become
effective by year end 1998 and would require Parent to revise the methodology
for determining the carrying value of the Common Stock held as an investment in
affiliated common stock. This change under the new principles is expected to
eliminate the entire carrying value of the Common Stock, regardless of its fair
market value or published Share prices. As a result of the expected codification
of the new principles by the NAIC, Parent has determined that, whether or not
the Offer or Merger is completed, Parent intends to revise the carrying value of
the Common Stock to zero, effective with its June 30, 1997 quarterly statement
to be filed with the Indiana Insurance Commissioner. Parent believes that the
changes in statutory accounting principles proposed by the NAIC would diminish
the benefit to Parent of having an investment in a publicly traded affiliate.

In September 1996, Parent retained Credit Suisse First Boston Corporation
("Credit Suisse First Boston") to assist its management in reviewing
alternatives with respect to Parent's interest in the Company and Parent's
healthcare mission. As part of this review, Credit Suisse First Boston
undertook, in consultation with Parent's and the Company's management, a
business and financial analysis of the Company and a review of various
alternatives. In December 1996, Parent amended its engagement with Credit Suisse
First Boston to include the analysis and evaluation of the business, operations
and financial position of the Company's insurance brokerage operations that are
independent of the administrative and marketing services provided to Parent
("Acordia Brokers") and the exploration of a possible sale of Acordia Brokers.
During this period there were further discussions at the management level
regarding administrative and marketing costs issues as the Company and Parent
developed their respective 1997 business plans. However, no action was taken by
the Board of Directors of either Parent or the Company.

10
<PAGE> 12

In January 1997, Parent and the Company, as part of the strategic
developments within Parent, decided that the wholesale marketing and
distribution functions for Parent's products outside of Indiana, Kentucky and
Ohio should be performed by Parent. Parent agreed to pay the Company a one-time
cancellation fee of $6.0 million, one-half of which was paid in the first
quarter of 1997 and the remainder of which will be paid during the second
quarter of 1997.

On February 6, 1997, the Company issued a press release announcing its
decision to undertake a strategic review of its business operations, including a
review of the Company's relationship with Parent. The Company also announced
that its Board had been informed by Parent that Parent was undertaking its own
strategic review, including an analysis of its business relationship with and
investment in the Company. The Company further announced that its Board of
Directors had created the Company Special Committee to evaluate any proposals
made by or involving Parent, and authorized it to retain such financial or other
advisors as might be necessary to assist the Company Special Committee in the
evaluation process. John C. Crane was designated as Chairman of the Company
Special Committee. The press release also stated that the Company was projecting
that revenues from the Company's health-related operations would be flat to
slightly down when compared to 1996.

At such time, Parent also informed the Company that no decision had as yet
been made by Parent as to what, if any, changes it believed should be made with
respect to Parent's business relationship with and investment in the Company and
that, as part of the evaluation process, Credit Suisse First Boston had been
asked to explore the possible sale of Acordia Brokers and the possible
reorganization of the Company's health business. In late February 1997, the
Board of Directors of Parent appointed a special committee of outside directors
(the "Parent Special Committee") to review and evaluate any proposals developed
regarding the Company, to make recommendations with respect to any such
proposals to the full Board of Directors of Parent and to oversee any
negotiations between Parent and others with respect to such proposals. Frank B.
Hower, Jr. was designated as Chairman of the Parent Special Committee.

Subsequent to the issuance of the February 6, 1997 press release, Credit
Suisse First Boston began soliciting indications of interest from prospective
purchasers of Acordia Brokers.

The Company Special Committee held its first meeting on February 20, 1997.
At this meeting, the Company Special Committee discussed the retention of
independent advisors and the process by which such advisors would be selected.

On March 11, 1997, the Company Special Committee met to interview five
financial advisor candidates. Following discussion, the Company Special
Committee selected Alex. Brown & Sons Incorporated ("Alex. Brown") as financial
advisor to the Company Special Committee. This selection was followed shortly
thereafter by the selection of Jones, Day, Reavis & Pogue ("Jones Day") to serve
as legal counsel to the Company Special Committee.

The Parent Special Committee held its first meeting on March 27, 1997. The
meeting was attended by representatives of Credit Suisse First Boston and Vorys,
Sater, Seymour and Pease, special counsel to Parent and the Parent Special
Committee ("Vorys Sater"). Credit Suisse First Boston advised the Parent Special
Committee on the process for valuing and analyzing the possible sale of Acordia
Brokers. Vorys Sater advised the Parent Special Committee of its fiduciary
duties under Indiana law and the legal issues to be considered with respect to
any transaction involving the Company and the possible sale of Acordia Brokers.

The next meeting of the Company Special Committee occurred on April 11,
1997. The meeting was attended by representatives of Alex. Brown and Jones Day.
At this meeting, Alex. Brown advised the Company Special Committee on the
process for valuing and analyzing the Company's business operations and progress
on their due diligence. Jones Day briefed the Company Special Committee on its
fiduciary duties and responsibilities to minority shareholders under Delaware
law. The Company Special Committee was also updated on the status of Credit
Suisse First Boston's evaluation of a possible sale of Acordia Brokers.

Between February 1997 and early May 1997, executives of each of the Company
and Parent had frequent communications regarding day-to-day operations as well
as general discussions regarding Parent's business relationship with and
investment in the Company.

11
<PAGE> 13

On May 6, 1997, the Company Special Committee met. The meeting was attended
by representatives of Alex. Brown and Jones Day. At this meeting, Alex. Brown
provided the Company Special Committee with a preliminary assessment of Alex.
Brown's view on the valuation of, and valuation methodology with respect to, the
components of the Company.

On May 7, 1997, Credit Suisse First Boston met with Alex. Brown at Alex.
Brown's offices in Baltimore, Maryland. At this meeting, Credit Suisse First
Boston provided Alex. Brown with its initial views on an appropriate valuation
of, and valuation methodology with respect to, the components of the Company.

On May 9, 1997, the Parent Special Committee met and was updated on the
progress of negotiations with respect to the possible sale of Acordia Brokers
and considered the possible terms of a transaction with the Company. Vorys Sater
again briefed the Parent Special Committee on its fiduciary duties under Indiana
law and the duties owed to minority shareholders under Delaware Law. In
addition, on May 9, the Parent Special Committee, through Credit Suisse First
Boston, received proposals with respect to the possible sale of Acordia Brokers.

On May 12, 1997, the Parent Special Committee met by telephone with Credit
Suisse First Boston and Vorys Sater present. Credit Suisse First Boston
described the proposals received for Acordia Brokers. Each proposal provided for
a leveraged buyout of Acordia Brokers and contained financing conditions. The
Parent Special Committee unanimously resolved to proceed to negotiations with
one of the bidders, whose proposal was within the valuation ranges ultimately
established for Acordia Brokers by Credit Suisse First Boston and Alex. Brown.
Credit Suisse First Boston recommended that the Parent Special Committee
authorize Credit Suisse First Boston to discuss a specific share price with
Alex. Brown. Following discussion of the appropriate price, the Parent Special
Committee unanimously resolved to authorize Credit Suisse First Boston to
discuss in general terms a price of $34 per Share with Alex. Brown.

On May 13, 1997, the Company Special Committee met, and Mr. Crane advised
the Company Special Committee of Alex. Brown's report on its May 7 meeting with
Credit Suisse First Boston. The Company Special Committee was also updated on
the proposals received for Acordia Brokers. At the Company's Board of Directors
meeting on the same date, the Company Special Committee updated the Board with
respect to its activities to such date.

On May 15, 1997, Credit Suisse First Boston met with Mr. Crane, Alex. Brown
and Jones Day and discussed in general terms a price of $34 per Share for all
Shares not owned by Parent. A telephonic meeting of the Company Special
Committee was convened later that day with Jones Day and Alex. Brown present to
discuss the price communicated by Credit Suisse First Boston. Following a
lengthy discussion, the Company Special Committee instructed Alex. Brown to
inform Credit Suisse First Boston that the Company Special Committee had placed
a preliminary per Share value for the Common Stock in excess of $40 per Share.

On May 16, 1997, Credit Suisse First Boston met at its offices in New York,
New York with Alex. Brown. At this meeting, Alex. Brown advised Credit Suisse
First Boston that the Company Special Committee placed a preliminary per Share
value for the Common Stock in excess of $40.

On May 19, 1997, the Parent Special Committee met again by telephone. The
Parent Special Committee's financial and legal advisors described the
negotiations with the bidder for Acordia Brokers. Credit Suisse First Boston
also reported to the Parent Special Committee that it had met with Alex. Brown
on May 16 and that Alex. Brown had reported that the Company Special Committee
placed a preliminary per Share value for the Common Stock in excess of $40 per
Share. The Parent Special Committee then deliberated regarding whether to
consider other alternatives or to increase the price it was willing to
recommend. Following discussion, the Parent Special Committee unanimously
resolved to authorize Credit Suisse First Boston to discuss with Alex. Brown a
per Share price of $37.

On May 20, 1997, following consideration of an increase in both the volume
and price of the Common Stock, the Company and Parent issued the following press
release:

INDIANAPOLIS -- Acordia, Inc. (NYSE: ACO) and Anthem Insurance
Companies, Inc. announced today that in furtherance of the previously
announced review of their current business and

12
<PAGE> 14

financial relationship, they are in discussions with regard to a possible
reorganization of Acordia's health business, which could include an
acquisition by Anthem of the publicly owned shares of Acordia not owned by
Anthem. Anthem further announced that it is in discussions with a third
party with regard to a possible sale of Acordia's brokerage business. There
can be no assurance that these discussions will result in any transaction,
or if so, as to the terms or timing of any such transaction.

As of May 1, 1997, Anthem owned approximately 67% of Acordia's
outstanding common stock.

On May 20, 1997, Credit Suisse First Boston also indicated to Alex. Brown
by telephone that the Parent Special Committee was prepared to discuss a per
Share price of $37.

On May 21, 1997, Vorys Sater delivered to Dewey Ballantine, counsel to the
Company, and Jones Day, an initial draft of the Merger Agreement for their
review.

On May 22, 1997, the Company Special Committee held a telephonic meeting
with Alex. Brown and Jones Day present. At this meeting, Alex. Brown reported on
its May 16 meeting with Credit Suisse First Boston and subsequent discussions.
After lengthy discussion, the Company Special Committee instructed Alex. Brown
to advise Credit Suisse First Boston that the Company Special Committee believed
that the value of the Common Stock was at least $40 per Share.

On May 23, 1997, Alex. Brown contacted Credit Suisse First Boston by
telephone and indicated that the Company Special Committee placed a preliminary
per Share value on the Common Stock of at least $40 per Share.

On the morning of May 27, 1997, the Parent Special Committee met by
telephone. Credit Suisse First Boston reported that Alex. Brown continued to
communicate that the Company Special Committee believed that the value of the
Company was at least $40 per Share. The Parent Special Committee determined that
Mr. Hower should contact Mr. Crane directly. Following telephone discussions
between Mr. Crane and Mr. Hower that afternoon, the Parent Special Committee
reconvened on the evening of May 27 and Mr. Hower reported that, based on his
conversation with Mr. Crane, the Company Special Committee would likely
recommend acceptance of an offer at $40 per Share. In addition, the Parent
Special Committee discussed whether the execution of a definitive agreement with
respect to the sale of Acordia Brokers should be a condition to a tender offer.
Following deliberations, the Parent Special Committee determined to recommend an
offer of $40 per Share to the Parent's Board of Directors which would not be so
conditioned. Following the meeting, Vorys Sater furnished a revised draft of the
Merger Agreement to Dewey Ballantine and Jones Day.

On May 28, 1997, a telephonic meeting of the Company Special Committee was
held to discuss a per Share price of $40 for the Common Stock. At the conclusion
of this meeting, the Company Special Committee determined to continue
discussions with the Parent Special Committee at a price of $40 per Share
subject to the negotiation of a mutually acceptable Merger Agreement.

The Board of Directors of Parent met on May 30, 1997, with Credit Suisse
First Boston and Vorys Sater present by telephone. The Parent Special Committee
described the course of the negotiations, and Credit Suisse First Boston
provided information on the financial terms of an offer at a per Share price of
$40. Credit Suisse First Boston also orally advised the directors that, as of
such date and based upon and subject to certain matters discussed with them, the
consideration to be paid by Parent in the Offer and the Merger was fair to
Parent from a financial point of view. Vorys Sater outlined the terms and
conditions of the draft Merger Agreement. The Board of Directors of Parent took
no action with respect to the Parent Special Committee's recommendation on May
30.

The Company Special Committee also met on May 30 to discuss a $40 per Share
price and to consider its recommendation to the Company's Board of Directors. At
this meeting, Alex. Brown rendered its oral opinion, subsequently confirmed in
writing, that, as of that date, the proposed consideration of $40 per Share was
fair, from a financial point of view, to the Company's stockholders other than
Parent, and Jones Day outlined the terms and conditions of the draft Merger
Agreement and the open issues that remained in that draft. At the conclusion of
this meeting, the Company Special Committee unanimously determined to recommend
to the

13
<PAGE> 15

Company's Board of Directors that the Board approve a $40 per Share price,
subject to the finalization of the draft Merger Agreement.

On May 31, 1997, Parent's Board of Directors reconvened and (excluding
certain interested directors who abstained) approved the Merger, the Merger
Agreement and the Offer. Following this meeting, Mr. Hower telephoned Mr. Crane
to convey the Offer. A telephonic meeting of the Company's Board of Directors
was held later that day. Following receipt of the Company Special Committee's
recommendation and a discussion of the Offer, the Merger and the Merger
Agreement, the Company's Board of Directors (excluding certain interested
directors who abstained) approved the Merger Agreement (including the Offer and
the Merger) and recommended to the Company's stockholders (other than Parent and
the Purchaser) that such stockholders accept the Offer and tender their Shares
pursuant to the Offer, and determined that the Offer and the Merger are fair to,
and in the best interests of, the stockholders (other than Parent and the
Purchaser).

On June 1, 1997, Jones Day and Vorys Sater finalized negotiations on the
Merger Agreement, and the Merger Agreement was thereafter executed by Parent,
the Purchaser and the Company. On June 2, 1997, the Company issued a press
release announcing such execution.

(b)(2) Reasons for the Recommendation of the Special Committee and the
Board. In determining that the Offer and the Merger are fair to, and in the
best interests of, the Public Stockholders, and in making its recommendation to
the Board, the Company Special Committee considered the following material
factors, which taken as a whole, supported its determination:

(i) the offer of $40.00 per Share represented a premium of approximately
43.5%, 42.9% and 39.1% over the closing price of the Shares on the
New York Stock Exchange one full trading day, one week and one month
prior to the public announcement of a strategic review by Parent and
the Company of their respective business and an investment
relationship, respectively. These premiums were compared to premiums
paid, or to be paid, in fifty-seven merger and acquisition
transactions from January 1988 through April 1997 involving the
acquisition of minority holdings of publicly-held equity of companies
by parents of such companies owning 50% to 80% of the outstanding
common stock of such companies, which averaged 30.2%, 32.9% and 34.7%
over the target's market price one day, one week and one month prior
to the public announcement, respectively. The median of the premiums
paid, or to be paid, for such transactions during such period was
25.6%, 27.7% and 31.1% one day, one week and one month prior to the
public announcement of the transaction, respectively;

(ii) the Company Special Committee's review of historical market prices
and recent trading activity of the Shares, including the fact that
prior to February 6, 1997, the Shares have never closed above $34.38
per Share;

(iii) the Company Special Committee's consideration of, among other
things, (a) the 1997 business plan and information with respect to
the financial condition, results of operations, business and
prospects of the Company, (b) the changes occurring in the health
care industry, their impact on the Company and the potential
implication of these changes on the Company's relationship with
Parent and (c) the administration and wholesale distribution
agreements between Parent and the Company pursuant to which the
Company provides health care services to Parent, which agreements
accounts for approximately two-thirds of the Company's earnings and
are terminable by either party upon six months' notice.

(iv) the history of the negotiations between the Company Special Committee
and its representatives and Parent's Special Committee and its
representatives, including the fact that (a) the negotiations
resulted in an increase in the price at which Parent was prepared to
acquire the Shares from approximately $34.00 per Share to $40 per
Share and (b) the Company Special Committee's belief that Parent
would not further increase the price payable in the Offer and that
$40 per Share was the highest price that could be obtained from
Parent;

14
<PAGE> 16

(v) the Company Special Committee's review of presentations by, and
discussion of the terms of the Merger Agreement (including the Offer
and the Merger) with, representatives of the Company Special
Committee's legal counsel and its financial advisor;

(vi) the terms of the Offer, the Merger and the Merger Agreement,
including the structural features of the Offer, which provide for a
prompt cash tender offer for all outstanding Shares held by the
Public Stockholders to be followed by a merger for the same
consideration (thereby enabling the Public Stockholders to obtain
the benefits of the transaction in exchange for their Shares at the
earliest possible time);

(vii) other provisions of the Offer and the Merger Agreement, including
the fact that (a) the Purchaser is not permitted to waive the
Minimum Tender Condition without the approval of the Company Special
Committee, (b) the Offer is not subject to any financing condition
and (c) the Merger Agreement allows the Company to respond to
unsolicited acquisition proposals to the extent that the Company's
directors or the Company Special Committee, as the case may be,
determines in good faith after consultation with outside legal
counsel that such action is necessary to comply with their fiduciary
duties under applicable law;

(viii) the written opinion of Alex. Brown delivered to the Company Special
Committee on May 30, 1997 (the "Alex. Brown Opinion") that, as of
that date, the consideration to be received by the Company
stockholders other than Parent pursuant to the Offer and the Merger
as contemplated by the Merger Agreement is fair, from a financial
point of view, to such stockholders, and the report and analysis
presented by Alex. Brown. The full text of the Alex. Brown Opinion,
which sets forth among other things, assumptions made, matters
considered and limitations on the review undertaken, is attached
hereto as Annex I and is incorporated herein by reference. The Alex.
Brown Opinion is directed to the Company Special Committee,
addresses only the fairness of the consideration to be received by
the Public Stockholders from a financial point of view and does not
constitute a recommendation to any such stockholder as to whether
such stockholder should accept the Offer and tender its Shares.
STOCKHOLDERS ARE URGED TO READ THE ALEX. BROWN OPINION AND THE
"OPINION OF ALEX. BROWN" SECTION SET FORTH BELOW CAREFULLY IN THEIR
ENTIRETY; and

(ix) the ability of the Public Stockholders to exercise dissenters' rights
under the Delaware Law in connection with the Merger.

In reaching its determinations referred to above, the Board considered the
recommendation of the Company Special Committee and the factors set forth
immediately above, each of which, in the view of the Board, supported such
determinations.

The members of the Board, including the members of the Company Special
Committee, evaluated the various factors listed above in light of their
knowledge of the business, financial condition and prospects of the Company, and
based upon the advice of financial and legal advisors. In light of the number
and variety of factors that the Board and the Company Special Committee
considered in connection with their evaluation of the Offer and the Merger,
neither the Board nor the Company Special Committee found it practicable to
quantify or otherwise assign relative weights to the foregoing factors, and,
accordingly, neither the Board nor the Company Special Committee did so. In
addition to the factors listed above, each of the Board and the Company Special
Committee considered the fact that consummation of the Offer and the Merger
would eliminate the opportunity of the Public Stockholders to participate in any
potential future growth in the value of the Company, but determined that this
loss of opportunity was reflected in part by the price of $40 per Share to be
paid in the Offer and the Merger.

The Board, including the Company Special Committee, believes that the Offer
and the Merger are procedurally fair because, among other things: (i) the
Company Special Committee consisted of independent directors (unaffiliated with
Parent, the Purchaser or their affiliates or the Company's management),
appointed to represent the interests of the Public Stockholders; (ii) the
Company Special Committee retained and was advised by independent legal counsel;
(iii) the Company Special Committee retained and was advised by an

15
<PAGE> 17

independent financial advisor, who assisted the Company Special Committee in
evaluating the Offer and the Merger; (iv) of the deliberations pursuant to which
the Company Special Committee evaluated the Offer and the Merger and
alternatives thereto; (v) the $40 per Share price and the other terms and
conditions of the Merger Agreement resulted from active arm's-length bargaining
between representatives of the Company Special Committee, on the one hand, and
Parent, on the other; and (vi) Purchaser is not permitted to waive the Minimum
Tender Condition without the consent of the Company Special Committee.

On May 31, 1997, the Board of Directors held a telephonic meeting and,
based upon, among other things, the unanimous recommendation of the Company
Special Committee, determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, upon the terms and
subject to the conditions set forth in the Merger Agreement are fair to, and in
the best interests of, the Company and its Public Stockholders and approved the
Offer, the Merger and the Merger Agreement and recommends (with Messrs. Lytle,
Sheridan, Smith and Houser, who are directors and/or officers of the Parent,
abstained from the actions taken at that meeting) that the Public Stockholders
of the Company accept the Offer and tender their Shares to the Purchaser
pursuant to the Offer.

(b)(3) Opinion of Alex. Brown. Alex. Brown was engaged by the Company
Special Committee pursuant to an engagement letter dated March 12, 1997 (the
"Engagement Letter") to provide certain investment banking advice and services
in connection with any proposals made by Parent in regard to the Company.
Pursuant to such engagement, the Company Special Committee requested Alex. Brown
to render an opinion as to the fairness, from a financial point of view, of the
consideration to be received in the Offer and the Merger by the Company's
stockholders other than Parent.

Alex. Brown is an internationally recognized investment banking firm and,
as a customary part of its investment banking activities, is regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, private placements, and valuations
for estate, corporate and other purposes. Alex. Brown regularly publishes
research reports regarding the insurance, insurance brokerage and health care
industries and the businesses and securities of publicly-owned companies in
those industries. After interviewing a number of investment banks, the Company
Special Committee selected Alex. Brown as its financial advisor because of Alex.
Brown's expertise, reputation and familiarity with the insurance, insurance
brokerage and health care industries, and because of Alex. Brown's familiarity
with the Company and Parent.

On May 30, 1997, in connection with the evaluation of the proposed Merger
Agreement by the Company's Board of Directors, Alex. Brown made a presentation
to the Company Special Committee with respect to the Offer and the Merger. In
addition, Alex. Brown rendered its oral opinion, subsequently confirmed in
writing, that, as of the date of such opinion, and subject to certain
assumptions, factors and limitations set forth in such written opinion as
described below, the consideration to be received in the Offer and the Merger by
the Company's stockholders other than Parent was fair, from a financial point of
view, to such stockholders.

THE FULL TEXT OF THE WRITTEN OPINION OF ALEX. BROWN, WHICH SETS FORTH THE
ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND THE
LIMITATIONS ON THE REVIEW UNDERTAKEN IN ARRIVING AT SUCH OPINION, IS ATTACHED
HERETO AS ANNEX I AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF COMMON
STOCK ARE URGED TO, AND SHOULD, READ THE ALEX. BROWN OPINION CAREFULLY AND IN
ITS ENTIRETY. THE SUMMARY OF THE ALEX. BROWN OPINION SET FORTH HERETO IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.

The Alex. Brown Opinion is directed to the Company Special Committee and
addresses only the fairness from a financial point of view of the consideration
to be received in the Offer and the Merger by the Company's stockholders other
than Parent, and does not address any other aspect of the Offer or the Merger
and does not constitute an opinion or a recommendation as to whether any holder
of Common Stock should accept the Offer or how such holder should vote with
respect to the Merger, if any vote is required.

Alex. Brown assisted the Company Special Committee in the negotiations with
Parent and Parent's financial advisor pursuant to which the Offer price and
Merger price per Share of $40.00 was determined, and

16
<PAGE> 18

such price was not determined by Alex. Brown. In arriving at its opinion, Alex.
Brown was not authorized to solicit, and did not solicit, interest from any
party with respect to the acquisition of the Company or any of its assets.

In rendering its opinion, Alex. Brown reviewed certain publicly available
financial and other information concerning the Company and Parent and certain
internal analyses and other information with respect to the business, operations
and prospects of each of the Company and Parent furnished to Alex. Brown by the
Company and Parent. Alex. Brown also held discussions with members of the senior
management of each of the Company and Parent regarding the business and
prospects of their respective companies and the joint prospects of a combined
company. In addition, Alex. Brown (a) reviewed the reported price and trading
activity for the Common Stock; (b) compared certain financial and stock market
information for the Company with similar information for certain selected
companies whose securities are publicly traded; (c) reviewed the financial terms
of certain recent business combinations which it deemed relevant in whole or in
part; (d) held discussions with Parent, Parent's financial advisor and the
management of the Company regarding the sale process for the Company's property
and casualty insurance brokerage operations; (e) reviewed the terms of the May
29, 1997 draft of the Merger Agreement and certain related documents; and (f)
performed such other studies and analyses and considered such other factors as
it deemed appropriate for the purpose of rendering the opinion.

In connection with its review, Alex. Brown did not independently verify the
information described above, and for purposes of its opinion assumed and relied
upon the accuracy, completeness and fairness of such information. With respect
to the information relating to the prospects of the Company and Parent, Alex.
Brown assumed that such information provided to it was reasonably prepared on
bases reflecting the best currently available judgments and estimates of the
managements of the Company and Parent, respectively, as to the likely future
financial performances of their companies and of the combined entity. In
addition, Alex. Brown did not conduct physical inspections of the properties and
facilities of the Company and Parent, and did not make or obtain, or assume any
responsibility for making and obtaining, an independent evaluation or appraisal
of the assets or liabilities of the Company or Parent, nor has it been furnished
with any such evaluations or appraisals. Alex. Brown's opinion was based on
market, economic and other conditions as they exist and can be evaluated as of
the date thereof.

In connection with its presentation to the Company Special Committee on May
30, 1997 and its opinion of the same date, Alex. Brown performed certain
financial and comparative analyses, including those described below. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances, and therefore such an opinion is
not readily susceptible to summary description. Furthermore, in arriving at its
fairness opinion, Alex. Brown did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Alex.
Brown believes that its analyses must be considered as a whole and that
considering any portions of such analyses and of the factors considered, without
considering all analyses and factors, could create a misleading or incomplete
view of the process underlying the opinion. In its analyses, Alex. Brown made
numerous assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control of
Parent and the Company. Any estimates contained in Alex. Brown's analyses are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. These analyses do not purport to be appraisals. With respect to the
comparison of selected companies analysis and the analysis of selected
transactions summarized below, no public company utilized as a comparison is
identical to the Company or its Acordia Brokers or Health Care Business (as
defined below). Accordingly, an analysis of selected publicly traded companies
and merger transactions is not mathematical; rather it involves complex
considerations and judgments concerning the differences in financial and
operating characteristics of the companies and other factors that could affect
the public trading values and acquisition prices of the companies concerned.

Historical Financial Position. In rendering its opinion, Alex. Brown
reviewed and analyzed, among other things, the historical financial condition of
the Company which included (i) an assessment of the

17
<PAGE> 19

Company's recent financial statements; (ii) an analysis of the Company's
revenue, growth and operating performance trends; (iii) an assessment of the
Company's margins; and (iv) a review of segment financial data for Acordia
Brokers and Health Care Business.

Relationship with Parent. Alex. Brown noted that Parent owned 66.8% of the
outstanding shares of Common Stock. Additionally, Alex. Brown noted that Parent
is pursuing a strategy focused on reducing its cost of distribution and claims
processing services which are currently provided by the Company and is divesting
many of its non-health care related operations. Parent is the primary customer
of the Company's Health Care Business, accounting for over 85% of the unit
revenues, and its contracts with the Company are generally subject to
termination on six months notice. Parent has initiated a process to explore the
possibility of a sale of Acordia Brokers in a transaction at or subsequent to
the Effective Time.

Analysis of Selected Publicly Traded Companies. Since no publicly traded
company is engaged in both of the Company's lines of business, Alex. Brown
reviewed selected data from publicly traded companies engaged in businesses
considered by Alex. Brown to be similar to either Acordia Brokers or the
Company's health care distribution and/or processing business ("Health Care
Business"). Specifically, Alex. Brown compared Acordia Brokers with three
companies, Arthur J. Gallagher & Co., Hilb, Rogal and Hamilton Company and Poe &
Brown, Inc. (referred to collectively as the "Brokerage Companies"), that are in
the property and casualty insurance brokerage business, and compared the
Company's Health Care Business with four companies, Crawford & Company, CorVel
Corporation, HealthPlan Services Corporation and Health Risk Management, Inc.
(referred to collectively as the "Health Care Companies"), that are in the
health care distribution and/or processing business. Alex. Brown compared the
companies within each group with regards to (a) equity market value, (b)
enterprise value (equity market value plus debt less excess cash), (c) estimated
growth rates, (d) market capitalization, (e) dividend yield and (f) debt to
equity ratio (based on published composite analyst estimates). Within each
group, Alex. Brown calculated, on a latest twelve month ("LTM") trailing basis,
enterprise value as a multiple of revenues, earnings before interest, taxes,
depreciation and amortization ("EBITDA") and earnings before interest and taxes
("EBIT") and calculated equity value as a multiple of after-tax cash flow
(defined as net operating income plus depreciation and amortization ("ATCF")),
LTM operating earnings per share ("EPS") and estimated 1997 EPS and 1998 EPS
(using published composite analyst estimates).

Within the group of Brokerage Companies, an analysis of the multiples of
enterprise value to LTM revenues yielded multiples ranging from 1.1x to 2.1x,
with a mean of 1.5x and a median of 1.4x for the group. An analysis of the
multiples of enterprise value to LTM EBITDA yielded multiples ranging from 6.5x
to 6.9x, with a mean of 6.8x and a median of 6.9x for the group. An analysis of
the multiples of enterprise value to LTM EBIT yielded multiples ranging from
7.4x to 10.7x, with a mean of 8.9x and a median of 8.6x for the group. An
analysis of the multiples of equity value to LTM net operating EPS yielded
multiples ranging from 12.2x to 16.6x, with a mean of 14.5x and a median of
14.7x for the group. An analysis of the multiples of equity value to LTM ATCF
yielded multiples ranging from 8.5x to 10.3x, with a mean of 9.6x and a median
of 10.2x for the group. An analysis of the multiples of equity value to
estimated 1997 EPS yielded multiples ranging from 11.6x to 16.5x, with a mean of
13.8x and a median of 13.4x for the group. An analysis of the multiples of
equity value to estimated 1998 EPS yielded multiples ranging from 10.9x to
15.1x, with a mean of 12.5x and a median of 11.5x for the group.

Based on this multiples analysis for the publicly traded Brokerage
Companies, and applying its judgment, Alex. Brown established a public market
reference range of $250 million to $300 million for the enterprise value of
Acordia Brokers. Applying 25% to 35% premiums to the public market reference
range (reflecting average premiums paid based on fifty-seven "squeeze-out"
transactions described below) resulted in a merger and acquisition market
reference range of $313 million to $405 million for the enterprise value of
Acordia Brokers. Alex. Brown noted that Parent has received a preliminary third
party proposal to acquire Acordia Brokers ("Third Party Proposal") which fell
within this merger and acquisition market reference range.

Within the group of Health Care Companies, an analysis of the multiples of
enterprise value to LTM revenues yielded multiples ranging from 0.9x to 1.2x,
with a mean of 1.0x and a median of 1.0x for the group. An analysis of the
multiples of enterprise value to LTM EBITDA yielded multiples ranging from 4.8x
to 8.3x,

18
<PAGE> 20

with a mean of 6.5x and a median of 6.4x for the group. An analysis of the
multiples of enterprise value to LTM EBIT yielded multiples ranging from 5.7x to
15.6x, with a mean of 10.9x and a median of 11.1x for the group. An analysis of
the multiples of equity value to LTM net operating EPS yielded multiples ranging
from 11.0x to 27.9x, with a mean of 17.9x and a median of 16.3x for the group.
An analysis of the multiples of equity value to LTM ATCF yielded multiples
ranging from 5.7x to 12.0x, with a mean of 8.8x and a median of 8.8x for the
group. An analysis of the multiples of equity value to estimated 1997 EPS
yielded multiples ranging from 13.2x to 22.0x, with a mean of 16.8x and a median
of 16.1x for the group. An analysis of the multiples of equity value to
estimated 1998 EPS yielded multiples ranging from 11.5x to 16.7x, with a mean of
14.5x and a median of 15.3x for the group. Alex. Brown did not develop a public
market reference range or merger and acquisition market reference range for the
Health Care Business. Alex. Brown determined that such ranges would not be
meaningful because the valuations for the selected companies reflected higher
earnings growth rates than are expected to be achieved by the Company's Health
Care Business.

Analysis of Selected Merger Transactions. Alex. Brown compared selected
financial data, including (where available) equity value as a multiple of LTM
net operating income, forward ("FWD") net income and LTM ATCF, and total
transaction value (equity value plus debt minus excess cash) as a multiple of
LTM revenue, LTM EBITDA and LTM EBIT, for seven selected transactions in the
property and casualty brokerage industry (Marsh & McLennan Companies, Inc.'s
1997 acquisition of Johnson & Higgins; AON Corporation's 1997 acquisition of
Alexander & Alexander Services Inc.; AON Corporation's 1996 acquisition of Bain
Hogg Group; the Company's 1994 acquisition of Bain Hogg Robinson, Inc.; The
Navigators Group, Inc. 1994 acquisition of the Somerset Companies; the Company's
1993 acquisition of American Business Insurance, Inc.; and Poe & Associates,
Inc.'s 1993 acquisition of Brown & Brown, Inc.) and four selected transactions
in the health care distribution and/or processing industry (HealthPlan Services
Corporation's 1996 acquisition of Harrington Services Corporation; HealthPlan
Services Corporation's 1996 acquisition of Consolidated Group, Inc.; First
Financial Management Corporation's 1995 acquisition of Employee Benefit Plans;
and First Financial Management Corporation's 1992 acquisition of ALTA Health
Strategies).

For the seven selected transactions in the property and casualty insurance
brokerage industry, Alex. Brown noted that the multiple of total transaction
value to LTM revenue ranged from 0.7x to 3.3x, with a mean of 1.4x and a median
of 1.2x for the selected transactions; the multiple of total transaction value
to LTM EBITDA ranged from 6.2.x to 15.5x, with a mean of 9.5x and a median of
8.9x for the selected transactions; the multiple of total transaction value to
LTM EBIT ranged from 8.2.x to 17.4x, with a mean of 12.0x and a median of 12.4x
for the selected transactions; the multiple of equity value to LTM net operating
income ranged from 9.8x to 40.2x, with a mean of 26.4x and a median of 24.3x for
the selected transactions; the multiple of equity value to LTM ATCF ranged from
9.4x to 18.6x, with a mean of 13.5x and a median of 13.3x for the selected
transactions. Based on this multiples' analysis for the selected mergers
transactions in the property and casualty insurance brokerage industry, and
applying its judgment, Alex. Brown established an acquisition reference range of
$275 million to $400 million for the enterprise value of Acordia Brokers. Alex.
Brown noted that the Third Party Proposal fell within this acquisition reference
range.

For the four selected transactions in the health care distribution and/or
processing industry, Alex. Brown noted that the multiple of total transaction
value to LTM revenue ranged from 0.6x to 1.0x, with a mean of 0.8x and a median
of 0.9x for the selected transactions; the multiple of total transaction value
to LTM EBITDA ranged from 5.8.x to 6.4x, with a mean of 6.1x and a median of
6.0x for the selected transactions; the multiple of total transaction value to
LTM EBIT ranged from 7.1x to 10.6x, with a mean of 9.4x and a median of 10.5x
for the selected transactions; the multiple of equity value to LTM net operating
income ranged from 9.8x to 18.5x, with a mean of 15.2x and a median of 17.4x for
the selected transactions; the multiple of equity value to LTM ATCF ranged from
7.2x to 8.4x, with a mean of 7.6x and a median of 7.2x for the selected
transactions. Based on this multiples' analysis for the selected mergers
transactions in the health care distribution and/or processing industry, and
applying its judgment, Alex. Brown established an acquisition reference range of
$340 million to $400 million for the enterprise value of the Company's Health
Care Business.

Discounted Cashflow Analysis. Alex. Brown performed a discounted cashflow
analysis for the Company for each of its Acordia Brokers and Health Care
Business, based on the Company management's projections

19
<PAGE> 21

and Parent management's projections, adjusted based on discussions with the
Company and Parent management. Alex. Brown calculated the terminal values at the
end of a five year period by applying multiples ranging from 7.0 to 9.0 times
(in the case of Acordia Brokers) and 6.0 to 7.0 times (in the case of the Health
Care Business) to the terminal year's projected EBITDA. These terminal multiples
reflected Alex. Brown's judgment as to an appropriate range, based on its
assessment of the merger and acquisition and trading multiples of LTM EBITDA for
the selected companies in each of the Brokerage Companies' and Health Care
Companies' groups. The cashflow streams and terminal values were then discounted
using discount rates, based on Alex. Brown's judgment, ranging from 12% to 14%
for each of Acordia Brokers and the Company's Health Care Business. Based on
this analysis, and applying its judgment, Alex. Brown established a range of
enterprise values for Acordia Brokers of $287 million to $455 million. Alex.
Brown noted again that the Third Party Proposal fell within this range. Based on
this analysis, and applying its judgment, Alex. Brown established ranges of
enterprise values for the Company's Health Care Business of (i) $176 million to
$309 million which reflects two scenarios based in part of the assumption that
Parent cancels its contracts with the Company for distribution and claims
processing and (ii) $333 million to $398 million based in part on the assumption
that Parent maintains its relationship with the Company with respect to
contracts for distribution and claims processing.

Combined Reference Range of Acordia Brokers and Health Care
Business. Alex. Brown developed an analysis which combined the reference range
values determined for Acordia Brokers and Health Care Business to determine the
overall per share price for the Company based on its component business
segments. Alex. Brown developed an overall reference range for the enterprise
value of Acordia Brokers of $300 million to $400 million based on the merger and
acquisition market reference range of $313 million to $405 million, the
acquisition reference range of $275 million to $400 million and the discounted
cash flow range of $287 million to $455 million. Alex. Brown developed an
overall reference range for the Health Care Business of $300 million to $400
million based on the acquisition reference range of $340 million to $400 million
and discounted cash flow ranges of $176 million to $309 million (assuming Parent
cancels its contracts with the Company for distribution) and $333 million to
$398 million (assuming that Parent maintains its relationship with the Company
with respect to contracts for distribution and claims processing). Based on
these overall reference ranges, Alex. Brown calculated the total value per
Company share by adding the reference ranges for Acordia Brokers and Health Care
Business, adding the assumed proceeds from the exercise of all outstanding
options and warrants of the Company, subtracting the total debt for the Company
and dividing by the total shares, warrants and options outstanding for the
Company. This analysis yielded a per share reference range of $29.78 per share
to $42.36 per share of Common Stock compared to the transaction value of $40.00
per share.

Historical Price and Volume Analysis. Alex. Brown also reviewed the daily
closing price and volume of the Common Stock during the period from October 21,
1992, the date of the Company's initial public offering ("IPO Date") through May
23, 1997. The trading price of the Common Stock since the IPO Date and prior to
February 6, 1997, the date of the joint announcement by the Company and Parent
described above (the "Announcement Date"), had risen from a low closing price of
$15.63 (on the IPO Date) to a high closing price of $34.38 (on February 13,
1995), with an average closing price of $27.31 for the period. The closing price
of the Common Stock fifty-two weeks prior to the Announcement Date ranged from a
low of $27.25 to a high of $33.75. Alex. Brown noted that the tender offer price
of $40.00 per share is significantly higher than all such closing market prices
during the period.

Alex. Brown also noted that from January 1, 1995 through May 23, 1997, the
Common Stock had underperformed the Standard & Poors 500 Index and an index
reflecting the average of the common stock market prices of the three Brokerage
Companies.

Squeeze-Out Premium Analysis. Alex. Brown analyzed the premium of the
$40.00 tender offer price per share to recent market prices per share of Common
Stock, noting that the tender offer price represented a premium of 43.5%, 42.9%
and 39.1% to the closing market prices one day, one week and one month prior to
the Announcement Date, respectively. Alex. Brown noted in comparison that the
mean of the premiums paid, or to be paid, in announced merger and acquisition
transactions involving the "squeeze-out" of publicly-held equity by parent
companies owning 50% to 80% of the outstanding common stock of such companies
for fifty-seven transactions from January 1988 through April 1997 were 30.2%,
32.9% and 34.7%, respectively, to the

20
<PAGE> 22

target's market price one day, one week and one month prior to announcement,
respectively, and that the median squeeze-out premiums paid, or to be paid in
such transactions was 25.6%, 27.7% and 31.1%, one day, one week and one month
prior to announcement, respectively. Alex. Brown noted that the market premiums
reflected in the tender offer price exceeded such means and medians.

Other Matters. Alex. Brown has previously rendered investment banking
services to the Company and Parent. It acted as financial adviser to Parent in
connection with the sale of its leasing and premium finance businesses completed
in July 1996. Alex. Brown was paid a fee of approximately $465,000 for its
services.

ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED

Pursuant to the Engagement Letter, the Company Special Committee retained
Alex. Brown to provide certain investment banking advice and services in
connection with any proposals made by Parent in regard to the Company. Pursuant
to such engagement, the Company Special Committee requested Alex. Brown to
render an opinion as to the fairness, from a financial point of view, of the
considerations to be received in the Offer and the Merger by the Company's
stockholders other than Parent.

Pursuant to the terms of the Engagement Letter, Alex. Brown will be paid a
fee of $600,000 payable at the time of delivering its opinion. The Company has
also agreed to indemnify Alex. Brown against certain liabilities, including
liabilities under the federal securities laws, and, whether or not the Offer and
the Merger are consummated and to reimburse Alex. Brown for certain expenses
incurred by Alex. Brown, including certain fees and disbursements of Alex.
Brown's counsel. See "The Solicitation or Recommendation -- Opinion of Alex.
Brown."

Except as disclosed herein or in the Offer to Purchase, neither the Company
nor any person acting on its behalf currently intends to employ, retain or
compensate any other person to make solicitations or recommendations to security
holders on its behalf concerning the Offer or the Merger.

ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES

(a) Share Transactions in Last 60 Days. During the past 60 days, no
transactions in the Shares have been effected by the Company or, to the best of
the Company's knowledge, by any executive officer, director, affiliate or
subsidiary.

(b) Intent to Tender. To the best of the Company's knowledge, except as set
forth below, each of the Company's executive officers and directors has
indicated his or her respective intentions to tender all Shares owned by him or
her pursuant to the Offer.

One director of the Company has indicated that he intends to make donations
to charitable institutions of not more than 500 Shares, with the expectation
that such donees will tender such donated Shares pursuant to the Offer.

ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY

(a) Certain Negotiations. Except as described in this Schedule 14D-9, or as
set forth in the Offer to Purchase, to the knowledge of the Company, no
negotiation is being undertaken or is under way by the Company in response to
the Offer which relates to or would result in (i) any extraordinary transaction,
such as a merger or reorganization, involving the Company or any affiliate or
subsidiary of the Company, (ii) a purchase, sale or transfer of a material
amount of assets by the Company or any subsidiary of the Company, (iii) a tender
offer for or other acquisition of securities by or of the Company or (iv) any
material change in the present capitalization or dividend policy of the Company.

Pursuant to the Merger Agreement, however, and as described in Item 3(b)(2)
above, the Company may, subject to certain limitations, take certain actions in
respect of proposed transactions necessary for the directors of the Company to
discharge their fiduciary duties to stockholders under applicable law.

21
<PAGE> 23

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED

Certain Litigation. On June 4, 1997, an individual and purported class
action was commenced in the Court of Chancery of the State of Delaware, New
Castle County, purportedly on behalf of stockholders of the Company. The
defendants are the Company and its following officers and directors: L. Ben
Lytle, Frank C. Witthun, Patrick M. Sheridan, John C. Alpin, Birch E. Bayh, John
C. Crane, Mitchell E. Daniels, Jr., Catherine E. Dolan, Ernie E. Green, Dwane R.
Houser, Thomas C. Roberts, William W. Rosenblatt, James B. Stradtner, and
Michael L. Smith. The complaint alleges that in connection with the decision to
enter into the definitive Merger Agreement with Parent the individual defendants
"suffer from conflicts of interest either because they are affiliated with
Parent or maintain close business and personal relationships with the members of
the Company's senior management," and that the defendants "have violated
fiduciary and other common law duties owed to the plaintiff and the other
members of the class in that they have not and are not exercising independent
judgment, and have acted and are acting to the detriment of the Class." The
complaint seeks damages in an unspecified amount, and preliminary and permanent
injunctive relief enjoining defendants from proceeding with or consummating the
transaction with Parent or rescission in the event the transaction is
consummated. The Company intends to, and understands that the other defendants
intend to, vigorously defend this lawsuit, including the request for a
preliminary injunction. The foregoing description of the complaint is qualified
in its entirety by reference to such complaint filed as Exhibit (c)(16) hereto
and incorporated by reference.

On June 4, 1997, another individual and purported class action was
commenced in the Court of Chancery of the State of Delaware, New Castle County,
purportedly on behalf of stockholders of the Company. The defendants are the
Company, Parent, L. Ben Lytle, Patrick M. Sheridan, Dwane R. Houser, and Frank
C. Whittun. The complaint alleges that in connection with the proposed merger
transaction with Parent, the defendants, among other things, have violated
fiduciary duties, failed to exercise independent business judgment, and acted to
the detriment of the Company's public stockholders for their own personal
benefit. The complaint seeks damages in an unspecified amount, preliminary and
permanent injunctive relief enjoining Parent from acquiring the outstanding
shares of the Company not already owned by it, and an order directing defendants
to carry out their fiduciary duties to plaintiff and the purported class. The
Company intends to, and understands that the other defendants intend to,
vigorously defend this lawsuit, including the request for preliminary
injunction. The foregoing description of the complaint is qualified in its
entirety by reference to such complaint filed as Exhibit (c)(17) hereto and
incorporated by reference.

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
(a)(1) Offer to Purchase dated June 6, 1997.
(a)(2) Letter of Transmittal dated June 6, 1997.
(a)(3) Text of Press Release dated June 2, 1997.
(a)(4) Fairness Opinion of Alex. Brown & Sons, Incorporated dated May 30, 1997.
(a)(5) Letter to Acordia, Inc. Stockholders, dated June 6, 1997.
(c)(1) Agreement and Plan of Merger dated as of June 2, 1997, by and among Acordia, Inc.,
Anthem Insurance Companies, Inc. and AICI Acquisition Corp.
(c)(2) Portions of Acordia, Inc.'s Proxy Statement dated April 11, 1997, for the Acordia
1997 Annual Meeting of Stockholders.
(c)(3) Acordia, Inc. 1992 Stock Compensation Plan.
(c)(4) Acordia, Inc. Directors Stock Compensation Plan.
(c)(5) Acordia, Inc. Directors Deferred Compensation Plan.
(c)(6) Acordia 401(k) Long Term Savings Investment Plan, as amended to date.
(c)(7) Transaction Agreement dated February 17, 1997, by and between Acordia, Inc. and
Frank C. Witthun.
</TABLE>

22
<PAGE> 24

<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
(c)(8) Transaction Agreement dated February 28, 1997, by and between Acordia, Inc. and
John J. O'Connor.
(c)(9) Transaction Agreement dated February 28, 1997, by and between Acordia, Inc. and
Ernest J. Newborn.
(c)(10) Transaction Agreement dated February 28, 1997, by and between Acordia, Inc. and
Keith A. Maib.
(c)(11) Transaction Agreement dated February 28, 1997, by and between Acordia, Inc. and
Robert C. Nevins.
(c)(12) Transaction Agreement dated February 28, 1997, by and between Acordia, Inc. and
Daniel W. Kendall.
(c)(13) Transaction Agreement dated March 17, 1997, by and between Acordia, Inc. and
Michael B. Henning.
(c)(14) Employment Agreement dated June 1, 1994, by and between Acordia, Inc. and Ernest
J. Newborn.
(c)(15) Employment Agreement dated January 1, 1994, by and between Acordia, Inc. and John
J. O'Connor.
(c)(16) Complaint filed in Crandon Capital Partners v. Acordia, Inc. et. al (Del. Ch. June
4, 1997).
(c)(17) Complaint filed in Sherry Levinson v. Acordia, Inc. et. al. and Anthem Insurance
Companies, Inc. (Del. Ch. June 4, 1997).
</TABLE>

23
<PAGE> 25

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

ACORDIA, INC.

By: /s/ FRANK C. WITTHUN
------------------------------------
Name: Frank C. Witthun
Title: President and Chief
Executive Officer

Dated: June 6, 1997

24
<PAGE> 26

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --------- ----------------------------------------------------------------------- ------------
<S> <C> <C>
(a)(1) Offer to Purchase dated June 6, 1997...................................
(a)(2) Letter of Transmittal dated June 6, 1997...............................
(a)(3) Text of Press Release dated June 2, 1997...............................
(a)(4) Fairness Opinion of Alex. Brown & Sons, Incorporated dated May 30,
1997...................................................................
(a)(5) Letter to Acordia, Inc. Stockholders dated June 6, 1977................
(c)(1) Agreement and Plan of Merger dated as of June 2, 1997, by and among
Acordia, Inc., Anthem Insurance Companies, Inc. and AICI Acquisition
Corp...................................................................
(c)(2) Portions of Acordia Inc.'s Proxy Statement dated April 11, 1997, for
the Acordia 1997 Annual Meeting of Stockholders........................
(c)(3) Acordia, Inc. 1992 Stock Compensation Plan.............................
(c)(4) Acordia, Inc. Directors Stock Compensation Plan........................
(c)(5) Acordia, Inc. Directors Deferred Compensation Plan.....................
(c)(6) Acordia 401(k) Long Term Savings Investment Plan, as amended to
date...................................................................
(c)(7) Transaction Agreement dated February 17, 1997, by and between Acordia,
Inc. and Frank C. Witthun..............................................
(c)(8) Transaction Agreement dated February 28, 1997, by and between Acordia,
Inc. and John J. O'Connor..............................................
(c)(9) Transaction Agreement dated February 28, 1997, by and between Acordia,
Inc. and Ernest J. Newborn.............................................
(c)(10) Transaction Agreement dated February 28, 1997, by and between Acordia,
Inc. and Keith A. Maib.................................................
(c)(11) Transaction Agreement dated February 28, 1997, by and between Acordia,
Inc. and Robert C. Nevins..............................................
(c)(12) Transaction Agreement dated February 28, 1997, by and between Acordia,
Inc. and Daniel W. Kendall.............................................
(c)(13) Transaction Agreement dated March 17, 1997, by and between Acordia,
Inc. and Michael B. Henning............................................
(c)(14) Employment Agreement dated June 1, 1994, by and between Acordia, Inc.
and Ernest J. Newborn..................................................
(c)(15) Employment Agreement dated January 1, 1994, by and between Acordia,
Inc. and John J. O'Connor..............................................
(c)(16) Complaint filed in Crandon Capital Partners v. Acordia, Inc. et al.
(Del. Ch. June 4, 1997)................................................
(c)(17) Complaint filed in Sherry Levinson v. Acordia, Inc. et al. and Anthem
Insurance Companies, Inc. (Del. Ch. June 4, 1997)......................
</TABLE>

<PAGE> 1

Offer to Purchase for Cash Exhibit (a)(1)
All Outstanding Shares of Common Stock
of

ACORDIA, INC.

$40.00 NET PER SHARE IN CASH

AICI ACQUISITION CORP.
a wholly owned subsidiary of

ANTHEM INSURANCE COMPANIES, INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
------------------

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED,
AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AT LEAST A
MAJORITY OF THE THEN ISSUED AND OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE
$1.00 PER SHARE (THE "COMMON STOCK"), OF ACORDIA, INC. (THE "COMPANY"), OTHER
THAN SHARES OF COMMON STOCK BENEFICIALLY OWNED BY AICI ACQUISITION CORP. (THE
"PURCHASER"), ANTHEM INSURANCE COMPANIES, INC. ("PARENT"), PARENT'S OTHER
SUBSIDIARIES AND PARENT'S EXECUTIVE OFFICERS AND DIRECTORS. SEE "INTRODUCTION"
AND "THE TENDER OFFER -- CERTAIN CONDITIONS OF THE OFFER."

THE BOARD OF DIRECTORS OF THE COMPANY, BASED UPON, AMONG OTHER THINGS THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE COMPANY'S BOARD OF
DIRECTORS (THE "COMPANY SPECIAL COMMITTEE"), HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE MERGER
AGREEMENT, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS (OTHER THAN THE PARENT AND THE PURCHASER) AND HAS APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS (EXCLUDING CERTAIN
INTERESTED DIRECTORS WHO ABSTAINED) THAT SUCH STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

IMPORTANT

Any stockholder desiring to tender all or any portion of such stockholder's
Common Stock should either (i) complete and sign the Letter of Transmittal
provided herewith (or a manually signed facsimile thereof) in accordance with
the instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal and
mail or deliver the Letter of Transmittal (or such facsimile) and all other
required documents to the Depositary (as defined herein) together with the
certificates for such Common Stock to the Depositary, or tender such Common
Stock pursuant to the procedure for book-entry transfer set forth in the section
entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock," or (ii)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
having Common Stock registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Common Stock.

If a stockholder desires to tender Common Stock and such stockholder's
certificate for such Common Stock is not immediately available or the procedure
for book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such stockholder's tender may be effected by following the procedure for
guaranteed delivery set forth in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock."

Questions and requests for assistance or for additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be directed to the Dealer Manager or the Information
Agent, at their respective addresses and telephone numbers set forth on the back
cover of this Offer to Purchase.

The Dealer Manager for the Offer is:

[CREDIT SUISSE LOGO]

June 6, 1997
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
SPECIAL FACTORS....................................................................... 3
Background of the Offer............................................................. 3
Analysis of Credit Suisse First Boston as Financial Advisor to Parent............... 8
Fairness of the Offer............................................................... 14
The Merger Agreement................................................................ 14
Purpose of the Offer and the Merger; Plans for the Company.......................... 17
Interests of Certain Persons; Stockholdings of Certain Officers and Directors; and
Related Transactions............................................................. 19
Certain Federal Income Tax Consequences............................................. 21
Appraisal Rights.................................................................... 21

THE TENDER OFFER...................................................................... 23
Terms of the Offer.................................................................. 23
Procedures for Tendering Common Stock............................................... 25
Withdrawal Rights................................................................... 28
Acceptance for Payment and Payment.................................................. 29
Price Range of Common Stock; Dividends on the Common Stock.......................... 30
Certain Effects of the Offer........................................................ 30
Certain Information Concerning the Company.......................................... 31
Certain Information Concerning Parent and the Purchaser............................. 32
Source and Amount of Funds.......................................................... 34
Dividends and Distributions......................................................... 34
Certain Conditions of the Offer..................................................... 34
Certain Legal Matters............................................................... 36
Fees and Expenses................................................................... 37
Miscellaneous....................................................................... 39
Schedule I -- Directors and Executive Officers of Parent and the Purchaser
Schedule II -- Parent Purchases of Common Stock
Annex I -- Section 262 of the General Corporation Law of the State of Delaware
</TABLE>
<PAGE> 3

TO THE HOLDERS OF COMMON STOCK OF ACORDIA, INC.:

INTRODUCTION

AICI Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual
insurance company ("Parent"), hereby offers to purchase all outstanding shares
of Common Stock, par value $1.00 per share (the "Common Stock"), of Acordia,
Inc., a Delaware corporation (the "Company"), not already owned by the
Purchaser, Parent or Parent's other subsidiaries at a price of $40.00 per share,
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer").

Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Common Stock by Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of Credit
Suisse First Boston Corporation ("Credit Suisse First Boston"), as Dealer
Manager (in such capacity, the "Dealer Manager"), First Chicago Trust Company of
New York, as Depositary (the "Depositary"), and D. F. King & Co., Inc., as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See "THE TENDER OFFER -- Fees and Expenses."

The Board of Directors of the Company, based upon, among other things, the
unanimous recommendation of the Company Special Committee, has determined that
the Merger Agreement (as defined below) and the transactions contemplated
thereby, including the Offer and the Merger (as defined below), upon the terms
and subject to the conditions set forth in the Merger Agreement, are fair to,
and in the best interests of, the Company and its stockholders (other than
Parent and the Purchaser) and has approved the Offer, the Merger and the Merger
Agreement and recommends (excluding certain interested directors who abstained)
that such stockholders accept the Offer and tender their Common Stock to the
Purchaser pursuant to the Offer. Reference is made to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to the Company's stockholders herewith. Stockholders are
urged to read the Schedule 14D-9 in its entirety for a description of the
assumptions made, factors considered and procedures followed by the Company
Special Committee and the Company's Board of Directors in making the approvals,
determinations and recommendations set forth above.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 2, 1997 (the "Merger Agreement") among the Company, Parent and the
Purchaser. The Merger Agreement provides, among other things, that promptly
following the purchase of shares of Common Stock pursuant to the Offer and
subject to the terms and conditions of the Merger Agreement, and in accordance
with the relevant provisions of the Delaware General Corporation Law (the
"DGCL"), the Purchaser will be merged with and into the Company (the "Merger").
The Company will continue as the surviving corporation (the "Surviving
Corporation") and as a wholly owned subsidiary of Parent following consummation
of the Merger. If the Purchaser owns at least 90% of the outstanding shares of
Common Stock of the Company, Purchaser will have the ability to consummate the
Merger without a meeting or vote of the stockholders of the Company pursuant to
the "short form" merger provisions of the DGCL. Pursuant to the Merger each then
outstanding share of Common Stock, other than Common Stock owned by the
Purchaser, Parent or Parent's other subsidiaries, shares held in the treasury of
the Company and Common Stock owned by stockholders who perfect their dissenters'
rights under the DGCL, would be converted into the right to receive an amount in
cash equal to the Offer Price without interest. See "SPECIAL FACTORS -- Purpose
of the Offer and the Proposed Merger; Plans for the Company" and "SPECIAL
FACTORS -- Appraisal Rights."
<PAGE> 4

THE OFFER IS CONDITIONED (THE "MINIMUM TENDER CONDITION") UPON, AMONG OTHER
THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO
EXPIRATION OF THE OFFER AT LEAST A MAJORITY OF THE THEN ISSUED AND OUTSTANDING
SHARES OF COMMON STOCK, OTHER THAN SHARES OF COMMON STOCK BENEFICIALLY OWNED BY
THE PURCHASER, PARENT, PARENT'S OTHER SUBSIDIARIES AND THE EXECUTIVE OFFICERS
AND DIRECTORS OF PARENT (THE "MINIMUM NUMBER OF SHARES"). SEE "THE TENDER
OFFER -- CERTAIN CONDITIONS OF THE OFFER."

The Company has represented to the Purchaser that as of June 2, 1997, there
were 13,016,378 shares of Common Stock outstanding, 2,218,605 shares of Common
Stock reserved for issuance under the Company's employee stock option and award
plans (with 1,362,467 options outstanding thereunder) (the "Stock Options") and
1,500,000 shares of Common Stock reserved for issuance pursuant to outstanding
warrants to purchase 1,500,000 shares of Common Stock issued to Great American
Insurance Company in connection with the Company's 1993 acquisition of the
outstanding capital stock of American Business Insurance, Inc. from Great
American Insurance Company (the "Great American Warrants"). The Company has
10,000,000 shares of Preferred Stock authorized, but none of such shares have
been issued. As of March 10, 1997, there were approximately 450 holders of
record of the Common Stock.

Based on the foregoing and assuming that all Stock Options and the Great
American Warrants are surrendered for the cash value thereof in accordance with
the terms of the Merger Agreement (see "SPECIAL FACTORS -- Background of the
Offer; Merger Agreement") and that no new shares of Common Stock have been
issued or Stock Options have been granted and exercised after June 2, 1997,
there will be 13,016,378 shares of Common Stock outstanding on the Expiration
Date (as defined below) entitled to 13,016,378 votes. Following the contribution
of shares from Parent to the Purchaser on or prior to the Expiration Date, the
Purchaser will own 8,693,056 shares of Common Stock, representing approximately
66.8% of the outstanding shares of Common Stock on the Expiration Date. See "THE
TENDER OFFER -- Certain Information Concerning Parent and the Purchaser." As set
forth on Schedule I to this Offer to Purchase, the executive officers and
directors of Parent beneficially own, in the aggregate, 188,886 shares of Common
Stock of the Company (excluding shares subject to unexercised Stock Options).
See "SPECIAL FACTORS -- Interests of Certain Persons; Stockholdings of Certain
Officers and Directors; and Related Transactions." Thus, based on the foregoing
assumptions, 2,067,219 shares of Common Stock would be the Minimum Number of
Shares. In the event the Great American Warrants are exercised in full,
2,817,219 shares of Common Stock would be the Minimum Number of Shares.

The Purchaser has been advised by the Company, that to the best of the
Company's knowledge, except as set forth below, each of the Company's executive
officers and directors has indicated his or her respective intentions to tender
all shares of Common Stock owned by him or her pursuant to the Offer. One
director of the Company has indicated that he intends to make donations to
charitable institutions of not more than 500 shares, with the expectation that
such donees will tender such donated shares pursuant to the Offer. See "SPECIAL
FACTORS -- Interests of Certain Persons; Stockholdings of Certain Officers and
Directors; and Related Transactions."

The Offer is subject to certain other conditions. See "THE TENDER
OFFER -- Certain Conditions of the Offer." The Purchaser expressly reserves the
right, in its sole discretion, to waive any one or more of the conditions to the
Offer; provided, that the Purchaser has agreed that it will not waive the
Minimum Tender Condition without the consent of a majority of the current
members of the Company's Special Committee (the "Independent Directors").

If, after giving effect to the purchase of Common Stock in the Offer, the
Purchaser owns 90% or more of the outstanding Common Stock, the Purchaser
intends to effect the Merger as a "short-form" merger under the DGCL, without a
vote of the stockholders of the Company. In order to obtain such 90% ownership,
the Purchaser must purchase at least 3,021,685 shares of Common Stock in the
Offer, assuming all Stock Options and the Great American Warrants are
surrendered in accordance with the provisions of the Merger Agreement for cash
rather than exercised (or 5,597,905 shares of Common Stock, assuming all Stock
Options and the Great American Warrants are exercised). Such 3,021,685 shares of

2
<PAGE> 5

Common Stock represent approximately 69.9% of the 4,323,322 shares of Common
Stock not currently beneficially owned by Parent. If, after giving effect to the
purchase of shares of Common Stock by the Purchaser in the Offer, the Purchaser
owns less than 90% of the outstanding shares of Common Stock, the Merger will
have to be approved by the Company's stockholders. Pursuant to the terms of the
Company's Certificate of Incorporation, the Merger and the Merger Agreement must
be approved and adopted by the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock. By reason of Parent's current ownership
of shares of Common Stock (which will be transferred to the Purchaser on or
prior to the Expiration Date), the Purchaser will have sufficient voting power
to approve the Merger and the Merger Agreement without the vote of any of the
other stockholders of the Company and regardless of the number of shares of
Common Stock purchased by the Purchaser pursuant to the Offer. Parent and the
Purchaser have agreed in the Merger Agreement to vote or cause to be voted all
shares of Common Stock owned by them in favor of approval and adoption of the
Merger Agreement and the Merger.

In the event the Offer is not consummated, Parent and the Purchaser intend
to explore all options which may be available to them at such time, which may
include, without limitation, the acquisition of Common Stock through open market
purchases, privately negotiated transactions, another tender offer or exchange
offer or otherwise upon such terms and at such prices as they shall determine,
which may be more or less than the price to be paid pursuant to the Offer.
Parent and the Purchaser also reserve the right to dispose of Common Stock.

The Company's Board of Directors declared a quarterly cash dividend to
holders of record of Common Stock as of May 27, 1997 of $0.20 per share on May
13, 1997, payable on June 16, 1997. Such holders of record will be entitled to
receive the quarterly cash dividend whether or not they tender their Common
Stock pursuant to the Offer, and no adjustment will be made to the price in the
Offer or to any other terms of the Offer as a result of the payment of any such
quarterly dividend to such stockholders.

THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

SPECIAL FACTORS

BACKGROUND OF THE OFFER

The Company was organized and initially capitalized by Parent in September
1989. In October 1992, the Company completed its initial public offering.
Following the initial public offering, Parent owned 63.3% of the Company's
outstanding Common Stock (62.5% on a fully diluted basis). Beginning in October
1995, Parent's Board of Directors authorized the purchase of up to two million
shares of the Company's Common Stock. Purchases have been made from time to time
in the open market at prevailing prices or in privately negotiated transactions.
Parent has made no open market purchases of the Company's Common Stock since
June 1996. See Schedule II to this Offer to Purchase. Since October 1995, Parent
has acquired 487,488 additional shares of Common Stock which, in addition to the
acquisition by the Company of shares of its Common Stock in a privately
negotiated purchase, has resulted in Parent's ownership increasing to 66.8%
(54.7% on a fully diluted basis).

According to the Company's publicly available filings, the Company has
grown through the acquisition of insurance brokerage companies and third party
administrators, through the creation of new Acordia companies and the expansion
of existing Acordia companies. From 1992 through the present, a significant
portion of the Company's revenues have been derived from commissions on Parent's
products and revenues and from the provision of various administrative services
to Parent and its affiliates. Commissions and fees to the Company from entities
affiliated with Parent were $291.0 million and $233.1 million in 1996 and 1995,
respectively. See "-- Interests of Certain Persons; Stockholdings of Certain
Officers and Directors; and Related Transactions." Because of the high
percentage of the Company's revenues derived from the sale and servicing of
Parent's life and health products, the Company has stated that it is inevitable
that industry forces affecting Parent will also affect the Company.

3
<PAGE> 6

The timing of Parent's strategic review of its ownership relationship with
the Company has also been affected by a recent, comprehensive codification of
statutory accounting principles for insurers undertaken by the National
Association of Insurance Commissioners ("NAIC"). While the codification has not
yet been completed, Parent anticipates that the resulting changes may become
effective by year end 1998 and would require Parent to revise the methodology
for determining the carrying value of the Company's Common Stock held as an
investment in affiliated common stock. This change under the new principles is
expected to eliminate the entire carrying value of the Company's Common Stock,
regardless of its fair market value or published share prices. As a result of
the expected codification of the new principles by the NAIC, Parent has
determined that, whether or not the Offer or Merger is completed, Parent intends
to revise the carrying value of the Company's Common Stock to zero, effective
with its June 30, 1997 quarterly statement to be filed with the Indiana
Insurance Commissioner. Parent believes that the changes in statutory accounting
principles proposed by the NAIC would diminish the benefit to Parent of having
an investment in a publicly traded affiliate.

In September 1996, Parent retained Credit Suisse First Boston to assist its
management in reviewing alternatives with respect to Parent's interest in the
Company and Parent's healthcare mission. As part of this review, Credit Suisse
First Boston undertook, in consultation with Parent's and the Company's
management, a business and financial analysis of the Company and a review of
various alternatives. In December 1996, Parent amended its engagement with
Credit Suisse First Boston to include the analysis and evaluation of the
business, operations and financial position of the Company's insurance brokerage
operations that are independent of the administrative and marketing services
provided to Parent ("Acordia Brokers") and the exploration of a possible sale of
Acordia Brokers. During this period there were further discussions at the
management level regarding administrative and marketing costs issues as the
Company and Parent developed their respective 1997 business plans. However, no
action was taken by the Board of Directors of either Parent or the Company.

4
<PAGE> 7

$6.0 million, one-half of which was paid in the first quarter 1997 and the
remainder of which will be paid during the second quarter of 1997.

On February 6, 1997, the Company issued a press release announcing its
decision to undertake a strategic review of its business operations, including a
review of the Company's relationship with Parent. The Company also announced
that its Board had been informed by Parent that Parent was undertaking its own
strategic review, including an analysis of its business relationship with and
investment in the Company. The Company further announced that its Board of
Directors had created the Company Special Committee to evaluate any proposals
made by or involving Parent, and authorized it to retain such financial or other
advisers as might be necessary to assist the Company Special Committee in the
evaluation process. John C. Crane was designated as Chairman of the Company
Special Committee. The press release also stated that the Company was projecting
that revenues from the Company's health-related operations would be flat to
slightly down when compared to 1996.

Subsequent to the issuance of the February 6, 1997 press release, Credit
Suisse First Boston began soliciting indications of interest from prospective
purchasers of Acordia Brokers.

The next meeting of the Company Special Committee occurred on April 11,
1997. The meeting was attended by representatives of Alex. Brown and Jones Day.
At this meeting, Alex. Brown advised the Company Special Committee on the
process for valuing and analyzing the Company's business operations and on their
progress in due diligence. Jones Day briefed the Company Special Committee on
its fiduciary duties and responsibilities to minority shareholders under
Delaware law. The Company Special Committee was also updated on the status of
Credit Suisse First Boston's evaluation of a possible sale of Acordia Brokers.

5
<PAGE> 8

On May 9, 1997, the Parent Special Committee met and was updated on the
progress of negotiations with respect to the possible sale of Acordia Brokers
and considered the possible terms of a transaction with the Company. Vorys Sater
again briefed the Parent Special Committee on its fiduciary duties under Indiana
law and the duties owed to minority shareholders under the DGCL. In addition, on
May 9, the Parent Special Committee, through Credit Suisse First Boston,
received proposals with respect to the possible sale of Acordia Brokers.

On May 15, 1997, Credit Suisse First Boston met with Mr. Crane, Alex. Brown
and Jones Day and discussed in general terms a price of $34 per share for all
shares of Common Stock not owned by Parent. A telephonic meeting of the Company
Special Committee was convened later that day with Jones Day and Alex. Brown
present to discuss the price communicated by Credit Suisse First Boston.
Following a lengthy discussion, the Company Special Committee instructed Alex.
Brown to inform Credit Suisse First Boston that the Company Special Committee
had placed a preliminary per share value for the Common Stock in excess of $40
per share.

On May 19, 1997, the Parent Special Committee met again by telephone. The
Parent Special Committee's financial and legal advisers described the
negotiations with the bidder for Acordia Brokers. Credit Suisse First Boston
also reported to the Parent Special Committee that it had met with Alex. Brown
on May 16 and that Alex. Brown had reported that the Company Special Committee
placed a preliminary per share value for the Common Stock in excess of $40 per
share. The Parent Special Committee then deliberated regarding whether to
consider other alternatives or to increase the price it was willing to
recommend. Following discussion, the Parent Special Committee unanimously
resolved to authorize Credit Suisse First Boston to discuss with Alex. Brown a
per share price of $37.

6
<PAGE> 9

On May 20, 1997, following consideration of an increase in both the volume
and price of the Company's Common Stock, the Company and Parent issued the
following press release:

INDIANAPOLIS -- Acordia, Inc. (NYSE: ACO) and Anthem Insurance
Companies, Inc. announced today that in furtherance of the previously
announced review of their current business and financial relationship, they
are in discussions with regard to a possible reorganization of Acordia's
health business, which could include an acquisition by Anthem of the
publicly owned shares of Acordia not owned by Anthem. Anthem further
announced that it is in discussions with a third party with regard to a
possible sale of Acordia's brokerage business. There can be no assurance
that these discussions will result in any transaction, or if so, as to the
terms or timing of any such transaction.

As of May 1, 1997, Anthem owned approximately 67% of Acordia's
outstanding common stock.

On May 20, 1997, Credit Suisse First Boston also indicated to Alex. Brown
by telephone that the Parent Special Committee was prepared to discuss a per
share price of $37.

On May 21, 1997, Vorys Sater delivered to Dewey Ballantine, counsel to the
Company, and Jones Day, an initial draft of the Merger Agreement for their
review.

On May 23, 1997, Alex. Brown contacted Credit Suisse First Boston by
telephone and indicated that the Company Special Committee placed a preliminary
per share value on the Common Stock of at least $40 per share.

On the morning of May 27, 1997, the Parent Special Committee met by
telephone. Credit Suisse First Boston reported that Alex. Brown continued to
communicate that the Company Special Committee believed that the value of the
Company was at least $40 per share. The Parent Special Committee determined that
Mr. Hower should contact Mr. Crane directly. Following telephone discussions
between Mr. Crane and Mr. Hower that afternoon, the Parent Special Committee
reconvened on the evening of May 27 and Mr. Hower reported that, based on his
conversation with Mr. Crane, the Company Special Committee would likely
recommend acceptance of an offer at $40 per share. In addition, the Parent
Special Committee discussed whether the execution of a definitive agreement with
respect to the sale of Acordia Brokers should be a condition to a tender offer.
Following deliberations, the Parent Special Committee determined to recommend an
offer of $40 per share to the Parent's Board of Directors which would not be so
conditioned. Following the meeting, Vorys Sater furnished a revised draft of the
Merger Agreement to Dewey Ballantine and Jones Day.

On May 28, 1997, a telephonic meeting of the Company Special Committee was
held to discuss a per share price of $40 for the Common Stock. At the conclusion
of this meeting, the Company Special Committee determined to continue
discussions with the Parent Special Committee at a price of $40 per share
subject to the negotiation of a mutually acceptable Merger Agreement.

The Board of Directors of Parent met on May 30, 1997, with Credit Suisse
First Boston and Vorys Sater present by telephone. The Parent Special Committee
described the course of the negotiations, and Credit Suisse First Boston
provided information on the financial terms of an offer at a per share price of
$40. Credit Suisse First Boston also orally advised the directors that, as of
such date and based upon and subject to certain matters discussed with them, the
consideration to be paid by Parent in the Offer and the Merger was fair to
Parent from a financial point of view. Vorys Sater outlined the terms and
conditions of the draft Merger Agreement. The Board of Directors of Parent took
no action with respect to the Parent Special Committee's recommendation on May
30.

The Company Special Committee also met on May 30 to discuss a $40 per share
price and to consider its recommendation to the Company's Board of Directors. At
this meeting, Alex. Brown rendered its oral

7
<PAGE> 10

opinion, subsequently confirmed in writing, that, as of that date, the proposed
consideration of $40 per share was fair, from a financial point of view, to the
Company's stockholders other than Parent, and Jones Day outlined the terms and
conditions of the draft Merger Agreement and the open issues that remained in
that draft. At the conclusion of this meeting, the Company Special Committee
unanimously determined to recommend to the Company's Board of Directors that the
Board approve a $40 per share price, subject to the finalization of the draft
Merger Agreement.

On May 31, 1997, Parent's Board of Directors reconvened and (excluding
certain interested directors who abstained) approved the Merger, the Merger
Agreement and the Offer. Following this meeting, Mr. Hower telephoned Mr. Crane
to convey the Offer. A telephonic meeting of the Company's Board of Directors
was held later that day. Following receipt of the Company Special Committee's
recommendation and a discussion of the Offer, the Merger and the Merger
Agreement, the Company's Board of Directors (excluding certain interested
directors who abstained) approved the Merger Agreement (including the Offer and
the Merger) and recommended to the Company's stockholders (other than Parent and
the Purchaser) that such stockholders accept the Offer and tender their shares
of Common Stock pursuant to the Offer, and determined that the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders
(other than Parent and the Purchaser).

ANALYSIS OF CREDIT SUISSE FIRST BOSTON AS FINANCIAL ADVISOR TO PARENT

Credit Suisse First Boston has acted as exclusive financial advisor to
Parent in connection with the Offer and the Merger. Credit Suisse First Boston
is an internationally recognized investment banking firm and is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, leveraged buyouts, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.

General. In connection with Credit Suisse First Boston's engagement, Parent
requested that Credit Suisse First Boston evaluate the fairness to Parent from a
financial point of view of the consideration to be paid by Parent in the Offer
and the Merger. At a meeting of Parent's Board of Directors held on May 30,
1997, Credit Suisse First Boston orally advised Parent's Board of Directors
that, as of such date and based upon and subject to certain matters discussed
with the Board, the consideration to be paid by Parent in the Offer and the
Merger was fair to Parent from a financial point of view. Credit Suisse First
Boston's opinion was subsequently confirmed in writing on June 2, 1997 (the
"Credit Suisse First Boston Opinion").

In arriving at its opinion, Credit Suisse First Boston (i) reviewed the
Merger Agreement and certain publicly available business and financial
information relating to Parent and the Company, (ii) reviewed certain other
information, including financial forecasts, provided by Parent and the Company,
(iii) met with the managements of Parent and the Company to discuss the
businesses and prospects of Parent and the Company, (iv) considered certain
financial and stock market data of the Company compared that data with similar
data for other publicly held companies in businesses similar to that of the
Company, (vi) considered the financial terms of certain other business
combinations and other transactions which have recently been effected, and (vii)
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which Credit Suisse
First Boston deemed relevant.

In connection with the Credit Suisse First Boston Opinion, Credit Suisse
First Boston did not assume responsibility for independent verification of any
of the information provided to or otherwise reviewed by Credit Suisse First
Boston and relied upon its being complete and accurate in all material respects.
With respect to the financial forecasts, Credit Suisse First Boston assumed that
they were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of Parent and the Company
as to the future financial performance of Parent and the Company. In addition,
Credit Suisse First Boston was not asked to and did not make an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Parent or the Company, nor was Credit Suisse First Boston

8
<PAGE> 11

furnished with any such evaluations or appraisals. Credit Suisse First Boston
notes in the Credit Suisse First Boston Opinion that it understood that Parent
had entered into discussions with a third parties with respect to the sale,
following consummation of the transactions contemplated by the Merger Agreement,
of all of the shares of certain subsidiary corporations and certain other assets
which comprise the independent insurance brokerage and related business of the
Company. The Credit Suisse First Boston Opinion is necessarily based on
information available to it and financial, economic, market and other conditions
as they existed and could be evaluated on the date of the Credit Suisse First
Boston Opinion. Although Credit Suisse First Boston evaluated the fairness of
the consideration to be paid by Parent in the Offer and the Merger from a
financial point of view, the specific consideration payable in the Offer and the
Merger was determined by Parent and the Company through arm's length
negotiation. No other limitations were imposed by Parent on Credit Suisse First
Boston with respect to the investigations made or procedures followed by Credit
Suisse First Boston.

Copies of the Credit Suisse First Boston Opinion have been filed as an
exhibit to the Schedule 14D-1 and may be inspected, copied and obtained in the
manner specified in "THE TENDER OFFER -- Certain Information Concerning the
Company." The Credit Suisse First Boston Opinion is directed only to the
fairness of the consideration to be paid by Parent in the Offer and the Merger
from a financial point of view, does not address any other aspect of the Offer,
the Merger or any related transaction and does not constitute a recommendation
to stockholders of the Company as to whether to tender Shares in the Offer.

Summary of Analyses. In deriving an equity value reference range for the
Company, Credit Suisse First Boston performed, as appropriate, a comparable
companies analysis, a comparable acquisition analysis and a discounted cash flow
analysis for each of the Acordia Brokers segment and the health insurance
business segment of the Company ("Acordia Health") and a leveraged buy-out
analysis for Acordia Brokers.

Credit Suisse First Boston also reviewed certain additional information
including information relating to the daily trading volume and price performance
of the Common Stock and the implications of certain "minority squeeze-out"
transactions.

The following is a summary of the material financial analyses performed by
Credit Suisse First Boston in connection with its presentation to Parent on May
30, 1997, and delivery of the Credit Suisse First Boston Opinion. Such
description does not purport to be a complete description of the analyses
conducted by Credit Suisse First Boston in arriving at its opinion.

Acordia Brokers Comparable Company Analysis. Credit Suisse First Boston
performed a comparable company analysis (the "Brokers Comparable Company
Analysis") in which it compared certain publicly available financial data,
projections of future financial performance (reflecting a composite of equity
research analysts' estimates as reported by First Call Corporation) and market
statistics (calculated based upon closing stock prices as of May 23, 1997) of
selected publicly traded insurance brokers with certain historical and projected
financial information for Acordia Brokers. Such comparable companies included:
Aon Corporation ("Aon"); Arthur J. Gallagher & Co. ("Gallagher"); E.W. Blanch
Holdings, Inc. ("Blanch"); Hilb, Rogal & Hamilton Company ("Hilb, Rogal"); Marsh
& McLennan Companies, Inc. ("Marsh & McLennan"); and Poe & Brown, Inc. ("Poe &
Brown") (the "Brokerage Comparable Companies"). Credit Suisse First Boston
further noted that in terms of total revenues, client base and geographic area
of operations, Gallagher; Hilb, Rogal; and Poe & Brown were most comparable to
Acordia Brokers. Credit Suisse First Boston calculated the Adjusted Market Value
(defined as aggregate equity value plus debt and preferred stock, net of
operating cash and cash equivalents) of the Brokerage Comparable Companies as
multiples of (i) latest twelve months ("LTM") revenues, (ii) LTM earnings before
interest, taxes, depreciation and amortization ("EBITDA") and (iii) LTM earnings
before interest and taxes ("EBIT"). Credit Suisse First Boston also derived
multiples of common stock prices per share relative to actual 1996 and a
composite equity research analysts' estimates of 1997 and 1998 earnings per
share (as reported by First Call Corporation) for the Brokerage Comparable
Companies. This analysis indicated that (i) the Adjusted Market Value to LTM
revenues ranged from 1.0x to 2.6x with a relevant multiple range of 1.0x to 1.2x
for the Brokerage Comparable Companies; (ii) the Adjusted Market Value to LTM
EBITDA multiples ranged from

9
<PAGE> 12

5.6x to 14.7x with a relevant multiple range of 5.6x to 7.0x for the Brokerage
Comparable Companies; and (iii) the Adjusted Market Value to LTM EBIT multiples
ranged from 6.4x to 19.2x with a relevant multiple range of 6.4x to 9.0x for the
Brokerage Comparable Companies; (iv) the common stock prices to actual 1996
earnings per share multiples ranged from 12.1x to 22.5x with a relevant multiple
range of 12.1x to 16.9x for the Brokerage Comparable Companies; and (v) the
common stock prices to estimated 1997 earnings per share multiples ranged from
11.6x to 20.6x with a relevant multiple range of 11.6x to 16.3x for the
Brokerage Comparable Companies. Credit Suisse First Boston then applied these
multiples of actual 1996 and estimated 1997 financial performance to the
appropriate benchmarks of Acordia brokers to derive equity and enterprise
reference ranges for Acordia Brokers taking into consideration control premiums
of 25% and 35%. The foregoing analysis resulted in an Enterprise Value
(including debt and earn-out obligations) reference range for Acordia Brokers of
$321 million to $396 million.

Acordia Brokers Comparable Acquisitions Analysis. Using publicly available
information, Credit Suisse First Boston reviewed 55 selected business
combinations which occurred since January 1990 involving companies in the
insurance brokerage industry. In conducting this analysis, Credit Suisse First
Boston noted that merger activity in the insurance brokerage industry had
accelerated in the prior 12 months and that valuations have varied dramatically.
Credit Suisse First Boston placed particular emphasis on recent business
combinations involving companies which (i) are similar in size to Acordia
Brokers or (ii) involved acquisitions of United States based insurance brokerage
businesses, consisting of the following transactions (listed as acquired
company/acquiror): Bain Hogg Robinson, Inc./Acordia, Inc.; Kaye International
L.P./Old Lyme Holding Corp.; H.W. Kaufman Financial Group Inc./AJK Acquisition
Company; Jardine Insurance Brokers -- U.S. Retail Operations/Alexander &
Alexander Services Inc.; The Frizzell Group Ltd. (subsidiary of Marsh &
McLennan)/Liverpool Victoria Friendly Society; Bain Hogg Group plc/Aon;
Alexander & Alexander Services Inc./Aon; JIB Group plc/Lloyd Thompson Group plc;
Lowndes Lambert Group Holdings plc/Fenchurch plc; CECAR/Marsh & McLennan;
Johnson & Higgins, Inc./Marsh & McLennan; and The Minet Group/Aon (the
"Brokerage Acquisition Comparables"). For each of the Brokerage Acquisition
Comparables, Credit Suisse First Boston (i) compared the purchase price of each
such transaction to the publicly available LTM net income of the acquired
company and (ii) compared the Adjusted Value (defined as purchase price plus
acquired company debt and preferred stock, if any, net of operating cash and
cash equivalents) to LTM revenues, EBITDA and EBIT of the acquired company.
Credit Suisse First Boston's analysis indicated that purchase price as a
multiple of LTM net income ranged from 6.0x to 24.3x with a relevant multiple
range of 20.0x to 24.0x. This analysis also indicated that Adjusted Value as a
multiple of: (i) LTM revenues ranged from 0.2x to 2.0x with a relevant multiple
range of 0.9x to 1.2x; (ii) LTM EBITDA ranged from 3.5x to 10.2x with a relevant
multiple range of 6.0x to 8.0x; and (iii) LTM EBIT ranged from 4.2x to 13.2x
with a relevant multiple range of 8.0x to 12.0x. The foregoing analysis resulted
in an Enterprise Value (including debt and earn-out obligations) reference range
for Acordia Brokers of $300 million to $400 million.

Acordia Brokers Discounted Cash Flow Analysis. Credit Suisse First Boston
performed a discounted cash flow analysis of the projected unlevered free cash
flows of Acordia Brokers for the period 1997 through 2006, based upon financial
forecasts for 1997 provided to Credit Suisse First Boston by the management of
the Company and financial forecasts for the period 1998 to 2006 developed by
Credit Suisse First Boston. The base case of this analysis assumed 4.3% revenue
growth and margin improvements to 15.2% in 1997 and held constant thereafter
(the "Base Case"). Credit Suisse First Boston also prepared, as a part of its
sensitivity analysis, a number of cases modifying certain of the assumptions
utilized to prepare the Base Case (the "Sensitivity Cases"). The Sensitivity
Cases included (i) a margin decrease case assuming, among other things, margins
decreasing by 0.8% per year until reaching 11.0% in 2002 and held constant
thereafter (the "Margin Decrease Case") and (ii) a margin increase case
assuming, among other things, increasing margins by 0.8% per year until reaching
19.8% in 2003 and held constant thereafter (the "Margin Increase Case"). Credit
Suisse First Boston utilized the "Base Case," "Margin Decrease Case" and "Margin
Increase Case" scenarios for Acordia Brokers merely as points of reference and
in no way intended to suggest parameters or forecasts as to minimum or maximum
enterprise and equity valuation ranges for Acordia Brokers. Credit Suisse First
Boston developed an Enterprise Value reference range utilizing discount rates of
10% to 14% and terminal value multiples of (i) estimated 2006 EBITDA of

10
<PAGE> 13

5.5x to 7.0x; (ii) estimated 2006 net income of 12.0x to 15.0x; and (iii)
estimated 2006 revenues of 0.9x to 1.2x. The foregoing analysis resulted in an
Enterprise Value (including debt and earn-out obligations) reference range of
$325 million to $400 million.

Acordia Brokers Leveraged Buyout Analysis. Credit Suisse First Boston
examined potential returns in four scenarios involving a highly leveraged
acquisition of Acordia Brokers. In this analysis, Credit Suisse First Boston
assumed revenue growth of 4.3% annually, EBITDA margins in 1997 of 15.2%, no
incremental acquisitions and a 10% carried interest for Acordia Brokers'
management. Credit Suisse First Boston analyzed the potential rates of return
available to an equity investor assuming (i) a purchase price of $367 million,
an equity contribution of $35 million and EBITDA margins increasing to 19.0% by
2001; (ii) a purchase price of $392 million, an equity contribution of $60
million and EBITDA margins increasing to 19.0% by 2001; (iii) a purchase price
of $417 million, an equity contribution of $85 million and EBITDA margins
increasing to 19.0% by 2001; and (iv) a purchase price of $367 million, an
equity contribution of $35 million and no EBITDA margin increase beyond 15.2%.
Assuming exit multiples of projected 2001 EBITDA ranging from 6.5x to 8.0x and
that an equity investor in a leveraged buy-out of Acordia Brokers would require
a 25% to 35% rate of return on its equity investment, the foregoing analysis
resulted in an Enterprise Value (including debt and earn-out obligations)
reference range of $365 million to $415 million.

Valuation Reference Range of Acordia Brokers. Based on the above analyses,
Credit Suisse First Boston derived an Enterprise Value (including debt and
earn-out obligations) reference range for Acordia Brokers of $325 million to
$375 million.

Acordia Health Comparable Companies Analysis. Credit Suisse First Boston
performed a comparable company analysis (the "Health Comparable Company
Analysis") in which it compared certain publicly available financial data,
projections of future financial performance reflecting a composite of equity
research analysts' estimates (as reported by First Call Corporation) and market
statistics (calculated based upon closing stock prices as of May 23, 1997) of
selected publicly traded health insurance service companies with certain
historical and projected financial information for Acordia Health. Such
comparable companies included: HealthCare Compare Corp.; Health Plan Services
Corporation ("HPS"); CoreVel Corporation; and Crawford & Company (the "Health
Insurance Service Comparable Companies"). Credit Suisse First Boston further
noted that (i) none of the Health Insurance Service Comparable Companies have a
concentration of business with a single customer analogous to the Company's
relationship with Parent, and (ii) the Health Insurance Service Comparable
Companies generally had high projected growth rates (18.5% to 19.9%) in contrast
to Acordia Health. Credit Suisse First Boston calculated the Adjusted Market
Value of the Health Insurance Service Comparable Companies as multiples of (i)
LTM revenues, (ii) LTM EBITDA and (iii) LTM EBIT. Credit Suisse First Boston
also derived multiples of common stock prices per share relative to actual 1996
earnings per share and a composite equity research analysts' estimates of 1997
and 1998 earnings per share (as reported by First Call Corporation) for the
Health Insurance Service Comparable Companies. This analysis indicated that (i)
the Adjusted Market Value to LTM revenues ranged from 0.9x to 1.2x with a
relevant multiple range of 0.9x to 1.2x for the Health Insurance Service
Comparable Companies; (ii) the Adjusted Market Value to LTM EBITDA multiples
ranged from 6.6x to 10.6x with a relevant multiple range of 7.0x to 9.0x for the
Health Insurance Service Comparable Companies; and (iii) the Adjusted Market
Value to LTM EBIT multiples ranged from 8.0x to 16.6x with a relevant multiple
range of 8.0x to 10.0x for the Health Insurance Service Comparable Companies;
(iv) the common stock prices to actual 1996 earnings per share multiples ranged
from 17.8x to 22.2x with a relevant multiple range of 17.0x to 19.0x for the
Health Insurance Service Comparable Companies; and (v) the common stock prices
to estimated 1997 earnings per share multiples ranged from 13.4x to 17.7x with a
relevant multiple range of 13.5x to 17.0x for the Health Insurance Service
Comparable Companies. Credit Suisse First Boston then applied these multiples of
actual 1996 and estimated 1997 financial performance to the appropriate
benchmarks of Acordia Health to derive an Enterprise Value reference range for
Acordia Health. The foregoing analysis resulted in an Enterprise Value reference
range for Acordia Health of $400 million to $500 million. Credit Suisse First
Boston considered the special relationship between Parent and the Company and
concluded that this special relationship limited the applicability of the
comparable company analysis to the valuation of Acordia Health on a stand-alone
basis and that a control premium for Acordia Health would be inappropriate.

11
<PAGE> 14

Acordia Health Comparable Acquisitions Analysis. Using publicly available
information, Credit Suisse First Boston reviewed various selected business
combinations which occurred since January 1991 involving third party
administration and cost-containment companies (the "Health Care Services
Acquisition Comparables"). The Health Care Services Acquisition Comparables
included (listed as acquired company/acquiror): GENEX Services Inc.
("GENEX")/Provident Companies, Inc.; MedView Services, Inc./Value Health, Inc.;
Health Risk Management Inc./HPS; Consolidated Group Inc./HPS; Harrington
Services Corp./HPS; Employee Benefit Plans/First Financial Management Corp.;
Alexsis/Continental Casualty; Electronic Tabulating Service/Equifax; GENEX/First
Financial Management Corp.; Executive Risk Consultants, Inc./Physician
Corporation of America; Community Care Network/Value Health, Inc.; Reviewco/The
Noetics Group/Foundation Health Corp.; FOCUS Healthcare Management/United
Healthcare Corporation; Preferred Health Care Ltd./Value Health, Inc.; Vantage
Computer Systems Inc./Continuum Corp.; Corporate Healthcare Financing/United
American Healthcare Corp.; American Biodyne, Inc./Medco Containment Services;
Health Economics Corp. (unit of Halliburton Company)/Equifax; Alta Health
Strategies, Inc./First Financial Management Corp.; Occupational-Urgent Care
Health Systems, Inc. (OUCH)/Health Care Compare Corp.; and Lincoln
National -- Network Unit/Investor Group. For each of the Health Care Services
Acquisition Comparables, Credit Suisse First Boston (i) compared the purchase
price of each such transaction to publicly available LTM net income of the
acquired company and (ii) compared the Adjusted Value to LTM revenues, EBITDA
and EBIT. This analysis indicated that purchase price as a multiple of LTM net
income ranged from 10.6x to 67.3x with a relevant multiple range of 12.0x to
15.0x and Adjusted Value as a multiple of: (i) LTM revenues ranged from 0.5x to
9.9x with a relevant multiple range of 0.9x to 1.4x; (ii) LTM EBITDA ranged from
4.9x to 34.5x with a relevant multiple range of 6.5x to 8.0x; and (iii) LTM EBIT
ranged from 4.0x to 39.0x with a relevant multiple range of 8.0x to 12.0x. The
foregoing analysis resulted in an Enterprise Value reference range of $450
million to $550 million. Credit Suisse First Boston considered the special
relationship between Parent and the Company and concluded that this special
relationship limited the applicability of the comparable acquisition analysis to
the valuation of Acordia Health on a stand-alone basis.

Acordia Health Discounted Cash Flow Analysis. Credit Suisse First Boston
performed a discounted cash flow analysis of the projected unlevered free cash
flows of Acordia Health for the period 1997 through 2001, based upon the
following: (i) financial forecasts for Acordia Health provided to Credit Suisse
First Boston by Parent assuming that (x) Parent achieves its planned growth in
managed care members and reduces over time its traditional health insurance
customers, (y) Acordia Health continues to serve Parent's customers, but does
not earn any revenue for the managed care which Parent provides and (z) a
reduction of EBITDA margins for Acordia from 20.1% in 1997 to 16.1% in 2001 (the
"Anthem Planned Case"), (ii) financial forecasts for Acordia Health provided to
Credit Suisse First Boston by Parent which assumed no change in the Company's
compensation or Parent's cost and which result in a decline in Parent's
business, substantially due to competitive factors, and a subsequent decline in
the Company's revenues by $57.4 million and a decline in Acordia Health's EBITDA
margin from 20.1% in 1997 to 10.0% in 1998 with a 1% per year increase
thereafter (the "Do Nothing/Margin Drop Case"), (iii) financial forecasts
developed by Credit Suisse First Boston which assumed the Company and Parent
sever their business relationship at the end of 1998 and the Company places 100%
of its business with unaffiliated carriers resulting in a decline in Acordia
Health's EBITDA margin from 20.1% in 1997 to 16.1% in 2001 (the "Independent
Acordia Case"), and (iv) financial forecasts developed by Credit Suisse First
Boston which assumed Parent achieves its planned growth in managed care members
but at a slower rate than currently planned and Acordia Health's EBITDA margin
remained constant at 20.1% (the "Slow Transition Case"). In each of the
foregoing cases Credit Suisse First Boston assumed that non-Parent revenues in
Acordia Health grow at 5% per year. Credit Suisse First Boston utilized the
"Anthem Planned Case," "Do Nothing/Margin Drop Case," "Independent Acordia Case"
and "Slow Transition Case" scenarios for Acordia Health merely as points of
reference and in no way intended to suggest parameters or forecasts as to
minimum or maximum enterprise and equity valuation ranges for Acordia Health.
Credit Suisse First Boston developed an Enterprise Value reference range
utilizing discount rates of 11% to 13% and terminal value multiples of (i)
estimated 2001 EBITDA of 5.5x to 7.0x; (ii) estimated 2001 net income of 16.0x
to 19.0x; and

12
<PAGE> 15

(iii) estimated 2001 revenues of 1.1x to 1.4x. The foregoing analysis resulted
in an Enterprise Value reference range of $225 million to $325 million.

Valuation Reference Range of Acordia Health. Based on the above analyses,
Credit Suisse First Boston derived an Enterprise Value reference range for
Acordia Health of $340 million to $440 million.

Combined Reference Range of Acordia Brokers and Acordia Health. Credit
Suisse First Boston combined the Enterprise Value reference range values
determined for Acordia Brokers and Acordia Health, as well as the operating cash
and cash equivalents and total debt of the Company, to determine the overall per
share reference range for the Company. For purposes of calculating the
appropriate per share reference range, Credit Suisse First Boston assumed
exercise of all outstanding options and warrants of the Company, including
proceeds of such exercises in operating cash and equivalents and including
shares issued upon such exercise in total shares and equivalents. The foregoing
analysis resulted in a Company Equity Value reference range per share and
equivalent of $33.45 to $41.63 (the "Company per Share Equity Value Reference
Range").

Additional Information. Credit Suisse First Boston also reviewed the
following: (i) the daily trading volume and per share daily closing market price
of the Company's Common Stock over the period from the Company's initial public
offering (October 21, 1992) to May 23, 1997; (ii) the relative price performance
of the Company's Common Stock against a Brokers Index composed of Aon;
Gallagher; Blanch; Hilb, Rogal; Marsh & McLennan; and Poe & Brown; (iii) the
price and volume distribution of trades of the Company's Common Stock for the
period from October 21, 1992 to May 23, 1997; and (iv) the Company's stockholder
profile.

Going Private Considerations. Credit Suisse First Boston also considered
the implications of a "minority squeeze-out" transaction whereby Parent acquired
as a majority stockholder in the Company all of the remaining Company Common
Stock, which generally requires a premium to the prevailing market price. In
particular, Credit Suisse First Boston analyzed the premium to stock price one
day, one week and one month prior to announcement of various minority
squeeze-out transactions since 1990 and determined that: (i) the mean premiums
to stock price one day, one week and one moth prior to the announcement were
20.0%, 23.1% and 25.9%, respectively; (ii) the median premiums to stock price
one day, one week and one month prior to the announcement were 26.1%, 29.6% and
31.4%, respectively; (iii) the 75th percentile of the range of premiums to stock
price one day, one week and one month prior to the announcement were 36.0%,
42.7% and 47.7%, respectively; and (iv) the 25th percentile of the range of
premiums to stock price one day, one week and one month prior to the
announcement were 10.8%, 12.5% and 8.2%, respectively. Credit Suisse First
Boston analyzed the premium of the Company Equity Value Reference Range to the
market price for Company Common Stock at selected dates and derived: (i) a range
of premiums to the market price for Company Common Stock one day prior to
Parent's February 6, 1997 announcement that it was reviewing its investment in
the Company (the "Announcement") from 20.0% to 49.3%; (ii) a range of premiums
to the market price for the Company Common Stock one week prior to the
Announcement from 19.5% to 48.7%; (iii) a range of premiums to the market price
for Company Common Stock one month prior to the Announcement from 20.0% to
49.3%; and (iv) a range of premiums to the market price for Company Common Stock
as of May 23, 1997 from (6.8)% to 16.0%. Credit Suisse First Boston further
noted that the $40 per share Offer Price represented a premium of 43.5% to the
market price for Company Common Stock one day prior to the Announcement date,
42.9% to the market price for Company Common Stock one week prior to the
Announcement date, 43.5% to the market price for Company Common Stock one month
prior to the Announcement date and 11.5% to the market price as of May 23, 1997.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the process
underlying the Credit Suisse First Boston Opinion. In arriving at its opinion,
Credit Suisse First Boston considered the results of all such analyses taken as
a whole. Furthermore, in arriving at its fairness opinion, Credit Suisse First
Boston considered the special relationship between Parent and the Company.
Credit Suisse First Boston also made qualitative judgments as to the
significance and relevance of each analysis and factor. No company or
transaction used in the above analyses as a comparison is identical to Parent,
the Company, or

13
<PAGE> 16

the Offer or the Merger. The analyses were prepared solely for purposes of
Credit Suisse First Boston providing its opinion to Parent as to the fairness
from a financial point of view to Parent of the consideration to be paid by
Parent in the Offer and the Merger, and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses are based upon numerous
factors or events beyond the control of Parent, the Company, their respective
advisors or any other person and are inherently uncertain. Actual future results
may be materially different from those forecast.

FEE AND OTHER INFORMATION

Pursuant to the terms of Credit Suisse First Boston's engagement, for its
services in connection with the Offer and the Merger, Parent has agreed to pay
Credit Suisse First Boston a financial advisory fee of $100,000 (which is
creditable against any transaction fee) and a transaction fee of $2.5 million,
$500,000 of which was payable upon execution of the Merger Agreement and the
balance of which is payable upon acquisition by Parent of greater than 90% of
the outstanding voting securities of the Company. In addition, Parent has agreed
to pay to Credit Suisse First Boston, under certain circumstances, a separate
fee of $2.5 million in connection with any sale of Acordia Brokers. Parent also
has agreed to reimburse Credit Suisse First Boston for its out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, and to
indemnify Credit Suisse First Boston and certain related persons against certain
liabilities, including liabilities under the federal securities laws.

In the ordinary course of business, Credit Suisse First Boston and its
affiliates may actively trade the securities of Parent and the Company for their
own account and for accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. In the past, Credit Suisse First
Boston and its affiliates have provided financial advisory services for Parent
and the Company and have received customary fees for rendering these services.

FAIRNESS OF THE OFFER

The Board of Directors of the Company, based upon, among other things, the
unanimous recommendation by the Company Special Committee, has determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, upon the terms and subject to the conditions set forth in
the Merger Agreement, are fair to, and in the best interests of, the Company and
its stockholders (other than Parent and the Purchaser) and recommends (excluding
certain interested directors who abstained) that such stockholders accept the
Offer and tender their shares of Common Stock to the Purchaser pursuant to the
Offer. Reference is made to the Company's Schedule 14D-9 mailed to stockholders
herewith for a description of the assumptions made, factors considered and
procedures followed by the Company Special Committee.

Parent and the Purchaser believe that the Offer and the Merger are fair to
the stockholders of the Company (other than Parent and the Purchaser) based on
the conclusions, and the bases therefor, unanimously reached by the Company
Special Committee in recommending the Offer and Merger to the Company's Board of
Directors, as set forth in the Company's Schedule 14D-9, and the fact that the
Offer and Merger were unanimously recommended to the Company's Board of
Directors by the Company Special Committee which was advised by experienced and
independent legal counsel and financial advisors and which received a fairness
opinion from Alex. Brown that the consideration to be received by the Company's
stockholders (other than Parent and the Purchaser) in the Offer and Merger is
fair to them from a financial point of view. However, Parent and the Purchaser
have a conflict of interest with respect to the Offer and the Merger. Parent and
the Purchaser did not find it practicable to, and did not, quantify or otherwise
attach relative weight to the specific factors considered by them.

THE MERGER AGREEMENT

The following is a summary of the Merger Agreement, a copy of which is
filed as an exhibit to the Schedule 14D-1 filed by the Purchaser and Parent with
the Commission in connection with the Offer. Such summary is qualified in its
entirety by reference to the Merger Agreement.

14
<PAGE> 17

The Offer. Pursuant to the Merger Agreement, the Purchaser is obligated to
commence the Offer no later than five business days following the public
announcement of the Merger Agreement. The obligation of the Purchaser to
commence the Offer and to accept for payment and to pay for any shares of Common
Stock tendered pursuant to the Offer are subject only to the conditions
specified in "THE TENDER OFFER -- Certain Conditions of the Offer."

Although the Purchaser has expressly reserved the right to amend or make
changes in the terms and conditions of the Offer, the Merger Agreement provides
that, without the consent of a majority of the Independent Directors (as defined
in the Merger Agreement) the Purchaser may not waive the Minimum Tender
Condition or make any change in the terms or conditions of the Offer which (A)
changes the form of consideration to be paid, (B) decreases the price per share
of Common Stock payable in the Offer, (C) reduces the maximum number of shares
of Common Stock to be purchased in the Offer, (D) imposes conditions to the
Offer in addition to those set forth in "THE TENDER OFFER -- Certain Conditions
of the Offer," (E) extends the Expiration Date of the Offer (except as required
by law or the applicable rules and regulations of the Commission and except that
the Expiration Date may be extended for up to forty business days in the
aggregate in the event any condition to the Offer is not satisfied), or (F)
amends any term of the Offer in any manner materially adverse to holders of
shares of Common Stock.

The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time the Purchaser will be merged with and
into the Company in accordance with the DGCL. The Company will continue as the
Surviving Corporation and as a wholly owned subsidiary of the Parent following
consummation of the Merger.

Covenants. The Company's covenants are standard and include, among other
things, operating in the ordinary course. In addition, the Company has agreed to
convene a meeting of the Company's stockholders to vote upon the Merger, unless
a vote of stockholders is not required by the DGCL. If such a meeting is
required for consummation of the Merger, the Company will prepare and file with
the Commission a proxy statement or information statement for such a meeting to
vote upon the Merger.

Stock Options; Great American Warrants. As soon as practicable, upon the
written request of the Purchaser, the Company and the Purchaser have agreed to
take such actions as are reasonably required to provide that at the earlier of
the purchase of shares of Common Stock pursuant to the Offer and the effective
time of the Merger, each holder of a then outstanding Stock Option, whether or
not exercisable, or a then outstanding Great American Warrant will receive from
the Company the difference between the Offer Price and the exercise price of
such Stock Option or Great American Warrant, as the case may be, net in either
case of any applicable tax withholding.

15
<PAGE> 18

fiduciary duties to the stockholders of the Company under applicable law and (2)
prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such person or entity, the Company's directors
or the Company Special Committee, as the case may be, receive from such person
or entity an executed confidentiality agreement with customary terms. The
Company has agreed to promptly notify Parent after receipt of any Acquisition
Proposal or any indication that any person or entity is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any subsidiary or for access to the properties, books or records of
the Company or any subsidiary by any person or entity that may be considering
making, or has made, an Acquisition Proposal and will keep Parent fully informed
of the status and details of any such Acquisition Proposal, indication or
request. For purposes hereof, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
subsidiary, other than the transactions contemplated by the Merger Agreement.

Directors' and Officers' Indemnification and Insurance. The Certificate of
Incorporation of the Surviving Corporation will contain provisions no less
favorable to the Company's directors and officers with respect to
indemnification than such provisions in the Company's Certificate of
Incorporation, and such provisions will not be amended, repealed or otherwise
modified for six years after the consummation of the Merger in a manner that
would materially adversely affect the rights of the Company's existing directors
and officers with respect to actions or events at or prior to the effective time
of the Merger. In addition, the Company and, following the Merger, the Surviving
Corporation have agreed to indemnify the existing directors and officers of the
Company in connection with any action or omission to act in their capacity as
directors and officers of the Company for a period of six years after the later
of the consummation of the Merger and the date of the Merger Agreement. Parent
has agreed to maintain directors' and officers' liability insurance policies
containing substantially comparable terms and conditions to the Company's
existing policies to cover the acts and omissions of the Company's current
directors and officers occurring on or prior to the consummation of the Merger
for a period of six years after the consummation of the Merger (or for such
lesser period as can be purchased for a premium not exceeding 200% of the last
intercompany allocation made by Parent to the Company with respect to directors'
and officers' insurance).

Conditions to Obligations of Each Party to Effect the Merger. Conditions
to the obligations of each party to effect the Merger include, (i) the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
by the Company's stockholders to the extent required by, and in accordance with,
the DGCL and the Company's Certificate of Incorporation and Bylaws; (ii) the
Purchaser's or its permitted assignee's purchase of all shares of Common Stock
validly tendered and not withdrawn pursuant to the Offer; (iii) the taking of
all actions and making of all filings with, and the approval of, any
governmental body, agency, official or authority required to permit the
consummation of the Merger; and (iv) the absence of the issuance of any order
and of the existence of any statute, rule or regulation restraining or
prohibiting the consummation of the Merger or the effective operation of the
business of the Company and its subsidiaries after the consummation of the
Merger.

Termination. The Merger Agreement may be terminated at any time prior to
the consummation of the Merger, whether prior to or after approval by the
Company's stockholders:

(i) by mutual written consent of the Company and Parent, if such
termination is also approved by a majority of the Independent Directors;

16
<PAGE> 19

(iv) by Parent, if the Purchaser shall have (a) terminated the Offer
without having accepted any shares of Common Stock for payment thereunder
by reason of the failure to satisfy any condition under "THE TENDER
OFFER -- Certain Conditions of the Offer" or (b) failed to pay for shares
of Common Stock pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares shall have
been caused by or resulted directly from the failure of Parent or the
Purchaser to perform in any material respect any material covenant or
agreement of either of them contained in the Merger Agreement or the
material breach by Parent or the Purchaser of any material representation
or warranty of either of them contained in the Merger Agreement;

(v) by the Company, upon approval of the Board of Directors of the
Company and a majority of the Independent Directors, if the Purchaser shall
have (a) failed to commence the Offer within five business days following
the date of the initial public announcement of the Offer, (b) terminated
the Offer without having accepted any shares of Common Stock for payment
thereunder by reason of the failure to satisfy any condition set forth
under "THE TENDER OFFER -- Certain Conditions of the Offer" or (iii) failed
to pay for shares of Common Stock pursuant to the Offer within 90 days
following the commencement of the Offer, unless such failure to pay for
shares of Common Stock shall have been caused by or resulted directly from
the failure of the Company to perform in any material respect any material
covenant or agreement of it contained in the Merger Agreement or the
material breach by the Company of any material representation or warranty
of it contained in the Merger Agreement; or

(vi) by the Company, upon approval of the Board of Directors of the
Company and a majority of the Independent Directors, if any representation
or warranty of Parent and the Purchaser in the Merger Agreement shall not
be true and correct in any material respect, as if such representation or
warranty was made as of such time on or after the date of the Merger
Agreement; or Parent or the Purchaser shall have failed to perform in any
material respect any obligation or to comply in any material respect with
any agreement or covenant of Parent or the Purchaser to be performed or
complied with by it under the Merger Agreement.

Expenses. All costs and expenses incurred in connection with the Merger
Agreement are to be paid by the party incurring them.

PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY

Purpose and Structure. The purpose of the Offer and the Merger is to
enable Parent to acquire, in one or more transactions, the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly. If the Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the outstanding shares of Common Stock
of the Company, the Purchaser will have the ability to consummate the Merger
without a meeting of the stockholders of the Company pursuant to the "short
form" merger provisions of the DGCL. Pursuant to the Merger, each then
outstanding share of Common Stock (other than Common Stock owned by the
Purchaser, Parent or any of Parent's other subsidiaries, shares held in the
Company's treasury and Common Stock owned by stockholders who perfect their
dissenters' rights under the DGCL) would be converted into the right to receive
an amount in cash equal to the price per share of Common Stock paid by the
Purchaser pursuant to the Offer. See "-- Appraisal Rights." If the Merger is not
consummated as a "short-form" merger, under the DGCL and the Company's Restated
Certificate of Incorporation, the Merger would require the affirmative vote of
the holders of a majority of the then outstanding shares of Common Stock.

If, following consummation of the Offer, the Purchaser owns less than 90%
of the outstanding shares of Common Stock, the Purchaser and Parent reserve the
right to purchase from time to time additional shares, if market conditions
permit and subject to the availability of funds and other investment
opportunities. Such purchases may be made through the open market, privately
negotiated purchases, another tender

17
<PAGE> 20

offer, an exchange offer or otherwise, subject, in each case, to market
conditions, at prices which may be greater or less than those of the Offer.
There can be no assurance that the Purchaser will acquire such additional shares
in such circumstances or over what period of time such additional shares, if
any, might be acquired. Any acquisition of shares by Purchaser would have to be
made in accordance with applicable legal requirements, including those of
Regulation 13D-G and Rules 10b-18 and 13e-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").

Plans for the Company. In February 1997, Parent and the Company each
announced that it was undertaking a strategic review of the relationship with
the other, and each of Parent and the Company stated that each was looking at
ways to reduce the administrative and marketing expense portion of the total
health care premium dollar in light of the intense competition and changes
occurring in the health care industry. In addition, Parent has been refining its
strategic decision to focus on its health care mission, in line with its
assessment of the opportunities presented by the changing dynamics of the
industry, and to divest its interest in other lines of business. Parent
subsequently determined that the property and casualty brokerage business might
not be consistent with Parent's long-term mission and that, in light of the
brokerage industry consolidation, there was an opportunity to capitalize on the
value of Acordia Brokers. Parent is presently negotiating with a prospective
purchaser with respect to the possible sale of Acordia Brokers. There can be no
assurance that a sale will be consummated, and neither the Offer nor the Merger
is contingent upon the possible sale of Acordia Brokers.

If the Merger is consummated and Acordia Brokers is sold, the Company's
primary business would be providing various health care administrative and
marketing services to Parent and its affiliates, and a substantial portion of
the Company's current management and personnel, as well as facilities, would be
transferred to the buyer of Acordia Brokers. In the event that the current
negotiations regarding Acordia Brokers do not result in a transaction involving
Acordia Brokers, Parent may seek another buyer or may retain the brokerage
business for an indefinite period.

Parent is currently reviewing, and will continue to review, various
possible business strategies with respect to the restructuring of Acordia's
health business, including the further consolidation of various claims, customer
services and other functions currently being performed by the Company for Parent
and its affiliates with and into one or more of Parent and its affiliates.
Parent currently believes that significant economic and operational efficiencies
might be achieved by consolidating various health-related functions of the
Company with those of Parent and its affiliates. It is anticipated that such
further restructuring will occur regardless of whether Acordia Brokers is sold,
assuming that the Purchaser acquires the remaining equity interest in the
Company. The restructuring may, in addition to changes in the Company's
business, include, among other things, changes in the Company's corporate
structure, capitalization and dividend policy, operations, facilities, employee
benefit plans and management and personnel. If the Offer and the Merger are not
consummated, Parent will continue to review various other possible business
strategies with respect to its business relationship with the Company, including
modifications to or the termination of one or more of the current contractual
relationships between the Company and Parent and its affiliates.

Purchaser currently intends, to the extent possible, to seek to have the
Company's Common Stock delisted from the New York Stock Exchange, Inc. (the
"NYSE") and to terminate the registration of the Common Stock under the Exchange
Act following consummation of the Offer or the Merger. Delisting of the Common
Stock may occur, in any event, at the instigation of the NYSE following
consummation of the Offer due to the reduced number of shares of Common Stock or
holders thereof then outstanding. The failure to be so listed could result in
the termination of the registration of the Common Stock under the Exchange Act.
If the Common Stock ceases to be registered under the Exchange Act, the Company,
among other things, would no longer be required to comply with the Exchange
Act's proxy or reporting rules. See "THE TENDER OFFER -- Certain Effects of the
Offer."

18
<PAGE> 21

INTERESTS OF CERTAIN PERSONS; STOCKHOLDINGS OF CERTAIN OFFICERS AND DIRECTORS;
AND RELATED TRANSACTIONS

Directors and Officers. As described above under "-- Background of the
Offer," three of the Company's directors, including the Chairman of the Board,
are officers or employees of Parent: Dwane R. Houser, Parent's Chairman of the
Board; L. Ben Lytle, Parent's President and Chief Executive Officer and the
Company's Chairman of the Board; and Patrick M. Sheridan, Parent's Executive
Vice President and Chief Financial Officer. A fourth director, Michael L. Smith,
is Chief Operating and Chief Financial Officer of American Health Network, a
subsidiary of Parent. The executive officers and directors of Parent
beneficially own, in the aggregate, 188,886 shares of Common Stock of the
Company (excluding shares subject to unexercised Stock Options). Messrs. Houser,
Lytle, and Sheridan beneficially own 8,449 shares, 105,000 shares and 60,000
shares, respectively, of such shares (excluding shares subject to unexercised
Stock Options). Schedule I to this Offer to Purchase sets forth the amount and
nature of such beneficial ownership for each executive officer and director of
Parent and the Purchaser.

The non-employee directors of the Company are entitled to certain fees,
stock options and/or stock awards pursuant to plans and arrangements which are
described in the Company's Proxy Statement, dated April 11, 1997. Messrs.
Houser, Lytle, Sheridan and Smith are considered employee directors for purposes
of such plans and arrangements and therefore are not entitled to, and do not
receive, any such fees, stock options or stock awards.

Stockholdings of Certain Officers and Directors. As noted above, Parent
currently owns 8,693,056 shares of Common Stock, representing approximately
66.8% of the outstanding shares of Common Stock, which shares Parent anticipates
will be contributed to the Purchaser prior to the consummation of the Offer. See
"INTRODUCTION" and " -- Background of the Offer." As of the date hereof, to the
knowledge of Purchaser, no executive officer or director of Parent or the
Purchaser beneficially owns, or has the right to acquire, directly or
indirectly, any shares of Common Stock, except as set forth on Schedule I to
this Offer to Purchase. Executive officers and directors of Parent listed in
Schedule I to this Offer to Purchase, who beneficially own, in the aggregate,
188,886 shares of Common Stock (excluding shares subject to unexercised Stock
Options), have indicated to the Purchaser that they currently intend to tender
their shares pursuant to the Offer. None of the Purchaser, Parent or, to the
knowledge of the Purchaser, any of the executive officers or directors of Parent
or the Purchaser, has engaged in any transaction in the Common Stock in the past
60 days.

Related Transactions.

(A) Marketing and Agency Agreements with Parent. The Company, through
one or more of its subsidiaries, markets insurance products underwritten by
Parent or its affiliates and/or perform administrative services in
connection with those insurance products. In connection therewith, each
such Company subsidiary has entered into a marketing and agency agreement
and/or administrative services agreement with Parent or an affiliate
insurer.

The marketing and agency agreement provides that such Company
subsidiary is appointed as an agent of Parent (or its affiliated insurer)
to solicit new applications and renewal applications for insurance coverage
marketed by it and underwritten by Parent or such affiliated insurer. The
administrative services agreement provides that the Company's subsidiary
company shall perform one or more of the following administrative services
with regard to insurance contracts underwritten by Parent or an affiliated
insurer: premium billing and collection, adjustment and settlement of
claims, customer service correspondence and general clerical and
administrative functions. In some cases, the administrative service
agreement also provides for the administration of Parent's or its
affiliated insurers' health maintenance organizations and other managed
case businesses. Parent or the affiliated insurer may, at its discretion,
grant underwriting authority to the Company's subsidiary in accordance with
the insurer's underwriting guidelines and the terms of the administrative
services agreement. As compensation for these services, Parent or the
affiliated insurer pays the Company's subsidiary a fee primarily based on a
percentage of the earned premium. Additionally, Parent and its affiliated
insurers

19
<PAGE> 22

permit the Company's subsidiary to charge insureds a monthly administrative
fee pursuant to the administrative services agreement. Parent and its
affiliated insurers paid an aggregate of approximately $175.6 million,
$233.1 million and $291.0 million to the Company pursuant to these
agreements for the years ended December 31, 1995 and 1996, respectively. In
accordance with insurance holding Company statutes applicable to Parent and
its affiliated insurers, the amounts paid pursuant to such agreements
cannot exceed a reasonable charge.

In January 1997, Parent and the Company, as part of strategic
developments within Parent, decided that the wholesale marketing and
distribution functions for Parent's products outside of Indiana, Kentucky
and Ohio should be performed by Parent. Parent agreed to pay the Company a
one-time cancellation fee of $6.0 million, one-half of which was paid
during the first quarter of 1997, and the remainder of which will be paid
during the second quarter of 1997. See "-- Background of the Offer."

In February 1997, the Company and Parent announced the planned
consolidation of their claims processing sites in Indiana, Kentucky and
Ohio into one central site located in Indiana. The consolidation of the
Indiana sites is virtually complete.

(B) Management Agreement. In June 1992, the Company entered into a
management agreement with Parent pursuant to which Parent has agreed to
provide to the Company the services of certain senior management employees.
Effective December 31, 1996, the Company terminated the management
agreement. Prior to the termination of the management agreement, the
Company reimbursed Parent for all allocated expenses incurred by Parent in
connection with the furnishing of the services rendered pursuant to the
management agreement. The Company paid fees for management services plus
allocated expenses to the Company in the amounts of approximately $574,000
and $180,000 for the years ended December 31, 1995 and 1996, respectively.

(C) Inter-Company Services Agreement. The Company is a party to The
Anthem Inter-Company Services Agreement (the "Services Agreement") among
Parent and its subsidiaries pursuant to which the parties thereto are
entitled to provide and receive certain administrative and systems services
including financial and payroll, legal, auditing, investment, information
services, data processing, actuarial, marketing and human resources.
Pursuant to the Agreement, the Company reimburses Parent or its affiliate
rendering such services for the actual costs and expenses which Parent or
such affiliate incurs in providing such services or on a reasonable charge
basis. In consideration of services under the Services Agreement, the
Company paid to Parent fees aggregating approximately $52.0 million and
$95.2 million for the years ended December 31, 1995 and 1996, respectively.

(D) Tax Sharing and Indemnification Agreements. Effective January 1,
1989 (or such later date as a subsidiary first became included in Parent's
consolidated tax return), the Company and its subsidiaries were included in
Parent's state and federal consolidated income tax returns and were parties
to a federal and a state income tax sharing agreement with Parent. The tax
sharing agreements provided for the allocation of tax liability among
Parent and its affiliates. Effective October 29, 1992, the Company and its
subsidiaries were not eligible to be included in Parent's federal and most
state income tax returns for periods following the October 1992 date since
Parent retained less than 80% of the voting power and the total value of
the stock of the Company. The Company and Parent file together with respect
to a few consolidated combined state tax returns. Pursuant to the tax
sharing agreements, the Company paid Parent $91,819 in 1995 for taxable
year 1994 and no amounts were paid by either party in 1996 for taxable year
1995. The Company and Parent have entered into a tax indemnification
agreement, pursuant to which Parent has agreed to indemnify the Company
with respect to any federal or state income taxes related to periods prior
to the October 1992 date when the Company was a member of Parent's
consolidated group for federal income tax purposes and reflected on the
Company's consolidated balance sheet dated December 31, 1991 or accrued in
the ordinary course of business consistent with past practices from
December 31, 1991 until the October 1992 date.

(E) Lease. In June 1992, the Company entered into a sublease
agreement with Parent pursuant to which the Company subleases certain
office space and related equipment located at 120 Monument

20
<PAGE> 23

Circle, Indianapolis, Indiana. For the years ended December 31, 1995 and
1996, the Company made rental payments to Parent in the amount of $690,000
and $698,000, respectively.

(F) Registration Rights Agreement. In connection with the initial
public offering of the Company's Common Stock, the Company and Parent
entered into a Registration Rights Agreement pursuant to which the Company
granted to Parent certain rights with respect to registration under the
Securities Act of 1933, as amended, of Common Stock currently held or
thereafter acquired by Parent.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
federal income tax purposes, a tendering stockholder will recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Common
Stock tendered by the stockholder and purchased pursuant to the Offer or
converted in the Merger, as the case may be. Gain or loss will be calculated
separately for each block (i.e., Common Stock acquired at the same time in a
single transaction) of Common Stock tendered and purchased pursuant to the Offer
or converted in the Merger, as the case may be. If shares of Common Stock are
held by a stockholder as capital assets, gain or loss recognized by the
stockholder will be capital gain or loss, which will be long-term capital gain
or loss if the stockholder's holding period for the Common Stock exceeds one
year.

A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Common Stock may be subject to 31% backup withholding unless the
stockholder provides its taxpayer identification number ("TIN") and certifies
that such number is correct or properly certifies that it is awaiting a TIN, or
unless an exemption applies. A stockholder that does not furnish its TIN may be
subject to a penalty imposed by the Internal Revenue Service ("IRS"). See "THE
TENDER OFFER -- Procedures For Tendering Common Stock -- Backup Withholding."

If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an appropriate income tax return.

THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO COMMON STOCK RECEIVED PURSUANT TO THE EXERCISE
OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO
HOLDERS OF COMMON STOCK WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE,
SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND
FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF COMMON STOCK IN LIGHT
OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS)
OF THE OFFER AND THE PROPOSED MERGER.

APPRAISAL RIGHTS

UNDER THE DGCL, HOLDERS OF SHARES OF COMMON STOCK NOT PURCHASED BY
PURCHASER ARE NOT ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE OFFER.
However, if following consummation of the Offer, Purchaser consummates the
Merger, holders of shares of Common Stock not purchased by Purchaser in the
Offer will be entitled to seek appraisal rights under the DGCL in connection
with the Merger as follows.

21
<PAGE> 24

The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL ("Section 262") which is attached hereto as
Annex I and is incorporated herein by this reference. All references in Section
262 and in this summary to a "stockholder" or "holders" are to the record holder
of the shares of Common Stock as to which appraisal rights are asserted.

Under the DGCL, holders of shares of Common Stock ("Appraisal Shares") who
follow the procedures set forth in Section 262, and who have neither voted in
favor of the Merger nor consented thereto in writing, will be entitled to have
their Appraisal Shares appraised by the Delaware Chancery Court and to receive
payment in cash of the "fair value" of such Appraisal Shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, if any, as determined by such court.

Under Section 262, if the Merger must be submitted to the stockholders of
the Company because Purchaser does not own 90% of the outstanding shares of
Common Stock or otherwise, the Company must, not less than 20 days prior to the
meeting held for the purpose of obtaining stockholder approval of the Merger,
notify each of the Company's stockholders entitled to appraisal rights that such
rights are available, and must include in such notice a copy of Section 262. If
no stockholder vote is required or if stockholder approval is obtained by
written consent in lieu of a meeting, the Company, either before the effective
date of the Merger or within ten days thereafter, must notify each of the
stockholders entitled to appraisal rights of the effective date of the Merger
and that appraisal rights are available, and must include in such notice a copy
of Section 262.

A holder of Appraisal Shares wishing to exercise such holder's appraisal
rights will be required to deliver to Purchaser within 20 days after the date of
mailing of the notice described in the preceding paragraph a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal (as described
below) is made and must continue to hold such Appraisal Shares of record through
the effective date of the Merger. Accordingly, a holder of Appraisal Shares who
is the record holder of Appraisal Shares on the date the written demand for
appraisal is made (if such demand is made prior to the effectiveness of the
Merger), but who thereafter transfers such Appraisal Shares prior to the
consummation of the Merger, will lose any right to appraisal in respect of such
Appraisal Shares.

Within 120 days after the effective date of the Merger, but not thereafter,
Purchaser or any stockholder who has complied with the statutory requirements
summarized above and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Chancery Court demanding a determination of the fair
value of the Appraisal Shares. Purchaser is under no obligation to file a
petition with respect to the appraisal of the fair value of the Appraisal Shares
and does not intend to do so. Accordingly, it will be the obligation of the
stockholders seeking appraisal rights to initiate all necessary action to
perfect any appraisal rights within the time prescribed in Section 262.

Within 120 days after the effective date of the Merger, any stockholder who
has complied with the statutory requirements summarized above will be entitled,
upon written request, to receive from Purchaser a statement setting forth the
aggregate number of Appraisal Shares with respect to which demands for appraisal
have been received and the aggregate number of holders of such Appraisal Shares.
Such statements must be mailed within ten days after a written request therefor
has been received by Purchaser or within ten days after expiration of the period
for delivery of demands for appraisal, whichever is later.

If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the "fair value" of their Appraisal
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value.

22
<PAGE> 25

In determining the "fair value" of the Appraisal Shares, a court could
consider factors other than, or in addition to, the market value of the Common
Stock, including, among other things, asset values and earning capacity of the
Company. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among
other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceeding.
Therefore, the value so determined in any appraisal proceeding could be
different from the Merger Consideration (as defined in the Merger Agreement).
Several decisions by the Delaware courts, which may or may not apply to the
Merger, have held that a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be "entirely fair" to such other stockholders. In determining whether a merger
is fair to minority shareholders, Delaware courts have considered, among other
things, the type and amount of the consideration to be received by the
stockholders and whether there was fair dealing among the parties. The Delaware
Supreme Court stated in Weinberger that, although the remedy ordinarily
available in a merger that is found not to be "fair" to minority stockholders is
the right to appraisal described above, such appraisal remedy may not be
adequate "in certain cases, particularly where fraud, misrepresentation,
self-dealing, deliberate waste of corporate assets, or gross and palpable
overreaching are involved," and that in such cases the Delaware Chancery Court
would be free to fashion any form of appropriate relief.

The costs of the proceeding may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems equitable
in the circumstances. Upon application of a stockholder, the Delaware Chancery
Court may also order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, to
be charged pro rata against the value of all of the Appraisal Shares entitled to
appraisal.

Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, from and after the effective date of the
Merger, be entitled to vote the Appraisal Shares subject to such demand for any
purpose or to receive payment of dividends or other distributions on those
Appraisal Shares (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
Merger).

If any stockholder who properly demands appraisal of his or her Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his or her right to appraisal, as provided in the DGCL, the Appraisal Shares of
such stockholder will be converted into the right to receive the consideration
receivable with respect to such Appraisal Shares pursuant to the Merger. A
stockholder will fail to perfect, or effectively lose or withdraw, his or her
right to appraisal if, among other things, no petition for appraisal is filed
within 120 days after the consummation of the Merger, or if the stockholder
delivers to Purchaser a written withdrawal of his or her demand for appraisal.
Any such attempt to withdraw an appraisal demand more than 60 days after the
consummation of the Merger will require the written approval of Purchaser.

THE TENDER OFFER

TERMS OF THE OFFER

Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all shares of
Common Stock validly tendered prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in "-- Withdrawal Rights" on or prior
to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New
York City time, on Thursday, July 3, 1997, unless and until the Purchaser,
subject to the terms of the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, will expire. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED COMMON STOCK, WHETHER OR NOT THE PURCHASER EXERCISES
ITS RIGHT TO EXTEND THE OFFER.

23
<PAGE> 26

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM TENDER CONDITION AND THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH
UNDER "-- CERTAIN CONDITIONS OF THE OFFER."

If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission
and the terms of the Merger Agreement, to (a) terminate the Offer and not accept
for payment or pay for any Common Stock and return all tendered Common Stock to
tendering stockholders, (b) waive all the unsatisfied conditions and accept for
payment and pay for all Common Stock validly tendered prior to the Expiration
Date and not theretofore withdrawn, (c) extend the Offer and, subject to the
right of stockholders to withdraw Common Stock until the Expiration Date, retain
the Common Stock that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer.

The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights set forth under "-- Certain Conditions of the
Offer." There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, or the first opening of the NYSE on the
next business day after the previously scheduled Expiration Date, in accordance
with the public announcement requirements of Rule 14d-4(c) under the Exchange
Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change), and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.

If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Common Stock) is delayed in its purchase of
or payment for Common Stock or it is unable to pay for Common Stock pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Common Stock on behalf of
the Purchaser, and such Common Stock may not be withdrawn except to the extent
tendering stockholders are entitled to withdrawal rights as described under
"-- Withdrawal Rights." However, the ability of the Purchaser to delay the
payment for Common Stock that the Purchaser has accepted for payment is limited
by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities tendered by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer.

If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will, or Parent will cause the Purchaser to, extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or otherwise. The minimum
period during which the Offer must remain open following material changes in the
terms of the Offer or information concerning the Offer, other than a change in
price or a change in the percentage of securities sought, will depend upon the
facts and circumstances then existing, including the relative materiality of the
changed terms or information. In the Commission's view, an offer should
generally remain open for a minimum of five business days from the date a
material change is first published, sent or given to stockholders. With respect
to a change in price or, subject to certain limitations, a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders and
investor response. Accordingly, if prior to the Expiration Date, in accordance
with the terms of the Merger Agreement, the Purchaser decreases the number of
shares of Common Stock being sought, or increases or decreases the Offer Price,
and if the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from the date that notice of such increase or
decrease is first published, sent or

24
<PAGE> 27

given to holders of shares of Common Stock, the Offer will be extended at least
until the expiration of such 10 business day period.

The Company is providing to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Common Stock. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Common Stock
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Common Stock.

PROCEDURES FOR TENDERING COMMON STOCK

Valid Tender. For a stockholder validly to tender Common Stock pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined herein), and any other required documents, must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date and either certificates for tendered Common Stock
must be received by the Depositary at such address or such Common Stock must be
delivered pursuant to the procedures for book-entry transfer set forth below
(and a Book-Entry Confirmation (as defined below) received by the Depositary),
in each case prior to the Expiration Date, or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below.

Participants in the Acordia 401(k) Long Term Savings Investment Plan, the
ABI 401(k) and Profit Sharing Plan and The Associated Group 401(k) Long Term
Savings Investment Plan (the "401(k) Plans") desiring to tender shares of Common
Stock held on their behalf should so instruct the 401(k) Plans Trustee by
completing the form which will be provided to participants for that purpose.
401(k) Plans participants cannot tender Common Stock allocated to their 401(k)
Plans accounts by executing the Letter of Transmittal.

Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Common Stock at The Depository Trust Company and
the Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities")
for purposes of the Offer within two business days after the date of this Offer
to Purchase. Any financial institution that is a participant in any of the
Book-Entry Transfer Facilities' systems may make book-entry delivery of Common
Stock by causing a Book-Entry Transfer Facility to transfer such Common Stock
into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Common
Stock may be effected through book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and all other required documents, or an Agent's Message (as defined
below), must, in any case, be transmitted to, and received by, the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below.

The confirmation of a book-entry transfer of Common Stock into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Stock that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.

25
<PAGE> 28

THE METHOD OF DELIVERY OF COMMON STOCK, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. COMMON
STOCK, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes hereof, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Common Stock) of Common Stock tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) such Common Stock is tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Common Stock are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Common
Stock not tendered or not accepted for payment are to be returned to a person
other than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed in blank or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holders appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instructions 1 and 5 to the
Letter of Transmittal.

Guaranteed Delivery. If a stockholder desires to tender Common Stock
pursuant to the Offer and such stockholder's certificates for Common Stock are
not immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such stockholder's tender may
be effected if all the following conditions are met:

(i) such tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and

(iii) the certificates, representing all tendered shares of Common
Stock, in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Common Stock), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the NYSE
is open for business.

The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution and a
representation that the stockholder owns the Common Stock tendered within the
meaning of, and that the tender of the Common Stock effected thereby complies
with, Rule 14e-4 under the Exchange Act, each in the form set forth in such
Notice of Guaranteed Delivery.

Notwithstanding any other provision hereof, payment for Common Stock
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Common Stock, (b) a Letter of Transmittal (or

26
<PAGE> 29

facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Common Stock or Book-Entry Confirmations with respect
to Common Stock are actually received by the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE COMMON STOCK TO BE PAID BY
THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.

Appointment as Proxy. By executing a Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Purchaser and each of them as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Common Stock tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Common Stock or other securities or rights issued or issuable in
respect of such Common Stock on or after June 6, 1997 (the "Applicable Date").
All such powers of attorney and proxies will be irrevocable and considered
coupled with an interest in the tendered Common Stock. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts such Common
Stock for payment pursuant to the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by such stockholder with
respect to such Common Stock and other securities or rights will, without
further action, be revoked and no subsequent powers of attorney, proxies,
consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Common Stock and other
securities or rights in respect of any annual, special, adjourned or postponed
meeting of the Company's stockholders, actions by written consent in lieu of any
such meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Common Stock to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Common Stock, the Purchaser must be able to exercise full voting,
consent and other rights with respect to such Common Stock and other securities
or rights, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) or acting by written consent without a
meeting in respect of such Common Stock.

Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Common Stock will be determined by the Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not to
be in proper form or the acceptance for payment of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any condition of the Offer or any defect or
irregularity in the tender of any Common Stock of any particular stockholder
whether or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Common Stock will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
None of the Purchaser, Parent, any of their affiliates or assigns, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding on all parties.

Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Common Stock in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct Taxpayer Identification Number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN or
fails to provide the certifications described above, the IRS may impose a
penalty on such stockholder and the payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31% of the amount of such
payment. All stockholders surrendering Common Stock pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9 included
as part

27
<PAGE> 30

of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to the Purchaser and the Depositary). Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.

Other Requirements. A tender of shares of Common Stock pursuant to any one
of the procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
stockholder's representation and warranty that (i) such stockholder has the full
power and authority to tender, sell, assign and transfer the tendered shares of
Common Stock (and any and all other shares or other securities issued or
issuable in respect of such Common Stock on or after June 2, 1997) and (ii) when
the same are accepted for payment by the Purchaser, the Purchaser will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances and not subject to any adverse claims. Purchaser's
acceptance for payment of shares of Common Stock tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.

WITHDRAWAL RIGHTS

Except as otherwise provided in this section, tenders of Common Stock
pursuant to the Offer are irrevocable. Common Stock tendered pursuant to the
Offer may be withdrawn pursuant to the procedures set forth below at any time
prior to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after August
4, 1997. If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Common Stock or is unable to purchase Common Stock validly tendered
pursuant to the Offer for any reason, then without prejudice to the Purchaser's
rights under the Offer, the Depositary may nevertheless, on behalf of the
Purchaser, subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Common Stock and such Common Stock may not be withdrawn except to the extent
that tendering stockholders are entitled to withdrawal rights as described in
this section. Any such delay will be accompanied by an extension of the Offer to
the extent required by law.

For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Common Stock to be
withdrawn, the number of shares of Common Stock to be withdrawn and the name of
the registered holder of the Common Stock to be withdrawn, if different from the
name of the person who tendered the Common Stock. If certificates for Common
Stock to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Common Stock has been tendered by an Eligible Institution, the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Common Stock has been delivered pursuant to the procedure for
book-entry transfer as set forth under "-- Procedures for Tendering Common
Stock," any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Common Stock and otherwise comply with such Book-Entry Transfer
Facility's procedures.

Withdrawals of tenders of Common Stock may not be rescinded, and any Common
Stock properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Common Stock may be retendered by
again following one of the procedures described under "-- Procedures for
Tendering Common Stock" at any time on or prior to the Expiration Date.

All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, any of their affiliates or assigns, the Depositary,
the Information

28
<PAGE> 31

Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.

ACCEPTANCE FOR PAYMENT AND PAYMENT

Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Common
Stock validly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the terms set forth under "-- Withdrawal Rights"
promptly after the Expiration Date. All questions as to the satisfaction of such
terms and conditions will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. See
"-- Withdrawal Rights" and "-- Certain Conditions of the Offer." The Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Common Stock in order to comply in whole or in part
with any applicable law. See "-- Certain Legal Matters." Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).

In all cases, payment for Common Stock accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (a)
certificates for (or a timely Book-Entry Confirmation with respect to) such
Common Stock, (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and (c) any other documents
required by the Letter of Transmittal. The consideration per share of Common
Stock paid to any stockholder pursuant to the Offer will be the highest
consideration paid to any other stockholder of the same class pursuant to the
Offer.

For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Common Stock validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Common Stock pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Common Stock accepted for payment pursuant to the
Offer will be made by deposit of the Offer Price therefor with the Depositary,
which will act as agent for validly tendering stockholders for the purpose of
receiving payment from the Purchaser and transmitting payment to tendering
stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE OF
THE COMMON STOCK TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Upon the deposit of funds with the
Depositary for the purpose of making payments to tendering stockholders, the
Purchaser's obligation to make such payment shall be satisfied and tendering
stockholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Common Stock
pursuant to the Offer. The Purchaser will pay any stock transfer taxes with
respect to the transfer and sale to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal, as
well as any charges and expenses of the Depositary and the Information Agent.

If the Purchaser is delayed in its acceptance for payment of or payment for
Common Stock or is unable to accept for payment or pay for Common Stock pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Common Stock, and such Common Stock may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described under "-- Withdrawal Rights."

If any tendered shares of Common Stock are not purchased pursuant to the
Offer for any reason, certificates for any such unpurchased Common Stock will be
returned, without expense to the tendering stockholder (or, in the case of
Common Stock delivered by book-entry transfer of such Common Stock into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth under "-- Procedures for Tendering Common Stock," such Common Stock
will be credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration, termination or
withdrawal of the Offer.

29
<PAGE> 32

The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Common Stock tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Common Stock validly
tendered and accepted for payment pursuant to the Offer.

PRICE RANGE OF COMMON STOCK; DIVIDENDS ON THE COMMON STOCK

The Common Stock currently is listed and traded on the NYSE under the
symbol ACO. The following table sets forth the high and low closing prices per
share of Common Stock together with the per share dividends paid by the Company
for the periods indicated as reported in publicly available sources.

<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
1995:
First quarter.................................................. $34 1/2 $31 3/8 $ .18
Second quarter................................................. 33 1/8 30 .18
Third quarter.................................................. 32 1/8 26 .18
Fourth quarter................................................. 29 7/8 23 1/2 .18
1996:
First quarter.................................................. 31 3/4 27 3/4 .20
Second quarter................................................. 33 3/4 30 7/8 .20
Third quarter.................................................. 33 5/8 30 1/8 .20
Fourth quarter................................................. 30 3/4 28 .20
1997:
First quarter.................................................. 33 27 1/2 .20
Second quarter through June 5, 1997............................ 39 1/2 31 1/2 .20
</TABLE>

On February 5, 1997, the last full trading day before Parent announced its
consideration of a change in its strategic plan with respect to, and
relationship with and investment in, the Company, the last reported sale price
of the Common Stock on the NYSE was $27 7/8. On May 30, 1997, the last full
trading day before the first public announcement of the Offer, the last reported
sales price of the Common Stock on the NYSE was $35 1/2. STOCKHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK.

CERTAIN EFFECTS OF THE OFFER

Market for the Shares. The purchase of Common Stock pursuant to the Offer
will reduce the number of holders of Common Stock and the number of shares of
Common Stock that might otherwise trade publicly and could adversely affect the
liquidity and market value of the remaining Common Stock held by the public.

Stock Exchange Listing. Depending on the number of shares of Common Stock
purchased in the Offer, the Common Stock may no longer meet the requirements of
the NYSE for continued listing. According to the NYSE's published guidelines,
the NYSE would consider delisting the Common Stock if, among other things, (i)
the number of record holders of at least 100 shares should fall below 1,200,
(ii) the number of publicly held shares of Common Stock (exclusive of holdings
of officers, directors, members of their immediate families and other
concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should fall
below 600,000 or (iii) the aggregate market value of publicly held Common Stock
(exclusive of NYSE Excluded Holdings) should fall below $5,000,000. According to
the Company's Annual Report on Form 10-K for the year ended December 31, 1996
(the "Company 10K"), as of March 10, 1997, there were 450 holders of record of
Common Stock and, as of March 1, 1997, there were 13,005,106 shares of Common
Stock outstanding.

If the NYSE were to delist the Common Stock, it is possible that the Common
Stock would trade on another securities exchange or in the over-the-counter
market and that price quotations for the Common Stock would be reported by such
exchange, the Nasdaq Stock Market or other sources. The extent of the public
market for the Common Stock and availability of such quotations would depend,
however, upon such factors as the number of holders, the aggregate market value
of the publicly held Common Stock at such

30
<PAGE> 33

time, the interest in maintaining a market in the Common Stock on the part of
securities firms, the possible termination of registration of the Common Stock
under the Exchange Act and other factors. The Purchaser cannot predict whether
the reduction in the number of Common Stock that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for or
marketability of the Common Stock or whether it would cause future market prices
to be greater or less than the price per share to be paid pursuant to the Offer.

Exchange Act Registration. The Common Stock is currently registered under
the Exchange Act. Registration of the Common Stock under the Exchange Act may be
terminated upon application of the Company to the Commission if the Common Stock
is neither listed on a national securities exchange or quoted on Nasdaq nor held
by 300 or more holders of record. Termination of registration of the Common
Stock under the Exchange Act would substantially reduce the information required
to be furnished by the Company to its stockholders and to the Commission and
would make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Common
Stock under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.

If registration of the Common Stock is not terminated prior to the Merger,
then the Common Stock will be delisted from all stock exchanges and the
registration of the Common Stock will be terminated following the consummation
of the Merger.

Margin Regulations. The shares of Common Stock are currently "margin
securities" under the regulations of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the Common
Stock. Depending upon factors similar to those described above regarding listing
and market quotations, it is possible that, following the Offer, the Common
Stock would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for loans made by brokers for the purpose of buying, carrying
or trading in securities.

CERTAIN INFORMATION CONCERNING THE COMPANY

The Company is a Delaware corporation with its principal offices at 120
Monument Circle, Indianapolis, Indiana 46204 and its telephone number is (317)
488-6666.

The Company is a holding company for a nationwide network of operating
business units engaged in providing insurance broking, risk management
consulting, managed health care integration and administration, workers
compensation administration, underwriting management and employee benefits
consulting services to government, not-for-profit and private sector employers,
groups, trusts and associations, and individual consumers. The Company offers to
its customers, as broker or agent, a range of products tailored to the specific
needs of their particular business which may include health related products
(including indemnity insurance, employee benefit programs, and third-party
administration), managed care programs, property and casualty insurance, life
and disability insurance, and other select financial services. The Company
derived approximately 44% of its revenues for the year ended December 31, 1996
from the sale and administration of life and health insurance products
underwritten by Parent and or its affiliated insurers.

Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 10-K and the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 (the "Company 10-Q"). More comprehensive
financial information is included in the Company 10-K and such Company 10-Q and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety

31
<PAGE> 34

by reference to such information. The Company 10-K and the Company 10-Q and such
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "-- Available Information."

ACORDIA, INC.

SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT SHARES, PER SHARE AMOUNTS AND RATIOS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED DECEMBER
MARCH 31, 31,
------------------- -------------------
1997 1996 1996 1995
------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................................... $ 165.8 $ 164.7 $ 661.0 $ 555.1
Operating income................................. 22.1 22.3 87.3 175.4
Net income....................................... 6.7 7.3 29.9 23.6
Earnings per share............................... 0.50 0.51 2.09 1.64
Earnings per share, fully diluted................ 0.49 0.50 2.09 1.64
Cash dividends per share......................... 0.20 0.20 0.80 0.72
Ratio of earnings to fixed charges............... 1.5x 2.8x 1.4x 2.0x
Weighted average shares outstanding.............. 13,395 14,361 14,324 14,379
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets..................................... $ 734.5 $ 721.7 $ 745.6 $ 736.5
Long-term debt................................... 136.7 138.7 136.2 131.6
Other long-term liabilities...................... 58.1 36.4 49.2 34.2
Stockholders' equity............................. 206.2 216.9 202.4 212.1
Book value per share............................. $ 15.86 $ 15.50 $ 15.58 $ 15.19
</TABLE>

Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, DC 20549. The Commission also maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports
and other information regarding registrants that file electronically with the
Commission. Such material should also be available for inspection at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.

Company Information. The information concerning the Company contained in
this Offer to Purchase has been taken from or based upon publicly available
documents on file with the Commission and other publicly available information.
Although Parent and the Purchaser do not have any knowledge that any such
information is untrue, neither the Purchaser nor Parent takes any responsibility
for the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.

CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER

Parent is an Indiana domiciled mutual insurance company and is one of the
nation's largest health insurance and managed care companies. As an independent
licensee of the Blue Cross Blue Shield

32
<PAGE> 35

Association, Parent offers Blue Cross Blue Shield ("BCBS") branded insurance
products in Indiana and, through its subsidiaries, in Ohio and Kentucky. As of
December 31, 1996, the Company provided health care coverage or services to
approximately four million people throughout these states, and its share of the
health insurance and managed care market ranged from 20-30% of the total
population in this tri-state region. Parent is licensed to do business in 30
states and, including subsidiary operations, conducts business in all fifty
states. As of December 31, 1996, Parent had total assets of $5.0 billion and
policyholders' surplus of $1.3 billion.

The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent which to date has not conducted any business other
than in connection with the Offer and the Merger. The principal executive
offices of Parent and the Purchaser are located at 120 Monument Circle,
Indianapolis, Indiana 46204. Of the 8,693,056 shares of Common Stock owned
beneficially by Parent, 8,693,056 shares of Common Stock are currently held of
record by Parent and no shares of Common Stock are currently held of record by
the Purchaser. Prior to the closing of the Offer, all of the shares of Common
Stock held of record by Parent will be contributed to Purchaser.

The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent is set forth in Schedule I hereto
and incorporated herein by reference.

During the last five years, none of the Purchaser, Parent or, to the
Purchaser's or Parent's knowledge, any person named in Schedule I hereto, has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation of such laws.

Set forth below is a summary of certain selected consolidated financial
information with respect to Parent and its subsidiaries for the three months
ended March 31, 1997 and March 31, 1996, and for the years ended December 31,
1996 and 1995.

Parent is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition or other matters.
Parent files certain financial and other information with the Departments of
Insurance for the 30 states in which it is licensed to transact insurance
business. In addition, the Indiana Department of Insurance conducts regular
financial examinations of Parent and, from time to time, state insurance
regulatory authorities in any of the 30 jurisdictions may make inquiries
regarding Parent's compliance with regulations regarding the conduct of its
insurance business. Parent is also subject to the insurance holding company act
of each state in which it is licensed. These laws contain requirements and
restrictions regarding transactions between an insurance company and its
affiliates. Reports that are required to be filed under such holding company
acts include information concerning capital structure, ownership, management,
general financial condition and certain intercompany transactions. Although
state laws vary somewhat, reports and other information submitted by, or
otherwise concerning, Parent are generally available from the Departments of
Insurance where Parent does business.

Parent's selected consolidated financial data included herein have been
prepared in accordance with generally accepted accounting principles.

33
<PAGE> 36

ANTHEM INSURANCE COMPANIES, INC.

SELECTED FINANCIAL INFORMATION
(IN MILLIONS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................... $1,599.0 $1,598.0 $6,269.6 $6,037.5
Income (loss) before income taxes and
minority interest.......................... 13.5 39.5 119.1 (121.3)
Minority interest in consolidated
subsidiaries............................... (1.7) (2.8) (12.1) (8.8)
Net income (loss)............................ 4.8 20.1 64.2 (98.0)
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................. $4,880.8 $5,344.9 $4,968.0 $5,345.7
Policy liabilities........................... 1,780.3 1,950.2 1,804.8 1,953.7
Total policyholders' surplus................. 1,316.2 1,281.4 1,347.4 1,314.9
</TABLE>

SOURCE AND AMOUNT OF FUNDS

The Offer is not conditioned upon obtaining any arrangements for the
financing of the Offer. Purchaser estimates that the total amount of funds
required by the Purchaser to purchase all of the Common Stock pursuant to the
Offer, to pay the surrender value of all outstanding Stock Options and all
outstanding Great American Warrants and to pay fees and expenses related to the
Offer and the Merger will be approximately $216 million. The Purchaser plans to
obtain all funds needed for the Offer and the Merger through a capital
contribution from Parent.

Parent plans to obtain funds for such capital contribution from available
cash on hand, assuming the closing of the sale of the assets of Anthem Casualty
Insurance Group, Inc., one of Parent's subsidiaries, which is scheduled to close
on June 30, 1997, or, if such closing does not occur, from the liquidation of
outstanding short-term investment securities.

DIVIDENDS AND DISTRIBUTIONS

The Company's Board of Directors declared a quarterly cash dividend to
holders of record of Common Stock on May 27, 1997, of $0.20 per share on May 13,
1997, payable on June 16, 1997. Such holders of record will be entitled to
receive the quarterly cash dividend whether or not they tender their Common
Stock pursuant to the Offer, and no adjustment will be made to the price in the
Offer or to any other terms of the Offer as a result of the payment of any such
quarterly dividend to such stockholders.

CERTAIN CONDITIONS OF THE OFFER

Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, to pay for any Common Stock not theretofore
accepted for payment or paid for (and the Purchaser may postpone the acceptance
for payment or, subject to the restriction set forth above, payment for any
tendered Common Stock pursuant to the Offer), and may amend or terminate the
Offer, to the extent provided in the Merger Agreement, unless the Minimum Tender
Condition shall have been satisfied or waived in accordance with the terms of
the Merger Agreement. Furthermore, notwithstanding any other term or provision
of the Offer, the Purchaser will not be required to accept for payment or, in
its good faith discretion, subject as aforesaid, to pay for any Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if, at any time on or after the date of the Merger Agreement (June 2,
1997), and before the acceptance of such

34
<PAGE> 37

Common Stock for payment or, subject to any applicable rules and regulations of
the Commission, the payment therefor, any of the following conditions exist:

(a) an order shall have been entered in any action or proceeding
before any federal or state court or governmental agency or other
regulatory body or a permanent injunction by any federal or state court of
competent jurisdiction in the United States shall have been issued and
remain in effect (i) making illegal the purchase of, or payment for, any
shares of Common Stock by the Purchaser, Parent or any of Parent's other
subsidiaries; (ii) otherwise preventing the consummation of the Offer or
the Merger; or (iii) imposing limitations on the ability of the Purchaser,
Parent or any of Parent's other subsidiaries to exercise effectively full
rights of ownership of any shares of Common Stock, including, without
limitation, the right to vote any shares of Common Stock acquired by the
Purchaser pursuant to the Offer on all matters properly presented to the
Company's stockholders, which would effect a material diminution in the
value of the shares acquired by the Purchaser;

(b) there shall have been any federal or state statute, rule or
regulation enacted, enforced, promulgated, amended or made applicable to
the Company, the Purchaser, Parent or any other affiliate of Parent or the
Company on or after the date of the Offer by any governmental, regulatory
or administrative authority or agency, domestic, foreign or supranational
(each, a "Governmental Entity") that could reasonably be expected to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iii) of paragraph (a) above;

(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) any
extraordinary or material adverse change in the financial markets or major
stock exchange indices in the United States from that existing at the close
of business on the date of the Merger Agreement, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or Governmental Entity on,
or other event that, in the reasonable judgment of the Purchaser, is
reasonably likely to materially adversely affect the extension of credit by
banks or other lending institutions, (v) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (vi) in the case of any of the
foregoing situations described in clauses (i) through (v) of this paragraph
(c) existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;

(d) any approval, permit, authorization, favorable review or consent
of any Governmental Entity, including, but not limited to, the Indiana
Insurance Commissioner, shall not have been obtained;

(e) the Purchaser shall have reached an agreement or understanding
with the Company, including with a majority of the Independent Directors,
providing for termination of the Offer;

(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations and warranties of the Company set
forth in the Merger Agreement shall not be true in any material respect
when made or at any time prior to consummation of the Offer as if made at
and as of such time;

(g) the Merger Agreement shall have been terminated in accordance with
its terms; or

(h) the Board of Directors of the Company shall have withdrawn, or
materially modified or amended in a manner materially adverse to Parent or
the Purchaser, its approval or recommendation of the Offer or the Merger;

which, in the reasonable judgment of the Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by the
Purchaser, Parent or any of Parent's other subsidiaries) giving rise to any such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payment.

35
<PAGE> 38

CERTAIN LEGAL MATTERS

General. In connection with the Offer and the Merger, Parent must obtain
approval from the Indiana Insurance Commissioner for the creation of the
Purchaser, the contribution of the shares of Common Stock owned by Parent to the
Purchaser and the contribution of cash to the Purchaser to fund the Offer, the
Merger and the other transactions contemplated by the Merger Agreement. Parent
received the requisite approval to form the Purchaser on June 2, 1997 and
expects to receive the other requisite approvals from the Indiana Insurance
Commissioner prior to the expiration of the Offer, and such approvals are a
condition to the Offer.

Except as otherwise disclosed herein, based on a review of publicly
available information filed by the Company with the Commission, neither the
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Common
Stock by the Purchaser pursuant to the Offer or the Merger or (ii) any approval
or other action, by any Governmental Entity, that would be required for the
acquisition or ownership of Common Stock by the Purchaser as contemplated
herein. Should any such approval or other action be required, the Purchaser
currently contemplates that such approval or action would be sought. While the
Purchaser does not currently intend to delay the acceptance for payment of
Common Stock tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the
Purchaser or Parent or that certain parts of the businesses of the Company, the
Purchaser or Parent might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Common Stock is
subject to certain conditions. See "-- Certain Conditions of the Offer."

Going Private Transaction. The Offer may be deemed to constitute a "Going
Private" transaction under Rule 13e-3 under the Exchange Act. Therefore,
Purchaser has filed with the Commission a Transaction Statement on Schedule
13E-3, together with exhibits, in addition to filing with the Commission a
Tender Offer Statement on Schedule 14D-1. Pursuant to Rule 13e-3, this Offer to
Purchase contains information relating to, among other matters, the fairness of
the Offer to the Company's stockholders.

Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice and the
FTC and certain waiting period requirements have been satisfied. Because Parent
already owns more than 50% of the outstanding voting securities of the Company,
Parent does not believe that it is required to make any filings pursuant to the
HSR Act or that the Offer and the Proposed Merger are subject to the HSR Act.

State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws governing corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were
inapplicable only under certain conditions. Subsequently, a number of Federal
courts ruled that various state takeover statutes were unconstitutional insofar
as they apply to corporations incorporated outside the state of enactment.

Except as described herein, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer, and nothing in this Offer to Purchase nor any action
taken in

36
<PAGE> 39

connection herewith is intended as a waiver of that right. In the event that any
state takeover statute is found applicable to the Offer, the Purchaser might be
unable to accept for payment or pay for shares of Common Stock tendered pursuant
to the Offer or be delayed in continuing or consummating the Offer. In such
case, the Purchaser may not be obligated to accept for payment or pay for shares
of Common Stock tendered. See "-- Certain Conditions of the Offer."

Delaware Statute. Section 203 of the DGCL, in general, prohibits a
Delaware corporation, such as the Company, from engaging in a business
combination with the holder of 15% or more of its outstanding shares (an
"interested stockholder") for a period of three years from the time such
interested stockholder became the holder of 15% or more of such shares unless
such stockholder owned shares in excess of the 15% limitation as of December 23,
1987, such stockholder acquired more than 15% of the stock with the prior
approval of the board of the corporation or certain other conditions are
satisfied. Parent initially acquired the shares of Common Stock it beneficially
owned with the prior approval of the Company's Board of Directors, and more than
three years have elapsed since Parent acquired more than 15% of the Common Stock
and became an "interested stockholder." Accordingly, Purchaser does not believe
that Section 203 of the DGCL is applicable to the Offer or will be applicable to
the Merger. See "SPECIAL FACTORS -- Background of the Offer."

Certain Litigation. On June 4, 1997, an individual and purported class
action was commenced in the Court of Chancery of the State of Delaware, New
Castle County, purportedly on behalf of stockholders of the Company. The
defendants are the Company and its following officers and directors: L. Ben
Lytle, Frank C. Witthun, Patrick M. Sheridan, John C. Alpin, Birch E. Bayh, John
C. Crane, Mitchell E. Daniels, Jr., Catherine E. Dolan, Ernie E. Green, Dwane R.
Houser, Thomas C. Roberts, William W. Rosenblatt, James B. Stradtner, and
Michael L. Smith. The complaint alleges that in connection with the decision to
enter into the definitive Merger Agreement with Parent the individual defendants
"suffer from conflicts of interest either because they are affiliated with
Parent or maintain close business and personal relationships with the members of
the Company's senior management," and that the defendants "have violated
fiduciary and other common law duties owed to the plaintiff and the other
members of the class in that they have not and are not exercising independent
judgment, and have acted and are acting to the detriment of the Class." The
complaint seeks damages in an unspecified amount, and preliminary and permanent
injunctive relief enjoining defendants from proceeding with or consummating the
transaction with Parent or rescission in the event the transaction is
consummated. The Company intends to, and understands that the other defendants
intend to, vigorously defend this lawsuit, including the request for a
preliminary injunction. The foregoing description of the complaint is qualified
in its entirety by reference to such complaint filed as exhibit (c)(4) to the
Schedule 14D-1 and incorporated by reference.

On June 4, 1997, another individual and purported class action was
commenced in the Court of Chancery of the State of Delaware, New Castle County,
purportedly on behalf of stockholders of the Company. The defendants are the
Company, Parent, L. Ben Lytle, Patrick M. Sheridan, Dwane R. Houser, and Frank
C. Whitthun. The complaint alleges that in connection with the proposed merger
transaction with Parent, the defendants, among other things, have violated
fiduciary duties, failed to exercise independent business judgment, and acted to
the detriment of the Company's public stockholders for their own personal
benefit. The complaint seeks damages in an unspecified amount, preliminary and
permanent injunctive relief enjoining Parent from acquiring the outstanding
shares of the Company not already owned by it, and an order directing defendants
to carry out their fiduciary duties to plaintiff and the purported class. The
Company intends to, and understands that the other defendants intend to
vigorously defend this lawsuit, including the request for preliminary
injunction. The foregoing description of the complaint is qualified in its
entirety by reference to such complaint filed as exhibit (c)(5) to the Schedule
14D-1 and incorporated by reference.

FEES AND EXPENSES

Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and serving as financial advisor to Parent in connection with its
proposed acquisition of the Common Stock. Parent has agreed to pay Credit Suisse
First Boston an advisory fee of $100,000 (creditable against the transaction

37
<PAGE> 40

fee) and a transaction fee of $2.5 million in connection with the effort to
acquire all of the outstanding Common Stock of the Company, $500,000 of which
was payable upon the execution of the Merger Agreement, and the balance of which
is payable upon the closing of the Offer if at such time Parent beneficially
owns more than 90% of the outstanding shares of Common Stock of the Company or
upon the closing of the Merger. Parent has also agreed to reimburse Credit
Suisse First Boston for all out-of-pocket expenses, including the fees and
expenses of its legal counsel and will indemnify Credit Suisse First Boston
against certain liabilities and expenses in connection herewith, including,
without limitation, certain liabilities under federal securities laws. In
addition, Parent has agreed to pay Credit Suisse First Boston a separate fee of
$2.5 million in connection with the sale of Acordia Brokers, which fee shall be
payable upon the sale of all or a substantial amount of the assets or capital
stock of Acordia Brokers.

Credit Suisse First Boston may from time to time in the future render
various investment banking services to Parent and its affiliates, for which it
is expected it would be paid customary fees. In the ordinary course of business,
Credit Suisse First Boston and its affiliates may actively trade the securities
of Parent and the Company for their own account and for the account of customers
and accordingly may, at any time, hold long or short positions in such
securities. Credit Suisse First Boston has from time to time rendered various
investment banking services to the Company.

D. F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Common Stock by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Common Stock. The Purchaser will
pay the Information Agent reasonable and customary compensation for all such
services in addition to reimbursing the Information Agent for reasonable
out-of-pocket expenses in connection therewith. The Purchaser has agreed to
indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including, without limitation, certain liabilities
under the federal securities laws.

First Chicago Trust Company of New York has been retained as the
Depositary. The Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including, without limitation, certain liabilities under
the federal securities laws.

Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Common Stock pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by Parent
or the Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.

The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement will be paid by the party incurring the
expense. Estimated costs and fees to be incurred by Parent in connection with
the Offer and the Merger are as follows:

<TABLE>
<S> <C>
Investment banking fees................................................. $2,500,000
Legal fees.............................................................. 350,000
S.E.C. filing fees...................................................... 57,487
Printing costs.......................................................... 50,000
Solicitation costs...................................................... 20,000
Miscellaneous........................................................... 22,513
--------
Total......................................................... 3,000,000
========
</TABLE>

The Company has advised Parent that the estimated fees and expenses to be
incurred by the Company in connection with the Offer and the Merger will be
approximately $1,000,000.

38
<PAGE> 41

MISCELLANEOUS

The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Common Stock in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Common Stock in such jurisdiction. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

The Purchaser and Parent have filed with the Commission a Transaction
Statement on Schedule 13E-3 pursuant to Rule 13e-3 under the Exchange Act,
together with Exhibits, and a Tender Offer Statement on Schedule 14D-1 pursuant
to Rule 14D-3 under the Exchange Act, together with Exhibits, each of which
furnishes certain additional information with respect to the Offer, and may file
amendments thereto. Such Schedule 13E-3 and Schedule 14D-1, and any amendments
thereto, including Exhibits, may be inspected and copies may be obtained in the
manner set forth under "-- Certain Information Concerning the Company" (except
that such material will not be available at the regional offices of the
Commission).

AICI ACQUISITION CORP.

June 6, 1997

39
<PAGE> 42

SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER

1. Directors and Executive Officers of Parent. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years, as well as the amount and nature of the beneficial
ownership of the Company's Common Stock, of each director and executive officer
of Parent. The principal address of Parent and the current business address for
each individual listed below is 120 Monument Circle, Indianapolis, Indiana. Each
of the individuals listed below is a citizen of the United States.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; STOCK OWNERSHIP
MATERIAL POSITIONS HELD DURING THE PAST FIVE OF THE COMPANY'S
NAME YEARS COMMON STOCK
- ------------------------------ --------------------------------------------- ----------------
<S> <C> <C>
Dwane R. Houser............... Chairman of the Board of Parent. Mr. Houser 8,449(1)
has been Chairman of Board of Parent since
October 1995 and a director of the Company
since September 1995. Prior to his
affiliation with Parent, he was Chairman of
the Board and Chief Executive Officer of
Community Mutual Insurance Company, a
health insurance company which merged with
Parent in October 1995 ("CMIC").
L. Ben Lytle.................. Chief Executive Officer, President and 136,500(2)
Director of Parent. Mr. Lytle has been
President, Chief Executive Officer and a
director of Parent since March 1989 and
Chairman of the Board of the Company since
it began operations. He served as the
Company's Chief Executive Officer from the
time it began operations until November
1996. From February 1994 to October 1995,
he served as Chairman of the Board of
Parent.
Stephen T. Bow................ Director of Parent. Mr. Bow has been a 2,050
director of Parent since 1993. From 1994
until his retirement in December 1996, Mr.
Bow was Chairman and Chief Executive
Officer of Anthem Life Insurance Companies,
and from July 1993 through June 1994 was
President and Chief Executive Officer of
Southeastern Group, Inc., the successor to
Southeastern Mutual Insurance Company,
d/b/a BC/BS of Kentucky (which merged into
Parent in 1993), for whom he served as
President and Chief Executive Officer since
1989.
Vincent A. Chiarucci.......... Director of Parent. Mr. Chiarucci has been a --
director of Parent since October 1995. From
June 1987 until his retirement in January
1995, Mr. Chiarucci was President of Figgie
International, Inc.
Kenneth K. Harper............. Director of Parent. Mr. Harper has been a 205
director of Parent since 1993. Mr. Harper has
been President of The Harper Realty Group,
L.L.C. since 1986.
John R. Hodowal............... Director of Parent. Mr. Hodowal has been a --
director of Parent since 1991. Mr. Hodowal
has been Chairman and Chief Executive
Officer of IPALCO Enterprises, Inc. since
1989.
Frank B. Hower, Jr. .......... Director of Parent. Mr. Hower has been a 1,000
director of Parent since 1993. From 1980
until his retirement in 1990, Mr. Hower was
Chairman and Chief Executive Officer of
Liberty National Bancorp, Inc.
</TABLE>

S-I-1
<PAGE> 43

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; STOCK OWNERSHIP
MATERIAL POSITIONS HELD DURING THE PAST FIVE OF THE COMPANY'S
NAME YEARS COMMON STOCK
- ------------------------------ --------------------------------------------- ----------------
<S> <C> <C>
William G. Mays............... Director of Parent. Mr. Mays has been a 1,000
director of Parent since 1993. Mr. Mays has
been the President of Mays Chemical Co.,
Inc. since 1980.
James W. McDowell, Jr. ....... Director of Parent. Mr. McDowell has been a --
director of Parent since 1993. He has been
President of McDowell & Associates since
1992 and was Chief Executive Officer of
Dairyman, Inc. from 1980 to 1992.
James A. Perkins.............. Director of Parent. Mr. Perkins has been a 450
director of Parent since 1989. From 1964
until his retirement in May 1995, he was
International Representative of United Auto
Workers, Region 3.
George A. Schaeffer, Jr. ..... Director of Parent. Mr. Schaefer has been a --
director of Parent since October 1995. He has
served as President and Chief Executive
Officer of Fifth Third Bancorp/Fifth Third
Bank since 1990.
Andrew W. Skrobola............ Director of Parent. Mr. Skrobola has been a --
director of Parent since October 1995. He has
served as Senior Vice President of Finance
of Thomas Steel Strip Corp. since 1975.
Charles C. Smith, Jr.,
M.D. ....................... Director of Parent. Dr. Smith has been a --
director of Parent since 1993. Dr. Smith has
been a physician since 1962.
Dennis J. Sullivan, Jr. ...... Director of Parent. Mr. Sullivan has been a --
director of Parent since October 1995. Since
1993, Mr. Sullivan has been Executive
Counselor of Dan Pinger Public Relations.
From 1987 until 1993, he was Executive Vice
President and Chief Financial Officer of
Cincinnati Bell, Inc.
Sr. Francis M. Thrailkill..... Director of Parent. Sister Thrailkill has --
been a director of Parent since October 1995.
She has served as President of College of
Mount St. Joseph since 1987.
Fred C. Tucker III............ Director of Parent. Mr. Tucker has been a 2,930
director of Parent since 1989. He has been
President of F. C. Tucker Company, Inc.
since 1977.
Thomas C. Walker.............. Director of Parent. Mr. Walker has been a 1,000
director of Parent since 1979. From 1980
until his retirement in 1990, Mr. Walker
was Executive Vice President and Chief
Financial Officer of Indiana Bell Telephone
Company, Inc.
Patrick M. Sheridan........... Executive Vice President and Chief Financial 78,000(2)
Officer of Parent. Mr. Sheridan has served as
Executive Vice President and Chief
Financial Officer of Parent since 1987, and
he was Treasurer of Parent from 1987 to
1991. From 1989 until August 1996, he
served as Executive Vice President and
Chief Financial Officer of the Company. Mr.
Sheridan has been a director of the Company
since 1989.
David R. Frick................ Executive Vice President and Chief 5,278(1)
Administrative Officer of Parent. Mr. Frick
has served as Executive Vice President and
Chief Administrative Officer of Parent
since 1995. Prior to joining the Parent, he
was an attorney with Baker & Daniels and
was Managing Partner of the firm from 1987
to 1992.
</TABLE>

S-I-2
<PAGE> 44

- ---------------
(1) Amount includes restricted stock as to which the executive has the right to
vote and receive dividends but does not have the right to dispose of such
stock until the expiration of various restriction periods as follows: Mr.
Houser -- 5,076 restricted shares and Mr. Frick -- 3,045.5 restricted
shares. During such restriction periods, the restricted stock is subject to
forfeiture upon termination of the executive's employment with Parent or one
of its subsidiaries.

(2) Amount includes 31,500 exercisable options held by Mr. Lytle; and 18,000
exercisable options held by Mr. Sheridan.

2. Directors and Executive Officers of the Purchaser. The executive
officers of the Purchaser are Dwane R. Houser, Chairman; L. Ben Lytle,
President; Patrick M. Sheridan, Treasurer; and David R. Frick, Secretary. The
directors of the Purchaser are Messrs. Houser, Lytle, Sheridan and Frick. The
current business address, citizenship and present occupation or employment and
material occupations, positions, offices or employments for the past five years,
as well as the amount and nature of the beneficial ownership of the Company's
Common Stock, of each such officer and director of the Purchaser are as set
forth above.

S-I-3
<PAGE> 45

SCHEDULE II

PURCHASES OF COMMON STOCK BY PARENT

Set forth below are the amount of shares of Common Stock purchased by
Parent since January 1, 1995, the range of prices paid for such shares and the
average purchase price for each quarterly period of the Company during such
period:

<TABLE>
<CAPTION>
FISCAL QUARTER NUMBER OF SHARES PRICE RANGE AVERAGE PRICE
- ----------------------------------------------- ---------------- ----------- ----------------
<S> <C> <C> <C>
4th Quarter 1995............................... 58,400 $27 1/2-29 1/8 $28.36125
1st Quarter 1996............................... 418,600 $27 3/4-31 39.375
2nd Quarter 1996............................... 4,500 $31 7/8-32 1/2 32.1875
3rd Quarter 1996............................... -- -- --
4th Quarter 1996............................... -- -- --
1st Quarter 1997............................... 5,988(1) N/A(1) N/A(1)
</TABLE>

- ---------------

(1) The transactions reported consist of Parent's acceptance of restricted
shares of Common Stock in satisfaction of tax withholding obligations of
participants in the Anthem Acordia Stock Plan upon the lapse of restrictions
upon such shares, at the request of the participants, pursuant to the plan.

S-II-1
<PAGE> 46

ANNEX I

SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

Section 262. Appraisal rights.

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:

(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to Section
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.

A-I-1
<PAGE> 47

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the

A-I-2
<PAGE> 48

effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.

(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound,

A-I-3
<PAGE> 49

as the Court may direct. Payment shall be so made to each such stockholder, in
the case of holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

A-I-4
<PAGE> 50

Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for shares of
Common Stock and any other required documents should be sent or delivered by
each Stockholder or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:

The Depositary for the Offer is:

FIRST CHICAGO TRUST COMPANY OF NEW YORK

<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street
Jersey City, New Jersey 07303 Vietnam Veterans Memorial Plaza New York, New York 10005
New York, New York 10041
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:

(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>

Any questions and request for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and addresses
below. You may also contact your local broker, dealer, commercial bank or trust
company for assistance concerning the Offer.

The Information Agent for the Offer is:

D.F. KING & CO., INC.

77 Water Street
New York, New York 10005
Call Toll Free (800) 207-2872

The Dealer Manager for the Offer is:

[CREDIT SUISSE LOGO]

Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (888) 624-6123
June 6, 1997

<PAGE> 1

LETTER OF TRANSMITTAL Exhibit (a)(2)

To Tender Shares of Common Stock

Acordia, Inc.
Pursuant to the Offer to Purchase dated June 6, 1997

AICI Acquisition Corporation
a wholly owned subsidiary of

Anthem Insurance Companies, Inc.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:

FIRST CHICAGO TRUST COMPANY OF NEW YORK

(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED
BELOW.

PARTICIPANTS IN THE COMPANY'S 401(k) LONG TERM SAVINGS INVESTMENT PLAN, THE ABI
401(k) AND PROFIT SHARING PLAN AND THE ASSOCIATED GROUP 401(k) LONG TERM SAVINGS
INVESTMENT PLAN (THE "PLANS") DESIRING TO TENDER COMMON STOCK (AS DEFINED BELOW)
SHOULD SO INSTRUCT THE TRUSTEE FOR THE PLANS BY COMPLETING THE FORM WHICH WILL
BE PROVIDED TO PARTICIPANTS FOR THAT PURPOSE. PARTICIPANTS CANNOT TENDER SHARES
ALLOCATED TO THEIR ACCOUNTS BY EXECUTING THIS LETTER OF TRANSMITTAL.

THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Common Stock (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
delivery of Common Stock is to be made by book-entry transfer to an account
maintained by the Depositary at The Depository Trust Company ("DTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to
the book-entry transfer procedure described in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase (as
defined below).

Stockholders whose certificates for Common Stock are not immediately
available or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to, their Common
Stock and all other documents required hereby to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) must tender their
Common Stock in accordance with the guaranteed delivery procedures set forth in
the section entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock"
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2

[ ] CHECK HERE IF TENDERED COMMON STOCK IS BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING. (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER COMMON STOCK BY BOOK-ENTRY TRANSFER):

Name of Tendering Institution
-----------------------------------------------------------------------------

Check Box of Applicable Book-Entry Transfer Facility:

<TABLE>
<CAPTION>
PHILADELPHIA
THE DEPOSITORY DEPOSITORY
TRUST COMPANY TRUST COMPANY
-------------- -------------
<S> <C> <C>
(CHECK ONE) [ ] [ ]
</TABLE>

Account Number
- --------------------------------------------------------------------------------

Transaction Code Number
-----------------------------------------------------------------------------

[ ] CHECK HERE IF TENDERED COMMON STOCK IS BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:

Name(s) of Registered Holder(s)
-----------------------------------------------------------------------------

Window Ticket No. (if any)
-----------------------------------------------------------------------------

Date of Execution of Notice of Guaranteed Delivery
---------------------------------------------------------

Name of Institution which Guaranteed Delivery
--------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK TENDERED

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) COMMON STOCK TENDERED
APPEAR(S) ON STOCK CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
CERTIFICATE EVIDENCED BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)

=================================================
=================================================
TOTAL SHARES
------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry stockholders.
(2) Unless otherwise indicated, it will be assumed that all shares of Common Stock being delivered to the Depositary
are being tendered hereby. See Instruction 4.
------------------------------------------------------------------------------------------------------------------
</TABLE>

The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Common Stock tendered hereby. The certificates and number of shares of Common
Stock that the undersigned wishes to tender should be indicated in the
appropriate boxes.
<PAGE> 3

NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.

Ladies and Gentlemen:

The undersigned hereby tenders to AICI Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Anthem Insurance
Companies, Inc. ("Parent"), the above-described shares of Common Stock, par
value $1.00 per share (the "Common Stock") of Acordia, Inc., a Delaware
corporation (the "Company"), pursuant to Purchaser's offer to purchase all
outstanding Common Stock, at a price of $40.00 per share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated June 6, 1997 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, as each may be amended or supplemented from time to time, together
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to
Parent or one or more direct or indirect wholly owned subsidiaries of Parent,
the right to purchase all or any portion of the Common Stock tendered pursuant
to the Offer.

Subject to, and effective upon, acceptance for payment of the Common Stock
tendered herewith, in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all the Common Stock that is being tendered hereby and
all dividends (other than regular quarterly cash dividends having a customary
and usual record and payment date prior to the Purchaser purchasing and becoming
a record holder of such Common Stock) and distributions (including, without
limitation, distributions of additional Common Stock) (collectively,
"Distributions"), and irrevocably appoints First Chicago Trust Company of New
York (the "Depositary") the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Common Stock and all Distributions, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to the full extent of the undersigned's rights
with respect to such Common Stock (and Distributions) to (i) deliver
certificates evidencing such Common Stock and all Distributions, or transfer
ownership of such Common Stock and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to, or upon the order of,
the Purchaser, (ii) present such Common Stock and all Distributions for transfer
on the books of the Company and (iii) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Common Stock and all
Distributions, all in accordance with the terms of the Offer.
<PAGE> 4

By executing this Letter of Transmittal, the undersigned irrevocably
appoints the Purchaser and its officers, and each of them, and any other
designees of the Purchaser, as the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to the Common Stock tendered hereby and
accepted for payment by the Purchaser (and any and all Distributions). All such
powers of attorney and proxies shall be considered irrevocable and coupled with
an interest in the tendered Common Stock (and Distributions). This appointment
will be effective if, when, and only to the extent that, the Purchaser accepts
such Common Stock for payment pursuant to the Offer. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Common Stock (and such other Common Stock and
securities issued in Distributions) will, without further action, be revoked,
and no subsequent powers of attorney, proxies, consents or revocations may be
given or executed by the undersigned (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
named above will, with respect to the Common Stock and other securities for
which the appointment is effective, be empowered to exercise all voting and
other rights of the undersigned as they in their sole discretion may deem proper
at any annual or special meeting of the stockholders of the Company or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise, and the Purchaser reserves the right to require that, in
order for Common Stock or other securities to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Common Stock,
the Purchaser must be able to exercise full voting, consent or other rights with
respect to such Common Stock and all Distributions, including voting at any
meeting of stockholders of the Company (whether annual or special or whether or
not adjourned) or action by written consent without a meeting in respect of such
Common Stock.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Common Stock
tendered hereby and all Distributions, and that when such Common Stock is
accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and that none of
such Common Stock and Distributions will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Common Stock tendered hereby
and all Distributions. In addition, the undersigned shall remit and transfer
promptly to the Depositary for the account of the Purchaser all Distributions in
respect of the Common Stock tendered hereby, accompanied by appropriate
documentation of transfer, and, pending such remittance and transfer or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Common Stock tendered hereby or deduct from such purchase
price, the amount or value of such Distribution as determined by the Purchaser
in its sole discretion.

No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that tenders of Common Stock pursuant to any
one of the procedures described in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase and in
the instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer. The Purchaser's acceptance of such Common
Stock for payment will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer,
including, without limitation, the undersigned's representation and warranty
that the undersigned owns the Common Stock being tendered. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Common Stock
tendered hereby. Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Offer, the price to be paid to the
undersigned will be the amended price notwithstanding the fact that a different
price is stated in this Letter of Transmittal.
<PAGE> 5

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Common Stock
purchased, and return all certificates evidencing Common Stock not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Common Stock Tendered." Similarly, unless otherwise indicated in
the box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Common Stock purchased and all certificates evidencing
Common Stock not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Common Stock Tendered." In the event that the boxes
entitled "Special Payment Instructions" and "Special Delivery Instructions" are
both completed, please issue the check for the purchase price of all Common
Stock purchased and return all certificates evidencing Common Stock not
purchased or not tendered (and any accompanying documents, as appropriate) in
the name(s) of, and mail such check and certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Please credit any
Common Stock tendered herewith by book-entry transfer that are not purchased by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Common Stock from the name of the
registered holder(s) thereof if the Purchaser does not purchase any of the
Common Stock tendered hereby.
<PAGE> 6

- ------------------------------------------------------------

SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Common
Stock purchased or certificates evidencing Common Stock not tendered or
not purchased are to be issued in the name of someone other than the
undersigned.

Issue [ ] Check [ ] Certificate(s) to:

Name
-----------------------------------------------------
(PRINT)

Address:
--------------------------------------------------

------------------------------------------------------------
(INCLUDE ZIP CODE)

------------------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
============================================================

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Common
Stock purchased or certificates evidencing Common Stock not tendered or
not purchased are to be mailed to someone other than the undersigned, or
to the undersigned at an address other than that shown under "Description
of Common Stock Tendered."

Mail [ ] Check [ ] Certificate(s) to:

Name:
-----------------------------------------------------
(PRINT)

Address:
--------------------------------------------------

------------------------------------------------------------
(INCLUDE ZIP CODE)

- ------------------------------------------------------------
<PAGE> 7

IMPORTANT

STOCKHOLDERS SIGN HERE:
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)

X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- ------------------------1997

(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for the Common Stock on a security position listing or by a
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instructions 1 and 5.)

Name(s):
================================================================================
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
- ----------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- ----------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)

GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)

FOR USE BY FINANCIAL INSTITUTIONS ONLY.
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
================================================================================
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Dated:
- ------------------------, 1997
<PAGE> 8

INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Common Stock (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Common Stock)
tendered hereby and such holder(s) has (have) completed neither the box entitled
"Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Common Stock is tendered for
the account of an Eligible Institution. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND STOCK CERTIFICATES. This Letter
of Transmittal is to be completed by the holder of the Common Stock either if
certificates are to be forwarded herewith or, unless an Agent's Message (as
defined below) is utilized, if Common Stock is to be delivered by book-entry
transfer pursuant to the procedure set forth in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase.
Certificates evidencing all physically tendered Common Stock, or a confirmation
of a book-entry transfer into an account maintained by the Depositary at a
Book-Entry Transfer Facility of all Common Stock delivered by book-entry
transfer as well as a properly completed and duly executed Letter of
Transmittal, together with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in the Offer
to Purchase). If certificates for tendered Common Stock are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery.

Stockholders whose certificates for tendered Common Stock are not
immediately available, who cannot deliver their certificates for tendered Common
Stock and all other required documents to the Depositary prior to the Expiration
Date or who cannot complete the procedure for delivery by book-entry transfer on
a timely basis may tender such Common Stock pursuant to the guaranteed delivery
procedure described in the section entitled "THE TENDER OFFER -- Procedures for
Tendering Common Stock" of the Offer to Purchase. Pursuant to such procedure:
(i) such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date; and (iii) the certificates
evidencing all physically delivered Common Stock in proper form for transfer by
delivery, or a confirmation of a book-entry transfer into an account maintained
by the Depositary at a Book-Entry Transfer Facility of all Common Stock
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery, as provided in the section
entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock" of the
Offer to Purchase. A "trading day" is any day on which the New York Stock
Exchange is open for business. The Notice of Guaranteed Delivery may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution and a representation that the stockholder owns the Common
Stock tendered within the meaning of, and that the tender of the Common Stock
effected thereby complies with, Rule 14e-4 under the Securities Exchange Act of
1934, as amended, each in the form set forth in such Notice of Guaranteed
Delivery.
<PAGE> 9

THE METHOD OF DELIVERY OF COMMON STOCK, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. COMMON STOCK
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no
fractional shares of Common Stock will be purchased. By execution of this Letter
of Transmittal (or a facsimile hereof), all tendering stockholders waive any
right to receive any notice of the acceptance of their Common Stock for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Common Stock Tendered" is inadequate, the certificate numbers and/or the number
of shares of Common Stock should be listed on a separate schedule and attached
hereto.

4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If less than all the Common Stock evidenced by any certificate
delivered to the Depositary herewith is to be tendered hereby, fill in the
number of shares of Common Stock which is to be tendered in the box entitled
"Number of Shares Tendered," as appropriate. In any such case, new
certificate(s) evidencing the remainder of the Common Stock that was evidenced
by the certificate(s) delivered to the Depositary herewith will be sent to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
box entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration of the Offer. All Common Stock evidenced by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.

5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Stock tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) evidencing such Common Stock without
alteration, enlargement or any other change whatsoever.

If any of the shares of Common Stock tendered hereby are owned of record by
two or more persons, all such persons must sign this Letter of Transmittal.

If any of the shares of Common Stock tendered hereby are registered in the
names of different holders, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Common Stock.

If this Letter of Transmittal is signed by the registered holder(s) of the
Common Stock tendered hereby, no endorsements of certificates or separate stock
powers are required, unless payment is to be made to, or certificates evidencing
Common Stock not tendered or not purchased are to be issued in the name of, a
person other than the registered holder(s), in which case, the certificate(s)
evidencing the Common Stock tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on such
certificate(s) and stock powers must be guaranteed by an Eligible Institution.
<PAGE> 10

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Stock tendered hereby, the certificate(s)
evidencing the Common Stock tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on such
certificate(s) and stock powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority so to act must be submitted.

6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Common Stock to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if certificate(s)
evidencing Common Stock not tendered or not purchased are to be issued in the
name of, a person other than the registered holder(s), the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price unless evidence satisfactory to the Purchaser
of the payment of such taxes, or exemption therefrom, is submitted. EXCEPT AS
PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS
TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE COMMON STOCK TENDERED HEREBY.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, or certificate(s) evidencing Common Stock not tendered or not
purchased are to be returned to, a person other than the person(s) signing this
Letter of Transmittal or if such check or any such certificate is to be sent to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Common Stock Tendered" herein, the
appropriate boxes on this Letter of Transmittal must be completed. Persons
tendering Common Stock by book-entry transfer may request that shares of Common
Stock not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such stockholder may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
shares of Common Stock not purchased will be returned by crediting the account
at the Book-Entry Transfer Facilities designated above.

8. WAIVER OF CONDITIONS. Subject to the terms and conditions set forth in
the Agreement and Plan of Merger dated as of June 2, 1997 among the Company,
Parent and the Purchaser, the conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.

9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
<PAGE> 11

10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Common Stock purchased from such stockholder. If the tendering stockholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification
Number. If "Applied For" is written in Part I and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary.

11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Common Stock has been lost, destroyed or stolen, the stockholder
should promptly notify the First Chicago Trust Company of New York by calling
(800) 446-2617 between 8:30 a.m. and 7:00 p.m. New York City time. An affidavit
of loss will be sent to the stockholder, which should then be completed and
returned with the Letter of Transmittal to the Depositary. The stockholder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
certificates have been followed.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE OF THE OFFER AND EITHER CERTIFICATES FOR
TENDERED COMMON STOCK MUST BE RECEIVED BY THE DEPOSITARY OR COMMON STOCK MUST BE
DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR
TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.

IMPORTANT TAX INFORMATION

Under the federal income tax law, a stockholder whose tendered Common Stock
is accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Common
Stock purchased pursuant to the Offer may be subject to backup withholding of
31%.

Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. Such forms can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.

If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
<PAGE> 12

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments that are made to a stockholder
pursuant to the Offer, the stockholder is required to notify the Depositary of
such stockholder's correct TIN by completing the form below certifying (a) that
the TIN provided on Substitute Form W-9 is correct (or that such stockholder is
awaiting a TIN), and (b) that (i) such stockholder has not been notified by the
Internal Revenue Service that such stockholder is subject to backup withholding
as a result of a failure to report all interest or dividends or (ii) the
Internal Revenue Service has notified such stockholder that such stockholder is
no longer subject to backup withholding.

WHAT NUMBER TO GIVE THE DEPOSITARY

The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Common
Stock tendered hereby. If the Common Stock is in more than one name or is not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report. If the tendering stockholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, the stockholder should write "Applied For" in the space
provided for the TIN in Part I, and sign and date the Substitute Form W-9 and
the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 13

ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:

<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification ------------------------------
FORM W-9 Number -- For all accounts, enter taxpayer Social Security Number(s)
DEPARTMENT OF THE TREASURY identification number in the box at right. OR
INTERNAL REVENUE SERVICE (For most individuals, this is your social ------------------------------
security number. If you do not have a Employer Identification Number
number, see Obtaining a Number in the (If awaiting TIN write
enclosed guidelines.) Certify by signing and "Applied For")
dating below. Note: If the account is in
more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER Guidelines and complete as instructed therein.
("TIN") CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of failure to report all
interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
PART III -- Awaiting TIN [ ]
PART IV -- Exempt TIN [ ]
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item
(2). (Also see instructions in the enclosed Guidelines.)
- ------------------------------------------------------------------------------------------------------
</TABLE>

Signature Date __________ 1997

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
III OF SUBSTITUTE FORM W-9.

- --------------------------------------------------------------------------------

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.

==============================================================
Signature Date

-------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
<PAGE> 14

The Information Agent for the Offer is:

D.F. KING & CO., INC.

77 Water Street
New York, New York 10005
Call Toll Free (800) 207-2872

The Dealer Manager for the Offer is:

[CREDIT SUISSE LOGO]

Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (888) 624-6123

June 6, 1997

<PAGE> 1
EXHIBIT (a)(3)

PRESS RELEASE
EXHIBIT

DOW JONES News/Retrieval(R)
- -------------------------------------------------------------------------------

DOW JONES NEWS SERVICE

06/02 Acordia, Anthem Merger-2: To Begin Tender Offer By June 6

INDIANAPOLIS (Dow Jones)--Acordia Inc. (ACO) and Anthem Inc. reached a
merger agreement under which Anthem will acquire all outstanding common shares
of Acordia for $40 each.

Anthem and a wholly owned unit will commence a tender offer for the 33.2%
of Acordia stock it doesn't already own no later than June 6. The offer is
conditioned upon, among other things, a majority of the shares not currently
held by Anthem, its units, officers or directors being tendered and not
withdrawn.

All Acordia shares remaining at the completion of the tender will be
acquired in a cash merger of Acordia and an Anthem unit at the tender offer
price of $40 per share.

Anthem also said Monday that its previously announced discussions with a
third party regarding a possible sale of Acordia's brokerage business are
continuing. The tender offer and the proposed merger are not conditioned upon
the sale of Acordia's brokerage business, the company said.

Acordia's stock closed at $35 in New York Stock Exchange trading Friday,
and opened at $39, up $4, in Monday trading.

Anthem is a mutually owned insurer and health insurance provider. Acordia
is an insurance brokerage company.

(END) DOW JONES NEWS 06-02-97
10:04 AM

Source: Dow Jones News Service, June 2, 1997
- -------------------------------------------------------------------------------
COPYRIGHT (C) 1997 DOW JONES & COMPANY, INC. ALL RIGHTS RESERVED. PAGE 1

<PAGE> 1

EXHIBIT (a)(4)
[ALEX. BROWN LOGO]

MAY 30, 1997

Special Committee of the Board
of Directors of Acordia, Inc.
120 Monument Circle
Indianapolis, IN 46204

Dear Members of the Special Committee:

We understand that Acordia, Inc. ("Acordia"), Anthem Inc. ("Anthem") and
AIC Acquisition Corp. ("Purchaser"), a Delaware corporation and wholly-owned
subsidiary of Anthem, intend to enter into an Agreement and Plan of Merger
("Agreement"). Pursuant to the Agreement, Purchaser will commence a tender offer
for all outstanding shares of common stock of Acordia, par value $1.00 per share
(the "Common Stock"), other than shares of Common Stock owned by Anthem, at a
price of $40.00 per share net to the selling stockholders in cash (the "Tender
Offer"). Anthem currently owns approximately 66.8% of the outstanding shares of
Common Stock. Following the consummation of the Tender Offer, Purchaser will be
merged into Acordia (the "Merger") and in the Merger each outstanding share of
Common Stock (other than shares held in treasury or shares owned by Anthem, its
affiliates or stockholders who have perfected dissenters' rights) will be
converted into the right to receive $40.00 in cash. You have requested our
opinion as to whether the consideration to be received in the Tender Offer and
the Merger by Acordia stockholders other than Anthem is fair, from a financial
point of view, to such stockholders.

Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. We have acted as financial advisor to the Special Committee of the
Board of Directors of Acordia in connection with the transaction described above
and will receive a fee for our services, a substantial portion of which is
payable upon delivery of the opinion. We have in the past acted as a co-manager
on a public offering of securities for Acordia. Alex. Brown regularly publishes
research reports regarding the insurance and insurance brokerage industries and
the businesses and securities of Acordia and other publicly traded companies in
the insurance and insurance brokerage industries. In the ordinary course of
business, Alex. Brown may actively trade the securities of Acordia for our own
account and the account of our customers and, accordingly, may at any time hold
a long or short position in such securities. We have also in the past acted as
financial advisor to Anthem in connection with certain other transactions.

In connection with this opinion, we have reviewed certain publicly
available financial information and other information concerning Acordia and
Anthem and certain internal analyses and other information with respect to the
business, operations and prospects of Acordia and Anthem furnished to us by
Acordia and Anthem. We have also held discussions with the members of the senior
managements of Acordia and Anthem regarding the businesses and prospects of
their respective companies and the joint prospects of a combined company. In
addition, we have (i) reviewed the reported prices and trading activity for the
common stock of Acordia, (ii) compared certain financial and stock market
information for Acordia with similar information for certain companies whose
securities are publicly traded, (iii) reviewed the financial terms of certain
recent business combinations which we deemed relevant in whole or in part, (iv)
held discussions with Anthem, Anthem's financial advisor and the management of
Acordia regarding the sale process for Acordia's unaffiliated, independent
insurance brokerage operations, (v) reviewed the terms of the May 29, 1997 draft
of the Agreement and certain related documents, and (vi) performed such other
studies and analyses and considered such other factors as we deemed appropriate
for the purpose of rendering our opinion.

We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of Acordia
and Anthem, we have assumed that such information provided to us was reasonably
prepared on bases reflecting the best currently available judgments and
estimates of the managements of Acordia and Anthem, respectively, as to the
likely future financial performances of their respective companies
<PAGE> 2

[ALEX. BROWN LOGO]

Special Committee of the Board
of Directors of Acordia, Inc.
May 30, 1997
Page 2

and of the combined entity. In addition, we did not conduct physical inspections
of the properties and facilities of Acordia and Anthem, and we did not make or
obtain, or assume any responsibility for making or obtaining an independent
evaluation or appraisal of the assets or liabilities of Acordia or Anthem, nor
have we been furnished with any such evaluations or appraisals. Our opinion is
based on market, economic and other conditions as they exist and can be
evaluated as of the date of this letter.

In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of Acordia or
any of its assets.

Our advisory services were rendered to, and the opinion expressed herein
was prepared for the use of, the Special Committee of the Board of Directors of
Acordia and may not be used for any other purpose or reproduced, disseminated,
quoted or referred to at any time, in any manner for any purpose, without the
written consent of Alex. Brown.

Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the consideration to be received in the Tender Offer and
Merger by Acordia stockholders other than Anthem is fair, from a financial point
of view, to such stockholders.

Very truly yours,

ALEX. BROWN & SONS INCORPORATED

By: /s/ Peter F. de Vos

------------------------------------
Peter F. de Vos
Managing Director

<PAGE> 1

EXHIBIT (a)(5)

[MASTHEAD]
June 6, 1997

Dear Stockholder:

On behalf of the Board of Directors of Acordia, Inc. (the "Company" or
"Acordia"), we are pleased to inform you that Acordia entered into an Agreement
and Plan of Merger dated as of June 2, 1997 (the "Merger Agreement"), with
Anthem Insurance Companies, Inc. ("Parent") and AICI Acquisition Corp. (the
"Purchaser"), a wholly-owned subsidiary of Parent, pursuant to which the
Purchaser has commenced a cash tender offer (the "Offer") to purchase all of the
outstanding shares (the "Shares") of the Company's common stock at $40.00 per
Share, net to the seller in cash, without interest thereon.

Following the successful completion of the Offer, upon the terms and
subject to the conditions contained in the Merger Agreement, the Purchaser will
be merged into the Company (the "Merger"), and each Share outstanding after the
Offer (other than Shares held by Parent, the Purchaser or the Company and Shares
held by stockholders, if any, who are entitled to and who perfect their
appraisal rights under Delaware General Corporation Law) will be converted into
the right to receive $40.00 per Share in cash.

The Board of Directors of the Company, based upon, among other things, the
unanimous recommendation of a special committee of the Board consisting of the
directors of the Company who are unaffiliated with Parent or the Company's
management (the "Company Special Committee"), has determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, upon the terms and subject to the conditions set forth in the Merger
Agreement are fair to, and in the best interests of, the Company and
stockholders other than Parent and the Purchaser ("Public Stockholders") and has
approved the Offer, the Merger and the Merger Agreement and recommends (with
Messrs. Lytle, Sheridan, Houser and Smith, who are directors and/or officers of
Parent and/or one of Parent's subsidiaries, abstaining) that the Public
Stockholders of the Company accept the Offer and tender their Shares to the
Purchaser pursuant to the Offer.

In arriving at their decisions, the Company Special Committee and the Board
of Directors gave careful consideration to a number of factors described in the
enclosed Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") which is being filed today with the Securities and Exchange Commission.
Among other things, the Special Committee and the Board considered the opinion
of Alex. Brown & Sons, Incorporated ("Alex. Brown"), financial adviser to the
Company Special Committee, that, on the basis of and subject to the matters set
forth therein, the cash consideration to be received by the holders of Shares,
other than Parent pursuant to the Offer and the Merger is fair, from a financial
point of view, to such holders. The enclosed Schedule 14D-9 describes the
Special Committee's and the Board's decision and contains other important
financial information relating to that decision. We urge you to read it
carefully.

Accompanying this letter, in addition to the attached Schedule 14D-9
relating to the Offer and Alex. Brown's fairness opinion, is the Purchaser's
Offer to Purchase, dated June 6, 1997, together with related materials including
a letter of transmittal to be used for tendering your Shares. These documents
set forth the terms and conditions of the Offer and provide instructions as to
how to tender your Shares. We urge you to read the enclosed materials carefully
and consider all factors set forth therein before making your decision with
respect to the Offer.

We, personally, along with the entire Board of Directors, management and
employees of Acordia, thank you for the support you have given Acordia.

Very truly yours,

<TABLE>
<S> <C>
[WITHUN SIGNATURE] [CRANE SIGNATURE]
Frank C. Witthun John C. Crane
President and Chief Chairman of the Special
Executive Officer Committee of the Board of Directors
</TABLE>

<PAGE> 1
EXHIBIT (c)(1)

AGREEMENT AND PLAN OF MERGER

dated as of

June 2, 1997

among

ACORDIA, INC.

ANTHEM INSURANCE COMPANIES, INC.

and

AICI ACQUISITION CORP.
<PAGE> 2
TABLE OF CONTENTS*

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER

SECTION 1.01 The Offer.......................................... 1
1.02 Company Action..................................... 2

ARTICLE II
THE MERGER

SECTION 2.01 The Merger......................................... 3
2.02 Conversion of Shares............................... 4
2.03 Surrender and Payment.............................. 4
2.04 Dissenting Shares.................................. 5
2.05 Stock Options and Purchase Rights.................. 5
2.06 Stock Purchase Warrants............................ 6

ARTICLE III
THE SURVIVING CORPORATION

SECTION 3.01 Certificate of Incorporation....................... 6
3.02 Bylaws............................................. 6
3.03 Directors and Officers............................. 6

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

SECTION 4.01 Corporate Existence and Power...................... 7
4.02 Corporate Authorization............................ 7
4.03 Governmental Authorization......................... 7
4.04 Non-Contravention.................................. 7
4.05 Capitalization..................................... 8
4.06 Subsidiaries....................................... 8
4.07 SEC Filings........................................ 9
</TABLE>

- --------
* The Table of Contents is not part of this Agreement.

i
<PAGE> 3
<TABLE>
<S> <C> <C>
4.08 Financial Statements............................... 9
4.09 Finders' Fees...................................... 9

ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER

SECTION 5.01 Corporate Existence and Power...................... 10
5.02 Corporate Authorization............................ 10
5.03 Governmental Authorization......................... 10
5.04 Non-Contravention.................................. 10
5.05 Finders' Fees...................................... 10
5.06 Financing.......................................... 11

ARTICLE VI
COVENANTS OF THE COMPANY

SECTION 6.01 Conduct of the Company............................. 11
6.02 Stockholders' Meeting; Proxy Material.............. 11
6.03 Disclosure Documents............................... 12
6.04 Access to Information.............................. 12
6.05 Other Offers....................................... 13

ARTICLE VII
COVENANTS OF PARENT AND PURCHASER

SECTION 7.01 Confidentiality.................................... 13
7.02 Obligations of Purchaser........................... 14
7.03 Voting of Shares................................... 14
7.04 Disclosure Documents............................... 14

ARTICLE VIII
COVENANTS OF PARENT, PURCHASER
AND THE COMPANY

SECTION 8.01 Reasonable Efforts................................. 15
8.02 Certain Filings.................................... 15
8.03 Public Announcements............................... 15
8.04 Further Assurances................................. 15
8.05 Notices of Certain Events.......................... 15
8.06 Directors' and Officers' Indemnification and Insurance 16
</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C>
8.07 Form of Merger..................................... 17

ARTICLE IX
CONDITIONS TO THE MERGER

SECTION 9.01 Conditions to the Obligations of Each Party........ 17
9.02 Condition to the Obligations of Parent and Purchaser
18

ARTICLE X
TERMINATION

SECTION 10.01 Termination........................................ 18
10.02 Effect of Termination.............................. 20

ARTICLE XI
MISCELLANEOUS

SECTION 11.01 Notices............................................ 20
11.02 Survival of Representations and Warranties......... 21
11.03 Amendments; No Waivers............................. 21
11.04 Expenses........................................... 22
11.05 Successors and Assigns............................. 22
11.06 Governing Law...................................... 22
11.07 Counterparts; Effectiveness........................ 22
</TABLE>

Annex I - Conditions to the Offer

iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of June 2, 1997 among Acordia,
Inc., a Delaware corporation (the "Company"), Anthem Insurance Companies, Inc.,
an Indiana mutual insurance company ("Parent"), and AICI Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser").

The parties hereto agree as follows:

ARTICLE 1

THE OFFER

SECTION 1.01. The Offer. (a) Provided that none of the events set
forth in Annex I hereto shall have occurred or be existing, Purchaser shall, as
promptly as practicable after the date hereof, but in no event later than five
business days following the public announcement of the terms of this Agreement,
commence an offer (the "Offer") to purchase any and all of the outstanding
shares of common stock, $1.00 par value (the "Shares"), of the Company at a
price of $40.00 per Share, net to the seller in cash. The Offer shall be subject
to the condition that at least a majority of the then issued and outstanding
Shares, other than Shares owned by Purchaser, Parent, Parent's other
subsidiaries and Parent's executive officers and directors, shall have been
validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn (the "Minimum Tender Condition")
and to the other conditions set forth in Annex I hereto. Purchaser expressly
reserves the right to waive the Minimum Tender Condition or any of the other
conditions to the Offer, to increase the price per Share payable in the Offer
and to make any other change in the terms or conditions of the Offer; provided
that (i) Parent shall not waive the Minimum Tender Condition without the consent
of a majority of the Independent Directors (as defined below) and (ii) without
the consent of a majority of the Independent Directors, the Purchaser shall not
make any change in the terms or conditions of the Offer which (A) changes the
form of consideration to be paid or (B) decreases the price per Share payable in
the Offer or (C) reduces the maximum number of Shares to be purchased in the
Offer or (D) imposes conditions to the Offer in addition to those set forth in
Annex I hereto or (E) extends the expiration date of the Offer (except as
required by law or the applicable rules and regulations of the SEC and except
that the expiration date of the Offer may be extended for up to forty (40)
business days in the aggregate in the event any condition to the Offer is not
satisfied) or (F) amends any term of the Offer in any manner materially adverse
to holders of Shares.

(b) As soon as practicable on the date of commencement of the Offer,
Parent and the Purchaser shall file with the SEC (as defined in Section 4.07)
with respect to the Offer, a Tender Offer Statement on Schedule 14D-l and a
Transaction Statement on Schedule 13E-3 which will contain the offer to
purchase, the information required by Rule 13e-3 under the Exchange Act (as
defined in Section 4.03), the form of the related letter of transmittal and an
<PAGE> 6
amendment to Parent's Schedule 13D (together with any supplements or amendments
thereto, collectively the "Offer Documents"). Parent, the Purchaser and the
Company each agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have been found to be
or become false or misleading in any material respect. Parent and the Purchaser
agree to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company, the Special Committee (as defined herein) and their respective counsel,
shall be given an opportunity to review and comment on the Schedule 14D-l and
the Schedule 13E-3 prior to the filing thereof with the SEC. Parent and the
Purchaser shall provide the Company, the Special Committee and their respective
counsel, a copy of any written comments or telephonic notification of any verbal
comments Parent or the Purchaser may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt thereof and shall
provide the Company, the Special Committee and their respective counsel with a
copy of any written responses thereto and telephonic notification of any verbal
responses thereto of Parent or the Purchaser or their counsel.

SECTION 1.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors (with Messrs. Lytle, Sheridan,
Houser and Smith abstaining), at a meeting duly called and held and acting on
the unanimous recommendation of a special committee of the Board of Directors of
the Company comprised entirely of non-management independent directors (the
"Special Committee"), has (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as defined
in Section 2.01), are fair to and in the best interest of the Company's
stockholders, excluding with respect to such determination the Purchaser, Parent
and Parent's other subsidiaries; (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger; and (iii)
resolved to recommend acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its stockholders; provided, that such recommendation
may be withdrawn, modified or amended to the extent the Board of Directors of
the Company deems it necessary to do so in the exercise of its fiduciary
obligations to the Company's stockholders after being so advised by counsel. The
Company further represents that the Special Committee's investment banker has
delivered to the Company's Board of Directors its written opinion that the
consideration to be paid in the Offer and the Merger is fair to the holders of
Shares, excluding the Purchaser, Parent and Parent's other subsidiaries, from a
financial point of view. The Company will promptly furnish Parent and Purchaser
with a list of its stockholders, mailing labels and any available listing or
computer file containing the names and addresses of all record holders of Shares
and lists of securities positions of Shares held in stock depositories, in each
case true and correct in all material respects as of the most recent practicable
date, and will provide to Parent and Purchaser such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent and
Purchaser may reasonably request, from time to time in connection with the
Offer.

(b) As soon as practicable on the day that the Offer is commenced
the Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of
the Company's Special

2
<PAGE> 7
Committee and Board of Directors referred to above. The Company, Parent and
Purchaser each agree promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that it shall have been found to be
or become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, other than the
Purchaser, Parent and Parent's other subsidiaries, in each case as and to the
extent required by applicable federal securities laws. Parent and Purchaser and
their counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.

(c) Until the Effective Time, the parties hereto agree to take all
action reasonably necessary to ensure that the Company's directors shall include
at least two directors who currently members of the Special Committee (the
"Independent Directors"); provided, however, that, if the number of Independent
Directors shall be reduced below two for any reason, the parties hereto agree to
take all action reasonably necessary to enable the remaining Independent
Director to designate a person who is not an officer, director, designee,
employee or affiliate of Parent or the Purchaser to fill such vacancy and such
person shall be deemed to be an Independent Director for purposes of this
Agreement or, if no Independent Directors then remain, the parties hereto agree
to take all action reasonably necessary to ensure that two persons are
designated to fill such vacancies who shall not be officers, directors,
designees, employees or affiliates of Parent or the Purchaser, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.

ARTICLE II

THE MERGER

SECTION 2.01. The Merger. (a) At the Effective Time, the Purchaser
shall be merged (the "Merger") with and into the Company in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law"), whereupon the
separate existence of Purchaser shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation").

(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Purchaser will file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by Delaware
Law in connection with the Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the certificate
of merger (the "Effective Time").

(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of the Company and
Purchaser, all as provided under Delaware Law.

3
<PAGE> 8
SECTION 2.02. Conversion of Shares. At the Effective Time:

(a) each Share held by the Company as treasury stock or owned
by Purchaser, Parent or any of Parent's other subsidiaries
immediately prior to the Effective Time shall be cancelled, and no
payment shall be made with respect thereto;

(b) each issued and outstanding share of common stock of
Purchaser outstanding immediately prior to the Effective Time shall
be converted into and become that number of shares of common stock
of the Surviving Corporation that equals the number of shares of
common stock of the Company issued and outstanding immediately prior
to the Effective Time divided by the number of shares of common
stock of Purchaser issued and outstanding immediately prior to the
Effective Time; and

(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.02(a) or as
provided in Section 2.04 with respect to Dissenting Shares (as
defined herein), be converted into the right to receive $40.00 in
cash, without interest (the "Merger Consideration").

SECTION 2.03. Surrender and Payment. (a) Prior to the Effective
Time, Parent shall appoint an agent who shall be reasonably acceptable to the
Special Committee (the "Exchange Agent") for the purpose of exchanging
certificates representing Shares for the Merger Consideration. Parent will make
available to the Exchange Agent the entire Merger Consideration to be paid in
respect of the Shares. Promptly after the Effective Time, Parent will send, or
will cause the Exchange Agent to send, to each holder of Shares at the Effective
Time a letter of transmittal for use in such exchange (which shall specify that
the delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).

(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes only the right to receive such Merger Consideration.

(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes

4
<PAGE> 9
required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable. For purposes of this Agreement,
"Person" means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or any agency or instrumentality thereof.

(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be cancelled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.

(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Parent, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
of Shares two years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable law,
become the property of Parent free and clear of any claims or interest of any
Person previously entitled thereto.

(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) to pay for Dissenting Shares (as
defined below) for which appraisal rights have been perfected shall be returned
to Parent, upon demand.

SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Delaware Law
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If after the Effective Time such holder fails to
perfect or withdraws or loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration. The Surviving Corporation shall give Parent
prompt notice of any demands received by the Company for appraisal of Shares,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Surviving Corporation shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.

SECTION 2.05. Stock Options and Purchase Rights. As soon as
practicable following the date of this Agreement, upon the written request of
the Purchaser, the Company (or, if appropriate, any committee administering any
stock option or compensation plan or arrangement) and the Purchaser shall take
such actions as are reasonably required (including, if necessary, the provision
of funds by the Purchaser to the Company) to provide that at the earlier

5
<PAGE> 10
of the purchase of Shares pursuant to the Offer and the Effective Time, each
holder of a then outstanding stock option and/or right to purchase Shares
granted under any stock option or compensation plan or arrangement of the
Company, whether or not then exercisable, shall, upon surrender thereof to the
Company or its designee, receive from the Company the difference between the
Merger Consideration and the exercise price per Share for the Shares covered by
such option or right, net of any applicable tax withholding. The holders of such
stock options or rights shall be entitled to enforce this Section 2.05 against
the Company, the Surviving Corporation and the Purchaser.

SECTION 2.06. Stock Purchase Warrants. As soon as practicable
following the date of this Agreement, upon the written request of the Purchaser,
the Company and the Purchaser shall take such actions as are reasonably required
(including, if necessary, the provision of funds by the Purchaser to the
Company) to provide that at the earlier of the purchase of Shares pursuant to
the Offer and the Effective Time, the holder of each outstanding warrant to
purchase Shares granted under that certain Warrant Subscription Agreement by and
between the Company and First Chicago Trust Company dated as of October 1, 1993
(each, a "Warrant" and, collectively, the "Warrants") shall, upon surrender
thereof to the Company or its designee, receive from the Company the difference
between the Merger Consideration and the exercise price per Share for the Shares
covered by such Warrant, net of any applicable tax withholding. The holders of
such Warrants shall be entitled to enforce this Section 2.06 against the
Company, the Surviving Company and the Purchaser.

ARTICLE III

THE SURVIVING CORPORATION

SECTION 3.01. Certificate of Incorporation. Subject to Section 8.06
hereof, the certificate of incorporation of the Company in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law.

SECTION 3.02. Bylaws. Subject to Section 8.06 hereof, the bylaws of
Purchaser in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.

SECTION 3.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Purchaser at the Effective Time shall
be the directors of the Surviving Corporation, and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.

6
<PAGE> 11
ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

The Company represents and warrants to Parent and Purchaser that:

SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have or
be reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, "Material Adverse Effect" means an effect that is materially adverse
to the condition (financial or otherwise), business, assets or results of
operations of the Company and the Subsidiaries (as defined in Section 4.06)
taken as a whole. The Company has heretofore made available to Parent and
Purchaser true and complete copies of the Company's certificate of incorporation
and bylaws as currently in effect.

SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of the Company.

SECTION 4.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
Merger by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (i) the filing of a
certificate of merger in accordance with Delaware Law and (ii) compliance with
any applicable requirements of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder (the "Exchange Act").

SECTION 4.04. Non-Contravention. Except as set forth on Schedule
4.04 and without giving effect to any change in the form of the Merger as
permitted by Section 8.07, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the certificate of incorporation or bylaws of the Company, (ii) assuming
compliance with the matters referred to in Section 4.03, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (iii) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under

7
<PAGE> 12
any provision of any agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, permit or other similar
authorization held by the Company or any Subsidiary, or (iv) result in the
creation or imposition of any Lien on any asset of the Company or any
Subsidiary, except, in the case of clauses (ii), (iii) and (iv), for such
exceptions which would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.

SECTION 4.05. Capitalization. The authorized capital stock of the
Company consists of ten million (10,000,000) shares of Preferred Stock, with no
par value, and one hundred million (100,000,000) shares of Common Stock, par
value $1.00 per share. As of May 1, 1997, there were outstanding (a) no shares
of Preferred Stock and 13,005,106 shares of Common Stock, (b) stock options and
rights to purchase an aggregate of 1,396,086 Shares (of which options and rights
to purchase an aggregate of 857,825 Shares were exercisable) and (c) Warrants to
purchase an aggregate of 1,500,000 Shares. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in this Section and except for
changes since May 1, 1997, resulting from the exercise of stock options, rights
or Warrants outstanding on such date, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, and (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (i),
(ii) and (iii) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Company Securities.

SECTION 4.06. Subsidiaries. (a) Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "Subsidiary" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in Exhibit 21 to the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K").

(b) All of the outstanding capital stock of, or other ownership
interests in, each Subsidiary, is, unless otherwise required by applicable law,
owned by the Company, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any

8
<PAGE> 13
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary, and (ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses (i)
and (ii) being referred to collectively as the "Subsidiary Securities"). There
are no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.

SECTION 4.07. SEC Filings. (a) The Company has made available to
Parent (i) the annual reports on Form 10-K for its fiscal years ended December
31, 1996, 1995 and 1994, (ii) its quarterly report on Form l0-Q for its fiscal
quarter ended March 31, 1997, (iii) its proxy or information statements relating
to meetings of, or actions taken without a meeting by, the stockholders of the
Company held since December 31, 1994 and (iv) all of its other reports,
statements, schedules and registration statements filed with the Securities and
Exchange Commission (the "SEC") since December 31, 1996.

(b) As of its filing date, each such report, statement or schedule
filed pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.

(c) Since December 31, 1996, the Company has not filed any
registration statements pursuant to the Securities Act of 1933.

SECTION 4.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in its annual report on Form 10-K and the quarterly report
on Form 10-Q referred to in Section 4.07 fairly present, in all material
respects, in conformity with generally accepted accounting principles applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended (subject to normal year-end
adjustments and the absence of notes thereto in the case of any unaudited
interim financial statements).

SECTION 4.09. Finders' Fees. Except for Alex Brown & Company, a copy
of whose engagement agreement has been provided to Parent and Purchaser, there
is no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, the Company or any Subsidiary
or the Special Committee, or any other committee of the Board of Directors of
the Company or any Subsidiary, and which might be entitled to any fee or
commission from Purchaser, Parent or any of Parent's other subsidiaries upon
consummation of the transactions contemplated by this Agreement.

9
<PAGE> 14
ARTICLE V

REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER

Parent and Purchaser jointly and severally represent and warrant to
the Company that:

SECTION 5.01. Corporate Existence and Power. Parent is a mutual
insurance company duly organized under the laws of the State of Indiana,
Purchaser is a corporation duly organized under the laws of the State of
Delaware, and each of them is validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Since the date of its incorporation,
Purchaser has not engaged in any activities other than in connection with or as
contemplated by this Agreement.

SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement and the consummation by
Parent and Purchaser of the transactions contemplated hereby are within the
corporate powers of Parent and Purchaser and have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of Parent and Purchaser.

SECTION 5.03. Governmental Authorization. The execution, delivery
and performance by Parent and Purchaser of this Agreement and the consummation
by Parent and Purchaser of the transactions contemplated by this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (i) the filing of a certificate of
merger in accordance with Delaware Law, (ii) compliance with any applicable
requirements of the Exchange Act and (iii) the filing of a Form D with, and the
approval thereof by, the Indiana Insurance Commissioner.

SECTION 5.04. Non-Contravention. The execution, delivery and
performance by Parent and Purchaser of this Agreement and the consummation by
Parent and Purchaser of the transactions contemplated hereby do not and will not
(i) contravene or conflict with the articles or certificate of incorporation or
bylaws of Parent and Purchaser, (ii) assuming compliance with the matters
referred to in Section 5.03, contravene or conflict with any provision of law,
regulation, judgment, order or decree binding upon Parent and Purchaser, or
(iii) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Parent or Purchaser
or to a loss of any benefit to which Parent or Purchaser is entitled under any
agreement, contract or other instrument binding upon Parent or Purchaser.

SECTION 5.05. Finders' Fees. Except for Credit Suisse First Boston
Corporation, whose fees will be paid by Parent, there is no investment banker,
broker, finder or other intermediary who might be entitled to any fee or
commission from the Company or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.

10
<PAGE> 15
SECTION 5.06. Financing. Parent has or will have available, prior to
the expiration of the Offer, and will provide to Purchaser on a timely basis,
sufficient funds to enable Purchaser to consummate the Offer, the Merger and the
other transactions contemplated hereby and to pay all related fees and expenses.

ARTICLE VI

COVENANTS OF THE COMPANY

The Company agrees that:

SECTION 6.01. Conduct of the Company. From the date hereof until the
Effective Time, except as set forth on Schedule 6.01 attached hereto, the
Company and the Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time:

(a) the Company will not adopt or propose any
change in its certificate of incorporation or bylaws;

(b) the Company will not, and will not permit any Subsidiary
to, (i) take or agree or commit to take any action that would make
any representation and warranty of the Company hereunder inaccurate
in any respect at or as of any time prior to the Effective Time or
(ii) omit or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in
any respect at any such time; and

(c) the Company will not, and will not permit any Subsidiary
to, (i) take or agree or commit to take any action that would cause
any of the conditions to the Offer set forth in Annex I hereto not
to be satisfied or (ii) omit or agree or commit to omit to take any
action necessary to cause any of the conditions to the Offer set
forth in Annex I hereto to be satisfied.

SECTION 6.02. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger and the
transactions contemplated by the Purchase Agreement, unless a vote of
stockholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised by counsel,
recommend approval and adoption by the Company's stockholders of this Agreement
and the Merger and the

11
<PAGE> 16
transactions contemplated by the Purchase Agreement. In
connection with such meeting, the Company (i) will promptly prepare and file
with the SEC, will use its reasonable efforts to have cleared by the SEC and
will thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) will use
its reasonable efforts to obtain the necessary approvals by its stockholders of
this Agreement, and (iii) will otherwise comply with all legal requirements
applicable to such meeting.

SECTION 6.03. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.

(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and at the Effective Time,
the Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy Statement
and at the time of any distribution thereof, such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
obligations of the Company contained in this Section 6.03(b) will not apply to
statements or omissions included in the Company Disclosure Documents based upon
information furnished to the Company in writing by Parent or Purchaser
specifically for use therein.

(c) The information with respect to the Company or any Subsidiary
that the Company furnishes to Parent or Purchaser in writing specifically for
use in the Offer Documents will not, at the time of the filing thereof, at the
time of any distribution thereof and at the time of the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.

SECTION 6.04. Access to Information. From the date hereof until the
Effective Time, the Company will give Parent and Purchaser, their counsel,
financial advisors, auditors and other authorized representatives full access
during normal business hours and without disrupting the orderly conduct of
business by the Company and its Subsidiaries to the offices, properties, books
and records of the Company and the Subsidiaries, will furnish to Parent and
Purchaser, their counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent and Purchaser in their
investigation of the business of the Company and the Subsidiaries; provided that
no

12
<PAGE> 17
investigation pursuant to this Section shall affect any representation or
warranty given by the Company to Parent and Purchaser hereunder.

SECTION 6.05. Other Offers. From the date hereof until the
termination hereof, the Company and its Subsidiaries will not, and the Company
shall use reasonable efforts to cause the officers, directors, employees or
other agents of the Company and the Subsidiaries not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Acquisition Proposal
or (ii) subject to the fiduciary duties of the Board of Directors under
applicable law as advised by counsel to the Company, engage in negotiations
with, or disclose any nonpublic information relating to the Company or any
Subsidiary or afford access to the properties, books or records of the Company
or any Subsidiary to, any Person that may be considering making, or has made, an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company, the Company's directors or the Special
Committee from furnishing nonpublic information to, or affording access to the
properties, books or records of the Company or any Subsidiary to, or entering
into discussions or an agreement with, any Person in connection with an
unsolicited Acquisition Proposal by such Person or recommending an unsolicited
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that (1) the Company's directors or the Special Committee, as the case
may be, determine in good faith after consultation with outside legal counsel
that such action is necessary to comply with their fiduciary duties to the
stockholders of the Company under applicable law and (2) prior to furnishing any
such nonpublic information to, or entering into discussions or negotiations
with, such Person, the Company's directors or the Special Committee, as the case
may be, receive from such Person an executed confidentiality agreement with
customary terms. The Company will promptly notify Parent after receipt of any
Acquisition Proposal or any indication that any Person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any Subsidiary or for access to the properties, books or records of
the Company or any Subsidiary by any Person that may be considering making, or
has made, an Acquisition Proposal and will keep Parent fully informed of the
status and details of any such Acquisition Proposal, indication or request. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement.

ARTICLE VII

COVENANTS OF PARENT AND PURCHASER

Parent and Purchaser agree that:

SECTION 7.01. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, Parent and Purchaser will hold, and will use
their reasonable efforts to cause their respective officers, directors,
employees, accountants, lenders, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law (in which case only such portion of the
relevant documents or information as is required to be disclosed following
reasonable efforts to

13
<PAGE> 18
obtain confidential treatment thereof), all confidential documents and
information concerning the Company and the Subsidiaries furnished to Parent or
Purchaser in connection with the transactions contemplated by this Agreement,
including, without limitation, the stockholder lists furnished by the Company
pursuant to Section 1.02, except to the extent that such information can be
shown to have been (i) previously known on a nonconfidential basis by Parent or
Purchaser, (ii) in the public domain through no fault of Parent or Purchaser or
(iii) later lawfully acquired by Parent or Purchaser from sources other than the
Company; provided that Parent or Purchaser may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, lenders,
advisors and agents solely in connection with the transactions contemplated by
this Agreement so long as such Persons are informed by Parent or Purchaser of
the confidential nature of such information and are directed by Parent or
Purchaser to treat such information confidentially. The obligation of Parent and
Purchaser to hold any such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If this Agreement
is terminated, Parent and Purchaser will, and will use reasonable efforts to
cause their officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained by Parent or
Purchaser or on their behalf from the Company in connection with this Agreement
that are subject to such confidence.

SECTION 7.02. Obligations of Purchaser. Parent will take all action
necessary to cause Purchaser to perform its obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth in this
Agreement.

SECTION 7.03. Voting of Shares. Each of Parent and Purchaser agrees
to vote all Shares beneficially owned by it in favor of adoption of this
Agreement at the Company Stockholder Meeting.

SECTION 7.04. Disclosure Documents. (a) The information with respect
to Parent and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the Effective Time, and
(ii) in the case of any Company Disclosure Document other than the Company Proxy
Statement, at the time of the filing thereof, at the time of any distribution
thereof and at the time of the consummation of the Offer.

(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this Section 7.04(b) will not apply to
statements or omissions in the

14
<PAGE> 19
Offer Documents based upon information furnished to Parent or Purchaser in
writing by the Company specifically for use therein.

ARTICLE VIII

COVENANTS OF PARENT, PURCHASER
AND THE COMPANY

The parties hereto agree that:

SECTION 8.01. Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.

SECTION 8.02. Certain Filings. The Company, Parent and Purchaser
shall cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, and (b) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency or official, or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.

SECTION 8.03. Public Announcements. Parent, Purchaser and the
Company will consult with each other before issuing any press release or making
any public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.

SECTION 8.04. Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.

SECTION 8.05. Notices of Certain Events. Each of the Company
and Parent shall promptly notify the other of:

15
<PAGE> 20
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;

(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and

(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting Parent, Purchaser,
the Company or any Subsidiary which relate to the consummation of
the transactions contemplated by this Agreement.

SECTION 8.06. Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in Article Ten of the Certificate of Incorporation of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
materially adversely the rights thereunder of individuals who at the Effective
Time were directors or officers of the Company, with respect to any act or
omission in their capacity as an officer or director of the Company occurring on
or prior to the Effective Time, unless such modification shall be required by
law.

(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless each present and former director and officer of the Company
(collectively, the "Indemnified Parties") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or directly pertaining to any action or omission in their
capacity as an officer or director of the Company occurring on or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, for a period of six years after the later of the Effective Time and the
date hereof, in each case to the fullest extent permitted under applicable law
(and shall pay any expenses in advance of the final disposition of such action
or proceeding to each Indemnified Party to the fullest extent permitted under
applicable law, upon receipt from the Indemnified Party to whom expenses are
advanced of an undertaking to repay such advances required under applicable
law). In the event of any such claim, action, suit, proceeding or investigation,
(i) the Company or the Surviving Corporation, as the case may be, shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties
promptly after statements therefor are received and (ii) the Company and the
Surviving Corporation shall cooperate in the defense of any such matter. In the
event that any claim for indemnification is asserted or made within such
six-

16
<PAGE> 21
year period, all rights to indemnification in respect of such claim shall
continue until the final disposition of such claim.

(c) Parent shall maintain in effect for the benefit of the
Indemnified Parties for six years after the Effective Time (or for such lesser
period as can be purchased for a premium not exceeding 200% of the last
intercompany allocation from Parent to the Company with respect to directors'
and officers' insurance) the current directors' and officers' liability
insurance policies maintained by the Company to cover acts and omissions of the
Indemnified Parties occurring prior to the Effective Time; provided, that Parent
may substitute therefor policies of substantially the same coverage containing
substantially comparable terms and conditions with respect to matters occurring
prior to the Effective Time.

(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 8.06; provided, that nothing
contained herein shall be deemed to impose any additional liability on the
acquiror of assets of the Company pursuant to a transaction of the kind
described in Schedule 6.01 attached hereto.

(e) The Indemnified Parties are each intended third-party
beneficiaries of the provisions of this Section 8.06, and may enforce this
Section 8.06 against the Company, the Surviving Corporation or Parent, as the
case may be, as fully and effectively as if each were a party to this Agreement.

SECTION 8.07. Form of Merger. Upon the request of Parent, the
parties hereto agree to use reasonable efforts to change the form of the Merger
from a reverse merger, pursuant to which Purchaser will be merged with and into
the Company, with the Company being the Surviving Corporation, to a forward
merger, pursuant to which the Company will be merged with and into Purchaser,
with the Purchaser being the Surviving Corporation.

ARTICLE IX

CONDITIONS TO THE MERGER

SECTION 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following conditions:

(a) this Agreement and the transactions contemplated hereby
shall have been approved and adopted by the stockholders of the
Company to the extent required by, and in accordance with,

17
<PAGE> 22
Delaware Law and the Certificate of Incorporation and Bylaws of the
Company;

(b) Purchaser or its permitted assignee shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer;

(c) all actions by or in respect of or filings with any
governmental body, agency, official, or authority required to permit
the consummation of the Merger shall have been obtained or made; and

(d) no court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the
consummation of the Merger or the effective operation of the
business of the Company and the Subsidiaries after the Effective
Time,

SECTION 9.02. Conditions to the Obligations of Parent and Purchaser.
The obligations of Parent and Purchaser to consummate the Merger are subject to
the satisfaction of the following further condition: the Company shall have
performed in all material respects all of its obligations hereunder required to
be performed by it at or prior to the Effective Time.

ARTICLE X

TERMINATION

SECTION 10.01. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):

(a) by mutual written consent of the Company
and Parent, if such termination is also approved by a
majority of the Independent Directors;

(b) by either the Company or Parent, if the Effective Time
shall not have occurred on or before October 31, 1997; provided,
however, that the right to terminate this Agreement under this
Section 10.01(b) shall not be available to any party whose

18
<PAGE> 23
failure to fulfill any obligation under this Agreement has been the
primary cause of, or resulted in, the failure of the Effective Time
to occur on or before such date;

(c) by either the Company or Parent, if there shall be any law
or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is
entered and such judgment, injunction, order or decree shall become
final and nonappealable;

(d) by Parent, if Purchaser shall have (i) terminated the
Offer without having accepted any Shares for payment thereunder by
reason of the failure to satisfy any condition set forth in Annex I
hereto or (ii) failed to pay for Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure
to pay for Shares shall have been caused by or resulted directly
from the failure of Parent or Purchaser to perform in any material
respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or
Purchaser of any material representation or warranty of either of
them contained in this Agreement;

(e) by the Company, upon approval of the Board of Directors of
the Company and a majority of the Independent Directors, if
Purchaser shall have (i) failed to commence the Offer within five
business days following the date of the initial public announcement
of the offer, (ii) terminated the Offer without having accepted any
Shares for payment thereunder by reason of the failure to satisfy
any condition set forth in Annex I hereto or (iii) failed to pay for
Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares
shall have been caused by or resulted directly from the failure of
the Company to perform in any material respect any material covenant
or agreement of it contained in this Agreement or the material
breach by the Company of any material representation or warranty of
it contained in this Agreement; or

(f) by the Company, upon approval of the Board of Directors of
the Company and a majority of the Independent Directors, if any
representation or warranty of Parent and Purchaser in this Agreement
shall not be true and correct in any material respect, as if such
representation or warranty was made as of such time on or after the
date of this Agreement; or Parent or Purchaser shall have failed to
perform in any material respect any obligation or

19
<PAGE> 24
to comply in any material respect with any agreement or covenant of
Parent or Purchaser to be performed or complied with by it under
this Agreement.

SECTION 10.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that (a) the
agreements contained in Sections 7.01, 11.01, 11.04 and 11.06 shall survive the
termination hereof and (b) nothing herein shall relieve any party from liability
for any breach hereof.

ARTICLE XI

MISCELLANEOUS

SECTION 11.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or by registered or certified mail (postage prepaid, return
receipt requested), to the respective parties and the Special Committee at the
following addresses (or at such other address as shall be specified in a notice
given in accordance with this Section 11.01):

if to Parent or Purchaser, to:

Anthem Insurance Companies, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Attn: Patrick M. Sheridan
Telecopy: (317) 488-6466

with a copy to:

James H. Gross
Vorys, Sater, Seymour and Pease
52 East Gay Street
Box 1008
Columbus, Ohio 43216-1008
Telecopy: (614) 464-6350

20
<PAGE> 25
if to the Company, to:

Acordia, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Attn: Frank C. Witthun
Telecopy: (317) 488-6542

with a copy to: William W. Rosenblatt
Jonathan L. Freedman
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333

if to the Special Committee, to:

John C. Crane
c/o Acordia, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Telecopy: (317) 488-6542

with a copy to: William P. Ritchie
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
Telecopy: (312) 782-8585

SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement pursuant to Section 10.01,
except that (a) the agreements and obligations set forth in Sections 7.01,
11.01, 11.04 and 11.06 shall survive any termination hereof and (b) the
agreements and obligations set forth in Articles II and XI and Section 8.05
shall survive the Effective Time in accordance with their respective terms.

SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended prior to the Effective Time if, and only if, such
amendment is in writing and signed by the Company, Parent and Purchaser;
provided, that after the approval and adoption of this Agreement by the
stockholders of the Company, no such amendment shall be made which would reduce
the amount or change the type of consideration in which each Share shall be
converted upon consummation of the Merger, would impose conditions to the Merger
other than those set forth in Sections 9.01 and 9.02 hereof or would otherwise
amend or change

21
<PAGE> 26
the terms and conditions of the Merger in a manner materially adverse to the
holders of the Shares (other than the Purchaser, Parent and Parent's other
subsidiaries); provided, further, that any amendment shall be approved by a
majority of the Independent Directors.

(b) At any time prior to the Effective Time, any party hereto may
(i) extend the time for the performance of any obligation or other act of any
other party hereto, (ii) waive any inaccuracy in any representation or warranty
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party to be bound thereby and, in the case of any extension or waiver by which
the Company is to be bound, only if approved by a majority of the Independent
Directors.

(c) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

SECTION 11.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.

SECTION 11.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Purchaser
may transfer or assign, in whole or from time to time in part, to one or more of
its subsidiaries, the right to purchase Shares pursuant to the Offer, but any
such transfer or assignment will not relieve Purchaser of its obligations under
the Offer or prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.

SECTION 11.06. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of the State of Delaware.

SECTION 11.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.

[Signature page follows.]

22
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

ACORDIA, INC.

By:/s/ Frank C. Witthun
-----------------------------------
Name: Frank C. Witthun
Title: President and Chief Executive
Officer

ANTHEM INSURANCE COMPANIES, INC.

By: /s/ L. Ben Lytle
------------------------------------
Name: L. Ben Lytle
Title: President and Chief Executive
Officer

AICI ACQUISITION CORP.

By: /s/ L. Ben Lytle
------------------------------------
Name: L. Ben Lytle
Title: President

23
<PAGE> 28
ANNEX I

Notwithstanding any other term or provision of the Offer, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, to pay for any Shares tendered
pursuant to the Offer and, in its good faith discretion, may amend or terminate
the Offer, to the extent provided in this Agreement, unless the Minimum Tender
Condition shall have been satisfied or waived in accordance with the terms
hereof. Furthermore, notwithstanding any other term or provision of the Offer,
the Purchaser will not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and, in its good faith discretion, may terminate or amend the Offer, to the
extent provided in this Agreement, if, at any time on or after the date of this
Agreement, and before the acceptance of such Shares for payment or, subject to
any applicable rules and regulations of the SEC, the payment therefor, any of
the following conditions exists:

(a) an order shall have been entered in any action or proceeding
before any federal or state court or governmental agency or other regulatory
body or a permanent injunction by any federal or state court of competent
jurisdiction in the United States shall have been issued and remain in effect
(i) making illegal the purchase of, or payment for, any Shares by Purchaser,
Parent or any of Parent's other subsidiaries; (ii) otherwise preventing the
consummation of the Offer or the Merger; or (iii) imposing limitations on the
ability of Purchaser, Parent or any of Parent's other subsidiaries to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to the
Offer on all matters properly presented to the Company's stockholders, which
would effect a material diminution in the value of the Shares acquired by
Purchaser;

(b) there shall have been any federal or state statute, rule or
regulation enacted, enforced, promulgated, amended or made applicable to the
Company, Purchaser, Parent or any other affiliate of Parent or the Company on or
after the date of the Offer by any governmental, regulatory or administrative
authority or agency, domestic, foreign or supranational (each, a "Governmental
Entity") that could reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (iii) of paragraph
(a) above;

(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States; (ii) any extraordinary
or material adverse change in the financial markets or major stock exchange
indices in the United States from that existing at the close of business on the
date of this Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any government, domestic, foreign or
supranational, or Governmental Entity on, or other event that, in the reasonable
judgment of the Purchaser, is reasonably likely to materially adversely affect,
the extension of credit by banks or other lending institutions, (v) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (vi) in the case
of any of the foregoing situations
<PAGE> 29
described in clauses (i) through (v) of this paragraph (d) existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof;

(d) any approval, permit, authorization, favorable review or consent
of any Governmental Entity, including, but not limited to, the Indiana Insurance
Commissioner, shall not have been obtained;

(e) the Purchaser shall have reached an agreement or understanding
with the Company, including with a majority of the Independent Directors,
providing for termination of the Offer;

(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Agreement, or any
of the representations and warranties of the Company set forth in the Agreement
shall not be true in any material respect when made or at any time prior to
consummation of the Offer as if made at and as of such time; or

(g) this Agreement shall have been terminated in accordance
with its terms; or

(h) the Board of Directors of the Company shall have withdrawn, or
materially modified or amended in a manner materially adverse to Parent or
Purchaser, its approval or recommendation of the Offer or the Merger;

which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Purchaser, Parent or
any of Parent's other subsidiaries) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.

<PAGE> 1
EXHIBIT (c)(2)

COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following information is furnished as of March 18, 1997, to indicate
beneficial ownership of shares of the Company's common stock by each director,
nominee and officer named in the Summary Compensation Table, individually, and
all officers and directors of the Company, as a group, and each person known by
the Company to own beneficially more than 5% of the outstanding shares of the
Company's common stock. Except as otherwise indicated, each of the persons
named below has sole voting and investment power with respect to the shares of
common stock beneficially owned by that person.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------
PERCENT OF
NAME AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNER (1) SHARES OUTSTANDING
-------------------- ------ -----------
<S> <C> <C>
Anthem Insurance Companies, Inc.(2)................................ 8,693,056 66.8
Great American Insurance Company(8)................................ 2,300,000 15.9
John C. Aplin(5)(7)................................................ 8,549 *
Birch E. Bayh(7)................................................... 9,480 *
John C. Crane(5)(7)................................................ 5,943 *
Mitchell E. Daniels(5)(7).......................................... 7,945 *
Catherine E. Dolan(7).............................................. 789 *
Ernie Green(5)(7).................................................. 3,136 *
Michael B. Henning(6).............................................. 40,996 *
Dwane R. Houser(3)................................................. 8,449 *
L. Ben Lytle(3)(6)................................................. 136,500 1.0
Keith A. Maib...................................................... 2,458 *
Robert C. Nevins(6)................................................ 243 *
Thomas C. Roberts(7)............................................... 4,612 *
William W. Rosenblatt(4)(5)(7)..................................... 9,686 *
Robert S. Schneider(6)............................................. 22,855 *
Patrick M. Sheridan(6)............................................. 78,000 *
Michael L. Smith(5)(7)............................................. 4,827 *
James B. Stradtner(5)(7)........................................... 12,216 *
Frank C. Witthun(6)................................................ 49,421 *
(All directors and officers as a group = 22 persons)(6)............ 431,597 3.3
</TABLE>

- --------

* Percentage of ownership is less than 1% of the total outstanding shares
on March 18, 1997.

(1) Unless otherwise noted below, the address of all of the stockholders
listed above is c/o the Company, 120 Monument Circle, Indianapolis,
Indiana 46204.

(2) Amount includes 104,402 shares which have been reserved for issuance
under Anthem's Acordia Stock Plan for key executive hires of Anthem.

(3) Messrs. Lytle and Houser are officers and directors of Anthem and
disclaim beneficial ownership of shares of the Company owned by Anthem.

(4) Amount includes 932 shares which are held by Mr. Rosenblatt's children
as to which he disclaims beneficial ownership.

(5) Amount includes 2,018 shares which are held by Mr. Aplin, 2,767 shares
which are held by Mr. Crane, 2,382 shares which are held by Mr. Smith,
809 shares which are held by Mr. Rosenblatt, 382 shares which are held
by Mr. Stradtner, 103 shares which are held by Mr. Green, and 485
shares which are held by Mr. Daniels under the Company's Deferred
Compensation Plan as to which they each disclaim beneficial ownership.

(6) Amount includes 31,500 exercisable options held by Mr. Lytle, 43,334
exercisable options held by Mr. Witthun, 18,000 exercisable options
held by Mr. Sheridan, 30,734 exercisable options held by Mr. Henning,
21,667 exercisable options held by Mr. Schneider, 89 exercisable
options held by Mr. Nevins, and 189,640 exercisable options held by all
directors and officers as a group. These amounts represent that portion
of

7
<PAGE> 2
the named officers and directors' 1993, 1994, 1995 and 1996 option
grants which are exercisable as of March 18, 1997.

(7) Amount includes 5,787 exercisable options which are held by Mr. Rosenblatt,
5,478 exercisable options which are held by each of Messrs. Aplin and Bayh,
4,332 exercisable options which are held by Mr. Stradtner, 4,612
exercisable options which are held by Mr. Roberts, 3,176 exercisable
options which are held by each of Messrs. Crane and Daniels, 3,033
exercisable options which are held by Mr. Green, 2,445 exercisable options
which are held by Mr. Smith and 789 exercisable options which are held by
Ms. Dolan under the Company's Directors Plan.

(8) On October 6, 1993, the Company purchased (the "Acquisition") all of the
outstanding capital stock of American Business Insurance, Inc. from Great
American Insurance Company ("Great American"). In connection with the
Acquisition, the Company issued to Great American 800,000 shares of common
stock of the Company, and warrants to purchase an additional 1,500,000
shares of common stock. The warrants are exercisable at any time until
October 6, 2003, at an exercise price of $25 per share. The 1,500,000
shares of common stock issuable upon exercise of the warrants are included
in the "number of shares" above, and are included as part of the number of
shares outstanding for purposes of calculating "percent of shares
outstanding" above. The Company granted to Great American certain
registration rights in connection with the Acquisition. The terms of the
Acquisition, including the terms of the warrants and the registration
rights granted to Great American, are more fully described in the Current
Report on Form 8-K filed by the Company with the Securities and Exchange
Commission on October 21, 1993, with respect to the Acquisition. On October
14, 1993, an affiliate of Great American filed a Statement on Schedule 13D
with the Securities and Exchange Commission concerning Great American's
ownership of common stock of the Company. Great American's address is 580
Walnut St., Cincinnati, Ohio 55202.

EXECUTIVE COMPENSATION

The Company believes that stockholders should be provided information about
executive compensation that is easy to understand and relevant. The following
disclosure was prepared in accordance with the proxy rules of the Securities and
Exchange Commission.

8
<PAGE> 3
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------

RESTRICTED STOCK
FISCAL OTHER ANNUAL STOCK OPTIONS ALL OTHER
EXECUTIVE YEAR SALARY BONUS(5)(6) COMPENSATION(7) AWARDS(3) SHARES COMPENSATION(4)
--------- ---- ------ ----------- -------------- ---------- ------ ---------------

<S> <C> <C> <C> <C> <C> <C> <C>
L. Ben Lytle(1)(2)................... 1996 $ 127,232 $ $ $ 0 0 $ 0
Chairman 1995 240,000 0 0 0 0 0
1994 240,000 200,000 0 0 0 0
Frank C. Witthun(3).................. 1996 327,971 297,016 0 160,625 25,000 15,260
President & CEO 1995 230,002 0 0 0 18,000 11,923
1994 209,447 136,179 0 0 0 11,142
Keith A. Maib(3)..................... 1996 90,419 160,844 87,930 75,000 4,583 3,345
Executive Vice President 1995 N/A N/A N/A N/A N/A N/A
& CFO 1994 N/A N/A N/A N/A N/A N/A
Michael B. Henning................... 1996 200,522 156,947 0 0 13,000 12,718
Executive Vice President 1995 190,008 0 0 0 9,600 9,646
1994 181,238 111,725 0 0 0 8,997
Robert S. Schneider.................. 1996 171,577 126,572 0 0 11,000 5,463
Senior Vice President 1995 163,097 0 0 0 7,500 7,402
& Controller 1994 155,012 83,551 0 0 0 8,137
Robert C. Nevins..................... 1996 207,513 109,521 0 0 8,517 4,976
Executive Vice President 1995 N/A N/A 0 0 N/A N/A
1994 N/A N/A 0 0 N/A N/A
</TABLE>

- ------------
(1) Mr. Lytle is an employee of Anthem who provided services to the Company
in 1996 pursuant to a management agreement between Anthem and the
Company. See "Certain Transactions--Management Agreement." Anthem pays
Mr. Lytle for his services to Anthem as well as to the Company. The
amounts disclosed above represent the portion of Mr. Lytle's
compensation paid by the Company to Anthem for Mr. Lytle's services.
The amount paid by the Company has varied from year to year depending
upon Mr. Lytle's contribution as evaluated by the Compensation
Committee of the Company. The Compensation Committee has reviewed the
performance and compensation of Mr. Lytle only with respect to the
services performed for and compensation paid by the Company.

(2) For the year 1996, the Compensation Committee of the Company authorized
the Company to pay Anthem $127,232 in total for Mr. Lytle's services.

(3) The amounts reported represent the market value of the common stock
underlying the restricted stock at the date of grant, without taking
into account any diminution in value attributable to the restrictions
on such stock. Mr. Witthun's award was made on May 20, 1996; the
closing price of the common stock on that date was $32.125 per share.
Mr. Maib's award was made on August 1, 1996; the closing price of the
common stock on that date was $31.00 per share. As of December 31,
1996, Mr. Witthun held 5,000 shares of restricted stock with a value on
that date of $145,000 based on a closing market price on that date of
$29.00. As of December 31, 1996, Mr. Maib held 2,419 shares of
restricted stock with a value on that date of $70,151 based on a
closing market price on that date of $29.00. Dividends are paid
quarterly on these shares at the same rate as dividends paid on common
stock held by public stockholders. The restricted stock for Mr. Witthun
vests at the rate of 25% per year for a 4-year period. The restricted
stock for Mr. Maib vests at a rate of 50% per year for a 2-year period.

(4) Amounts for 1996 include the Company's matching contribution under the
401(k) Long Term Investment Saving Plan in the amount of $3,620 for Mr.
Witthun, $1,931 for Mr. Maib, $2,983 for Mr. Henning, $3,321 for Mr.
Schneider and $3,138 for Mr. Nevins. Amounts for 1996 also include the
Company's matching contribution under the Acordia Deferred Compensation
Plan in the amount of $3,971 for Mr. Witthun, $1,399 for Mr. Maib,
$1,433 for Mr. Henning, $1,583 for Mr. Schneider and $1,813 for Mr.
Nevins. The 1995 amount for Mr. Witthun has been restated from the
prior year to exclude $24,619 in moving expenses. Amounts for 1996 also
include the vested portion of interest earned on certain deferred
compensation in excess of what would be earned at 100% of the
applicable federal interest rate as published by the Internal Revenue
Service in the amount of $7,669 for Mr. Witthun, $15.00 for Mr. Maib,
$8,301 for Mr. Henning, $579.00 for Mr. Schneider and $25.00 for Mr.
Nevins.

(5) The amounts reported are classified by reference to the performance
year in which the incentive awards were earned.

(6) Amount for Mr. Maib includes $100,000 which was paid as an employment
contract signing bonus in August, 1996. Mr. Maib joined the Company in
August of 1996 and Mr. Nevins joined the Company in March 1996. Mr.
Maib's 1996 performance year incentive award was pro-rated 5/12. Mr.
Nevin's 1996 performance year incentive award was pro-rated 9/12.

(7) Amount represents a tax gross-up payment on Mr. Maib's employment
contract signing bonus of $100,000.

9
<PAGE> 4
OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REAALIZABLE
VALUE AT
% OF ASSUMED ANNUAL RATE OF
TOTAL STOCK
OPTIONS EXERCISE PRICE APPRECIATION
STOCK GRANTED OR FOR OPTION TERM(4)
DATE OF OPTIONS IN FISCAL BASE PRICE EXPIRATION --------------------
EXECUTIVE GRANT GRANTED (#)(1)(2) YEAR(3) PER SHARE DATE 5% 10%
--------- ----- ----------------- ------- --------- ---- -- ---

<S> <C> <C> <C> <C> <C> <C> <C>
L. Ben Lytle.................... N/A 0 0 0 0 0 0
Frank C. Witthun................ 2/23/96 25,000 5.8% $28.375 2/23/06 $446,122 $1,130,561
Keith A. Maib................... 10/18/96 4,583 1.1% 30.125 10/18/06 86,827 220,036
Michael B. Henning.............. 2/23/96 13,000 3.0% 28.375 2/23/06 231,984 587,892
Robert S. Schneider............. 2/23/96 11,000 2.6% 28.375 2/23/06 196,294 497,447
Robert C. Nevins................ 5/20/96 8,250 1.9% 32.125 5/20/06 166,677 422,392
</TABLE>

- ------------
(1) All options granted in 1996 are exercisable in cumulative 33-1/3%
installments commencing one year after date of grant, with full vesting
occurring on the third anniversary date. All awards vest immediately upon
change of control of the Company as defined in the plan document.

(2) Under the terms of the Company's executive stock plan, the Compensation
Committee retains discretion subject to plan limits to modify the term of
outstanding options and to re-price the options.

(3) A total of 430,134 options were granted in 1996.

(4) These amounts represent calculations at 5% and 10% assumed rates of
appreciation set by the Securities and Exchange Commission and therefore
are not intended to forecast possible future appreciation, if any, of the
Company's common stock price.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF (IN THE MONEY)
NUMBER OF OPTIONS HELD AT OPTIONS AT FISCAL YEAR
FISCAL YEAR END END(1)
--------------- ------
EXECUTIVE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
L. Ben Lytle.................................................... 31,500 0 $ 348,250 0
Frank C. Witthun................................................ 29,000 37,000 217,250 $ 15,625
Keith A. Maib................................................... 0 4,583 0 0
Michael B. Henning.............................................. 23,200 19,400 197,000 8,125
Robert S. Schneider............................................. 15,500 16,000 126,500 6,875
Robert C. Nevins................................................ 0 8,517 0 167
</TABLE>

(1) Values were calculated using the closing stock price on December 31, 1996
on the New York Stock Exchange of $29.00.

There were no options exercised in 1996 by any of the officers named in the
Summary Compensation Table.

10
<PAGE> 5
PENSION PLAN TABLE

The following table shows estimated annual benefits payable upon retirement
(age 65) under the Acordia Pension Plan computed as a straight-line annuity,
including amounts payable under the Supplemental Executive Retirement Plan.

<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------

REMUNERATION 15 20 25 30 35
------------ --------- --------- --------- --------- ---------

Benefits are paid as a life annuity and are not offset by Social Security
or other amounts.

The annual benefit at retirement on or after age 65 is equal to the sum of
1.2% of final average pay up to a breakpoint, plus 1.5% of final average pay in
excess of the breakpoint multiplied by years of service up to a maximum of 35
years. Benefits from the Acordia Pension Plan are limited pursuant to Internal
Revenue Code Section 415(b). The general rule currently limits the annual
benefit to $125,000. Final average pay is the highest average compensation for a
consecutive 5-year period in the ten years preceding retirement or other
termination of employment. Compensation includes base salary, commissions,
overtime, premium pay and annual cash bonuses (i.e., the salary and bonus amount
shown on the Summary Compensation Table), however, under Internal Revenue Code
Section 401(a)(17), the maximum amount of annual compensation that can be taken
into account under the Acordia Pension Plan for any individual in 1997 is
$160,000. Amounts that cannot be paid from the Acordia Pension Plan because of
Internal Revenue code limits are paid from the Supplemental Executive Retirement
Plan.

The Pension Plan also provides grandfathered benefits for employees who
were participants in the predecessor Pension Plan on or before July 1, 1989,
which are intended to be reasonably comparable to the benefits which would have
accrued had the predecessor Pension Plan remained in effect. As a result, the
defined benefits at retirement age 65 for Michael B. Henning may be larger than
shown on the Pension Plan Table. Estimated annual benefits payable to Michael B.
Henning at age 65 are $150,000.

The years of credited service as of December 31, 1996 under the Pension
Plan for individuals named in the Summary Compensation Table are as follows: Mr.
Henning, 25.3 years; Mr. Witthun, 5.8 years and Mr. Schneider, 4.4 years. Mr.
Nevins and Mr. Maib are not yet participants in the Pension Plan.

EXECUTIVE EMPLOYMENT AGREEMENTS/
SEVERANCE AND CHANGE OF CONTROL AGREEMENT

Effective January 1, 1997, the Company entered into a revised employment
agreement with Mr. Witthun. The employment agreement provides for the employment
of Mr. Witthun as an executive officer of the Company. Mr. Witthun's agreement
is for a period of two years ending on December 31, 1998.

11
<PAGE> 6
Effective January 1, 1996, the Company extended the term of its employment
agreement with Mr. Henning for an additional year term expiring on December 31,
1998.

The Company entered into an employment agreement with Mr. Maib effective
August 1, 1996 for a term ending December 31, 1998, and an employment agreement
with Mr. Nevins, effective April 1, 1996, for a term ending December 31, 1998.

Each of the agreements with Messrs. Witthun, Henning, Maib and Nevins
provides for a base annual salary; currently, $330,018 for Mr. Witthun, $235,014
for Mr. Maib, $235,014 for Mr. Nevins and $190,008 for Mr.
Henning.

Each agreement further provides that if the executive is terminated (i) for
Cause by the Company, (ii) voluntarily, or (iii) by reason of death, the Company
will pay the executive his salary through the date of termination. The
employment agreements of Messrs. Henning, Maib and Nevins further provide that
if the executive is terminated without Cause, the Company will pay the executive
the greater of twelve months' salary or the remaining salary through the end of
the employment agreement term. Mr. Witthun's employment agreement with the
Company provides that if Mr. Witthun is terminated without Cause by the Company,
the Company will pay Mr. Witthun his salary, any accrued annual and long-term
incentive award, and benefits through the date of termination. The employment
agreement further states that if Mr. Witthun executes the Company's standard
Release and Waiver Agreement, for the greater of one year or the unexpired term
of the agreement, the Company will pay Mr. Witthun (i) his then current salary,
(ii) an amount equal to 50% of any target annual incentive and long-term
incentive opportunity which Mr. Witthun would otherwise have been eligible to
receive as of the effective date of Mr. Witthun's termination of employment,
including, if equity-based incentives are held by the Executive or otherwise
accrue to him but such stock is not publicly traded, cash in an amount equal to
fifty percent (50%) of the value that was intended to be earned by executive at
target performance under the stock plan; and (iii) medical benefits which
executive would otherwise have been eligible to receive as of the effective date
of executive's termination of employment.

The employment agreements of Messrs. Witthun, Henning, Maib and Nevins
provide that they will remain in effect in the event of a Change of Control of
the Company. For Mr. Witthun, if, following a Change of Control of the Company,
(i) Mr. Witthun is assigned to any duties substantially inconsistent with his
position with the Company immediately prior to a Change of Control or his duties
are substantially reduced, (ii) Mr. Witthun's salary or incentive opportunities
are materially reduced, (iii) Mr. Witthun is assigned to duties or
responsibilities involving a residence relocation or substantially greater
travel obligations, (iv) the Company's Strategic Plan is materially changed or
abandoned, or (v) the Company fails to obtain assumption of the obligations of
the agreement by a successor, Mr. Witthun shall be entitled to receive the same
severance package that would be payable if the Company terminated the employment
agreement without Cause. For Messrs. Maib, Nevins and Henning, if, following a
Change of Control of the Company, (i) the executive's duties, responsibilities,
or compensation are substantially reduced or executive is assigned to any duties
substantially inconsistent with his position, duties or responsibilities with
the Company immediately prior to the Change in Control, (ii) the executive's
salary is materially reduced as compared to his salary immediately prior to the
Change in Control, (iii) the Company fails to obtain the assumption of its
obligations to perform the agreement by any successor, or (iv) the Company's
long-term strategic plan is materially changed or abandoned such that the
maximum potential payout of incentive compensation to the executive is
substantially reduced, the executive shall be entitled to receive the same
severance package as is payable upon termination without Cause. The employment
agreements also provide that each executive is eligible to participate in all
employee benefit, stock options, bonus and executive perquisite programs
provided by the Company to employees in similar positions. Messrs. Witthun,
Henning, Nevins and Maib are also subject to certain restrictions under their
agreements, prohibiting them from engaging in competition with the Company or
any of its subsidiaries and from divulging any confidential or proprietary
information obtained by them while in the employ of the Company. A breach of any
such restriction will entitle the Company to seek injunctive relief.

Effective February 1997 in the case of Mr. Maib, and March 1997 in the case
of Messrs. Witthun, Henning and Nevins, the Company entered into Transaction
Agreements with each of the four executives which provide for

12
<PAGE> 7
additional compensation in the event of a Termination as a result of a Change in
Control, including any potential business combination with Anthem or a third
party concerning the Company's independent brokerage operations (the
"Independent Brokerage Operations") and/or its health business. The Transaction
Agreements do not replace the Employment Agreements discussed above. The
Transaction Agreements expire on the earlier of December 31, 1997 or the date
the Company and Anthem announce that they are no longer soliciting interest from
prospective purchasers in the Independent Brokerage Operations. However, if on
or before December 31, 1997, the Board has approved a transaction which would be
a Change in Control, the Transaction Agreements will be extended to December 31,
1998. Under the Transaction Agreements, a Termination as a result of a Change in
Control occurs if on or following a Change in Control, Anthem, one of its
affiliates, or a successor to the Company does not both offer the executive a
comparable position and assume the executive's Employment Agreement and
Transaction Agreement, or if upon, following or in anticipation of a Change in
Control (and within 12 months prior to the event), the executive's position at
the Company is not comparable to his position at the time of execution of the
Transaction Agreement. The Transaction Agreement with Mr. Witthun requires as a
further condition that Anthem, one of its affiliates, or a successor to the
Company extend the term of Mr. Witthun's Employment Agreement for a period of 36
months from the date of Change in Control. The Transaction Agreements between
the Company and Messrs. Witthun, Henning and Maib provide that in the event of a
Change in Control, each executive will be paid annual and long-term incentive
opportunities at target levels for 1997.

The Transaction Agreement between the Company and Mr. Henning also provides
that in the event of a Termination as a result of a Change in Control, Mr.
Henning will receive consulting and non-compete payments equaling $673,000 (in
lieu of severance under the Employment Agreement), all payable over the period
beginning on the date of Termination and ending on January 31, 2001. In
addition, Mr. Henning will receive continued pension accruals and medical
coverage until February 1, 2000, and shall be eligible for the Company's
post-retirement medical program. The Transaction Agreement between the Company
and Mr. Maib provides that in the event of a Termination as a result of a Change
in Control, Mr. Maib will receive severance payments equal to 24 months' salary
(in lieu of severance under the Employment Agreement), and at 50% of target
levels annual and long-term incentive opportunities for 1998 and 1999, all
payable over a two year period beginning at the date of termination. In
addition, Mr. Maib will receive medical coverage during the severance period.
Under Mr. Nevin's Transaction Agreement, in the event of a Termination as a
result of a Change in Control, Mr. Nevins will receive continued medical
benefits during any period for which severance is paid under the Employment
Agreement. He will also be paid a Retention Bonus of $130,000 if he remains in
employment of the Company, or its successor, on the date of the Change in
Control (or is earlier terminated other than for Cause), and an additional
Retention Bonus of $170,000 if he remains in such employment on the second
anniversary of the Change in Control (or is earlier terminated other than for
Cause, dies, or becomes disabled). The Transaction Agreement between the Company
and Mr. Witthun provides that in the event of a Termination as a result of a
Change in Control, Mr. Witthun will receive consulting and non-compete payments
equaling $1,886,000 (in lieu of severance and incentives under the Employment
Agreement), all payable over the period beginning on the date of Termination and
ending on the third anniversary of the Change in Control. In addition, Mr.
Witthun will receive continued pension accruals until October 31, 1998 and
medical coverage during the consulting and severance periods, and shall be
eligible for the Company's post-retirement medical program. Under each
Transaction Agreement, awards previously made under the Company 1992 Stock
Compensation plan will vest upon a Change in Control.

Effective January 1, 1997, Mr. Schneider is no longer employed by the
Company.

13
<PAGE> 8
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS

The Company's Compensation Committee has determined that a strong link
should exist between executive compensation and value created for stockholders.
This philosophy is put into practice through incentive compensation programs
which tie total compensation directly to the Company's performance and the value
received by stockholders.

COMPENSATION PHILOSOPHY

The Compensation Committee's decisions are based on its belief that
compensation is an integral part of the Company's strategic direction which
should reflect the value created for stockholders. The Company's compensation
programs are structured to reflect the following core principles:

- Compensation should be meaningfully related to the value created for
stockholders and provide executives an opportunity to acquire ownership
in the Company;

- Compensation programs should support the short-term and long-term
strategic goals and objectives of the Company;

- Compensation programs should reflect and promote the Company's values,
and reward individuals for outstanding contributions to the Company's
success;

- Compensation plays a critical role in attracting and retaining highly
qualified executives;

- There should be significant "pay at risk" for executive performance
within the Company, and,

- While compensation opportunities should be based in part on individual
contribution, total compensation earned by executives should be
determined by how the Company performs as a whole.

COMPENSATION MIX AND MEASUREMENT

The Company's executive compensation program consists of three (3) major
components, base salary, annual incentive and long-term incentive, each of which
is intended to support the overall compensation philosophy. For purposes of
competitive comparisons, the Compensation Committee used data from compensation
surveys for companies determined by the Compensation Committee to be of
comparable size and market capitalization (the "Comparable Companies"). These
are not the same as the Peer Group used for purposes of the stock price
performance graph below, but there is overlap. The Comparable Companies include
companies with which the Company competes for executives.

BASE SALARY. Base salary is targeted to be between 80% and 100% of the
median of Comparable Companies. The Company does not adjust base salaries every
year. Rather, salaries for executives are reviewed by the Compensation Committee
periodically and may be adjusted based on:

(1) the Compensation Committee's assessment that the individual's
responsibilities and/or contributions to the Company have increased; and

(2) significant movement in market competitive pay levels.

For 1996, the salary of Mr. Witthun was increased based on an increase in
responsibilities and an assessment of market competitive salary levels.

14
<PAGE> 9
ANNUAL INCENTIVE PLAN. Annual incentives are intended to reflect the
Compensation Committee's belief that executive contribution to stockholder
returns comes from maximizing earnings and increasing the quality of those
earnings. These incentives (at target levels) coupled with base salary, position
cash compensation between the 50th and 75th percentiles of the market of
Comparable Companies. Awards may range from 0% to 180% of target.

The Compensation Committee believes that the Company's Annual Incentive
Plan (the "Annual Incentive Plan") provides an excellent link between the value
created for stockholders and the incentives paid to executives. Under the Annual
Incentive Plan, executives do not receive incentive awards unless a specified
level of growth in operating profits (threshold) is achieved. Target awards are
based on the attainment of financial and strategic objectives, such as growth in
revenues and increasing the quality of earnings by diversifying revenue sources
among product and geographic parameters, profitability of business placed with
affiliated insurers and retention of existing customers.

LONG-TERM INCENTIVE PLAN. The long-term incentive component is intended to
attract, retain and motivate executives to improve long-term stock performance.
Executives are encouraged to acquire and hold Company common stock. Executives
have the opportunity to earn annual stock option awards based on their
performance. Stock options are awarded at fair market value and will only create
compensation if the Company's common stock market price per share appreciates in
value. Generally, awards vest in equal amounts over three (3) years and options
are exercisable for ten (10) years from the date of the award.

The target level of options for each executive is based on demonstrated
past and expected future performance of the executive. To earn a full award for
the performance year, each participant must achieve specific long-term financial
and strategic goals. The Compensation Committee determines the number of options
to be awarded based on individual executive and overall Company performance in
the prior year. The Compensation Committee also takes into consideration prior
option awards and the overall equity position of the individual executive.

Effective January 1, 1995, the Compensation Committee adopted stock
ownership guidelines for executives including the executives named in the
Summary Compensation Table. Executives are expected to achieve a level of stock
ownership equal to a multiple of salary, with the multiple varying depending
upon the position (the multiple ranges from 1-4 times salary in the case of the
named executives). Shares owned directly or beneficially, restricted shares,
shares held in 401(k) accounts and in the money unexercised stock options
(limited to 50% of the guidelines) are counted for the purposes of the
guidelines. Executives are expected to achieve their guideline level over a five
year period beginning January 1, 1995 or their hire date, whichever is later.

TOTAL COMPENSATION

Total compensation potential (for the highest performing employee officers
of the Company) is targeted at the 75th percentile of the market of Comparable
Companies. Actual payment of this level of total compensation is based on
performance. Aggressive long-term incentives are emphasized to deliver
significant compensation for performance above competitive levels when the
Company's stockholders also benefit from the executive's performance.

REVIEW OF 1996 PERFORMANCE AND COMPENSATION FOR THE COMPANY'S NAMED OFFICERS

In carrying out its responsibilities, the Compensation Committee of the
Company met on February 20, 1997 and reviewed the following:

1. The performance and compensation of the Company's officers;

2. The Annual Incentive Plan 1996 award recommendations; and

3. Target total compensation and the mix among elements for the Company's
executives.

15
<PAGE> 10
DEDUCTIBILITY CAP ON EXECUTIVE COMPENSATION

Section 162(m) of the Internal Revenue Code ("Section 162(m)") disallows,
subject to limited exceptions, a corporate tax deduction for certain
compensation paid in excess of $1 million to the chief executive officer and the
four other most highly paid executive officers of publicly-held companies. The
Company believes that the stock options and SARs granted at an exercise price
not less than the fair market value of the Company's common stock on the date of
grant in 1996 and prior years satisfied the requirements of Section 162(m) and
thus compensation recognized in connection with such awards should be fully
deductible. For 1996, the Company will not be denied a deduction with respect to
any amount of compensation paid to any executive officer.

CHIEF EXECUTIVE OFFICER'S COMPENSATION

Mr. Lytle served as the Chief Executive Officer of the Company through
November 1996. Effective December 1, 1996, the Company's Board of Directors
elected Mr. Witthun as its President and Chief Executive Officer. Prior to Mr.
Witthun's election, Mr. Lytle provided services to the Company through a
management agreement with Anthem. Anthem pays Mr. Lytle for his services to
Anthem as well as to the Company. The Company reimbursed a portion of the
compensation paid to Mr. Lytle, plus other related costs. The amount paid by the
Company has varied from year to year depending on Mr. Lytle's contribution as
evaluated by the subjective judgment of the Compensation Committee. For the year
1996, the Compensation Committee of the Company authorized the Company to pay
Anthem an amount equal to $127,232.

Mr. Witthun receives all of his pay directly from the Company. The
Compensation Committee approved a base salary adjustment and 1996 Annual
Incentive Plan award as noted in the Summary Compensation Table, relating to his
contributions to Company performance. These decisions were based on the
subjective judgment of the Compensation Committee, with particular reference to:
(1) the Company's significant earnings and revenue growth over 1995, (2)
improved organizational efficiency, through regionalizing operations, (3)
continued growth through financially and strategically sound acquisitions, and
(4) disposition (at a gain) of operations that were not core to the Company's
strategic plan.

The above Compensation Committee Report and the Company's Stock Price
Performance Graph which follows shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

COMPENSATION COMMITTEE

John C. Aplin (Chair)
John C. Crane
Mitchell E. Daniels, Jr.
Catherine E. Dolan
Thomas C. Roberts
James B. Stradtner

<PAGE> 1
EXHIBIT (c)(3)

ACORDIA, INC.
1992 STOCK COMPENSATION PLAN

SECTION 1. PURPOSES

The purpose of the 1992 Stock Compensation Plan (the "Plan")
is to advance the interests of Acordia, Inc. (the "Company") and its
shareholders by providing incentives to officers and other key employees or
individuals who contribute significantly to the strategic and long-term
performance objectives and growth of the Company by their invention, ability,
industry, loyalty or exceptional service. The Plan is intended not only as a
means of attracting and retaining those highly talented individuals upon whose
judgment, initiative, leadership and continuing efforts the success of the
Company depends, but also of promoting a close identity of interests between
those individuals and its stockholders.

SECTION 2. DEFINITIONS

The following terms, when used in the Plan, shall have the
meanings set forth below:

AWARD: An award or grant of any Stock Option, Stock
Appreciation Right Restricted Stock, Restricted Unit, Performance Share or
Performance Unit, or any combination thereof, by the Committee to a Participant
under the Plan.

BOARD: The Board of Directors of the Company.

CODE: The Internal Revenue Code of 1986, as in effect from
time to time or any successor thereto, together with the rules, regulations and
interpretations promulgated thereunder.

COMMITTEE: The Compensation Committee of the Board, or such
other committee as may be duly appointed by the Board from time to time to
administer the Plan, in either case so constituted as to permit the Plan to
comply with Rule 16b-3 with respect to grants to individuals subject to Section
16 of the Exchange Act. The Committee shall consist of at least three persons,
who shall be directors of the Company, and who shall not be or have been
eligible, while serving on the Committee or within one year prior thereto, to
receive grants of awards or rights pursuant to this Plan.

COMMON STOCK: The common stock of Acordia, Inc. having a par
value of $1.00 per share or such other class of shares or other securities as
may be applicable pursuant to Section 14.
<PAGE> 2
COMPANY: Acordia, Inc., a Delaware corporation, and any
subsidiary corporation at least 50% of whose issued and outstanding voting stock
is owned, directly or indirectly, by Acordia, Inc.

DEFERRED COMPENSATION STOCK OPTION: Any Stock Option granted
pursuant to Section 6 of the Plan that is specifically designated as such.

DIRECTOR: A member of the Board of Directors of the Company.

DISABILITY: Complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced, as determined by the
Committee based on medical evidence acceptable to it.

EXCHANGE ACT: The Securities Exchange Act of 1934 as amended
and in effect from time to time, or any successor statute.

FAIR MARKET VALUE: As applied to the Common Stock on any given
day, the closing market price of such stock on the trading day next preceding
such date as reported on the registered national exchange providing the primary
market in such securities, or if the Common Stock was not traded on such market,
the average of the closing bid prices as reported by the National Association of
Securities Dealers Automated Quotation System for the previous ten consecutive
trading days, or if such stock is not so traded or reported, as determined by
the Committee in good faith.

FISCAL YEAR: The twelve-month period used as the annual
accounting period by the Company.

INCENTIVE STOCK OPTION: Any Stock Option granted pursuant to
the provisions of Section 6 of the Plan that qualifies as an "incentive stock
option" within the meaning of Section 422A of the Code.

NON-QUALIFIED STOCK OPTION: Any Stock Option granted pursuant
to the provisions of Section 6 of the Plan that does not qualify as an Incentive
Stock Option.

PARTICIPANT: Any officer or other employee of the Company, or
any other individual whose participation the Committee determines is in the best
interests of the Company, who is selected to participate in the Plan by the
Committee, other than any Director who is not an employee or officer of the
Company.

PERFORMANCE AWARD: An Award granted pursuant to the provisions
of Section 9 of the Plan, the vesting of which is contingent on attainment of
Performance Goals.

2
<PAGE> 3
PERFORMANCE CYCLE: The period of time, designated by the
Committee, during which performance is measured for the purpose of determining
whether a Performance Award has been earned.

PERFORMANCE SHARE: A unit of value with each unit equivalent
in value to one (1) share of Common Stock and granted pursuant to the provisions
of Section 9 of the Plan.

PERFORMANCE GOALS: The financial, strategic or other goals and
objectives of the Company or any division or financial unit thereof and such
other individual performance criteria and objectives as may be established from
time to time by the Committee, including, but not limited to, continuous service
with the Company, achievement of specific business objectives, increases in
specified indices and attaining growth rates and other comparable measurements
of Company performance.

PERFORMANCE UNIT: A unit of value with each unit representing
such monetary amount as designated by the Committee and granted pursuant to the
provisions of Section 9 of the Plan.

PLAN: The 1992 Stock Compensation Plan herein set forth, as
amended from time to time.

RESTRICTED AWARD: An Award granted pursuant to the provisions
of Section 8 of the Plan.

RESTRICTED PERIOD: The period of time, designated by the
Committee, Restricted Awards are subject to the restrictions determined in
accordance with Section 8 of the Plan.

RESTRICTED STOCK: Shares of Common Stock awarded pursuant to
the provisions of Section 8 of the Plan.

RESTRICTED UNIT: A unit of measurement equivalent to one share
of Common Stock awarded pursuant to the provisions of Section 8 of the Plan but
with none of the attendant rights of a shareholder including, without
limitation, the right to vote; provided, however, such unit, at the discretion
of the Committee, may be accompanied by dividend equivalent or payment rights.

RETIREMENT: Separation from service under conditions entitling
the Participant to an immediate benefit under the Company's qualified retirement
plans at or after the attainment of age 65, or at an earlier age if permitted by
the Committee in its sole discretion.

3
<PAGE> 4
RULE 16b-3: Securities Exchange Commission Regulation
240.16b-3, or any successor regulation.

SHARE RESERVE: The share reserve established pursuant to
Section 5 of the Plan.

STOCK APPRECIATION RIGHT: An Award entitling a Participant to
receive an amount equal to (or if the Committee shall determine at the time of
grant, less than) the excess of the Fair Market Value of a share of Common Stock
on the date of exercise over the Fair Market Value of a share of Common Stock on
the date of Grant, or such other price as set by the Committee, multiplied by
the number of shares of Common Stock with respect to which the Stock
Appreciation Right shall have been exercised.

STOCK OPTION: An option to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan.

SECTION 3. ADMINISTRATION

The Plan shall be administered by the Committee, which shall
have the power to interpret the Plan and, subject to its provision, to
prescribe, amend, waive and rescind rules and regulations, to determine the
terms of Awards and to make all other determinations necessary or desirable for
the Plan's administration. All action taken by the Committee in the
administration and interpretation of the Plan, and all financial statements
certified by the Company's Controller in respect of the Plan, shall be final and
binding on all concerned. Except in respect of the administration of the Plan
with respect to persons subject to Section 16 of the Exchange Act, the Committee
may delegate all or any part of its powers hereunder to the Chief Executive
Officer of the Company under such conditions and limitations as it may
prescribe.

SECTION 4. PARTICIPATION

Subject to the provisions of the Plan, the Committee may at
any time, and from time to time, make Awards under the Plan in any form provided
pursuant to Sections 6 through 10 of the Plan, or in any combination thereof or
in tandem; provided, however, that Awards in the form of Incentive Stock Options
may only be made to employees of the Company. Awards may also be made in
combination or in tandem with, in replacement of, or as alternatives to, grants
or rights under the Plan or any other employee plan of the company, including
the plan of any acquired entity. The Committee shall select the Participants to
be granted Awards, determine the amounts and type or types of Awards to be made,
set forth the terms, conditions and limitations applicable to each Award, and
prescribe the form of the instruments embodying Awards made under the Plan. No
individual shall at any time have the right to be selected as a Participant. No
Participant, having been granted an Award, shall have the right to be granted an
additional Award in the future. At the

4
<PAGE> 5
Committee's sole discretion, a Participant may be given an election to surrender
an Award in exchange for the grant of a new Award.

SECTION 5. SHARE RESERVE

Subject to adjustment as permitted under this Section 5 or as
required by Section 14 hereof, aggregate number of shares of Common Stock that
may be distributed to Participants under the Plan may not exceed 12% of the
outstanding shares of Common Stock (the "Share Reserve"). Such shares may be
either authorized but unissued shares, treasury shares or shares issued and
thereafter acquired by the Company. For the purpose of computing the total
number of shares of Common Stock available for Awards under the Plan, there
shall be counted against the foregoing limitations the number of shares of
Common Stock subject to issuance upon exercise or settlement of Awards and the
number of shares of Common Stock which equal to the value of Restricted Units
and Performance Shares and other stock based Awards in each case determined as
at the dates on which such Awards are granted. If any Awards are forfeited or
terminate, expire unexercised, settled in cash in lieu of stock or exchanged for
other Awards, the shares of Common Stock which were theretofore subject to such
Awards shall again be available for Awards under the Plan to the extent of such
forfeiture, termination, expiration, settlement or exchange. Any shares of
Common Stock which are covered by Stock Appreciation Rights which are not issued
as payment upon exercise shall again be available for Awards under the Plan. No
fractional shares of Common Stock shall be issued under the Plan.

SECTION 6. STOCK OPTIONS

(a) AWARDS OF STOCK OPTIONS. Stock Options may be granted
under the Plan on such terms and conditions not inconsistent with the provisions
of the Plan and in such form as the Committee may from time to time approve.
Awards of Stock Options made pursuant to the Plan may be in the form of
Incentive Stock Options, Non-Qualified Stock Options or Deferred Compensation
Stock Options. Stock Options may be granted alone, in addition to or in tandem
with other Awards under the Plan. In addition, reload Stock Options may be
granted whereby when the Option is exercised by paying the exercise price with
Common Stock, the Participant automatically will be granted an additional option
for the same number of shares paid to exercise the original option, with the
same term as the original option but with the exercise price at the fair market
value of the stock on the date of the exercise of the original option.

(b) EXERCISE PRICE. The exercise price per share of Common
Stock deliverable upon the exercise of each Stock Option shall be determined by
the Committee at the date such Stock Option is granted. Such exercise price may
be less than the Fair Market Value of Common Stock on the date of grant but in
no event shall the exercise price be less than the par value of the Common
Stock; provided, however, in no event shall the exercise price of an Incentive
Stock Option be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the

5
<PAGE> 6
date of grant of such Incentive Stock Option. If the exercise price is less than
the Fair Market Value, the Committee shall establish the method used for
determining the exercise price in respect of Awards to be made to individuals.
The Committee may grant to Participants holding outstanding Stock Options, in
exchange for the surrender and cancellation of such Stock Options, new Stock
Options having purchase prices higher or lower than the purchase price as
provided in the surrendered Stock Options and containing such other terms and
conditions as the Committee may deem appropriate.

(c) EXERCISE PERIOD. Stock Options shall become exercisable in
whole or in part on such date or dates as shall be determined by the Committee
at the date of grant. The Committee may, in its sole discretion, accelerate the
time at which any Stock Option may be exercised whether or not such right is set
forth in the terms of any option certificate evidencing such Stock Option. Each
Stock Option which is not yet exercisable by the Participant shall terminate and
be forfeited back to the Company if and when the Participant shall terminate
employment with the Company, or, in the case of individuals who are not
employees (i.e., brokers, producers, consultants, etc.), if and when the
Participant's relationship with the Company is terminated, except as the
Committee may otherwise determine. Any exercisable Stock Options shall remain
exercisable for such period after termination of employment or termination of
the business relationship as shall be determined by the Committee at the time
the Stock Option is granted which period may extend beyond the expiration of the
original exercise period of the Stock Option except with respect to Incentive
Stock Options.

(d) OPTION TERM. Each Stock Option shall expire on such date
or dates as the Committee may determine at the time the Stock Option shall be
granted; provided, however, the term of Incentive Stock Options shall not exceed
the earlier of three (3) months after termination of employment (or in the case
of death or disability, twelve (12) months) or ten (10) years after the date of
grant.

(e) METHOD OF EXERCISE. Any Stock Option granted under the
Plan may be exercised solely by the person to whom granted (or by his guardian
or legal representative) or, in the case of such person's death, by the person's
legal representative. Notwithstanding the foregoing, the Committee may provide
that a Stock Option may be transferred to family members, trusts or charities,
except while a participant is subject to Section 16 of the Exchange Act. Each
Stock Option shall be exercised by written notice to the Company in the manner
set forth in the option certificate evidencing such Stock Option. As soon as
practicable after receipt by the Company of the notice of exercise and of
payment of the option price for all shares of Common Stock with respect to which
a Stock Option has been exercised, a certificate or certificates representing
such shares shall be registered in the name or names of the Participant or his
successor and shall be delivered to the Participant or his successor at the
Participant's address as it appears in the records of the Company or such other
address as may be designated by the Participant. Payment for shares purchased
upon exercise of a Stock Option shall be made (a) in full in cash or by check at
the time of

6
<PAGE> 7
exercise, (b) with the consent of the Committee, in whole or in part by the
surrender of shares of Common Stock (including restricted stock or other
contingent awards denominated in stock or cash), such Common Stock to be
credited against the option price in an amount equal to its Fair Market Value on
the Date of exercise, or (c) with the consent of the Committee and subject to
any applicable restrictions imposed by law, in deferred compensation credits,
notes, Reg T cashless exercises or other means, and upon such terms and
conditions including provision for securing the payment of the same, as the
Committee, in its discretion, shall determine are consistent with the Plan's
purposes and applicable law. In no event, however, shall the Committee provide
for the payment of any option price unless, at the time of exercise of the Stock
Option to which such option price relates, the holder of the Stock Option pays
in cash or by check an amount equal to not less than the aggregate par or stated
value of the shares being acquired.

(f) OPTION CERTIFICATE. Each Participant shall receive an
option certificate, which shall contain such provisions, consistent with the
provisions of this Plan, as may be established at any time or from time to time
by the Committee. Each option certificate may provide, in the discretion of the
Committee, that the issuance of the Common Stock shall be conditioned upon the
receipt from the person exercising such Stock Option of a representation, or
other instruments in form and substance satisfactory to the Committee,
indicating that at the time of such exercise it is his present intention to
acquire the Common Stock being purchased for investment and not with a view to
the resale or distribution of any part thereof. Neither the Participant nor his
legal representative shall be, or have any of the rights and privileges of, a
stockholder of the Company in respect of any shares purchasable upon the
exercise of any Stock Option, in whole or in part, unless and until certificates
for such shares shall have been issued. The form of option certificate
authorized by the Plan may contain such other provisions as the Committee shall
deem advisable. The Committee may vary the terms and provisions of individual
option certificates on a case-by-case basis and shall not be required to make
all option certificates uniform.

(g) SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options granted under the Plan, the aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of the number
of shares with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year shall not exceed One
Hundred Thousand Dollars ($100,000) or such other limit as may be required by
the Code.

(h) DEFERRED COMPENSATION STOCK OPTIONS. Deferred Compensation
Stock Options are intended to provide a means by which compensation payments can
be deferred to future dates. The number of shares of Common Stock subject to a
Deferred Compensation Stock Option shall be determined by the Committee, in its
sole discretion, in accordance with the following formula:

Amount of Compensation to be Deferred = Number
--------------------------------------
Fair Market Value - Stock Option Price of Shares

7
<PAGE> 8
The Stock Option Price for Deferred Compensation Options shall be determined by
the Committee, but shall in all events be less than the Fair Market Value of
Common Stock at the time the Deferred Compensation Options are granted. Amounts
of compensation deferred may include amounts earned under Awards granted under
the Plan or under any other compensation plan, program or arrangement of the
Company as permitted by the Committee. Deferred Compensation Stock Options will
be granted only if the Committee has reasonably determined that the recipient of
such a Stock Option will not be deemed at the date of grant to be in receipt of
the amount of income being deferred for purposes of the Code. Notwithstanding
the foregoing, no grant of Deferred Compensation Stock Options shall be made to
any person subject to Section 16 of the Exchange Act unless such person makes an
irrevocable election to defer such person's compensation at least six months
prior to the grant of such award.

(i) LIMITED RIGHTS. If so authorized by the Committee, any
option certificate may provide that the Company may with the consent of the
Participant, or the Participant may, at any time or from time to time, cancel
all or any portion of any Stock Option granted under the Plan then subject to
exercise, in which event the Company may discharge its obligation in respect of
the Stock Option either by payment to the Participant of an amount of cash equal
to the excess, if any, of the Fair Market Value, at such time, of the shares
subject to the portion of the Stock Option so canceled over the aggregate option
price of such shares, or by issuance or transfer to the Participant of shares of
Common Stock with a Fair Market Value, at such time, equal to any such excess,
or by a combination of cash and shares. In addition, if so authorized by the
Committee, a limited right may be awarded, at any time or from time to time, in
connection with any Stock Option granted under the Plan subject to such terms
and conditions as may be determined by the Committee with respect to the
exercise of such limited right in the event there is a threatened Change in
Control of the Company. Upon any such payment such Stock Options shall be deemed
to have been exercised.

SECTION 7. STOCK APPRECIATION RIGHTS

(a) AWARDS OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted under the Plan in such form as the Committee may from time
to time approve. Stock Appreciation Rights may be granted in tandem with, in
addition to or completely independent of a Stock Option or any other Award under
the Plan.

(b) EXERCISE. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Committee. The
Committee may also provide that a Stock Appreciation Right shall be
automatically exercised on one or more specified dates. Unless the Committee has
established an automatic exercise date, a stock appreciation right may be
exercised by a person subject to Section 16 of the Exchange Act only during the
window periods following the client's release of financial data pursuant to
Section 13(a) of the Exchange Act, as set forth in Rule 16b-3.

8
<PAGE> 9
(c) FORM OF PAYMENT. Payment upon exercise of a Stock
Appreciation Right may be made in cash, in shares of Common Stock, in Deferred
Compensation Stock Options or any combination thereof, as the Committee shall
determine; provided, however, that any Stock Appreciation Right exercised upon
or subsequent to the occurrence of a Change in Control (as defined in Section
18(h)) shall be paid in cash.

SECTION 8. RESTRICTED AWARDS

(a) AWARDS OF RESTRICTED SHARES OR RESTRICTED UNITS. Awards of
Restricted Stock or Restricted Units may be granted under the Plan in such form
and on such terms and conditions as the Committee may from time to time approve
including, without limitation, restrictions on the sale, assignment, transfer or
other disposition or encumbrance of such shares or units during the Restricted
Period and the requirement that the Participant forfeit such shares or units
back to the Company upon termination of employment for specified reasons (or
upon termination of the relationship between the Company and the individual if
the Participant is not an employee) within the Restricted Period. Restricted
Awards may be granted alone, in addition to or in tandem with other Awards under
the Plan.

(b) RESTRICTED PERIOD. At the time an Award of Restricted
Stock or Restricted Units is made, the Committee shall establish the Restricted
Period applicable to such Restricted Stock or Restricted Units during which
period of time such Restricted Stock or Restricted Units are subject to a
substantial risk of forfeiture in accordance with this Section and Section 13
hereof. During the Restricted Period, such Restricted Stock or Restricted Units
may not be sold, assigned, transferred, made subject to gift, or otherwise
disposed of, mortgaged, pledged or encumbered. Each Restricted Award may have a
different Restricted Period. The Committee may, in its sole discretion, at the
time a Restricted Award is made prescribe conditions for the incremental lapse
of restriction during the Restricted Period and for the lapse or termination of
restrictions upon the satisfaction of other conditions in addition to or other
than the expiration of the Restricted Period with respect to all or any portion
of the Restricted Stock or Restricted Units. The Committee may also, in its sole
discretion, shorten or terminate the Restricted Period or waive any conditions
for the lapse or termination of restrictions with respect to all or any portion
of the Restricted Stock or Restricted Units.

(c) RIGHTS OF HOLDERS OF RESTRICTED STOCK. Except for the
restrictions described in Section 8(b), the Participant shall be the owner of
the Restricted Stock and shall have all rights of a shareholder, including the
right to receive dividends paid on such Restricted Stock and the right to vote
such Restricted Stock; provided, however, at the discretion of the Committee,
cash, stock or other dividends with respect to the Restricted Stock may be
either currently paid or withheld by the Company for the Participant's account,
and interest may be paid on the amount of cash dividends at a rate and subject
to such terms as determined by the Committee, Dividends so withheld shall not be
subject to forfeiture.

9
<PAGE> 10
(d) DELIVERY OF RESTRICTED STOCK. Restricted Stock awarded to
a Participant under the Plan may be held under the Participant's name in a book
entry account maintained by the Company or, if not so held, stock certificates
for Restricted Stock awarded pursuant to the Plan may be registered in the name
of the Participant and issued and deposited, together with a stock power
endorsed in blank, with the Company or an agent appointed by the Company and
shall bear an appropriated legend restricting the transferability thereof. A
Participant shall be entitled to delivery of stock certificates only when they
become vested in accordance with the provisions of this Section and Section 13
and upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee.

(e) FORFEITURES. Except to the extent that the Participant's
right to receive a Restricted Award without restrictions shall have vested, each
Participant's right to any Restricted Award shall be forfeited if and when such
Participant ceased to be a Participant or when any prescribed condition for the
lapse or termination of restrictions is not satisfied. If forfeited, all such
stock shall become the property of the Company and shall again immediately
become available for award under the Plan and all of the rights of such
Participant to such Restricted Award and as a stockholder shall terminate
without further obligation on the part of the Company.

(f) SECTION 83(b) ELECTION. A Participant who files an
election with the Internal Revenue Service to include the fair market value of
any Restricted Stock in gross income while they are still subject to
Restrictions shall promptly furnish the Company with a copy of such election
together with the amount of any federal, state, local or other taxes required to
be withheld to enable the Company to claim an income tax deduction with respect
to such election.

(g) SPECIAL PROVISION REGARDING RESTRICTED UNITS. In the case
of an Award of Restricted Units, no shares of Common Stock shall be issued at
the time the Award is made, and the Company shall not be required to set aside a
fund for the payment of any such Award. The Committee shall, in its sole
discretion, determine whether to include in the Award and, if included, whether
to credit to the account of, or to currently pay to, a Participant who has an
Award of Restricted Units an amount equal to the cash, stock or other dividends
paid by the Company upon one share of Common Stock for each Restricted Unit then
credited to such Participant's Account ("Dividend Equivalents") as provided in
Section 12 hereof. Neither the Participant nor his legal representative shall
be, or have any of the rights and privileges of, a stockholder of the Company in
respect of Restricted Units.

(h) PAYMENT OF RESTRICTED UNITS. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
restrictions or conditions prescribed by the Committee in respect of a
Restricted Unit, the Company shall deliver to the Participant or the
Participant's estate or beneficiary, as the case may be, one share of Common
Stock for each vested Restricted Unit together with any Dividend Equivalent held
in respect thereof, provided, however, the Committee may,

10
<PAGE> 11
in its sole discretion, elect to pay cash or part cash and part Common Stock in
lieu of delivering only Common Stock for the vested Restricted Units. The amount
of any such cash payment shall be determined by multiplying the Fair Market
Value of one share of Common Stock on the date the Restricted Unit vested by the
number of Restricted Units for which such Participant is receiving payment in
cash. No payment will be required from the Participant upon the award of any
Restricted Unit, the crediting or payment of any Dividend Equivalents, or the
delivery of Common Stock or the payment of cash in respect of vested Restricted
Units, except as set forth in Section l8(c). The Restricted Unit award agreement
may permit a Participant to request that the payment of vested Restricted Units
(and Dividend Equivalents and the interest thereon with respect to such vested
Restricted Units) be deferred beyond the payment date specified in the
agreement. The Committee shall, in its sole discretion, determine whether to
permit such deferment and to specify the terms and conditions, which are not
inconsistent with the Plan, to be contained in the agreement. In the event of
such deferment, the Committee may determine whether and at what rate interest
shall be credited on any Dividend Equivalents.

SECTION 9. PERFORMANCE AWARDS

(a) AWARDS OF PERFORMANCE SHARES OR PERFORMANCE UNITS.
Performance Awards may be granted under the Plan in the form of Performance
Share Grants or Performance Unit Grants and subject to such terms and conditions
as the Committee may from time to time approve, including, without limitation,
the requirement that the Participant forfeit such Award or a portion of such
Award in the event certain Performance Goals are not met within the Performance
Cycle. Performance Awards may be granted alone, in addition to or in tandem with
other Awards under the Plan. Subject to the terms of the Plan, the Committee
shall determine the number of Performance Awards to be granted to a Participant
and the Committee may impose different terms and conditions on any particular
Performance Award made to any particular Participant.

(b) PERFORMANCE GOALS AND PERFORMANCE CYCLES. Performance
Awards shall provide that in order for a Participant to vest in such Awards
certain Performance Goals must be achieved over a designated performance period
("Performance Cycle") as shall be established by the Committee, in its sole
discretion. The Committee shall establish Performance Goals for each Performance
Cycle before, or as soon as practicable after, the commencement of the
Performance Cycle. The Committee may also establish a schedule or schedules for
such Performance Cycle setting forth the portion of the Performance Award which
will be earned or forfeited based on the degree of achievement of the
Performance Goals actually achieved or exceeded. During the Performance Cycle,
the Committee shall have the authority to adjust upward or downward the
Performance Goals in such manner as it deems appropriate in recognition of
extraordinary or nonrecurring events, changes in applicable accounting rules or
principles or such other events, changes, occurrences, conditions or
circumstances as the Committee determines warrant such adjustment.

11
<PAGE> 12
(c) PAYMENT OF PERFORMANCE AWARDS. In the case of Performance
Stock, the Participant shall be entitled to receive payment for each unit earned
in an amount equal to the aggregate Fair Market Value of the shares of Common
Stock covered by such Award. In the case of a Performance Unit, the Participant
shall be entitled to receive payment for each unit earned in an amount equal to
the dollar value of each unit times the number of units earned. Payment in
settlement of a Performance Award shall be made as soon as practicable following
the conclusion of the respective Performance Cycle in cash, in shares of Common
Stock, in Deferred Compensation Stock Options, in other equity-based units or
any combination thereof, as the Committee in its sole discretion shall
determine.

SECTION 10. OTHER STOCK-BASED AND COMBINATION AWARDS

(a) GRANT. The Committee may grant other Awards under the Plan
pursuant to which Common Stock is or may in the future be acquired, or Awards
denominated in stock units, including ones valued using measures other than
market value. Such other Stock-Based Grants may be granted either alone, in
addition to or in tandem with any other type of Award granted under the Plan.

(b) COMBINATION AWARDS. The Committee may also grant Awards
under the Plan in tandem or combination with other Awards or in exchange of
Awards, or in tandem or combination with, or as alternatives to grants or rights
under any other employee plan of the Company, including the plan of any acquired
entity.

(c) ELIGIBILITY. Subject to the provisions of the Plan, the
Committee shall have authority to determine the individuals to whom and the time
or times at which such Awards shall be made, the number of shares of Common
Stock to be granted or covered pursuant to such Awards, and any and all other
conditions and/or terms of the Awards.

SECTION 11. DEFERRAL ELECTIONS

The Committee may permit a Participant to elect to defer his
or her receipt of the payment of cash or the delivery of shares of Common Stock
that would otherwise be due to such Participant by virtue of the exercise, earn
out or vesting of an Award made under the Plan. If any such election is
permitted, the Committee shall establish rules and procedures for any such
payment deferrals, including the possible (a) payment or crediting of reasonable
interest on such deferred amounts credited in cash, (b) payment or crediting of
dividend equivalents in respect of deferrals credited in units of Common Stock,
(c) granting of Deferred Compensation Stock Options; and (d) granting of other
equity-based units, or any combination thereof, as determined by the Committee
in its sole discretion.

12
<PAGE> 13
SECTION 12. DIVIDEND EQUIVALENTS

Awards of Stock Options, Stock Appreciation Rights, Restricted
Units, Performance Awards, and other stock-based Awards may, in the discretion
of the Committee, include Dividend Equivalents. In respect of any such Award
which is outstanding on a dividend record date for Common Stock, the Participant
may be credited with an amount equal to the amount of cash, stock or other
dividends that would have been paid on the shares of Common Stock covered by
such Award had such covered shares been issued and outstanding on such dividend
record date. The Committee shall establish such rules and procedures governing
the crediting of Dividend Equivalents, including the timing, form of payment and
payment contingencies of such dividend equivalents, as it deems are appropriate
or necessary.

SECTION 13. SPECIAL VESTING RULES

(a) DEATH, DISABILITY OR RETIREMENT. Notwithstanding any other
provisions of the Plan, the Committee may provide that a Participant shall be
vested in 100% of all or any portion of such Participant's Awards not previously
vested if his employment by the Company (or relationship with the Company if the
Participant is not an employee) is terminated because of Death, Disability or
Retirement.

(b) TERMINATION OF EMPLOYMENT. Unless otherwise provided by
the Committee, a Participant shall cease vesting in all or any portion of an
Award as of the date of his termination or employment if he voluntarily
terminates his employment or if his employment is terminated by the Company for
any reason. Any Awards that are still subject to restrictions as of the date of
such termination shall be forfeited.

(c) AMENDMENTS. The Committee may amend the vesting schedules,
restrictions or other conditions in any Award; provided, however, that no such
amendment shall reduce interests in the Plan that were vested prior to the date
of such amendment without the consent of the Participant holding such vested
interest; provided further, however, the Committee may, notwithstanding any
other provision hereof or in the Award, annul any Awards made to a Participant
if such Participant is terminated for "Cause" as defined in Section 13(b)
hereof, or if such Participant becomes employed with a competing company as
determined by the Committee in its sole discretion or if such Participant enters
into a business relationship with a competing company of the Company as
determined by the Committee in its sole discretion.

(d) BUSINESS RELATIONSHIP TERMINATION. Unless the Committee
otherwise provides, a Participant shall cease vesting in all or any portion of
an Award as of the date he voluntarily terminates his business relationship with
the Company or if the business relationship with the Company is terminated by
the Company for any reason.

13
<PAGE> 14
SECTION 14. ADJUSTMENT PROVISIONS

In the event that the Common Stock should as a result of a
stock split or stock dividend or combination of shares or other change or
exchange for other securities by reclassification or otherwise, be increased or
decreased or changed into, or exchanged for, a different number or kind of
shares or other securities of the Company or any other corporation, or in the
event of a spin-off, spin-out or other distribution of assets to shareholders or
the assumption or conversion of outstanding grants pursuant to an acquisition,
the number and kind of share then subject to Awards granted under the Plan and
the number of shares then remaining in the Share Reserve and the exercise price
per share in outstanding Options, shall be appropriately adjusted by the
Committee to reflect such action.

SECTION 15. AMENDMENT OR DISCONTINUANCE OF THE PLAN

The Plan may be amended, suspended or terminated by the Board
in whole or in part at any time, with prospective or retroactive effect,
provided that, no amendment, suspension or termination of the Plan shall
adversely affect, except with the consent of the holder, any rights or
obligations with respect of Awards theretofore granted and provided further that
no amendment shall be made which would cause the Plan to no longer comply with
Rule 16b-3 or other regulatory requirement to the extent applicable to the
Participants in the Plan subject to Section 16 of the Exchange Act, and provided
further, that, without shareholder approval, the Board may not (a) materially
increase the benefits accruing to participants under the Plan, (b) materially
increase the number of Shares which may be issued under the Plan, or (c)
materially modify the requirements as to eligibility for participation under the
Plan.

SECTION 16. LISTING AND QUALIFICATION OF SHARES

The Company, in its discretion, may postpone the issuance or
delivery of shares of Common Stock pursuant to any Award until completion of
such stock exchange listing, or other qualification of such shares under any
state or federal law, rule or regulation as the Company may consider
appropriate, and may require any Participant to make such representations,
including, but not limited to a written representation that the shares are to be
acquired for investment and not for resale or with a view to the distribution
thereof, and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations. The Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference to such
representation and to restrict transfer in the absence of compliance with
applicable federal or state securities laws.

14
<PAGE> 15
SECTION 17. HOLDING PERIOD

An equity security granted pursuant to the Plan to any
participant subject to Section 16 of the Exchange Act shall be held by such
participant or by the Plan for the benefit of that participant for a period of
not less that six (6) months from the date of such grant to the date of
disposition (other than upon exercise or conversion) of such equity security by
the Plan or the Participant. A stock option (other than a Deferred Stock
Option), Stock Appreciation Right and Restricted Award shall be deemed disposed
upon the disposition of any such award or its underlying Common Stock.

SECTION 18. OTHER PROVISIONS

The following miscellaneous terms and conditions are also in
effect under the Plan:

(a) NO RIGHT TO EMPLOYMENT OR TO CONTINUED BUSINESS
RELATIONSHIP. No person shall have any claim or right to be granted an Award
under the Plan, and no Participant shall have any right under the Plan to be
retained in the employ of the Company or to continue a business relationship
with the Company. No participant or other person shall have any right with
respect to the Plan or in any Award, contingent or otherwise, until written
evidence of the Award shall have been delivered to the recipient and all the
terms, conditions and provisions of the Plan and the Award applicable to such
recipient (and each person claiming under or through him) have been met.

(b) NON-TRANSFERABILITY OF AWARDS. Except as set forth in
Section 6(e) and except by will or the laws of descent and distribution, no
security, right or interest of any Participant in the Plan shall be assignable
or transferable and no security, right or interest of any Participant shall be
liable for, or subject to, any lien, obligation or liability of such
Participant.

(c) TAX WITHHOLDING. All Awards and distributions of shares or
other payments pursuant to the Plan shall be subject to withholding required by
applicable Federal, state and local laws, and the Committee may make such
arrangements for the payment of any withholding taxes on Awards or distributions
as it deems satisfactory, including, but not limited to (i) reducing the number
of shares of Common Stock, based upon their Fair Market Value, or cash,
otherwise deliverable, to permit deduction of the amount of any such withholding
taxes from the amount otherwise payable under the Plan, (ii) deducting the
amount required to be withheld from salary or any other amount then or
thereafter payable to a Participant, beneficiary or legal representative, and
(iii) requiring a Participant, beneficiary or legal representative to pay to the
Company the amount required to be withheld as a condition of releasing the
Common Stock and any other distributions related thereto. Any tax withholding
with respect to an individual subject to Section 16 of the Exchange Act which is

15
<PAGE> 16
treated as a stock appreciation security under Rule 16b-3 may be made only in
conference with that rule.

(d) EXPENSES. Any expenses of administering the Plan shall be
borne by the Company.

(e) NEW PARTICIPANTS. Certain Awards may be granted under the
Plan from time to time in substitution for stock options, restricted shares,
restricted units, performance units, stock appreciation rights or other equity
incentives held by employees of other corporations who are or are about to
become employees of the Company as the result of a merger or consolidation of
the employing corporation with the Company, or the acquisition by the Company of
the assets of the employing corporation, or the acquisition by the Company of
stock of the employing corporation as a result of which it becomes a subsidiary
of the Company. The terms and conditions of the substituted Awards so granted
may vary from the terms and conditions set forth in this Plan to such extent as
the Committee may deem appropriate to conform, in whole or in part, to the
provisions of the substituted equity incentives.

(f) NOTICES. All notices under the Plan shall be in writing,
and if to the Company, shall be mailed to:

Acordia, Inc.
120 Monument Circle
Indianapolis, IN 46204
Attention: Nancy Wilhite, Vice President
and Assistant Corporate Secretary

Notices to the Participant shall be delivered personally or mailed to the
Participant at his address appearing in the payroll records of the Company. The
address of any party may be changed at any time by written notice to the other
party given in accordance with this provision.

(g) OTHER COMPANY PLANS. Nothing contained herein shall
prevent the Company from establishing other incentive plans in which
Participants in the Plan may also participate. No Award under the Plan shall be
considered as compensation in calculating any insurance, pension or other
benefit for which the recipient is eligible unless any such insurance, pension
or other benefit is granted under a plan which expressly provides that
compensation under this Plan (and specifying the type of such compensation)
shall be considered as compensation under such plan.

(h) CHANGE IN CONTROL. Notwithstanding the provisions of the
Plan, if there should be a "Change in Control" of the Company, all Stock Options
and Stock Appreciation Rights that are outstanding under the Plan shall become
fully exercisable and all Awards to Participants shall become fully vested as of
the date of such Change in Control unless otherwise provided in the Award
agreement. For purposes of the

16
<PAGE> 17
Plan, the term "Change in Control" shall mean (a) a merger, consolidation or
other reorganization of the Company in which the Company is not the surviving
entity if prior to the reorganization the Board has not specifically approved
the reorganization, (b) a sale or other transfer of all or substantially all of
the assets of the company, or (c) a change in the composition of a majority of
the Board elected by shareholders within 12 months after any "person" (as such
term is used in Section 3(a)(9) and 13(d)(3) of the Exchange Act) is or becomes
the beneficial owner, directly or indirectly, of securities representing 20% of
the combined voting power of the then outstanding securities of the Company,
provided that for purposes of determining stock ownership, share, held by the
employee benefit plan maintained by the Company shall be treated as owned by the
plan's participants in proportion to their interests in the plan.

(i) INDEMNIFICATION. No member of the Committee or the Board
shall be personally liable by reason of any contract or other instrument
executed by such member or on such member's behalf in his or her capacity as a
member of the Committee for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each employee, officer or director of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.

(j) UNFUNDED PLAN. The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any Award under the Plan,
nor shall the Company be deemed to be a trustee of any rights granted under the
Plan and rights to payment of Awards shall be no greater than the rights of the
Company's general creditors.

(k) GOVERNING LAW. The Plan shall be governed by and construed
in accordance with the laws of the State of Indiana, without reference to the
principles of conflicts of law thereof.

<PAGE> 1
EXHIBIT (c)(4)

ACORDIA, INC.
DIRECTORS STOCK COMPENSATION PLAN

(As amended as of May __, 1995)

Section 1. Plan Purpose. The purpose of this Plan is to promote the
interests of the Company and its stockholders by permitting the Company's
non-employee directors to acquire stock and increase their proprietary interest
in the Company. By so doing, the Company seeks to attract, retain and motivate
those highly talented individuals upon whose judgment, initiative, leadership
and continuing efforts the success of the Company depends.

Section 2. Definitions. The following definitions are applicable to
this Plan:

"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under
the Exchange Act.

"Award" means a Retainer Award or an Incentive Award under this Plan.

"Board of Directors" or "Board" means the Board of Directors of the
Company.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" means the committee appointed by the Board of Directors to
administer the Plan pursuant to Section 8 below.

"Common Stock" means the Common Stock, par value $1.00 per share, of
the Company.

"Company" means Acordia, Inc., a Delaware corporation.

"Election" means a written election to receive a Retainer Award in
cash, Options or shares of Common Stock, made by an Eligible Director in
accordance with Section 4(b) hereof.

"Eligible Director" means a director of the Company who is not an
officer of or otherwise employed by the Company or any of its Affiliates.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Market Value" of the Common Stock means the last sale price on
the last trading day of the applicable Fiscal Quarter or Fiscal Year (or, if
there is no reported sale on such date, on the last preceding date on which any
reported sale occurred) of

<PAGE> 2
one share of Common Stock on the New York Stock Exchange, or, if no such
quotations are available, the fair market value on such date of one share of
Common Stock as the Committee shall determine.

"Fiscal Quarter" means a fiscal quarter of the Company with respect to
which a Retainer Award is to be calculated or paid.

"Fiscal Year" means a fiscal year of the Company with respect to which
an Award is to be calculated or paid.

"Holder" means a director or former director of the Company who owns
Shares or Options of record and beneficially.

"Incentive Award" has the meaning ascribed to that term in Section 5(a)
below.

"Option" means a non-qualified option to purchase one Share, granted
pursuant to this Plan.

"Plan" means the Acordia, Inc. Directors Stock Compensation Plan as set
forth in this document, as amended from time to time.

"Retainer Award" has the meaning ascribed to that term in Section 4(a)
below.

"Securities Act" means the Securities Act of 1933, as amended.

"Shares" means shares of the Common Stock that are issued pursuant to
this Plan, all of which shall be duly authorized, validly issued, fully paid and
nonassessable upon delivery thereof in accordance with this Plan.

"Transfer" means to sell, give, assign, pledge, hypothecate, or in any
way alienate or encumber, whether voluntarily, by operation of law, or
otherwise.

Section 3. Shares Subject to the Plan.

(a) Subject to the provisions of Section 3(c) below, the aggregate
number of shares of Common Stock that may be issued pursuant to Awards under
this Plan shall not exceed one-half of one percent (0.5%) of the outstanding
shares of Common Stock, determined as of January 1 of each year.

(b) The Shares to be delivered under this Plan may be made available,
at the Committee's discretion, either from authorized but unissued shares of
Common Stock or from previously issued shares reacquired by the Company.

(c) If the outstanding shares of Common Stock are increased, decreased,
or exchanged for a different number or kind of shares or other securities, or if
additional

2
<PAGE> 3
shares or new or different shares or other securities are distributed with
respect to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other distribution with respect to such shares of Common
Stock or other securities, an appropriate adjustment shall be made in (i) the
maximum number and kind of shares provided for in Section 3(a) above, (ii) the
number and kind of shares subject to then outstanding Options and (iii) the
exercise price for each share subject to then outstanding Options (without
change in the aggregate exercise price as to which such Options are
exercisable). Adjustments under this Section will be made by the Committee,
whose determination as to what adjustments will be made and the extent thereof
will be final, binding and conclusive.

Section 4. Retainer Awards.

(a) The Company shall, within 30 days after the beginning of each
Fiscal Quarter (subject to Section 7(d) below) pay to each director of the
Company who was an Eligible Director on the first day of such Fiscal Quarter a
retainer award with respect to such Fiscal Quarter (a "Retainer Award") in the
amount of $3,000.

(b) (i) Each Eligible Director may make an Election to receive his or
her Retainer Awards in either cash, Options or Shares, by delivering a completed
Form of Election (in substantially the form set forth on Exhibit A attached
hereto) to the Secretary of the Company at any time during the first six months
of any Fiscal Year. Any Election so made shall become effective on the first day
of the next succeeding Fiscal Year and shall remain irrevocably in effect for
that entire Fiscal Year, and for each succeeding Fiscal Year thereafter unless
and until such Eligible Director shall have made a new Election for any such
succeeding Fiscal Year in accordance with this Section 4(b)(i).

(ii) Notwithstanding Section 4(b)(i), upon first becoming a Director,
an Eligible Director may make his or her first Election by delivering a
completed Form of Election to the Secretary of the Company at any time during
the first 30 days after the effective date of his or her election to the Board.
Any Election so made shall become effective six months and one day after the
date of such Election and shall remain irrevocably in effect until the end of
the Fiscal Year during which such Election becomes effective, and for each
succeeding Fiscal Year thereafter unless and until such Eligible Director shall
have made a new Election for any such succeeding Fiscal Year in accordance with
Section 4(b)(i).

(c) If an Eligible Director has not made an effective Election to
receive Retainer Awards in cash or Shares, or has made an effective Election to
receive Retainer Awards in Options, then each Retainer Award shall be payable in
that number of Options which equals approximately three (3) times the number of
shares of Common Stock having an aggregate Fair Market Value equal to $3,000.

3
<PAGE> 4
(d) If an Eligible Director has made an effective Election to receive
Retainer Awards in Shares, then each Retainer Award shall be payable in that
number of shares of Common Stock having an aggregate Fair Market Value equal to
$3,000.

Section 5. Incentive Awards.

(a) In addition to Retainer Awards, meeting fees and other
compensation, if any, payable to each Eligible Director, the Company shall,
within 120 days after the end of each Fiscal Year (subject to Section 7(d)
below), pay to each director of the Company who was an Eligible Director on the
last day of such Fiscal Year, an award with respect to such Fiscal Year (an
"Incentive Award") in an amount to be determined in accordance with the formula
set forth in Exhibit B attached hereto and incorporated by reference herein;
provided, however, that if such Eligible Director was not an Eligible Director
on the first day of such Fiscal Year, the Incentive Award payable to such
Eligible Director shall be in an amount equal to the product of (i) the
Incentive Award that would be payable to a director who was an Eligible Director
throughout such Fiscal Year, and (ii) a fraction, the numerator of which is the
number of days in such Fiscal Year on which such director was an Eligible
Director and the denominator of which is the number 365.

(b) Each Incentive Award shall be payable in that number of Options
which equals approximately three (3) times the number of shares of Common Stock
having an aggregate Fair Market Value equal to the amount of such Incentive
Award.

Section 6. Terms of Options.

(a) The exercise price of each Option shall be 100% of the Fair Market
Value of one share of Common Stock.

(b) Each Option may be exercised at any time after the date of issuance
thereof and prior to the 10th anniversary of the date of issuance thereof,
subject to earlier termination of such Option as follows:

(i) This clause (i) shall apply solely to each Option that is
issued after November __, 1994 and prior to May __, 1995, for a period
of six months and one day after the date of issuance thereof (and no
such Option may be exercised during such period): In the event that a
Director ceases to be an Eligible Director for any reason, each Option
held by the Director shall immediately terminate; provided, however,
that the Director may, during the following three-month period,
exercise such Option to the extent he was entitled to exercise the
Option at that date he ceased to be an Eligible Director; and provided,
further, that if the Director ceased to be an Eligible Director due to
death or total and permanent disability (as determined by the
Committee), the Director (or his or her legal representative or Estate)
may, during the 12-month period following such death or disability,
exercise such Option to the

4
<PAGE> 5
extent the Director was entitled to exercise the Option at the date of
such death or disability.

(ii) This clause (ii) shall apply to all Options that are not
subject to clause (i) above (and to all Options that are subject to
clause (i) above upon expiration of the period set forth in the
introductory clause thereof): Each Option shall terminate on the date
that is (A) 12 months after the date that the Director ceases to be a
member of the Board due to death or total and permanent disability (as
determined by the Committee) or (B) five years after the date that the
Director ceases to be a member of the Board for any other reason.

(iii) Upon dissolution or liquidation of the Company, or upon a
reorganization, merger, consolidation or sale of securities of the
Company with or to one or more corporations as a result of which the
Company is not the surviving corporation or becomes a subsidiary of a
company other than Associated Insurance Companies, Inc., or upon the
sale of all or substantially all of the assets of the Company, all
Options shall terminate as of a date to be fixed by the Committee;
provided, however, that each Holder shall receive written notice of
such date at least 20 business days in advance, and shall have the
right during such period to exercise his Options as to all or part of
the Shares covered thereby.

(iv) Notwithstanding any provision of this Plan, each Option
shall terminate on the 10th anniversary of the date of issuance
thereof.

(c) Any exercise of an Option shall be effected by delivery to the
Secretary of the Company of a written notice of such exercise, which shall
specify the number of Shares as to which the Option is being exercised and be
accompanied by full payment of the exercise price therefor. Upon the exercise of
an Option, the exercise price shall be payable to the Company in full in cash
and/or, in the Committee's discretion, by delivery to the Company of shares of
Common Stock. Any shares so assigned and delivered to the Company in payment of
the exercise price shall be valued at their Fair Market Value.

(d) As a condition to the receipt of any Option hereunder, the Eligible
Director shall execute an Option Agreement in substantially the form set forth
on Exhibit C attached hereto, and containing such other provisions as the
Committee may deem appropriate. Except as otherwise set forth in such Agreement,
all of the terms and conditions of the Options and the Shares issuable
thereunder shall be as set forth in this Plan.

5
<PAGE> 6
Section 7. Restrictions on Transfer; Etc.

(a) No Option or any right thereunder may be Transferred other than by
will or under the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code. Any Transfer of an Option in
violation of this Plan shall be void.

(b) No Share issued pursuant to this Plan may be Transferred (other
than by will or under the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code) prior to the date
that is six months and one day after the date of issuance thereof or, in the
case of Shares issued upon the exercise of an Option, the date that is six
months and one day after the date of issuance of such Option.

(c) No Share issued pursuant to this Plan may be resold or otherwise
Transferred by any Holder who is an "affiliate" of the Company, as defined in
Rule 144 under the Securities Act, except in compliance with such Rule or
pursuant to an effective registration statement under the Securities Act* and
compliance with applicable state securities laws, or pursuant to an opinion of
counsel in form and substance satisfactory to the Company that such sale or
other Transfer is exempt from such registration and compliance.

(d) The issuance or exercise of any Option and the issuance or delivery
of any Shares may be postponed by the Company for such period as may be
necessary or desirable to comply with any applicable requirements under federal
or state securities laws, any applicable listing requirements of any national
securities exchange or requirements under any other law or regulation applicable
thereto, and the Company shall not be obligated to issue any Option or issue or
deliver any Shares if the issuance or delivery thereof would constitute a
violation of, or an undue burden under, any provision of any law or regulation
of any governmental authority or any national securities exchange.

Section 8. Administration, Amendment and Termination.

(a) This Plan shall be administered by the Committee, which shall
consist of two or more persons appointed by the Board of Directors. The
Committee shall

- -------------------------------
* Note: The effectiveness of a registration statement on Form S-8 covering the
Shares would not satisfy this condition that any secondary offering by an
"affiliate," otherwise than pursuant to Rule 144, must be made pursuant to an
effective registration statement under the Securities Act. Any such secondary
offering must be made pursuant to a separate registration statement with respect
to that particular offering.

6
<PAGE> 7
consist of such persons, and this Plan shall be administered in such manner, as
shall be required to satisfy the requirements of Rule 16b-3 under the Exchange
Act.

(b) The Committee shall have the authority to interpret and administer
this Plan, to prescribe, amend, and rescind rules and regulations relating
hereto, and to exercise such powers as are necessary or appropriate for it to
carry out its functions hereunder. The actions and determinations of the
Committee will be final and binding upon all parties. The Committee may delegate
to one or more agents who are not Eligible Directors such administrative duties
as it may deem advisable.

(c) The Board or the Committee has the power to amend, suspend, or
terminate this Plan; provided, however, that neither the definition of Eligible
Director, Sections 4 or 5 hereof nor Exhibit B attached hereto shall be amended
more than once every six months, other than to comport with changes in the Code
or the rules hereunder; and provided, further, that any amendment requiring
stockholder approval in order to maintain the exemption of the Plan under Rule
16b-3 under the Exchange Act, as in effect from time to time, shall be subject
to approval of the stockholders of the Company in the manner required by such
Rule.

(d) No stockholder of the Company, member of the Board or the
Committee, or any of their agents or designees will be liable for any action or
determination made in good faith by any of them with respect to the Plan or any
transaction arising under the Plan.

Section 9. No Right to Continued Directorship. Nothing in this Plan
shall be deemed to create any obligation on the part of the Board to nominate
any director for reelection as a director by the stockholders of the Company.

Section 10. Effective Date. This Plan has been approved by the Board of
Directors and the Company's stockholders, and first became effective January 1,
1990.

7
<PAGE> 8
Exhibit A

Form of Election

ACORDIA, INC.
DIRECTORS STOCK COMPENSATION PLAN

RETAINER AWARD ELECTION

Subject to and in accordance with the terms and conditions of the
Acordia, Inc. Directors Stock Compensation Plan (the "Plan"), I hereby elect to
receive my Retainer Awards in:

____ Cash ____ Options ____ Shares of Common Stock

If I have elected to receive my Retainer Awards in Shares of Common
Stock, I hereby represent and agree that:

(a) I have received and carefully reviewed a copy of the Plan; all
capitalized terms used herein have the meanings given to them in the Plan; and,
except to the extent set forth herein, all of the terms and conditions of the
Retainer Award and the Shares are contained in the Plan and there are no other
agreements, written or oral, with respect thereto.

(b) I understand that no Shares may be Transferred prior to the date
that is six months and one day after the date of issuance thereof, other than by
will or under the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, and that there may be further
restrictions on the Transfer of the Shares if I am an "affiliate" of the Company
as defined in Rule 144 under the Securities Act.

IN WITNESS WHEREOF, I have signed this Election and delivered it to the
Secretary of the Company on the date written below.

---------------------
Signature

---------------------
Name Printed

---------------------
Date

8
<PAGE> 9
NOTE: Unless you are a new Director, this Election must be completed
and delivered to the Secretary of the Company prior to June 30 of the Fiscal
Year in order to be effective for the next Fiscal Year. It will remain effective
for at least one full Fiscal Year, and for each succeeding Fiscal Year unless
and until a new Election is properly made in accordance with the terms and
conditions of the Plan.

9
<PAGE> 10
Exhibit B

FORMULAS FOR CALCULATION OF INCENTIVE AWARDS

The following formulas set forth the basis of the computation of the
Incentive Award with respect to the Fiscal Year ended December 31, 199_, that
would be payable to a director of the Company who was an Eligible Director
throughout such Fiscal Year:

Net Income Formula Incentive Award
- ------------------ ---------------

This Exhibit B has been adopted by the Committee and shall not be
amended more than once every six months, other than to comport with changes in
the Internal Revenue Code of 1986, as amended, or the rules thereunder.

By:
--------------------
For the Committee

Date:
--------------------

10
<PAGE> 11
Exhibit C

Form of Option Agreement

AWARD AGREEMENT (this "Agreement"), dated as of _____________ __, 199_,
between Acordia, Inc., a Delaware corporation (the "Company"), and
__________________________ (the "Holder").

W I T N E S S E T H:

WHEREAS, as the date hereof, the Holder has been granted an Award in
the form of options ("Options") to purchase shares (the "Shares") of the
Company's Common Stock, par value $1.00 per share (the "Common Stock"), pursuant
to the Acordia, Inc. Directors Stock Compensation Plan (the "Plan," a copy of
which is attached hereto as Exhibit A); and

WHEREAS, the parties desire by this Agreement to document the grant of
the Options, but intend that, except to the extent set forth herein, all of the
terms and conditions of the Award, the Options and the Shares shall be as
contained in the Plan.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Plan, the parties hereto
hereby agree as follows:

1. The Grant. Subject to the terms and conditions set forth herein and
in the Plan, as of the date hereof, the Company hereby grants to the Holder
Options to purchase __________ Shares at the exercise price of $_________ per
Share (the "Exercise Price"), subject to adjustment in certain events as set
forth in the Plan, as [a Retainer Award for the Fiscal Quarter commencing
_____________________] or [an Incentive Award with respect to the Fiscal
Year-ended ________________]. The Options are not intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended.

2. Exercise: Subject to the terms and conditions set forth herein and
in the Plan, the Options may be exercised by the Holder at any time after the
date of this Agreement, and prior to the 10th anniversary of the date of this
Agreement, subject to termination of the Options as set forth in the Plan. Any
exercise of Options shall be effected in the manner set forth in the Plan.

3. Representations and Warranties of Holder. The Holder represents and
warrants to the Company that: (a) he has received and carefully reviewed a copy
of the Plan; and (b) he understands that no Shares issued upon exercise of the
Options may be Transferred prior to the date that is six months and one day
after the date of this Agreement, other than by will or under the laws of
descent and distribution or

11
<PAGE> 12
pursuant to a qualified domestic relations order as defined by the Code, and
that there may be further restrictions on the Transfer of the Shares if I am an
"affiliate" of the Company as defined in Rule 144 under the Securities Act of
1933, as amended.

4. Plan Controlling. The parties agree that, except to the extent set
forth herein, all of the terms and conditions of the Award, the Options and the
Shares are contained in the Plan and there are no other agreements, written or
oral, with respect thereto. Neither anything in the Plan or this Agreement, nor
receipt of the Shares, shall be deemed to create any obligation on the part of
the Company's Board of Directors to nominate the Holder for election or
reelection as a director by the stockholders of the Company.

5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first hereinabove written.

ACORDIA, INC.

By:
---------------------------
Name:
Title:

---------------------------
Holder

<PAGE> 1
EXHIBIT (c)(5)

ACORDIA, INC.
DIRECTORS DEFERRED COMPENSATION PLAN

ARTICLE I.

INTRODUCTION AND RESTATEMENT OF PURPOSE

This instrument is a continuation and complete restatement,
effective January 1, 1995, of the Acordia, Inc. Directors Deferred Compensation
Plan (the "Plan"), originally effective April 1, 1992. The purpose of the Plan
is to allow Eligible Directors to elect whether to receive or defer payment of
Compensation.
ARTICLE II.
DEFINITIONS AND RULES OF CONSTRUCTION

Section 2.1. Definitions. As used in the Plan, the following
words and phrases, when capitalized, shall have the following meanings except
where used in a context that plainly requires a different meaning:

(a) "Accounts" means, with respect to a Participant, his Cash
Deferral Account and his Stock Deferral Account.

(b) "Affiliate" has the meaning given to that term in Rule
12b-2 under the Securities Exchange Act of 1934, as amended.

(c) "Beneficiary" means, with respect to a Participant, the
person or persons designated pursuant to Section 6.4 to receive
payments under the Plan in the event of the Participant's death.

<PAGE> 2
(d) "Board of Directors" means the Company's board of
directors.

(e) "Cash Compensation" means, with respect to an Eligible
Director, (1) meeting fees payable to the Eligible Director; and (2)
retainers payable to the Eligible Director, to the extent the Eligible
Director has elected to have those retainers paid in the form of cash.

(f) "Cash Deferral Account" means the bookkeeping account used
to record a Participant's interest attributable to his deferred Cash
Compensation and any cash dividends paid on Common Stock credited to
his Stock Deferral Account.

(g) "Committee" means the Committee appointed pursuant to
Article III to administer the Plan.

(h) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.

(i) "Company" means Acordia, Inc.

(j) "Compensation" means, with respect to an Eligible
Director, the Cash Compensation and the Stock Compensation earned by
the Eligible Director for his serving in that capacity.

(k) "Deferral Agreement" means the written agreement entered
into between an Eligible Director and the Company pursuant to which the
Eligible Director elects to defer Compensation pursuant to the Plan.

2
<PAGE> 3
(l) "Eligible Director" means any individual serving as a
member of the Board of Directors who is not an officer or otherwise
employed by the Company or any of its Affiliates.

(m) "Fair Market Value" means with respect to a share of
Common Stock, the last sale price on the trading day of the appropriate
date of reference, or on the preceding trading day if the appropriate
date was not a trading day, of one share of Common Stock on the
principal exchange on which such shares are listed, or if not listed on
an exchange, on the NASDAQ National Market System or any similar system
then in use, or, if shares of the Common Stock are not listed on the
NASDAQ Market System, the mean between the closing high bid and low
asked quotations of one share of Common Stock on the date in questions
as reported by NASDAQ or any similar system then in use, or, if no such
quotations are available, the Fair Market Value on the date in question
of one share of Common Stock as the Committee shall determine.

(n) "Investment Return" means, with respect to any calendar
year, the average of the monthly average rates of the ten-year United
States Treasury Notes for the 12-month period ending on September 30 of
the preceding calendar year plus 150 basis points.

3
<PAGE> 4
(o) "Participant" means the Eligible Director who has elected
to defer Compensation pursuant to Article IV of the Plan.

(p) "Plan" means the Acordia, Inc. Directors Deferred
Compensation Plan, as set forth in this instrument and as amended from
time to time.

(q) "Stock Compensation" means, with respect to an Eligible
Director, the retainers earned by the Eligible Director for his serving
in that capacity, to the extent the Eligible Director elects to have
those retainers paid in the form of Common Stock.

(r) "Stock Deferral Account" means the bookkeeping account
used to record the interest of a Participant attributable to his
deferred Stock Compensation and any stock dividends paid on the Common
Stock credited to his Accounts.

Section 2.2. Rules of Construction. The following rules of
construction shall govern in interpreting the Plan.

(a) Governing Law. The provisions of this instrument shall be
construed and governed in all respects under and by the internal laws
of the State of Indiana.

(b) Gender. Words used in the masculine gender shall be
construed to include the feminine gender, where appropriate, and vice
versa.

4
<PAGE> 5
(c) Number. Words used in the singular shall be construed to
include the plural, where appropriate, and vice versa.

(d) Headings. The headings and subheadings in the Plan are
inserted for convenience of reference only and are not to be considered
in the construction of any provision of the Plan.

(e) Savings Clause. If any provision of the Plan shall be held
to be illegal or invalid for any reason, that provision shall be deemed
to be null and void, but the invalidation of that provision shall not
otherwise impair or affect the Plan.

ARTICLE III.
ADMINISTRATION

Section 3.1. Committee. The Company shall appoint a Committee
of not less than three persons to represent the Company in all matters
concerning the administration of this Plan. Members of the Company's Board of
Directors are not eligible for appointment. The Company may remove a Committee
member for any reason by giving him written notice and may fill any vacancies
thus created. All decisions of the Committee shall be by vote of a majority of
its members.

Section 3.2. Powers and Duties of the Committee. Subject to
the specific limitations stated in this Plan, the Committee shall have the
following powers, duties, and responsibilities:

5
<PAGE> 6
(a) To carry out the general administration of the Plan;

(b) To cause to be prepared all forms necessary or appropriate
for the administration of the Plan;

(d) To determine amounts to be distributed to participants and
others under the provisions of the Plan;

(e) To determine, consistent with the provisions of this
instrument, all questions of eligibility, rights, and status of
Participants and others under the Plan;

(f) To adopt rules and regulations for the administration of
the Plan, provided that the rules are not inconsistent with the
provisions of this Plan, and to interpret, alter, amend, or revoke any
rules and regulations they have adopted;

(g) To interpret, with discretionary authority, the provisions
of this Plan and to resolve with discretionary authority, all disputed
questions of Plan interpretation and benefit eligibility; and

(h) To exercise all other powers and duties specifically
conferred upon the Committee elsewhere in this instrument.

6
<PAGE> 7
ARTICLE IV.

ELIGIBILITY AND PARTICIPATION

Section 4.1. Participation. Any Eligible Director may become a
Participant by electing to defer Compensation pursuant to Section 4.2.

Section 4.2. Election to Defer Compensation.

(a) Election Procedure. Within a reasonable time before the
beginning of each calendar year, the Committee shall provide each
Eligible Director with a Deferral Agreement. An Eligible Director may
elect to defer Compensation for a calendar year by submitting a
completed Deferral Agreement to the Committee prior to the first day of
the calendar year. On the Deferral Agreement, the Eligible Director
shall indicate the amount or percentage of his Cash Compensation, if
any, to be deferred for the calendar year and the amount or percentage
of his Stock Compensation, if any, to be deferred for the calendar
year. Subject to Subsection (b), an election made under this Section
shall be effective as of the first day of the calendar year. The
election for any calendar year shall be irrevocable, but a Participant
may make a new election for each calendar year in which he is an
Eligible Director.

(b) New Participant Deferrals. If an Eligible Director becomes
an Eligible Director subsequent to January 1 of a calendar year and has
not previously

7
<PAGE> 8
served as a member of the Board of Directors, that Eligible Director
may elect within 30 days of his election as an Eligible Director to
defer all or any part of his Compensation for the remainder of the
calendar year in which he was elected. The Eligible Director's election
shall be irrevocable. Elections for calendar years beginning after a
Participant's initial deferral election shall be governed by Subsection
(a).

ARTICLE V.

PARTICIPANTS' ACCOUNTS

Section 5.1. Establishment of Accounts. The Committee shall create and
maintain adequate records to disclose the interest in the Plan of each
Participant and Beneficiary. Records shall be in the form of individual
bookkeeping accounts, which will be credited with deferrals pursuant to Section
4.2 and with dividends and Investment Return pursuant to this Article V. Each
Participant who defers Cash Compensation shall have a separate Cash Deferral
Account. Each Participant who defers Stock Compensation shall have a separate
Stock Deferral Account and a separate Cash Deferral Account. A Participant's
interest in his Accounts shall be fully vested at all times.

Section 5.2. Cash Deferral Account.

(a) Crediting of Cash Compensation and Deferrals. A Participant's Cash
Compensation shall be credited with all Cash Compensation deferred by the
Participant

8
<PAGE> 9
pursuant to Section 4.2. A Participant's Cash Compensation deferral
shall be credited to his Cash Deferral Account as of the date on which
the deferred Cash Compensation otherwise would have been paid to the
Participant.

(b) Crediting of Investment Return. For each calendar year, a
Participant's Cash Deferral Account shall be credited with an
Investment Return pursuant to this Subsection.

(1) On or before December 31 of each year, the Company shall
estimate the Investment Return for the following calendar year. The
actual investment return to be credited to Participants' Cash Deferral
Accounts for a calendar year shall be equal to the Investment Return.

(2) Investment Return shall be credited to a Participant's
Cash Deferral Account monthly, on the last day of each month, based on
the value of the Participant's Cash Deferral Account as of the last day
of the immediately preceding month and upon the Investment Return
estimated by the Company pursuant to Paragraph (1) above.

(3) Notwithstanding any termination of the Plan pursuant to
Article VII, Investment Return shall continue to be credited to a
Participant's Cash Deferral Account until all amounts credited to that
Account have been distributed.

9
<PAGE> 10
(c) Crediting of Cash Dividends. A Participant's Cash Deferral
Account shall be credited with the amount of any cash dividend (or the
Fair Market Value of a dividend paid in property other than Common
Stock) paid on Common Stock credited to the Participant's Stock
Deferral Account.

Section 5.3. Stock Deferral Account.

(a) Crediting of Stock Deferrals. A Participant's Stock
Deferral Account shall be credited with all Stock Compensation deferred
by the Participant pursuant to Section 4.2. A Participant's Stock
Compensation deferral shall be credited to his Stock Deferral Account
as of the date on which the deferred Stock Compensation otherwise would
have been paid to the Participant.

(b) Crediting of Stock Dividends. A Participant's Stock
Deferral Account shall be credited with a number of full or fractional
shares of Common Stock paid as a dividend on Common Stock credited to
the Participant's Stock Deferral Account.

(c) Other Adjustments. The value of a Participant's Stock
Deferral Account shall also be appropriately adjusted for any change in
the Common Stock by reason of any recapitalization, reorganization,
merger, consolidation, or any similar change affecting the Common
Stock.

10
<PAGE> 11
Section 5.4. Accounts Unfunded. Accounts shall be accounting accruals,
in the names of Participants, on the Company's books. Accounts shall be
unfunded, so that the Company's obligation to pay amounts due under the Plan is
merely a contractual duty to make payments when due under the Plan. The
Company's promise to pay amounts under the Plan shall not be secured in any way,
and the Company shall not set aside or segregate assets for the purpose of
paying its obligations under the Plan.

ARTICLE VI.

PAYMENT OF DEFERRED COMPENSATION

Section 6.1. General Distribution Rules. Compensation deferred under
the Plan for each calendar year, together with any attributable Investment
Return and dividends, shall be distributed in accordance with the election made
by the Participant for that calendar year pursuant to Section 6.2. Amounts
credited to a Participant's Cash Deferral Account shall be distributed in cash.
Amounts credited to a Participant's Stock Deferral Account shall be distributed
in the form of Common Stock, except that fractional shares of Common Stock shall
be distributed in cash.

Section 6.2. Distribution Elections. As part of his Deferral Agreement
for each calendar year, a Participant may select, from among the options
described in this Section, the form and time for the payment of his Compensation
deferred for the calendar year (and any

11
<PAGE> 12
attributable Investment Return and dividends). A Participant's election for each
calendar year shall be irrevocable, but the Participant may make a new election
for each calendar year's deferrals.

(a) Time of Distribution. As part of his Deferral Agreement
for each calendar year, the Participant shall specify, with respect to
the Compensation deferred pursuant to the Deferral Agreement, the year
to which payment of the Compensation is deferred. Amounts payable in a
lump sum shall be paid on January 1 of the year to which payment has
been deferred. Distribution of amounts payable in installments shall
begin on January 15th of the year to which payment is deferred, and
subsequent installments shall be made on January 15th of each
succeeding year in the distribution period.

(b) Form of Distribution. As part of his Deferral Agreement
for a calendar year, a Participant shall elect to have his deferred
Compensation for the calendar year (and attributable Investment Return
and dividends) distributed in one of the following forms:

(1) A lump sum payment; or

(2) Substantially equal annual installments
over a specified number of years not exceeding 10.

Section 6.3. Distributions Upon Death. If a Participant dies before all
amounts credited to his Accounts are distributed, the balance of his Accounts
shall be paid

12
<PAGE> 13
to his Beneficiary in the same manner they would have been paid to the
Participant had he survived to the payment date.

Section 6.4. Designation of Beneficiary. Each Participant, at the
time he elects to participate in the Plan, shall file with the Committee a
Beneficiary designation, on a form supplied by the Committee, designating one or
more Beneficiaries to receive payments otherwise due to the Participant in the
event of the Participant's death. A Beneficiary designation will be effective
only if the signed Beneficiary designation form is filed with the Committee
during the Participant's life. Filing of a completed and signed Beneficiary
designation form will cancel all Beneficiary designations previously signed and
filed with the Committee. A Participant may designate one or more primary
Beneficiaries and one or more contingent Beneficiaries. If no designated primary
Beneficiary survives the Participant, amounts remaining unpaid at the time of
the Participant's death shall be paid to the contingent Beneficiary surviving
the Participant who is next in the order specified by the Participant. If that
contingent Beneficiary dies before receiving all of the amounts due under the
Plan, the unpaid amount shall be paid to the contingent Beneficiary's estate. If
no person has been designated as the Participant's Beneficiary, or if no person
designated as Beneficiary survives the Participant, the Participant's estate
shall be his Beneficiary.

13
<PAGE> 14
ARTICLE VII.

AMENDMENT AND TERMINATION

Section 7.1. Amendment. The Company reserves the right to
amend the Plan at any time by action of the Board of Directors. The Company,
however, may not make any amendment that affects the rights of Participants or
their Beneficiaries to receive payment with respect to any Compensation deferred
prior to the date of the amendment.

Section 7.2. Termination. The Company reserves the right to
terminate the Plan at any time as it deems appropriate. In the event the Company
elects to terminate the Plan, the Company shall notify each Participant in
writing of its intent to terminate the Plan at least two weeks prior to the
termination date. In the event of termination, each Participant's Account shall
be distributed in the form elected by the Participant pursuant to Section 6.2.
To the extent distribution of a Participant's Account has not begun before the
termination date, distribution shall commence as though the Participant had
elected pursuant to Subsection 6.2(a) to have payment of his deferred
Compensation under the Plan commence in the first calendar year beginning after
the termination date.

Section 7.3. Restoration of Compensation. If the Plan is
terminated pursuant to Section 7.2, then with respect to periods after the
effective date of the termination, an Eligible Director's full Compensation
shall be paid on a non-deferred basis.

14
<PAGE> 15
ARTICLE VIII.

MISCELLANEOUS

Section 8.1. Relationship. Notwithstanding any other provision
of this Plan, this Plan and any action taken pursuant to it shall not be deemed
or construed to establish a trust or fiduciary relationship of any kind between
or among the Company, Participants, Beneficiaries, or any other persons. The
Plan is intended to be unfunded for purposes of the Internal Revenue Code of
1986, as amended. The rights of Participants and Beneficiaries to receive
payment of Deferred Compensation pursuant to the Plan is strictly a contractual
right to payment, and this Plan does not grant, nor shall it be deemed to grant,
Participants, Beneficiaries, or any other person any interest in or right to any
of the funds, property, or assets of the Company other than as a general
unsecured creditor of the Company.

Section 8.2. Nonassignability Clause. Neither a Participant
nor his Beneficiary or any other person shall have any right or power to
transfer, sell, assign, commute, anticipate, pledge, alienate, or otherwise
convey or encumber in advance any of the payments that may become due under the
Plan, and any attempt to do so shall be void. Any payments that may become due
under this Plan are expressly declared to be nonassignable and nontransferable
and shall not be subject to attachment, garnishment, execution, or be
transferrable by operation of law in the event of

15
<PAGE> 16
bankruptcy, insolvency, or otherwise, except to the extent otherwise required
by law.

Acordia, Inc. has caused this Acordia, Inc. Directors Deferred
Compensation Plan to be executed by its duly authorized officers as of the ____
day of December, 1994.

ACORDIA, INC.

DATED:_____________________ By:_________________________
Chairman and
Chief Executive Officer

ATTEST:

- ---------------------------
Secretary

<PAGE> 1
EXHIBIT (c)(6)

ACORDIA

401(k) LONG TERM SAVINGS INVESTMENT PLAN

(RESTATED EFFECTIVE OCTOBER 21, 1992)
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

ARTICLE I
INTRODUCTION

ARTICLE II
DEFINITIONS AND CONSTRUCTION
<S> <C> <C>
Definitions ............................................................................ 2
2.1 Accounts.................................................................... 2
2.2 Acordia Stock............................................................... 2
2.3 Actual Contribution Percentage.............................................. 2
2.4 Actual Deferral Percentage.................................................. 2
2.5 Affiliate................................................................... 2
2.6 Annual Additions............................................................ 3
2.7 Before Tax Contributions.................................................... 3
2.8 Before Tax Matched Account.................................................. 3
2.9 Before Tax Matched Contributions............................................ 3
2.10 Before Tax Supplemental Account............................................. 3
2.11 Before Tax Supplemental Contributions....................................... 4
2.12 Beneficiary................................................................. 4
2.13 Board of Directors.......................................................... 4
2.14 Code........................................................................ 4
2.15 Company..................................................................... 4
2.16 Company Account............................................................. 4
2.17 Compensation................................................................ 4
2.18 Disabled or Disability...................................................... 5
2.19 Effective Date.............................................................. 5
2.20 Eligible Employee........................................................... 5
2.21 Eligible Participant........................................................ 6
2.22 Employee.................................................................... 6
2.23 Employer.................................................................... 6
2.24 Employer Matched Account.................................................... 6
2.25 Employer Matched Contributions.............................................. 6
2.26 Employment Commencement Date................................................ 6
2.27 Entry Date.................................................................. 6
2.28 ERISA....................................................................... 6
2.29 Excess Aggregate Contributions.............................................. 6
2.30 Excess Contributions........................................................ 7
2.31 Family Member............................................................... 7
2.32 Fiduciary................................................................... 7
2.33 Forfeiture.................................................................. 7
2.34 Former Participant.......................................................... 7
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
2.35 Full-Time Employee.......................................................... 7
2.36 Highly Compensated Eligible Participant..................................... 7
2.37 Highly Compensated Employee................................................. 7
2.38 HMI Company Regular Account................................................. 9
2.39 Hours of Service............................................................ 9
2.40 Income...................................................................... 10
2.41 Investment Funds............................................................ 11
2.42 Investment Manager.......................................................... 11
2.43 Leased Employee............................................................. 11
2.44 Limitation Year............................................................. 11
2.45 Merged Plan................................................................. 11
2.46 Merged Plan I............................................................... 11
2.47 Merged Plan II.............................................................. 11
2.48 Merged Plan III............................................................. 11
2.49 Merged Plan IV.............................................................. 11
2.50 Merged Plan V............................................................... 12
2.51 Merged Plan VI.............................................................. 12
2.52 Normal Retirement Age....................................................... 12
2.53 Normal Retirement Date...................................................... 12
2.54 Participant................................................................. 12
2.55 Participating Employer...................................................... 12
2.56 Part-Time Employee.......................................................... 12
2.57 Pension Committee........................................................... 12
2.58 Period of Service........................................................... 12
2.59 Period of Severance......................................................... 12
2.60 Plan........................................................................ 13
2.61 Plan Year................................................................... 13
2.62 Post 1986 After Tax Contribution Account.................................... 13
2.63 Post 1986 After Tax Contributions........................................... 13
2.64 Pre 1987 After Tax Contribution Account..................................... 13
2.65 Pre 1987 After Tax Contributions............................................ 14
2.66 QNEC(s...................................................................... 14
2.67 QNEC Account................................................................ 14
2.68 Raff-Hughes Company Regular Account......................................... 14
2.69 Raff-Hughes Plan............................................................ 14
2.70 Retirement.................................................................. 14
2.71 Rollover Account............................................................ 14
2.72 Severance From Service Date................................................. 14
2.73 Shelby Pension Transfer Account............................................. 14
2.74 Spouse (surviving spouse)................................................... 14
2.75 Temporary Employee.......................................................... 15
2.76 Terminated or Termination................................................... 15
2.77 Trust (or Trust Fund)....................................................... 15
2.78 Trust Agreement............................................................. 15
2.79 Trustee..................................................................... 15
</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C>
2.80 Valuation Date.............................................................. 15
Construction................................................................ 15

ARTICLE III
PARTICIPATION AND SERVICE
3.1 Continuing Participation.................................................... 16
3.2 Eligibility to Participate.................................................. 16
3.3 Change in Active Status..................................................... 16
3.4 Special Rules for Participation and Vesting Purposes........................ 16
3.5 Participation and Service upon Reemployment................................. 17
3.6 Cessation of Participation.................................................. 17
3.7 Transfers From Affiliates and Change in Status.............................. 17
3.8 Transfers To and From The Associated Group.................................. 17

ARTICLE IV
CONTRIBUTIONS
4.1 Employer Contributions...................................................... 19
4.2 Post 1986 After Tax Contributions........................................... 21
4.3 Time and Manner of Contribution............................................. 21
4.4 Conditions on Employer Contributions........................................ 22
4.5 Change in Amount of Before Tax or Post 1986 After Tax
Contributions............................................................... 22
4.6 Limitations on Before Tax Contributions..................................... 23
4.7 Income Attributable to Excess Contributions................................. 25
4.8 Limitations on Employer Matched and Post 1986 After Tax
Contributions............................................................... 26
4.9 Income Attributable to Excess Aggregate Contributions....................... 28
4.10 Combined Limitation......................................................... 28
4.11 Rollovers................................................................... 28
4.12 Requirements for Qualified Non-Elective Contributions and
Qualified Matching Contributions............................................ 29

ARTICLE V
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 Individual Accounts......................................................... 30
5.2 Account Adjustments (Effective for Valuation Dates Occurring
Prior to January 1. 1994)................................................... 30
5.3 Account Adjustments (Effective for Valuation Dates on or After
January 1, 1994)............................................................ 32
5.4 Maximum Annual Additions.................................................... 33
5.5 No Rights Created by Allocation............................................. 35

ARTICLE VI
PAYMENT OF BENEFITS
6.1 Retirement or Disability.................................................... 36
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C> <C>
6.2 Death....................................................................... 36
6.3 Other Termination of Employment............................................. 36
6.4 Vesting..................................................................... 36
6.5 Disposition of Forfeitures.................................................. 37
6.7 Mode and Method of Payment of Benefits...................................... 40
6.8 Designation of Beneficiary.................................................. 41
6.9 Withdrawals................................................................. 42
6.10 Loans to Participants....................................................... 45
6.11 Direct Rollover Option...................................................... 47

ARTICLE VII
TRUST FUND
7.1 Exclusive Benefit of Eligible Employees and Beneficiaries................... 49
7.2 Investment Directions by Participants....................................... 49
7.3 Acordia Stock............................................................... 52
7.4 Special Rules Applicable to Persons Subject to Section 16(b) of
the Securities Exchange Act of 1934......................................... 53

ARTICLE VIII
ADMINISTRATION
8.1 Duties and Responsibilities of Fiduciaries; Allocation of
Responsibility Among Fiduciaries for Plan and Trust
Administration.............................................................. 56
8.2 Allocation of Duties and Responsibilities................................... 56
8.3 Expenses.................................................................... 56
8.4 Claims Procedure............................................................ 56
8.5 Records and Reports......................................................... 58
8.6 Other Powers and Duties..................................................... 58
8.7 Rules and Decisions......................................................... 59
8.8 Authorization of Benefit Payments........................................... 59
8.9 Application and Forms for Benefits.......................................... 59
8.10 Facility of Payment......................................................... 59
8.11 Indemnification............................................................. 60
8.12 Resignation or Removal of the Pension Committee............................. 60
8.13 Notices and Forms........................................................... 60

ARTICLE IX
MISCELLANEOUS
9.1 No Guarantee of Employment.................................................. 61
9.2 Rights to Trust Assets...................................................... 61
9.3 No Alienation of Benefits................................................... 61
9.4 Discontinuance of Employer Contributions.................................... 61

ARTICLE X
AMENDMENTS AND ACTION BY COMPANY
</TABLE>

iv
<PAGE> 6
<TABLE>
<S> <C> <C>
10.1 Amendments Generally........................................................ 62
10.2 Amendments to Vesting Schedule.............................................. 62
10.3 Action by Company........................................................... 63

ARTICLE XI
SUCCESSOR EMPLOYER AND MERGER OR
CONSOLIDATION OF PLANS
11.1 Successor Employer.......................................................... 64
11.2 Plan Assets................................................................. 64
11.3 Merged Plans................................................................ 64

ARTICLE XII
PLAN TERMINATION
12.1 Right to Terminate.......................................................... 65
12.2 Liquidation of the Trust Fund............................................... 65
12.3 Manner of Distribution...................................................... 65

ARTICLE XIII
DETERMINATION OF TOP-HEAVY STATUS
13.1 General..................................................................... 66
13.2 Top-Heavy Plan.............................................................. 66
13.3 Super Top-Heavy Plan........................................................ 66
13.4 Cumulative Accrued Benefits and Cumulative Accounts......................... 66
13.5 Definitions................................................................. 66
13.6 Vesting..................................................................... 67
13.7 Compensation................................................................ 67
13.8 Minimum Contributions....................................................... 67
13.9 Defined Benefit and Defined Contribution Plan Fractions..................... 68

APPENDIX A

EXHIBIT A

EXHIBIT B

EXHIBIT C
</TABLE>

v
<PAGE> 7
ACORDIA
401(k) LONG TERM SAVINGS INVESTMENT PLAN

ARTICLE I
INTRODUCTION

The Acordia 401(k) Long Term Savings Investment Plan (the "Plan") is established
and maintained in accordance with the terms of this instrument. The assets of
this Plan are held by the Trustee in accordance with the terms of the Trust
Agreement, which is considered to be an integral part of this Plan. Except as
otherwise provided herein or in the Trust Agreement, the Trustee has the
exclusive authority to manage and control the assets of this Plan. Except as
otherwise provided herein, this amended and restated plan applies to those
Participants who are credited with an Hour of Service with an Employer on or
after the effective date of the Initial Public Offering of the Company (the
"Effective Date"). As of the Effective Date, this Plan accepted a transfer of
assets and liabilities from The Associated Group 401(k) Long Term Savings
Investment Plan (the "TAG Savings Plan").

The rights of those individuals (or their beneficiaries) who terminated
employment with an Employer prior to the Effective Date are governed by the
terms and conditions of the TAG Savings Plan in effect prior to such date.

The Plan is hereby designated as a profit sharing plan for purposes of Section
401(a)(27)(B) of the Code. The Plan is intended to be a tax qualified plan under
Section 401(a) of the Code, and its associated trust is intended to be a
tax-exempt trust under Section 501(a) of the Code.
<PAGE> 8
ARTICLE II
DEFINITIONS AND CONSTRUCTION

Definitions. The following words and phrases, when used in this Plan, shall have
the following meanings:

2.1 Accounts means a Participant's Before Tax Matched Account, Before Tax
Supplemental Account (effective January 1, 1994, the Before Tax Matched
and Before Tax Supplement Accounts were merged into the Before Tax
Account), Employer Matched Account, Raff-Hughes Company Regular
Account, HMI Company Regular Account, Shelby Pension Transfer Account,
Post 1986 After Tax Contribution Account, Pre 1987 After Tax
Contribution Account, Rollover Account, Company Account and QNEC
Account.

2.2 Acordia Stock means common stock of the Company.

2.3 Actual Contribution Percentage means, for a specified group of Eligible
Participants for a given Plan Year, the average of the ratios,
calculated separately for each Eligible Employee in such group, of: (i)
the sum of the Employer Matched Contributions, if any, contributed by
an Employer on behalf of each such Eligible Participant and After Tax
Contributions made by each Eligible Participant for the Plan Year; to
(ii) the Eligible Participant's Compensation for such Plan Year.

2.4 Actual Deferral Percentage means, for a specified group of Eligible
Participants for a given Plan Year, the average of the ratios,
calculated separately for each Eligible Participant in such group, of:
(i) the Before Tax Contribution, if any, contributed by the Employer on
behalf of each such Eligible Participant for the Plan Year; to (ii) the
Eligible Participant's Compensation for such Plan Year.

2.5 Affiliate means any employer that has not adopted this Plan and is not
a Participating Employer, but, in accordance with the appropriate
Sections of the Code, (i) is included as a member with the Company in a
controlled group of corporations, (ii) is a trade or business (whether
or not incorporated) included with the Company in a brother-sister
group or combined group of trades or businesses under common control,
(iii) is a member of an affiliated service group in which the Company
is a member, or (iv) any other organization which must be aggregated
with the Company pursuant to Section 414(o) of the Code. With respect
to periods prior to the Effective Date, for Participants or Former
Participants whose pension assets and liabilities were transferred to
this Plan from the TAG Savings Plan as of the Effective Date (and for
Eligible Employees who were employed by an "employer" or "affiliate"
under the TAG Savings Plan prior to the Effective Date but were not yet
participating in that plan on such date), affiliate shall also include
Associated Insurance Companies, Inc. and any other

2
<PAGE> 9
company that was an "affiliate" as defined in the TAG Savings Plan on
the Effective Date.

2.6 Annual Additions means, with respect to each imitation Year, the
additions to a Participant's Account as defined below:

(i) Employer contributions;

(ii) forfeitures;

(iii) (A) for Limitation Years before January 1, 1987, the lesser of

(a) Participant's After Tax Contributions in
excess of 6% of Compensation for such
Limitation Year; or

(b) 50% of Participant's After Tax Contributions
allocated to the Accounts of the Participant
with respect to such Limitation Year; and

(B) for Limitation Years beginning after December 31, 1986,
Participant's After Tax Contributions allocated to the
Accounts of the Participant with respect to such
Limitation Year.

(iv) allocations to individual medical accounts established for the
Participant, who is a Key Employee as defined in Section 13.5,
under a defined benefit plan as provided in Section 415(1) of the
Code and any amount attributable to post-retirement medical
benefits allocated to an account established under Section
419A(d)(1) of the Code for such Participant.

2.7 Before Tax Contributions means a Participant's Before Tax Matched and
Before Tax Supplemental Contributions.

2.8 Before Tax Matched Account means the account maintained for a
Participant to record (i) his share of Before Tax Matched Contributions
under Section 4.1(a)(i); (ii) his share of before tax matched
contributions under Merged Plans I, II, IV or V, if any; (iii) his
share of before tax matched contributions that he made under the
Raff-Hughes Plan, which he has elected to transfer to this Plan, if
any; and (iv) adjustments relating thereto.

2.9 Before Tax Matched Contributions means the contributions made by the
Employer on a Participant's behalf pursuant to Section 4.1(a)(i).

2.10 Before Tax Supplemental Account means the account maintained for a
Participant to record (i) his share of Before Tax Supplemental
Contributions under Section

3
<PAGE> 10
4.1(a)(ii); (ii) his share of before tax supplemental contributions
under Merged Plans I, II, III, IV or V, if any; and (iii) adjustments
relating thereto.

2.11 Before Tax Supplemental Contributions means the contributions made by
the Employer pursuant to Section 4.1(a)(ii).

2.12 Beneficiary means a person or persons (natural or otherwise) designated
by a Participant in accordance with the provisions of Section 6.8 to
receive any death benefit which shall be payable under this Plan.

2.13 Board of Directors means the board of directors of the Company.

2.14 Code means the Internal Revenue Code of 1986, as it may be amended, and
includes any regulations or other rulings issued thereunder.

2.15 Company means Acordia, Inc., and any other business organization which
succeeds to its business and elects to continue the Plan.

2.16 Company Account means the account maintained for a Participant to
record (i) his share of discretionary Employer Contributions under
Merged Plan III and IV, if any; (ii) transferred contributions
allocated to a Participant's "Transfer Account" under Merged Plan IV,
if any; and (ii) adjustments relating thereto.

2.17 Compensation means, for any Plan Year base salary, commissions,
overtime pay and cash bonuses actually received by a Participant.
Compensation shall also include cash received under the Employer's
flexible benefits program and the amount of any elective deferrals the
Participant has authorized the Employer to make on his behalf under the
plans maintained by the Employer in accordance with Sections 125 and
401(k) of the Code but shall exclude all other forms of compensation
such as imputed income, car allowances, non-qualified deferred
compensation, severance payments, payments under the directed executive
compensation program and income from the exercise of qualified or
non-qualified stock options or similar items.

In no event shall a Participant's Compensation considered under the
Plan exceed the amount set forth in Section 401(a)(17) of the Code, as
adjusted for increases in the cost of living.

For purposes of Sections 4.1 and 4.2, notwithstanding any provision in
this Plan to the contrary, for purposes of determining Before Tax
Contributions and Employer Matched Contributions for a Participant,
Compensation shall include such Participant's Compensation during each
pay period beginning with the Entry Date coincident with or next
following participation in the Plan pursuant to Section 3.2; or if the
individual elects to authorize Before Tax Contributions to the

4
<PAGE> 11
Plan at a later date, the Participant's Compensation during each pay
period beginning with the pay period with respect to which such
election is first effective.

For purposes of Sections 4.6 and 4.8, Compensation shall mean, with
respect to any determination period, a definition of Compensation
selected by the Pension Committee in accordance with, and from among
alternatives permissible under, Treas. Reg. 1.414(s)-lT (for years
prior to September 19, 1991) and 1.414(s)-1 or any successor thereto.
Any definition of Compensation selected by the Pension Committee for
use in satisfying the requirements of Section 4.6 or 4.8 for a
determination period shall be used consistently to define the
Compensation of all Employees to be taken into account in satisfying
those requirements for that determination period.

2.18 Disabled or Disability means:

(i) In the case of a Participant who is covered by the Employer's
long-term disability plan, the total incapacity of the
Participant due to a physical or mental condition which qualifies
the Participant for benefits under the Employer's long-term
disability plan whether or not the benefit under the long-term
disability plan has been paid as a single sum amount; and

(ii) In the case of a Participant who is not covered by the Employer's
long-term disability plan, a physical or mental condition, which
in the sole opinion of the Pension Committee, renders the
Participant incapable of performing the duties of any position
for which he is reasonably qualified in light of his education
and employment experience.

(iii) The Pension Committee may require the Participant to be examined
by a duly licensed physician selected by the Pension Committee
before making its determination that the Participant is disabled
and not more frequently than annually thereafter to determine
whether the Participant continues to be Disabled.

2.19 Effective Date means October 21, 1992.

2.20 Eligible Employee means a Full-Time, Part-Time or Temporary Employee
who is employed by the Employer. A non-resident alien who receives no
income from sources within the United States shall not be deemed to be
an Eligible Employee. Any Employee who is included in a unit of
employees covered by a negotiated collective bargaining agreement where
there exists evidence that retirement benefits were the subject of good
faith bargaining, shall not be deemed to be an Eligible Employee,
unless the agreement provides for participation in the Plan. A Leased
Employee shall not be deemed to be an Eligible Employee. An individual
whose income from an Employer is reported on Form 1099 shall not be
deemed to be an Eligible Employee. An individual hired as a Temporary

5
<PAGE> 12
Employee on or after January 1, 1994 shall not be deemed to be an
Eligible Employee. An Eligible Employee whose employment status is
changed to that of a Temporary Employee on or after January 1, 1994
shall not be permitted to make additional Before Tax Contributions
after such status change.

2.21 Eligible Participant means as of each Entry Date, each Eligible
Employee who has met the requirements for participation in the Plan
regardless of whether he has authorized the Employer to make Before Tax
Contributions or Post 1986 After Tax Contributions on his behalf to the
Plan.

2.22 Employee means any individual employed by the Employer as a common law
employee. A Leased Employee shall be deemed to be an Employee.

2.23 Employer means the Company and any Participating Company which, with
the approval of the Board of Directors, has adopted this Plan. With
respect to periods prior to the Effective Date, the Participants or
Former Participants whose savings plan assets and liabilities were
transferred to the Plan from the TAG Savings Plan as of the Effective
Date (and for Eligible Employees who were employed by an "employer" or
"affiliate" under the TAG Savings Plan prior to the Effective Date but
were not yet participating in that plan on such date). Employer shall
also include Associated Insurance Companies, Inc. and any other company
that was an "employer" as defined in the TAG Savings Plan on the
Effective Date.

2.24 Employer Matched Account means the account maintained for a Participant
to record (i) his share of Employer Matched Contributions under Section
4.1(b); (ii) his share of matching contributions under Merged Plan I,
II, IV and V, if any; and (iii) adjustments relating thereto.

2.25 Employer Matched Contributions means the contributions made by the
Employer on a Participant's behalf pursuant to Section 4.1(b).

2.26 Employment Commencement Date means the first day on which an Eligible
Employee is credited with an Hour of Service.

2.27 Entry Date means the first day of each calendar month, and effective
April 1, 1993, every day.

2.28 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.

2.29 Excess Aggregate Contributions means with respect to each Plan Year,
the amount determined for Highly Compensated Eligible Participants
under the procedure set forth in Treas. Reg. 1.401(m)-l(e)(2) or any
successor thereto.

6
<PAGE> 13
2.30 Excess Contributions means with respect to each Plan Year, the amount
determined for Highly Compensated Eligible Participants under the
procedure set forth in Treas. Reg. 1.401(k)-l(f)(2) or any successor
thereto.

2.31 Family Member means, with respect to each Highly Compensated Employee
who owns a 5% interest in an Employer or is in the group consisting of
the 10 most Highly Compensated Employees, the spouse, lineal
descendants or ascendants and their spouses of such Highly Compensated
Employee who are Employees; provided, however, for purposes of the
limitation on Compensation set forth in Section 401(a)(17) of the Code,
Family Members are limited to spouses and descendants who have not
attained age 19 as of the end of the Plan Year of such Highly
Compensated Employee.

2.32 Fiduciary means the Employer, the Board of Directors, the Pension
Committee or the Trustee, but only with respect to the specific
responsibilities of each with respect to Plan and Trust administration
and only to the extent required by ERISA.

2.33 Forfeiture means that portion of a Participant's HMI Company Regular
Account or Raff-Hughes Company Regular Account that is forfeited in
accordance with Section 6.5 due to incomplete vesting.

2.34 Former Participant means any former Eligible Employee who has credits
in his Account as of the close of any Plan Year.

2.35 Full-Time Employee means an Eligible Employee designated as full-time
under the Employer's employment procedures.

2.36 Highly Compensated Eligible Participant means those Eligible
Participants who are Highly Compensated Employees.

2.37 Highly Compensated Employee means:

(a) Employees who were five percent owners, as defined in Section
416(i)(1)(iii) of the Code, at any time during the
determination year or the look-back year;

(b) Employees with compensation greater than $75,000 (as adjusted
pursuant to Section 415(d)(2) of the Code) during the
look-back year;

(c) Employees with compensation greater than $50,000 (as adjusted
pursuant to Section 415(d)(2) of the Code) during the
look-hack year and who are in the top-paid group for the
look-back year;

(d) Employees who are officers of the Employer or any Affiliate
during the look-back year and who have compensation in the
look-back year greater

7
<PAGE> 14
than 50% of the benefit limit in Section 415(b)(1)(A) of the
Code for such year; and

(e) Employees who are both described in paragraph (b), (c), or (d)
above when these paragraphs are modified to substitute the
determination year for the look-back year and who are one of
the 100 Employees who receive the highest compensation from
the Employer during the determination year.

(1) The top-paid group shall consist of the top 20% of
active Employees, ranked on the basis of compensation
received from the Employer during the year including
Employees with less than 6 months of service,
part-time Employees (less than 17 hours per week or
less than 6 months a year). Employees who are not yet
age 21, and nonresident aliens. These Employees shall
not be excluded for purposes of identifying the
particular Employees in the top-paid group. If the
Plan being tested covers only noncollective
bargaining Employees, and collective bargaining
Employees constitute 90 percent or more of the
Employer's Employees, then such collective bargaining
Employees shall be excluded both from the total
number of active Employees and the identification of
particular Employees in the top-paid group. The
top-paid group shall not include Employees who
perform no service during the year.

(2) For purposes of determining whether an Employee is
highly compensated, the determination year is the
Plan Year for which the determination is being made.
The look-back year is the twelve month period
preceding the determination year.

(3) Also, for this purpose, the term "Employee" shall
include Leased Employees unless such Employees are
covered under a safe-harbor plan of the leasing
organization and not covered under a qualified plan
of the Employer.

(4) The number of officers shall be limited to the lesser
of (a) 50, or (b) the greater of 3 individuals or 10
percent of all Employees. If the Employer does not
have at least one officer whose compensation is in
excess of 50% of the limit in Section 415(b)(1)(A) of
the Code, then the highest paid officer of the
Employer shall be treated as a Highly Compensated
Employee.

(5) For purposes of defining Highly Compensated
Employees, Compensation means Compensation as defined
in Section 2.16. The dollar limits are those for the
calendar year in which the

8
<PAGE> 15
determination or look-back year begins, as adjusted
for increases in the cost of living pursuant to
Section 415(d)(2) of the Code.

(6) The Plan shall take into account Employees of all
employers aggregated under Sections 414(b), (c), (m)
and (o) of the Code, in determining who is highly
compensated.

(7) Certain former Employees shall be treated as
Employees for the purpose of determining the number
of Highly Compensated Employees. If a former Employee
had a separation prior to the determination year and
was an active Highly Compensated Employee in the year
he separated from service, or in any determination
year after attaining age 55, the former Employee
shall be counted as a Highly Compensated Employee for
the determination year.

(f) Effective for Plan Years beginning on or after January 1,
1994, the Company and all Employers hereby make the calendar
year calculation election described in Treas. Reg.
1.414(q)-1T, Q&A 14(b).

Notwithstanding the foregoing, the Company, by action of the Pension
Committee, may elect for any Plan Year, to define Highly Compensated
Employee by substituting $50,000 (as adjusted pursuant to Section
415(d) of the Code) for $75,000 (as adjusted pursuant to Section 415(d)
of the Code) in Section 414(q)(1)(B) of the Code and by disregarding
Section 414(q)(1)(C) of the Code.

2.38 HMI Company Regular Account means the account maintained for a
Participant to record his share of HMI contributions under Merged Plan
II, if any, and adjustments relating thereto.

2.39 Hours of Service means:

(a) Performance of Duties. The actual hours for which an Eligible
Employee is paid or entitled to be paid by the Employer for
the performance of duties.

(b) Nonworking Paid Time. Each hour for which an Eligible Employee
is paid or entitled to be paid by the Employer on account of a
period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or leave of
absence; provided, however, no more than 501 Hours of Service
shall be credited to an Eligible Employee on account of any
single continuous period during which he performed no duties;
and provided further that no credit shall be given for
payments made or due under a plan maintained solely for the

9
<PAGE> 16
purpose of complying with applicable workers' or unemployment
compensation or disability insurance laws or for payments
which solely reimburse an Eligible Employee for medical or
medically related expenses incurred by the Eligible Employee.

(c) Back Pay. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer, provided, however, Hours of Service credited under
paragraphs (a) and (b) above shall not be recredited by
operation of this paragraph.

(d) Equivalencies. To the extent that the Plan requires Hours of
Service to be counted, the Pension Committee shall have the
authority to adopt any of the following equivalency methods,
other than elapsed time, for counting Hours of Service that
are permissible under regulations issued by the Department of
Labor: (1) Working Time, (2) Periods of Employment, or
(3) Earnings.

The adoption of any equivalency method for counting Hours of
Service shall be evidenced by a certified resolution of the
Pension Committee, which shall be attached to and made part of
the Plan. Such resolution shall indicate the date from which
such equivalency shall be effective.

(e) Miscellaneous. Unless the Pension Committee directs otherwise,
the methods of determining Hours of Service when payments are
made for other than the performance of duties and of crediting
such Hours of Service to Plan Years set forth in DOL Reg.
2530.200b-2(b) and (c), shall be used hereunder and are
incorporated by reference into the Plan.

(f) Military Leave. Participants on military leaves of absence who
are not directly or indirectly compensated or entitled to be
compensated by the Employer while on such leave shall be
credited with Hours of Service as required by Section 9 of the
Military Selective Service Act.

(g) No Duplication. Notwithstanding any other provision of this
Plan to the contrary, an Eligible Employee shall not be
credited with Hours of Service more than once with respect to
the same period of time.

2.40 Income means the net gain or loss of the Trust Fund from investments,
as reflected by interest payments, dividends, realized and unrealized
gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the
Trust Fund, assets shall be valued on the basis of their fair market
value except for any investment which the Pension Committee determines
shall be valued on the basis of contract or book value.

10
<PAGE> 17
2.41 Investment Funds means the funds designated by the Pension Committee in
accordance with Section 7.2.

2.42 Investment Manager means an investment adviser, bank or insurance
company, meeting the requirements of Section 3(38) of ERISA appointed
by the Employer to manage the Plan's assets in accordance with the
Trust Agreement.

2.43 Leased Employee means any person within the meaning of Section 414(n)
of the Code who is not an Employee of the Employer and who provides
services to the Employer if:

(a) such services are provided pursuant to an agreement between
the Employer and any leasing organization;

(b) such person has performed such services for the Employer (or
for the Employer and Affiliates) on a substantially full-time
basis for a period of at least one year; and

Notwithstanding the foregoing, a person shall not be deemed to be a
Leased Employee if he is covered by a plan maintained by the leasing
organization and Leased Employees (as determined without regard to this
paragraph) do not comprise more than 20% of the Employer's nonhighly
compensated workforce. Such plan must be a money purchase pension plan
providing for nonintegrated employer contributions of ten percent of
compensation and also providing for immediate participation and
vesting.

2.44 Limitation Year means the Plan Year.

2.45 Merged Plan means any of the plans defined in Sections 2.47 - 2.52 and
any other plan that is merged into the Plan after October 21, 1992.

2.46 Merged Plan I means the Blue Cross and Blue Shield of Indiana
Employees' Thrift Savings Plan, as in effect prior to January 1, 1991.

2.47 Merged Plan II means the HM1 Employees' Profit Sharing Plan that was in
effect prior to its merger into the TAG Savings Plan on January 1,
1991.

2.48 Merged Plan III means the Key Care Health Resources, Inc. Retirement
Plan that was in effect prior to its merger into the TAG Savings Plan
on January 1, 1991.

2.49 Merged Plan IV means the Robinson-Conner, Inc. 401(k) Plan that was in
effect prior to its merger into the TAG Savings Plan on January 1,
1992.

11
<PAGE> 18
2.50 Merged Plan V means the Anthem Group Services Corporation Retirement
Savings Plan that was in effect prior to its merger into the TAG
Savings Plan on January 1, 1992.

2.51 Merged Plan VI means Price and McDonald, Inc. Profit Sharing Plan that
was in effect prior to its merger into the Plan on May 31, 1993.

2.52 Normal Retirement Age means age 65.

2.53 Normal Retirement Date means the date on which a Participant attains
his Normal Retirement Age.

2.54 Participant means any Eligible Employee participating in the Plan in
accordance with the provisions of Section 3.1.

2.55 Participating Employer means any direct or indirect subsidiary of the
Company or any other entity designated by the Board of Directors that
has adopted this Plan with the approval of the Company.

2.56 Part-Time Employee means an Eligible Employee who is designated as a
part-time Employee by the Employer under its employment procedures.

2.57 Pension Committee means the Pension Committee appointed by the Board of
Directors to administer the Plan and to manage and invest the Trust
Fund.

2.58 Period of Service means the aggregate of all periods of a person's
employment as an Eligible Employee with the Employer, whether or not
consecutive.

Service shall include (i) a period of up to 12 months of absence from
employment for any reason other than because of resignation,
retirement, death or discharge; (ii) the period from the date the
Eligible Employee resigns, retires or is discharged to the date of his
reemployment, if he returns to employment with the Employer or any
Affiliate within 12 months of such resignation, retirement or
discharge; and (iii) the period beginning on the date the Eligible
Employee is absent for maternity or paternity reasons and ending on the
date the Eligible Employee commences a Period of Severance due to such
absence.

Service also shall include such period of service in the armed forces
of the United States as shall be required to be recognized under
applicable federal law with respect to military service. Service is
determined as full calendar months.

2.59 Period of Severance means a period of time commencing with an Eligible
Employee's Severance From Service Date and ending with the date such
Eligible Employee resumes employment with the Employer.

12
<PAGE> 19
Notwithstanding the foregoing, if an Eligible Employee is absent from
work for maternity or paternity reasons, the Period of Severance shall
not begin until the second anniversary of the first day of the period
in which such absence began. For purposes of this Section, an absence
from work for maternity or paternity reasons meaning an absence (i) by
reason of the pregnancy of the individual; (ii) by reason of a birth of
a child of the individual; (iii) by reason of the placement of a child
with the individual by adoption; or (iv) for purposes of caring for
such child for a period beginning immediately following such birth or
placement.

2.60 Plan means the Acordia Retirement Savings Plan; effective January 1,
1994, the name was changed to the Acordia 401(k) Long Term Savings
Investment Plan.

2.61 Plan Year means the 12 consecutive month period commencing each January
1 and ending December 31. For purposes of discrimination testing, the
first Plan Year will be deemed to be the 12 month period beginning
January 1, 1992.

2.62 Post 1986 After Tax Contribution Account means the separate Account
maintained for a Participant to record: (i) his share of the Trust Fund
attributable to his Post 1986 After Tax Contributions; (ii) his share
of post 1986 after tax contributions that he made to Merged Plan IV;
and (iii) earrings and losses attributable thereto. The Pension
Committee shall separately account, through subaccounts for "Post 1986
Voluntary Contributions." "Post 1986 Voluntary Contributions" shall
mean after-tax contributions made to the Plan which do not qualify for
an Employer Matched Contribution.

2.63 Post 1986 After Tax Contributions means the after-tax contributions
made by a Participant to the Plan under Section 4.2, if any, after
December 31, 1985. Effective April 1, 1993, Participants are prohibited
from making Post 1986 After Tax Contributions. Such contributions prior
to that date shall continue to be held under the Plan.

2.64 Pre 1987 After Tax Contribution Account means the separate Account
maintained for a Participant to record: (i) his share of the Trust Fund
attributable to his Pre 1987 After Tax Contributions; (ii) his share of
pre 1987 after tax contributions that he made under the Raff-Hughes
Plan, which he elected to transfer to this Plan, if any; (flu) his
share of pre 1987 voluntary contributions that he made to Merged Plan
IV; and (iv) earnings and losses attributable thereto. The Pension
Committee shall separately account, through subaccounts, for the
following contributions, and earnings and losses attributable thereto:

(a) "Voluntary Basic Contributions" made to Merged Plan I prior to
January 1, 1984; and

(b) "Voluntary Supplemental Contributions", including
nondeductible voluntary contributions made to Merged Plan II
or that were transferred to the Plan.

13
<PAGE> 20
For purposes of this Plan, (i) "Voluntary Basic Contributions" shall
mean after-tax contributions made to the Plan which qualified for an
Employer matched contribution, and (ii) "Voluntary Supplemental
Contributions" shall mean after-tax contributions made to the Plan
which did not qualify for an Employer matched contribution.

2.65 Pre 1987 After Tax Contributions means the after tax contributions made
by a Participant to the Plan before January 1, 1987.

2.66 QNEC(s) means the discretionary qualified nonelective contributions
made by the Employer on a Participant's behalf pursuant to Section
4.1(c).

2.67 QNEC Account means the account maintained for a Participant to record
his share of QNECs under Section 4.1(c) and adjustments relating
thereto.

2.68 Raff-Hughes Company Regular Account means the Account maintained for a
Participant to record his share of Raff-Hughes contributions made on
his behalf under the TAG Savings Plan in plan years beginning on or
after January 1, 1992.

2.69 Raff-Hughes Plan means the Raffensperger, Hughes & Co., Inc. Employees'
Profit Sharing Plan.

2.70 Retirement means termination of employment from the Employer at or
after Normal Retirement Date.

2.71 Rollover Account means the account maintained on behalf of a
Participant to record the amounts (i) he has rolled over to the Plan
pursuant to Section 4.11; (ii) amounts that he rolled over to Merged
Plan III, V, or VI, if any; (iii) any amounts (including outstanding
plan loans) transferred on a trustee to trustee basis from The
Associated Group 401(k) Long Term Savings Investment Plan; and (iv)
adjustments relating thereto.

2.72 Severance From Service Date means the earlier of (i) the date on which
an Employee quits, dies, retires or is discharged or (ii) the first
anniversary of the first date of a period in which an Employee remains
absent from service with or without pay with the Employer for any
reason other than the foregoing.

2.73 Shelby Pension Transfer Account means the account maintained for a
Participant who participated in the Shelby Insurance Group Retirement
Savings Plan to record his share of pension transfer dollars held for
his benefit under that plan, if any, and adjustments related thereto.

2.74 Spouse (surviving spouse) means the spouse or surviving spouse of the
Participant or Former Participant; provided that a former spouse will
be treated as the spouse

14
<PAGE> 21
or surviving spouse to the extent provided under a qualified domestic
relations order as described in Section 414(p) of the Code.

2.75 Temporary Employee means an Employee who is neither a Part-Time or
Full-Time Employee.

2.76 Terminated or Termination means a termination of employment with the
Employer or with an Affiliate for any reason other than a transfer of
employment from the Employer to an Affiliate or from an Affiliate to
another Affiliate.

2.77 Trust (or Trust Fund) means the fund created by the Trust Agreement and
maintained by the Trustee in accordance with the terms of the Trust
Agreement.

2.78 Trust Agreement means "The Master Trust Agreement between Acordia, Inc.
and the Bank of New York," as amended from time to time and that
constitutes part of the Plan.

2.79 Trustee means the individual or entity designated in the Trust
Agreement, or any successor Trustee or Trustees appointed to administer
the Trust.

2.80 Valuation Date means the last day of each calendar month and such other
dates selected by the Pension Committee, on which dates Trust gains and
losses are allocated to Participants' Accounts pursuant to Section 5.2.
Effective January 1, 1994, each day on which the security markets of
the United States are generally in operation shall be a Valuation Date
or such other dates selected by the Pension Committee.

Construction. The masculine gender, where appearing in the Plan, shall be deemed
to include the feminine gender, unless the context clearly indicates to the
contrary.

15
<PAGE> 22
ARTICLE III
PARTICIPATION AND SERVICE

3.1 Continuing Participation. Each Eligible Employee who was a Participant
in the TAG Savings Plan on the day before the Effective Date shall
continue as a Participant if employed by an Employer on the Effective
Date. Each other Full-Time, Part-Time or Temporary Eligible Employee
shall be eligible to participate as provided in Section 3.2.

3.2 Eligibility to Participate.

(a) Effective for Eligible Employees first credited with an Hour
of Service prior to April 1, 1993:

(i) Full-Time Employees and Part-Time Employees shall be
eligible to participate as soon as administratively
feasible after completing three (3) months of
service.

(ii) Temporary Employees shall be eligible to participate
as soon as administratively feasible after they are
credited with 1,000 Hours of Service in a 12 month
period.

(b) An Eligible Employee first credited with an Hour of Service on
or after April 1, 1993, shall be eligible to participate on
his Employment Commencement Date.

(c) Temporary Employees hired on or after January 1, 1994 and
those Employees who become Temporary Employees on or after
January 1, 1994, may not participate or continue to actively
participate in the Plan.

3.3 Change in Active Status. A Participant shall cease to be an active
Participant and shall no longer be permitted to contribute to the Plan
when he is no longer an Eligible Employee.

3.4 Special Rules for Participation and Vesting Purposes. For purposes of
determining an Eligible Employee's eligibility to participate and
Periods of Service for vesting pursuant to Section 6.4, Hours of
Service, months of employment and Period of Service shall include an
Eligible Employee's Hours of Service and months of employment or
Periods of Service (i) as a Leased Employee of the Employer or an
Affiliate (after the employer became an Affiliate); (ii) as an Employee
of the Employer or an Affiliate (after the employer became an
Affiliate) covered by the terms of a collective bargaining agreement
that does not provide for participation in this Plan; (iii) while a
common law Employee of the Employer who is not deemed to be an Eligible
Employee or while a common law Employee of an Affiliate; or (iv) while
an Employee of a predecessor organization of the Employer

16
<PAGE> 23
in any case where the Employer maintains the plan of such predecessor
organization as required under Section 414(a) of the Code.

3.5 Participation and Service upon Reemployment. Upon the reemployment of
any person after the Effective Date who had previously been employed by
the Employer, the following rules shall apply in determining his
participation in the Plan. If the reemployed Eligible Employee was not
a Participant in the Plan during his prior period of employment, he
must meet the requirements of Section 3.2 for participation in the
Plan. If the reemployed Eligible Employee was a Participant in the Plan
during his prior period of employment, he shall again become a
Participant in the Plan as soon as administratively feasible upon his
rehire. For purposes of this Section 3.5, any Periods of Service
credited to a Participant, Eligible Employee or Employee prior to his
termination of employment shall be restored upon his reemployment for
purposes of vesting in Employer contributions allocated to his Account
following his reemployment. Section 6.5 sets forth the rules pertaining
to vesting following reemployment in amounts allocated to a
Participant's Account prior to his Termination of employment.

3.6 Cessation of Participation. A Participant shall cease to a Participant
on the date as of which (i) he is no longer an Eligible Employee and
(ii) all of his vested Accounts have been distributed.

3.7 Transfers From Affiliates and Change in Status. Any Eligible Employee
who transfers to the Employer from an Affiliate or who otherwise
becomes an Eligible Employee after his Employment Commencement Date,
shall be eligible to participate in the Plan as of the date of transfer
or change in status.

3.8 Transfers To and From The Associated Group.

(a) A Participant who is transferred (as defined in subsection (c)
below) to Associated Insurance Companies, Inc. or one of its
affiliates participating in The Associated Group Long Term
Savings Investment Plan (a TAG Employer) may elect in
accordance with procedures adopted by the Pension Committee to
have his accounts (including any outstanding plan loans) and
the assets associated with those accounts transferred to The
Associated Group 401(k) Long Term Savings Investment Plan as
soon as administratively feasible after the transfer.

(b) An employee of a TAG Employer who is transferred (as defined
in subsection (c) below) to an Employer and becomes a
Participant may have his accounts (including any outstanding
plan loans) and the assets associated with those accounts
transferred to the Plan as soon as administratively feasible
after the transfer.

17
<PAGE> 24
(c) A Participant shall be deemed to have transferred

(i) from an Employer to a TAG Employer if, within the 60
day period following the Participant's Termination
with an Employer, he is hired by a TAG Employer and
becomes an eligible employee under the TAG Savings
Plan; or

(ii) from a TAG Employer to an Employer if, within the 60
day period following the termination of employment as
an eligible employee with a TAG Employer, he is hired
by an Employer participating in the Plan and becomes
an Eligible Employee.

18
<PAGE> 25
ARTICLE IV
CONTRIBUTIONS

4.1 Employer Contributions.

(a) (i) Before Tax Matched Contributions. Subject to the
limitations of Sections 4.6, 4.10 and 5.3, each Participant
shall have the option to authorize the Employer in accordance
with procedures established by the Pension Committee, to
contribute to the Plan for a Plan Year on his behalf, an
amount equal to any whole percentage of his Compensation from
one percent (1%) up to six percent (6%) (as determined without
regard to this Section 4.1(a)) for such Plan Year. Such
authorization shall be in the form of an election by the
Participant to have his Compensation reduced by payroll
withholding. The election of a new Participant shall be
effective as soon as administratively feasible following
receipt of the election by the Pension Committee. Such
withheld amounts are to be transmitted by the Employer to the
Trustee as of the earliest date on which such amounts can
reasonably be segregated from the Employer's general assets,
but in no event later than 90 days after such amounts are
withheld from the Participant's Compensation.

(ii) Before Tax Supplemental Contributions. Subject to the
limitations of Sections 4.6, 4.10 and 5.3, each Participant
shall have the option to authorize the Employer in accordance
with procedures established by the Pension Committee, to
contribute to the Plan for a Plan Year on his behalf, an
amount equal to any whole percentage of his Compensation from
seven percent (7%) up to sixteen percent (16%) (as determined
without regard to this Section 4.1(a)) for such Plan Year.
Such authorization shall be in the form of an election by the
Participant to have his Compensation reduced by payroll
withholding. The election of a new Participant shall be
effective as soon as administratively feasible following
receipt of the election by the Pension Committee. Such
withheld amounts are to be transmitted by the Employer to the
Trustee as of the earliest date on which such amounts can
reasonably be segregated from the Employer's general assets,
but in no event later than 90 days after such amounts are
withheld from the Participant's Compensation.

(iii) Excess Deferrals. Notwithstanding the foregoing, the
Participant shall be prohibited from authorizing any Before
Tax Contributions to be made on his behalf under this Plan and
elective contributions under any other plan, in excess of the
applicable limit under Section 402(g) of the Code in effect
for the Plan Year to which such Before Tax Contributions
relate. In the event a Participant has made excess deferrals,
then not later

19
<PAGE> 26
than the first day of March following the close of the
Participant's taxable year, the Participant may notify each
plan under which deferrals were made of the amount of the
excess deferrals received by that plan. The Participant shall
be deemed to have notified the Plan of excess deferrals to the
extent he has excess deferrals for the taxable year calculated
by taking into account only elective deferrals under the Plan
and other plans of the Employer or Affiliate. The Employer may
notify the Plan on behalf of the Participant under these
circumstances.

Not later than the first April 15 following the close of the
taxable year, the Plan shall distribute to the Participant the
amount designated above, including any Income allocated
thereto. The Income attributable to a Participant's excess
deferral pursuant to this Section 4.1(a)(iii) for the Plan
Year during which such excess deferral arose shall be
determined in accordance with Treas. Reg.
1.402(g)-1(e)(5)(ii). Unless otherwise provided for by the
Pension Committee, any Income attributable to a Participant's
excess deferrals for the period between the end of the Plan
Year and the date of distribution shall be disregarded.

A Participant who has excess deferrals for a taxable year may
receive a corrective distribution of excess deferrals during
the same year. This corrective distribution shall be made only
if:

(A) The Participant designates the distribution as an excess
deferral. The Participant shall be deemed to have designated
the distribution to the extent the Participant has excess
deferrals for the taxable year calculated by taking into
account only elective deferrals under the Plan and other plans
of the Employer and Affiliate. The Employer may make the
designation on behalf of the individual under these
circumstances.

(B) The correcting distribution is made after the date on
which the Plan received the excess deferral.

The term "excess deferrals" means the excess of an
individual's elective deferrals for any taxable year, as
defined in Treas. Reg. 1.402(g)-1(b), over the applicable
limit under Section 402(g)(1) of the Code for the taxable
year.

(iv) Compliance. The Pension Committee may further limit a
Participant's right to make Before Tax Contributions to the
Plan if in the sole judgment and discretion of the Pension
Committee, such limits are

20
<PAGE> 27
necessary to ensure the Plan's compliance with the
requirements of Sections 401(k) and (m) of the Code.

(b) Employer Matched Contributions. Subject to the limitations
of Sections 4.8 and 5.3 and except for those Participating
Employers listed on Appendix A, an Employer shall contribute
with respect to each pay period an amount equal to 50% of a
Participant's Before Tax Matched Contributions that a
Participant has authorized the Employer to make on his
behalf for the Plan Year. In the event a Participant who is
not a Highly Compensated Employee for the Plan Year and who
is not participating in one of the nonqualified deferred
compensation plans sponsored by the Company elected to make
Before Tax Matched Contributions in such amount that the
limitations under Section 402(g) of the Code restricted the
Participant's Before Tax Contributions, that Participant
shall receive an Employer Matched Contribution as if the
full amount of the Before Tax Contributions of the
Participant had been made. The amount of such contribution
shall not exceed the maximum amount allowable as a deduction
under the Code for such Plan Year.

(c) QNECS. Subject to the limitations of Sections 4.3 and 5.3,
the Employer shall contribute for each Plan Year an amount,
if any, as determined by the Board of Directors on behalf of
some or all Participants who are not Highly Compensated
Eligible Participants. The amount of such contribution shall
not exceed the maximum amount allowable as a deduction under
the Code for such Plan Year. It is intended that this
contribution shall constitute a qualified nonelective
contribution within the meaning of Treas. Reg.
1.401(k)-1(g)(13)(ii) or any successor thereto.

4.2 Post 1986 After Tax Contributions. Subject to the limitations of
Sections 4.8, 4.10 and 5.3, each Participant shall have the option to
contribute to the Plan for a Plan Year an amount equal to any
percentage of his Compensation up to ten percent (10%) for such Plan
Year. Such authorization shall be in the form of an election by the
Participant to have his Compensation reduced on an after-tax basis by
payroll deduction in accordance with procedures established by the
Pension Committee. Such amounts are to be transmitted by the Employer
to the Trustee as of the earliest date on which such amounts can be
reasonably segregated from the Employer's general assets, but in no
event later than 90 days after such amounts have been withheld from
Participants' Compensation.

Effective April 1, 1993, Participants shall not have the option to
contribute to the Plan on an after-tax basis. Pre-April 1, 1993,
after-tax contributions shall continue to be held by the Plan in
accordance with the provisions of the Plan.

4.3 Time and Manner of Contribution. All Employer contributions shall be
paid directly to the Trustee. Except as provided in Section 4.1(a), a
contribution for

21
<PAGE> 28
any Plan Year shall be made not later than the date prescribed by law
for filing the Employer's Federal income tax return, including
extensions, for such Plan Year.

4.4 Conditions on Employer Contributions. To the extent permitted or
required by ERISA and the Code, contributions under this Plan are
subject to the following conditions:

(a) If the Employer makes a contribution, or any part thereof,
by mistake of fact, such contribution or part thereof shall
be returned to the Employer within one year after such
contribution is made.

(b) Contributions to the Trust Fund are specifically conditioned
on the initial qualification of the Plan under the Code; in
the event the Plan is determined to be disqualified upon an
application for determination made by the time prescribed by
law for filing the Employer's return for the taxable year in
which the Plan was adopted or such later date as the
Secretary of the Treasury may prescribe, contributions made
with respect to any period subsequent to the effective date
of such disqualification shall be refunded to the Employer
within one year after the effective date of
disqualification.

(c) Contributions to the Plan are specifically conditioned upon
their deductibility under the Code. To the extent a
deduction is disallowed for any such contribution, such
amount shall be refunded to the Employer within one year
after the disallowance of the deduction.

(d) Earnings attributable to the contribution shall not be
refunded to the Employer, but losses shall reduce the amount
to be refunded. In no event shall return of the contribution
to the Employer reduce the amount of any Participant's
Account to less than the balance that would have been in
such Account had the contribution not been made.

(e) The amount of any Employer contribution shall be subject to
the limitations prescribed in Section 5.3.

4.5 Change in Amount of Before Tax or Post 1986 After Tax Contributions.
Upon notice to the Pension Committee, each Participant shall have the
option to change the amount of Before Tax Contributions he has
authorized the Employer to contribute to the Plan on his behalf
pursuant to Section 4.1(a) or Post 1986 After Tax Contributions under
Section 4.2 (for periods prior to April 1, 1993), effective as soon as
administratively feasible following receipt of the change by the
Pension Committee. Upon notice to the Pension Committee, each
Participant shall have the option to suspend completely the amount of
Before Tax Contributions he has authorized the Employer to contribute
to the Plan on his behalf pursuant to Section

22
<PAGE> 29
4.1(a) or Post 1986 After Tax Contributions under Section 4.2,
effective as soon as administratively feasible after receipt of the
notice by the Pension Committee. A Participant who has ceased making
Before Tax Contributions or Post 1986 After Tax Contributions may again
authorize Before Tax Contributions to be made to the Plan on his behalf
or Post 1986 After Tax Contributions effective as soon as
administratively feasible following receipt of the form by the Pension
Committee and after a suspension period of six months. Notwithstanding
the foregoing, effective January 1, 1994, the six month suspension
period is eliminated, and a Participant may change the amount of his
Before Tax Contributions at any time by giving notice to the Pension
Committee, but not more than four changes shall be permitted in any
Plan Year. The change shall become effective as soon as
administratively feasible following receipt of notice by the Pension
Committee.

A Participant also may elect to change his Before Tax Contributions'
rate and may elect to commence or increase his Post 1986 After Tax
Contributions as a result of any limitations imposed by Section
4.1(a)(iii) on the amount of Before Tax Contributions that a
Participant may authorize the Employer to contribute on his behalf.

4.6 Limitations on Before Tax Contributions. The amount of Before Tax
Contributions made in each Plan Year on behalf of all Participants
under the Plan shall comply with either (i) or (ii) and (iii), if
applicable, below.

(i) The Average Deferral Percentage for the Highly Compensated
Eligible Participants shall not exceed the Average Deferral
Percentage for all other Eligible Participants multiplied by
125%, or

(ii) The Average Deferral Percentage for Highly Compensated Eligible
Participants shall not be greater than the Average Deferral
Percentage of all other Eligible Participants multiplied by 200%
and the excess of the Average Deferral Percentage for Highly
Compensated Eligible Participants over the Average Deferral
Percentage for all other Eligible Participants shall not
exceed two percentage points.

Compliance with (i) and (ii) above, shall be determined in
accordance with the rules set forth in Section 401(k)(3) of the
Code, Treas. Reg. 1.401(k)-l(b), or any successors thereto.

(iii) Notwithstanding the foregoing, if this Section 4.6 and Section
4.8 are both satisfied by use of the limitation set forth in
Section 4.6(ii) and Section 4.8(ii), respectively, the Average
Deferral Percentages for the Highly Compensated Eligible
Participants and the Average Contribution Percentages for the
Highly Compensated Eligible Participants, as defined in Section
4.8, also must satisfy the aggregate limit test set forth in
Treas. Reg. 1.401(m)-2(b)(3).

23
<PAGE> 30
If the Pension Committee determines, in its sole discretion,
with respect to any Plan Year, that the Plan will (or may) fail
(i) or (ii) and (iii) above, the Pension Committee shall take
any action, that it deems appropriate, including imposing
limitations on Before Tax Contributions made by Highly
Compensated Eligible Participants, for the Plan to satisfy (i)
or (ii) and (iii) above.

Effective January 1, 1994, the Pension Committee, at the beginning of
the Plan Year, shall impose a limitation (the "Initial Limitation") on
the Before Tax Contributions made by Highly Compensated Eligible
Participants as deemed necessary and appropriate by the Pension
Committee to ensure that the Plan satisfies either (i) or (ii) and
(iii) above. The Pension Committee shall monitor the Plan on a monthly
basis to determine whether, in the Pension Committee's judgment, the
Plan will satisfy either (i) or (ii) and (iii) above. If, as of any
month, the Pension Committee, in its sole discretion, determines that
the Plan will not satisfy either (i) or (ii) and (iii) above without
further adjustments, the Pension Committee will reduce, by one or more
whole or fractional percentage points, the rate of Before Tax
Contributions of those Highly Compensated Eligible Participants who
have not yet reached the Initial Limitation. The Pension Committee
shall only reduce contribution rates by the number of whole or
fractional percentage points that the Pension Committee, in its
judgment, deems necessary to make the Average Contribution Percentages
and Average Deferral Percentages of Highly Compensated Eligible
Participants satisfy the requirements of either (i) or (ii) and (iii)
above.

If the amount of Before Tax Contributions authorized by Highly
Compensated Eligible Participants in a Plan Year would not comply with
either (i) or (ii) and (iii) above, then by the last day of the
following Plan Year, the Pension Committee may determine that the
Excess Contributions for such Plan Year (including any Income
attributable to such contributions) shall be distributed to Highly
Compensated Eligible Participants on the basis of the respective
portions of such Excess Contributions attributable to each such Highly
Compensated Eligible Participant in accordance with Treas. Reg.
1.40l(k)-l(f)(4).

If Excess Contributions are distributed to Highly Compensated Eligible
Participants, the amount of excess of each Highly Compensated Eligible
Participant is the amount by which his Before Tax Contributions must be
reduced for the Participant's deferral percentage to equal the highest
permitted Actual Deferral Percentage under the Plan. To calculate the
highest permitted Actual Deferral Percentage under the Plan, the Actual
Deferral Percentage of the Highly Compensated Eligible Participant with
the highest deferral percentage is reduced by the amount required to
cause the Participant's Actual Deferral Percentage to equal the
percentage of the Highly Compensated Eligible Participant with the next
highest Actual Deferral Percentage. If a lesser reduction would enable
the arrangement to satisfy the Actual Deferral Percentage test, only
such lesser

24
<PAGE> 31
reduction need be made. This process shall be repeated until the
requirements set forth above are met. The highest deferral percentage
remaining under the Plan after leveling is the highest permitted Actual
Deferral Percentage. In no event shall the amount of Excess
Contributions to be distributed for a Plan Year with respect to any
Highly Compensated Eligible Participant exceed the amount of Before Tax
Contributions made on behalf of the Highly Compensated Eligible
Participant for the Plan Year.

The Compensation and Before Tax Contributions of Highly Compensated
Eligible Participants who are either 5 percent owners or among the ten
most Highly Compensated Eligible Participants includes the Compensation
and Before Tax Contributions of their Family Members. When family
aggregation shall be required, the family group shall be treated as one
Highly Compensated Eligible Participant and the Actual Deferral
Percentage for the group shall be determined by combining the Before
Tax Contributions, amounts treated as Before Tax Contributions and
Compensation of all the eligible Family Members. If an Employee is
required to be aggregated as a Family Member of more than one family
group in the Plan, then all Participants who are Family Members of
those family groups that include that Employee, are aggregated as one
family group.

The amount of Excess Contributions for a Highly Compensated Eligible
Participant shall be determined by reducing the contribution percentage
of the Highly Compensated Eligible Participants who have the highest
percentages to the maximum acceptable level. The amount of Excess
Contributions to be reduced shall be reduced by excess deferrals, as
defined in Section 4.1(a)(ii), previously distributed for the taxable
year ending in the same Plan Year.

If the Highly Compensated Eligible Participant's deferral percentage
was required to be determined by combining the Compensation and Before
Tax Contributions of all Family Members who are Participants, the
Highly Compensated Eligible Participant's percentage shall be reduced
as set forth above. Excess Contributions shall be allocated among the
eligible Family Members in proportion to the Before Tax Contributions
of each such Family Member that were combined above.

Notwithstanding the foregoing, the Employer may make a QNEC on behalf
of some or all Eligible Participants who are not Highly Compensated
Eligible Participants in order to comply with (i) or (ii) and (iii) for
any Plan Year.

25
<PAGE> 32
Unless otherwise provided for by the Pension Committee, any gain or
loss on a Participant's Excess Contributions for the period between the
end of the Plan Year and the date of distribution shall be disregarded.

4.8 Limitations on Employer Matched and Post 1986 After Tax Contributions.
The amount of Employer Matched Contributions made in each Plan Year on
behalf of all Participants under the Plan and Post 1986 After Tax
Contributions made by Participants shall comply with either (i) or (ii)
and (iii), if applicable, below.

(i) The Average Contribution Percentage for the Highly Compensated
Eligible Participants shall not exceed the Average Contribution
Percentage for all other Eligible Participants multiplied by
125%, or

(ii) The Average Contribution Percentage for Highly Compensated
Eligible Participants shall not be greater than the Average
Contribution Percentage of all other Eligible Participants
multiplied by 200% and the excess of the Average Contribution
Percentage for Highly Compensated Eligible Participants over the
Average Compensation Percentage for all other Eligible
Participants shall not exceed two percentage points.

Compliance with (i) and (ii) above, shall be determined in
accordance with the rules set forth in Section 401(m)(2) of the
Code and Treas. Reg. 1.401(m)-1(b), or any successors thereto.

(iii) Notwithstanding the foregoing, if Section 4.8 and Section 4.6
are both satisfied by use of the limitation set forth in Section
4.8(ii) and Section 4.6(ii), respectively, above, the Average
Contribution Percentages for the Highly Compensated Eligible
Participants and the Average Deferral Percentages for the Highly
Compensated Eligible Participants, as defined in Section 4.6,
also must satisfy the aggregate limit test set forth in Treas.
Reg. 1.401(m)-2(b)(3).

If the Pension Committee determines, in its sole discretion,
with respect to any Plan Year, that the Plan will (or may) fail
(i) or (ii) and (iii) above, the Pension Committee shall take
any action that it deems appropriate, for the Plan to satisfy
(i) or (ii) and (iii) above.

If the amount of Employer Matched Contributions made on behalf
of Highly Compensated Eligible Participants and Post 1986 After
Tax Contributions made by Highly Compensated Eligible
Participants in a Plan Year would not comply with either (i) or
(ii) and (iii) above, then by the last day of the following Plan
Year, the Pension Committee may determine that the Excess
Aggregate Contributions for such Plan Year (including any Income
attributable to such contributions) shall be distributed to
Highly Compensated Eligible Participants or Employer Matched
Contributions may

26
<PAGE> 33
be forfeited on the basis of the respective portions of such
Excess Aggregate Contributions attributable to each such Highly
Compensated Eligible Participant in accordance with Treas. Reg.
1.401(m)-l(e).

If Excess Aggregate Contributions are distributed or forfeited
for Highly Compensated Eligible Participants, the amount of
excess of each Highly Compensated Eligible Participant is the
amount by which his Matching Contributions must be reduced for
the Participant's contribution percentage to equal the highest
permitted Actual Contribution Percentage under the Plan.

To calculate the highest permitted Actual Contribution
Percentage under the Plan, the Actual Contribution Percentage of
the Highly Compensated Eligible Participant with the highest
contribution percentage is reduced by the amount required to
cause the Participant's Actual Contribution Percentage to equal
the percentage of the Highly Compensated Eligible Participant
with the next highest Actual Contribution Percentage. If a
lesser reduction would enable the arrangement to satisfy the
Actual Contribution Percentage test, only such lesser reduction
need be made. This process shall be repeated until the
requirements set forth above are met. The highest contribution
percentage remaining under the Plan after leveling is the
highest permitted Actual Contribution Percentage. In no event
shall the amount of Excess Aggregate Contributions to be
distributed or forfeited for a Plan Year with respect to any
Highly Compensated Eligible Participant exceed the amount of
Matching Contributions made on behalf of the Highly Compensated
Eligible Participant for the Plan Year.

The Compensation and Matching Contributions of Highly
Compensated Eligible Participants who are either 5 percent
owners or among the ten most Highly Compensated Eligible
Participants includes the Compensation and Matching
Contributions of their Family Members. When family aggregation
shall be required, the family group shall be treated as one
Highly Compensated Eligible Participant and the Actual
Contribution Percentage for the group shall be determined by
combining the Matching Contributions, amounts treated as
Matching Contributions and Compensation of all the eligible
Family Members. If an Employee is required to be aggregated as a
Family Member of more than one family group in the Plan, then
all Participants who are Family Members of those family groups
that include that Employee, are aggregated as one family group.

The amount of Excess Aggregate Contributions for a Highly
Compensated Eligible Participant shall be determined by reducing
the contribution percentage of the Highly Compensated Eligible
Participants who have the highest percentages to the maximum
acceptable level.

27
<PAGE> 34
If the Highly Compensated Eligible Participant's contribution
percentage was required to be determined by combining the
Compensation and Matching Contributions of all Family Members
who are Participants, the Highly Compensated Eligible
Participant's percentage shall be reduced as set forth above.
Excess Aggregate Contributions shall be allocated among the
eligible Family Members in proportion to the Matching
Contributions of each such Family Member that were combined
above.

Notwithstanding the foregoing, the Employer may make a QNEC on
behalf of some or all Eligible Participants who are not Highly
Compensated Eligible Participants in order to comply with (i) or
(ii) and (iii) for any Plan Year.

Unless otherwise provided for by the Pension Committee, any gain or
loss on a Participant's Excess Aggregate Contributions for the period
between the end of the Plan Year and the date of distribution shall be
disregarded.

4.10 Combined Limitation. In no event shall the combined amount of Before
Tax Contributions and Post 1986 After Tax Contributions made by or on
behalf of any Participant for any payroll period exceed sixteen percent
(16%) of such Participant's Compensation for such payroll period. To
the extent that the foregoing limitation would be exceeded, a
Participant's Post 1986 After Tax Contributions shall be reduced first
prior to reducing his Before Tax Contributions.

4.11 Rollovers. An Eligible Employee may transfer to the Trust any cash
which has been distributed to him whether such amount is (i)
transferred by the Eligible Employee after his receipt of such amount
from a plan qualified under Section 401(a) of the Code or (ii)
transferred from a "conduit" individual retirement account established
by the Eligible Employee upon his receipt of such amount from a plan
qualified under Section 401(a) of the Code; provided, however, that
such amount qualifies as a rollover amount as defined by the Code at
the time of the transfer and the Participant complies with such rules
and other criteria as the Pension Committee may establish from time to
time to insure the qualified status of the Plan. The amount of cash
transferred to the Trust pursuant to this Section 4.11 shall be
credited to the Eligible Employee's Rollover Account in accordance with
Section 5.1. A Participant shall be fully vested in his Rollover
Account at all times. In the event any amount rolled over into the Plan
is found not eligible for rollover, such amount, as adjusted for
earnings and losses, shall be distributed to the Participant as soon as
administratively feasible.

28
<PAGE> 35
4.12 Requirements for Qualified Non-Elective Contributions and Qualified
Matching Contributions. Any contributions that are designated as
qualified non-elective contributions (QNEC) or as qualified matching
contributions shall meet the requirements of Treas. Reg.
1.401(k)-1(b)(5) and 1.401(m)-1(b)(5). In addition, qualified
non-elective contributions and qualified matching contributions shall
be fully vested at all times. Such contributions shall be distributed
from the Plan only in accordance with the events enumerated in the
Plan, provided, however, that in no event shall such amounts be
available for hardship withdrawal.

29
<PAGE> 36
ARTICLE V
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS

5.1 Individual Accounts. On and after the Effective Date, the Pension
Committee shall direct the recordkeeper for the Plan to maintain the
following separate accounts in the name of each Participant:

(a) Before Tax Matched Account.

(b) Before Tax Supplemental Account.

(d) Employer Matched Account.

(e) HMI Company Regular Account.

(f) Post 1986 After Tax Contribution Account.

(g) Pre 1987 After Tax Contribution Account.

(h) QNEC Account.

(i) Raff-Hughes Company Regular Account.

(j) Rollover Account.

(k) Shelby Pension Transfer Account.

5.2 Account Adjustments (Effective for Valuation Dates Occurring Prior to
January 1. 1994). The Accounts of Participants, Former Participants and
Beneficiaries shall be adjusted as of each Valuation Date in accordance
with the following:

(a) Income. The Income of each investment fund shall be allocated
as of each Valuation Date to the accounts of Participants,
Former Participants and Beneficiaries who have unpaid balances
in their accounts invested in each particular fund on the
Valuation Date, in proportion to the balances in such accounts
immediately after the preceding Valuation Date, but after
first reducing each such account by any distributions,
withdrawals or loans from such account during the interim
period. Income for any month to be allocated since the
preceding Valuation Date, shad be allocated prior to posting
any contributions to Participants' Accounts for that month.

Notwithstanding the foregoing, in the case of any QNEC's that are made
after the close of a Plan Year but which are credited pursuant to
Section 5.3 as of the last

30
<PAGE> 37
day of the Plan Year, Income with respect to such contributions shall
begin to be allocated as of the Valuation Date after such contributions
are made.

If during any month of the Plan Year a Participant, Former Participant
or Beneficiary becomes entitled to a distribution from an account, the
Committee shall instruct the Trustee or recordkeeper, as appropriate,
to determine the Income as of the immediately preceding Valuation Date.
The Account or Accounts of any Participant, Former Participant or
Beneficiary to be distributed as of that Valuation Date shall not be
adjusted proportionately to reflect any Income accrued after such
Valuation Date.

(b) Crediting of Employer Contributions.

(i) The Employer's Before Tax Contributions for the Plan Year
made pursuant to Section 4.1(a) shall be forwarded to the
Trustee and credited directly to the Before Tax Matched
or Before Tax Supplemental Account of each Participant
who authorized Before Tax Contributions as soon as such
amounts can be segregated from the general assets of the
Employer. Before Tax Contributions shall be credited as
of the last day of the month in which occurs the pay date
to which such Before Tax Contributions relate.

(ii) The Employer's Employer Matched Contributions for the
Plan Year made pursuant to Section 4.1(b) shall be
credited to the Employer Matched Account of each
Participant who authorized a Pre Tax Contribution to be
made on his behalf in accordance with Section 4.1(b), as
of the last day of the month in which occurs the pay date
to which such contributions relate.

(iii) The Employer's QNEC for the Plan Year, made pursuant to
Section 4.1(c), shall be credited as of each Plan Year
directly to the QNEC Accounts of Eligible Participants
who are not Highly Compensated Eligible Participants and
who are designated to receive such a contribution as of
the last day of the Plan Year.

(c) Post 1986 After Tax Contributions. Participants' Post 1986 After
Tax Contributions made pursuant to Section 4.2, shall be
forwarded to the Trustee and credited directly to the Post 1986
After Tax Contribution Account of each Participant who has made
Post 1986 After Tax Contributions as soon as such amounts can be
reasonably segregated from the general assets of the Employer.
Post 1986 After Tax Contributions shall be credited as of the
last day of the month in which occurs the pay date to which they
relate.

31
<PAGE> 38
(d) Deemed Date of Allocation. All credits or deductions made under
this Article to Participants' accounts shall be deemed to have
been made no later than the last day of the Plan Year though
actually determined thereafter.

5.3 Account Adjustments (Effective for Valuation Dates on or After January
1, 1994). The Accounts of Participants, Former Participants and
Beneficiaries shall be adjusted by valuing all assets of the Trust
following the end of each business day of the Plan Year in the
following manner.

(a) Adjustments.

(i) The Pension Committee shall first compute the net asset
value of securities and/or other assets comprising each
investment fund, designated by the Pension Committee for
direction of investment by Participants, Former
Participants and Beneficiaries. This net asset value
shall be equal to the market price of the investment fund
on the prior business day applied to the net asset value
as of the close of business on the current business day.

(ii) The recordkeeper, at the direction of the Pension
Committee, shall, following the computation of the net
asset value, assign a gain or loss to each Participant's
Account.

(iii) The Trustee shall then account for any requests for
additions or withdrawals made to or from a specific
designated investment fund by any Participant and
received by the Trustee prior to the stated deadline on
such business day.

In completing the valuation procedure described above,
such adjustments in the amounts credited to such Accounts
shall be made on the business day to which the investment
activity relates. No admissions to Investment Funds made
pursuant to the Plan shall be taken into account until
the date such contribution was both actually paid to the
Trustee and credited to the Participant's Accounts. It is
intended that this Section operate to distribute among
the Participant's Accounts all income of the Trust Fund
and changes in the value of the Trust Fund's assets.

(iv) In addition to the above paragraph (iii), in the event a
pooled investment fund is created as a designated fund
for Participant investment election in the Plan,
valuation of the pooled investment fund shall be governed
by the administrative services agreement for such pooled
investment fund.

32
<PAGE> 39
(b) Crediting of Employer Contributions.

(i) The Employer's Before Tax Contributions for the Plan Year
made pursuant to Section 4.1(a) shall be forwarded to the
Trustee and credited directly to the Before Tax Account
of each Participant who authorized Before Tax
Contributions as soon as such amounts can be segregated
from the general assets of the Employer.

(ii) The Employer's Employer Matched Contributions for the
Plan Year made pursuant to Section 4.1(b) shall be
credited as soon as administratively feasible to the
Employer Matched Account of each Participant who
authorized a Before Tax Contribution to be made on his
behalf in accordance with Section 4.1(b).

(c) Deemed Date of Allocation. All credits or deductions made under
this Article to Participants' Accounts shall, for all purposes
other than the allocation of Income, be deemed to have been made
no later than the last day of the Plan Year though actually
determined thereafter.

5.4 Maximum Annual Additions. The maximum Annual Additions that may be
contributed or allocated to a Participant's Accounts under the Plan for
any Limitation Year shall not exceed the lesser of:

(i) the defined contribution dollar limitation, or

(ii) 25 percent of the Participant's compensation, as defined
below, for the Limitation Year.

"Compensation" is the Participant's wages, salaries, fees
and other amounts paid or made available for personal
services actually rendered in the course of employment
with the Employer, including, but not limited to,
commissions, compensation for services on the basis of a
percentage of profits, tips and bonuses but (in
accordance with regulations prescribed by the Secretary
of Treasury) excluding:

(A) Contributions made by the Employer to a
non-qualified plan of deferred compensation
to the extent that such are not included in
the gross income of the Participant in the
year made; Employer contributions to
simplified employee

33
<PAGE> 40
pension plans which are deductible by the
Participant; and any distributions from any
such plan other than an unfunded
non-qualified plan;

(B) Amounts realized from the exercise of a
non-qualified stock option or when
restricted stock either becomes freely
transferable or free from a substantial risk
of forfeiture:

(D) Other amounts which receive special tax
benefits; and

(E) For Plan Years beginning on or before
January 1, 1994, any amount in excess of
$200,000 (as adjusted annually by the
Secretary of the Treasury for increases in
the cost of living) (effective January 1,
1994, $150,000, as adjusted). Such
limitation shall be adjusted and applied in
accordance with the family unit provisions
set forth in Section 2.12.

The compensation limitation referred to shall not apply to:

(i) Any contribution for medical benefits (within the meaning of
Section 419A(f)(2) of the Code) after separation from service
which is otherwise treated as Annual Additions, or

(ii) Any amount otherwise treated as Annual Additions under Section
415(1)(1) of the Code.

The defined contribution dollar limitation shall mean $30,000
or, if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as in
effect for the Limitation Year. All defined contribution plans
of the Employer and Affiliates shall be treated as one plan for
purposes of these limitations. If allocations to any of the
defined contribution plans maintained by the Employer or any
Affiliates on behalf of a Participant for any Limitation Year
would cause the limitations set forth above to be exceeded,
contributions under this Plan shall be reduced first to the
extent necessary and then under any other defined contribution
plans of the Employer or Affiliates.

For purposes of this Section 5.4, all defined contribution plans
maintained by the Employer shall be treated as one defined contribution
plan.

Notwithstanding any other provision of the Plan to the contrary, the
total Annual Additions on behalf of a Participant for a Limitation Year
shall not cause the sum

34
<PAGE> 41
of that Participant's defined contribution plan fraction and defined
benefit plan fraction (as those terms are defined in Section 415(e) of
the Code) to exceed 1.0. If the sum of such fractions would exceed 1.0
for any Limitation Year, the excess amount will be eliminated first by
making appropriate adjustments under any defined benefit plan
maintained by the Employer, then under this Plan and then under any
other defined contribution plans maintained by the Employer or
Affiliates.

If the total Annual Additions on behalf of a Participant for a
Limitation Year would exceed the limitations described herein as a
result of a reasonable error in determining the amount of Before Tax
Contributions that a Participant may make without violating the
requirements of Section 5.3 or as a result of a reasonable error in
estimating a Participant's compensation for purposes of this Section,
the Post 1986 After Tax Contribution of the Participant, if any, and if
necessary any excess Before Tax Contributions, may thereafter be
distributed to the Participant to the extent that such distribution
would reduce the excess Annual Additions as permitted under Section 415
of the Code. If Post 1986 After Tax Contributions are so distributed,
such amounts shall be disregarded under Section 4.8 and 4.9. If Before
Tax Contributions are so distributed, such amounts shall be disregarded
under Section 4.6, 4.7 and 4.9 and for purposes of the limitations of
Section 402(g) of the Code. If Before Tax Matched Contributions must be
distributed, any Employer Matched Contribution allocated to a
Participant's Account because of such Before Tax Matched Contributions
shall be placed in a suspense account for the Participant and allocated
during the next Plan Year. If after the distribution or placement in
suspense of Before Tax Contributions, Post 1986 After Tax Contributions
and Employer Matched Contributions, the Annual Additions would exceed
the limitations described herein, discretionary contributions allocated
to a Participant's Company Account shall be withdrawn from the
Participant's Account and placed in a suspense account and will be
allocated to all Participants eligible for a discretionary contribution
in the next Plan Year.

5.5 No Rights Created by Allocation. Any allocation made and credited to
the account of a Participant, Former Participant or Beneficiary under
this Article shall not cause such Participant, Former Participant or
Beneficiary to have any right, title or interest in or to any assets of
the Trust Fund except at the time or tunes, and under the terms and
conditions, expressly provided in this Plan.

35
<PAGE> 42
ARTICLE VI
PAYMENT OF BENEFITS

6.1 Retirement or Disability. If a Participant's employment is Terminated
by reason of his Retirement or Disability, then such Participant shall
be entitled to receive the entire amount credited to his Accounts in
the manner and at the time provided in Sections 6.6 and 6.7.

6.2 Death. In the event that the Termination of employment of a Participant
is caused by his death, or in the event that a Participant or Former
Participant who is entitled to receive distributions pursuant to
Section 6.1 or 6.3 dies prior to receiving the full amount of such
distributions, the entire amount credited to his Accounts shall be paid
to his Beneficiary in the manner and at the time provided in Sections
6.6 and 6.7, but only after receipt by the Pension Committee of
acceptable proof of death

6.3 Other Termination of Employment. If a Participant's employment is
Terminated by reason of other termination of employment, then such
Participant shall be entitled to receive the entire amount credited to
his Before Tax Matched Account, Before Tax Supplemental Account,
Rollover Account, Post 1986 After Tax Contribution Account, Pre 1987
After Tax Contribution Account, QNEC Account, Employer Matched Account
and Company Account and the vested percentage of his HMI Company
Regular Account and Raff-Hughes Company Regular Account, in the manner
and at the time provided in Sections 6.6 and 6.7.

6.4 Vesting. A Participant shall have a fully vested and non-forfeitable
interest in all of his Accounts other than his HMI Company Regular
Account and Raff-Hughes Company Regular Account. A Participant's vested
interest in his HMI Company Regular Account and Raff-Hughes Company
Regular Account shall be determined in accordance with the following
schedule:

<TABLE>
<CAPTION>
12 Month Period of Service Vested Percentage
-------------------------- -----------------
<S> <C>
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
</TABLE>

A Participant who is employed by the Employer or an Affiliate upon
attainment of Normal Retirement Age shall be 100% vested in his HMI
Company Regular Account and Raff-Hughes Company Regular Account.

36
<PAGE> 43
6.5 Disposition of Forfeitures.

(a) Cash-Out. Upon Termination of employment pursuant to Section
6.3, the vested percentage of a Participant's Accounts shall
be distributed in accordance with Sections 6.6 and 6.7. The
non-vested percentage of his HMI Company Regular Account and
Raff-Hughes Company Regular Account shall be forfeited and
used to reduce future Employer contributions as soon as
administratively feasible following the earlier of (i) the
distribution to the Participant of his vested Accounts, or
(ii) a Period of Severance equal to five consecutive years. A
Participant whose vested interest in any of his Accounts upon
Termination of employment is zero shall be deemed to have
received a distribution of such amount.

(b) Buy-Back. If the Terminated Participant resumes employment
covered by the Plan prior to incurring a Period of Severance
equal to five consecutive years and if he repays to the Plan
prior to the earlier of five years after the date he is
reemployed by the Employer or the date he has incurred a Break
in Service equal to five consecutive years, the amount of the
distribution, if any, he received from his Accounts under
Section 6.3 at his previous Termination of employment, then
(i) the repaid amount plus the amount forfeited from his
previous HMI Company Regular Account and Raff-Hughes Company
Regular Account shall become the beginning balance in his new
Accounts and (ii) the Period of Service, if any, he completes
following his reemployment shall be aggregated with his
pre-Severance from Service Date Period of Service for purposes
of determining his vested percentage in the amounts allocated
to his Accounts prior to his Termination of employment. The
restoration allocation first shall be made from Forfeitures
otherwise available for the Plan Year of restoration. If
Forfeitures are insufficient to allow for complete
restoration, then the Employer shall make an additional
contribution sufficient to restore the forfeited amounts. The
additional Employer contribution shall not constitute an
Annual Addition. In no event will a restoration of a
Participant's non-vested percentage be made if the Participant
returns after incurring a Period of Severance equal to five
consecutive years. If the Terminated Participant is reemployed
prior to incurring a Period of Severance equal to five
consecutive years, but does not repay to the Plan the amount
of distribution he received at his prior Termination of
employment, if any, prior to the earlier of the date he incurs
a Period of Severance equal to five consecutive years or five
years after the date he is reemployed by the Employer, then a
restoration allocation pursuant to this Section 6.5 shall not
be made.

(c) Deferred Distribution. Notwithstanding the foregoing, if a
Participant does not elect to take an immediate distribution
of his entire vested interest in his Account when he
Terminates employment (pursuant to Section 6.6(d)),

37
<PAGE> 44
a Forfeiture of the nonvested portion of his HMI Company
Regular Account or Raff-Hughes Company Regular Account shall
not occur until the Participant has incurred a Period of
Severance equal to five consecutive years. As of the end of
the Plan Year in which the Participant Terminates employment,
his HMI Company Regular Account or Raff-Hughes Company Regular
Account shall be divided into two portions, one representing
the Participant's vested percentage and the other representing
the nonvested percentage. Both portions shall continue to be
credited with Income pursuant to Section 5.2(a) until
distributed or forfeited. If such a Participant returns prior
to incurring a Period of Severance equal to five consecutive
years, the vested and non-vested portions of his HMI Company
Regular Account and Raff-Hughes Company Regular Account plus
Income allocated thereto, shall become the beginning balance
in his new HMI Company Regular Account and Raff-Hughes Company
Regular Account. The Period of Service, if any, he completes
following his reemployment, shall be aggregated with his
pre-Severance from Service Date Period of Service for purposes
of determining his new vested interest in the amounts
allocated to such HMI Company Regular Account and Raff-Hughes
Company Regular Account prior to his Termination of
employment. If the Terminated Participant does not return
prior to incurring a Period of Severance equal to five
consecutive years, the nonvested portion of his HMI Company
Regular Account and Raff-Hughes Company Regular Account, plus
Income allocated thereto, shall be forfeited and used to
reduce contributions pursuant to Section 5.2(d) as soon as
administratively feasible after the end of the year in which
his Period of Severance equal to five consecutive years
occurs.

If the Terminated Participant does not receive a distribution
of the vested percentage of his Accounts and does not return
to the employ of the Employer prior to incurring a Period of
Severance equal to five consecutive years, any amounts held
under a Participant's HMI Company Regular Account and
Raff-Hughes Company Regular Account that are not forfeited,
that are attributable to the Participant's service prior to
the Period of Severance equal to five consecutive years and
that are not distributed, shall be fully vested and
nonforfeitable at all times notwithstanding any other
provisions of this Plan.

6.6 Time of Payment of Benefits.

(a) Subject to subsection (d), a distribution to a Participant of
his Accounts due to Retirement or Disability pursuant to
Section 6.1 shall be made as soon as administratively feasible
following receipt by the Pension Committee of the appropriate
notice and shall be valued as of the last completed Valuation
Date preceding the distribution.

38
<PAGE> 45
(b) Distribution of a Participant's Accounts, payable on account
of the death of a Participant or Former Participant pursuant
to Section 6.2, shall be distributed as soon as
administratively feasible following the earlier of (i) receipt
by the Pension Committee of the appropriate form; or (ii) the
end of the three-month period commencing on the date the
Pension Committee is notified of such death but no later than
December 31 of the year which includes the fifth anniversary
of the Participant's death. The distribution shall be valued
as of the last completed valuation preceding the distribution.
However, if such distribution had already commenced in the
form of payments over a period permitted under Section 6.7,
the remaining benefits may be distributed over such period, at
least as rapidly as payments were made to the Participant.
Notwithstanding the foregoing, if a Participant or Former
Participant's Beneficiary is the surviving Spouse, then a
distribution on account of the death of the Participant or
Former Participant must commence no later than December 31 of
the calendar year in which the Participant or Former
Participant would have attained age 70-1/2, valued as of the
last completed valuation date preceding the distribution.

(c) Subject to subsection (d) of this Section 6.6, a distribution
to a Participant of the vested percentage of his Accounts
payable on account of other Termination of employment pursuant
to Section 6.3, shall be made as soon as administratively
feasible following receipt by the Pension Committee of the
appropriate form and shall be valued as of the last completed
valuation preceding the distribution.

(d) If the vested percentage of a Participant's Accounts exceeds
$3,500 (determined at any time), no distribution from a
Participant's Accounts may be made prior to a Participant's
Normal Retirement Date (other than as a result of death)
without obtaining the Participant's consent, as may be
required by the Code and applicable regulations thereunder, to
such distribution being made prior to his Normal Retirement
Date. If the Former Participant does not consent to such
distribution, benefits shall remain in the Trust Fund and
shall continue to receive Income allocations pursuant to
Section 5.2(a) and shall not be distributed to the Participant
(or his Beneficiary) until receipt by the Pension Committee of
the appropriate distribution request form, valued as of the
completed valuation date preceding the filing of such form,
subject to Section 6.6(f).

No such consent shall be valid unless the Participant has been
furnished not more than 90 days nor less than 30 days prior to
the date as of which the distribution is to be made with
notice of his right to defer the distribution until the
Participant attains his Normal Retirement Date and a statement
as to the effect of such a deferral on the Former
Participant's rights under the Plan. Notwithstanding this
minimum notice period, a

39
<PAGE> 46
Participant may, after being advised of his right to defer the
distribution and of his right to consider his distribution
options for a minimum of 30 days, elect in writing to the
Pension Committee to waive the 30 day minimum period between
receipt of such notice and the distribution.

(e) Notwithstanding any other provision of this Plan to the
contrary, unless the Participant or Former Participant elects
otherwise, payment of benefits under this Plan shall commence
not later than sixty (60) days after the close of the Plan
Year in which the latest of the following events occurs: (a)
the Participant or Former Participant attains age 65; (b) the
tenth (10th) anniversary of the Plan Year in which the
Participant or Former Participant commenced participation in
the Plan; or (c) the Termination of the Participant's service
with the Employer.

(f) Distribution of a Participant's Accounts, following his
attainment of age 70-1/2, must commence no later than April 1
of the calendar year following the calendar year in which the
Participant or Former Participant attains age 70-1/2. The
foregoing shall not apply to any Participant who (i) has
attained age 70-1/2 before January 1, 1988 and (ii) is not a
five percent (5%) owner of the Employer, as defined in Section
416(i)(B) of the Code at any time during the Plan Year ending
with or within the calendar year in which he attains age
66-1/2 and any subsequent Plan Year. Distribution shall be
made in accordance with the minimum distribution requirements
under Section 401(a)(9) of the Code that is incorporated by
reference including the regulations issued pursuant thereto
and shall be made in accordance with the minimum distribution
incidental benefit requirements under Prop. Treas. Reg.
1.401(a)(9)-2.

6.7 Mode and Method of Payment of Benefits. Any amount to which a
Participant, Former Participant or Beneficiary shall become entitled to
hereunder shall be distributed in cash in accordance with one of the
following forms of distribution as elected by the Participant.

(a) Equal quarterly or annual installments over a period of time
not to exceed the life expectancy of the Participant, or the
joint life expectancy of the Participant and his Beneficiary.

(b) Equal quarterly or annual installments over a period of 10
years.

Notwithstanding the foregoing, a Participant who previously
participated in Merged Plan II and for whom amounts were transferred
from Merged Plan II to this Plan shall be subject to the provisions of
Merged Plan II, as set forth in Exhibit A to the Plan.

40
<PAGE> 47
Notwithstanding the foregoing, a distribution made under this Section
6.7 for the sole purpose of satisfying the requirements set forth in
Section 6.6(f), shall be made in a lump sum.

All distributions shall satisfy the incidental death limitations of
Section 401(a)(9)(G) of the Code, including the maximum distribution
incidental benefit requirement and the pre-retirement incidental
benefit requirement as set forth in Treas. Reg. 1.401-1(b)(ii) by
payment in a lump sum.

6.8 Designation of Beneficiary. Each Participant or Former Participant from
time to time may designate any person or persons (who may be designated
contingently or successively and who may be an entity other than a
natural person) as his Beneficiary or Beneficiaries to whom his Plan
benefits are to be paid if he dies before receipt of all such benefits.
Each Beneficiary designation shall be made on a form prescribed by the
Pension Committee and will be effective only when filed with it during
the Participant's or Former Participant's lifetime. Each Beneficiary
designation filed with the Pension Committee will cancel all
Beneficiary designations previously filed with it by that Participant
or Former Participant. The revocation of a Beneficiary designation, no
matter how effected, shall not require the consent of any designated
Beneficiary. In the case of a Participant who participated in the TAG
Savings Plan immediately before the Effective Date or whose accounts
were transferred to this Plan from the TAG Savings Plan pursuant to
Section 3.8, a Beneficiary designation made by the Participant pursuant
to the terms of the TAG Savings Plan shall be treated as a Beneficiary
designation made under this Plan.

Notwithstanding the foregoing, the surviving Spouse of a Participant or
Former Participant shall be deemed to be the Participant's or Former
Participant's designated Beneficiary, and shall be entitled to receive
in a lump sum any distribution on account of the Participant's or
Former Participant's death, unless the Participant or Former
Participant designates a Beneficiary other than the surviving Spouse
and such surviving Spouse consents irrevocably in writing to the
designation of such Beneficiary and the Spouse's consent acknowledges
the effect of such designation and is witnessed by a notary public. The
requirements of this paragraph may be waived if it is established to
the satisfaction of the Pension Committee that the consent may not be
obtained because there is no Spouse or because the Spouse cannot be
located or because of such other circumstances as may be prescribed by
regulation.

In the event that the Participant failed to designate a Beneficiary or
is predeceased by all designated primary and contingent beneficiaries,
death benefits under this Plan shall be payable to his surviving
Spouse, if any, and if none to the Participant's estate.

41
<PAGE> 48
6.9 Withdrawals. A Participant may make withdrawals from his Accounts,
valued as of the last Valuation Date. In no event may a Participant
make withdrawals more frequently than twice in any Plan Year.

(a) Hardship Withdrawal. A Participant may withdraw: (i) up to
100% of the value of his Before Tax Contributions; (ii) Income
allocated to his Before Tax Matched and Before Tax
Supplemental Accounts as of December 31, 1988; and (iii) up to
100% of his Employer Matched Account, Rollover Account and
Company Account on account of an immediate financial hardship
as defined below.

A withdrawal in the case of an immediate financial hardship
shall only be permitted if it is not in excess of the amount
of the immediate and heavy financial need of the Participant,
as evidenced in documentation that is satisfactory to the
Pension Committee and if the Pension Committee determines that
the withdrawal is necessary in light of immediate and heavy
financial needs of the Participant due to:

(A) medical expenses described in Section 213(d) of the
Code and incurred by the Participant, his Spouse, or
any of the Participant's dependents (as defined in
Section 152 of the Code), or expenses necessary for
these individuals to obtain medical care described in
Section 213(d) of the Code, as long as such expenses
are ineligible for reimbursement under any health
care plans and as long as the Participant submits the
expense for a hardship withdrawal within six months
of the date the medical service was rendered or
purchased;

(B) costs directly related to the purchase (excluding
mortgage payments) of a principal residence of the
Participant;

(C) the payment of tuition and related educational fees
for the next twelve-months of post-secondary
education for the Participant, his Spouse, children
or dependents (as defined in Section 152 of the
Code); or

(D) payments necessary to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.

The Participant may request that any hardship distribution
shall be increased by the amount the Pension Committee
reasonably determines to be the tax liability (Federal, state,
or local) the Participant will incur because of the
distribution but not in excess of the Participant's Account
balance.

42
<PAGE> 49
Withdrawals due to financial hardship shall be permitted only
if the following conditions are satisfied:

(1) The Participant shall have obtained all other
withdrawals and nontaxable loans, if any, available
to him under the Plan and under all other Employer
plans;

(2) If a Participant makes a hardship withdrawal under
subsection (a)(i) or (a)(ii), the Employer shall be
precluded from making Before Tax Contributions and
Employer Matched Contributions on the Participant's
behalf and the Employee shall be prohibited from
making Post 1986 After Tax Contributions to this Plan
and employee contributions to all other plans of the
Employer coincident with or next following the date
that is 12 months from the date on which the
withdrawal is received by the Participant. All other
plans of the Employer shall mean all qualified and
nonqualified plans of deferred compensation
maintained by the Employer, including any of the
Merged Plans under which voluntary Employee after-tax
contributions were permitted. A Participant whose
participation in the Plan is suspended shall be
required to reenroll in the Plan at the end of the
suspension period in order to resume Before Tax
Contributions and Post 1986 After Tax Contributions
to the Plan; and

(3) If a Participant makes a hardship withdrawal under
subsection (a)(i) or (a)(ii), the Employer shall not
make, and the Participant shall not authorize the
Employer to make, Before Tax Contributions on the
Participant's behalf for the Plan Year immediately
following the Plan Year of such withdrawal in an
amount in excess of the applicable dollar limitation
imposed by Section 4.1(a)(iii) (and as described in
Section 402(g) of the Code), reduced by the amount of
the Participant's Before Tax Contributions in the
Plan Year in which such withdrawal is made.

(b) Withdrawal of Post 1986 and Pre 1987 After Tax Contribution
Accounts. A Participant may make a withdrawal from his Post
1986 After Tax Contribution Account and Pre 1987 After Tax
Contribution Account for any reason, including Income
attributable to such Account.

(c) Attainment of Age 59-1/2. Except as provided in subsection
(d)(1), a Participant may withdraw up to 100% of the vested
percentage of all his Accounts, including Income attributable
to such Accounts, for any reason upon attainment of age
59-1/2.

43
<PAGE> 50
(d) General Rules. The withdrawals under this Section 6.10 shall
be subject to the following requirements:

(1) In no event may a Participant make a withdrawal from
his QNEC Account, HMI Company Regular Account, or
Raff-Hughes Company Regular Account.

(2) Only two withdrawals in any Plan Year shall be
permitted.

(3) A request for a withdrawal shall be processed as soon
as administratively feasible following receipt of the
withdrawal request by the Pension Committee.

(4) The minimum amount allowable for withdrawal shall be
$300.00; provided, however, that a Participant may
make a hardship withdrawal in accordance with Section
6.10(a) in an amount less than $300.00.

(5) The amount available for withdrawal shall be
determined as of the Valuation Date preceding the
withdrawal, but in no event may a Participant
withdraw more than the amount then standing in the
applicable account as of the date of withdrawal.

(6) A withdrawal shall be charged to the Participant's
investment fund(s) on a pro-rata basis.

(e) Processing of Withdrawals. All withdrawals shall be processed
on a pro-rata basis from the funds in which a Participant's
Accounts are invested, in the following order:

(1) Pre 1987 After Tax Contribution Account attributable
to Pre 1987 After Tax Contributions.

(2) The remaining portion of a Participant's Pre 1987
After Tax Contribution Account and the entire Post
1986 After Tax Contribution Account of a Participant.

(3) The Participant's Employer Matched Contribution
Account.

(4) The Participant's Company Contribution Account.

(5) The Participant's Rollover Contribution Account.

(6) Amounts attributable to Before Tax Matched and Before
Tax Supplemental Contributions and Income allocated
to a Participant's

44
<PAGE> 51
Before Tax Matched and Before Tax Supplemental
Contribution Accounts as of December 31, 1988.

6.10 Loans to Participants. The Pension Committee may direct the Trustee to
lend a Participant an amount not in excess of the lesser of (i) 50% of
his vested Accounts or (ii) $50,000 (reduced by the excess, if any, of
the highest outstanding balances of all other loans from the Plan
during the one-year period ending on the day before the loan was made
over the outstanding balance of loans from the Plan on the date on
which such loan was made), determined as of the last completed
valuation coincident with or immediately preceding the date the
Participant applies for the loan. A Participant may have only one loan
outstanding at any time. Subject to the rules of the Pension Committee
as set forth below, the Trustee, upon application by a Participant, may
make a loan to such Participant for any purpose.

In addition to such rules as the Pension Committee may adopt, all loans
shall comply with the following terms and conditions:

(a) An application by a Participant for a loan from the Plan shall
be made to the Pension Committee whose action thereon shall be
final.

(b) The period of repayment for any loan shall be arrived at by
mutual agreement between the Pension Committee and the
borrower, but such period shall not exceed five years except
for loans used to acquire the Participant's principal
residence. Loans used to acquire a Participant's principal
residence shall not exceed ten (10) years. All loan terms
shall be in multiples of one year. Repayment of interest and
principal shall be according to a substantially level
amortization schedule of payments beginning with the first
payroll period following receipt of the loan. Repayment of
interest and principal shall be by payroll deduction, except
for those Participants who are not receiving a paycheck or who
are laid off with recall rights, with respect to whom a loan
repayment check shall be due in accordance with the
amortization schedule in effect. Loans may be prepaid in full
at any time without penalty; provided, however, that a
Participant must wait three months before requesting another
loan. Loan repayments shall be allocated to a Participant's
Accounts on a pro-rata basis to those Accounts from which the
loan was distributed as set forth in Section 6.11(j) below and
shall be invested pursuant to a Participant's current
investment elections.

(c) Each loan shall be made against collateral being the
assignment of the borrower's right, title and interest in and
to the Trust Fund to the extent of the borrowed amount,
supported by the borrower's collateral promissory note for the
amount of the loan, including interest, payable to the order
of the Trustee.

45
<PAGE> 52
(d) Subject to the regulations of the U.S. Department of Labor,
each loan shall bear interest equal to the prime lending rate
of the Bank of New York in effect on Monday of the week in
which the loan was approved or such other rate determined by
the Pension Committee.

(e) The minimum amount available for any loan is $1,000.00.

(f) The procedure to be followed by a Participant in applying for
a loan shall be determined by the Pension Committee and
documented by a duly approved set of rules of the Pension
Committee. Such rules shall be attached to and shall be deemed
to be a part of the Plan as Exhibit B. Prior to January 1,
1991, loans with respect to Merged Plan III and prior to
January 1, 1992, loans with respect to Merged Plans IV and V,
were determined in accordance with the procedures set forth in
Exhibits B, C and D applicable to such Plans, which are
incorporated herein by reference. Loans with respect to any
amounts transferred to this Plan from the TAG Savings Plan
attributable to the Raff-Hughes Plan were determined in
accordance with the procedure set forth in Exhibit C, which is
incorporated herein by reference.

(g) A loan shall not be made in an amount that would result in a
payroll deduction for the Participant greater than the amount
of the Participant's net pay (after all other deductions).

(h) In the event of (i) default on the loan or (ii) the
Participant's Termination of employment prior to repayment of
the entire loan balance, the Participant shall have the option
to repay the remaining loan balance in full no later than two
weeks (three months, effective for loans outstanding on or
after December 31, 1993) following the Participant's
Termination of employment. If the loan is not repaid, there
shall be distributed to the Participant upon his Termination
of employment the sum of (i) the value of the Participant's
Accounts without regard to the amount of any outstanding loan
(including any accrued interest thereon) plus (ii) the
Participant's promissory note. Notwithstanding the foregoing,
if the sum of (i) and (ii) exceeds $3,500, then such amount
shall be distributed to the Participant only in accordance
with Section 6.6(d) hereof. If the Participant does not
consent to take a full distribution of the sum of (i) plus
(ii), there shall be distributed to the Participant the
promissory note and the remaining value of the Participant's
Accounts shall be distributed in accordance with Section
6.6(d).

For purposes of this Section 6.11, default means a
Participant's failure to repay the loan when due in accordance
with the procedures outlined in subsection (b) hereof.

46
<PAGE> 53
(i) Notwithstanding anything herein to the contrary, the Pension
Committee may direct the Trustee to lend a Former Participant
who is a "party in interest" as that term is defined in
Section 3(14) of ERISA, an amount not to exceed the amount set
forth in the first paragraph of Section 6.11. In such case,
the rules set forth in Section 6.11 shall apply to such loan,
provided, however, that repayment of such loan shall not be by
payroll deduction. Repayment shall be made by the Former
Participant by check or money order payable to the Trustee,
based on a monthly repayment schedule established by the
Pension Committee when the Former Participant makes
application for the loan

(j) All loans shall be processed on a pro-rata basis from the
funds in which a Participant's Accounts, other than the
Investment Fund holding Acordia Stock, are invested, in the
following order:

(1) Amounts attributable to a Participant's Before Tax
Contribution Accounts.

(2) Amounts attributable to a Participant's vested HMI
Company Regular Account or vested Raff-Hughes Company
Regular Account.

(3) Amounts attributable to a Participant's Company
Account.

(4) Amounts attributable to a Participant's Rollover
Account.

(5) Amounts attributable to a Participant's Post 1986
After Tax Contribution Account.

(6) Amounts attributable to a Participant's Pre 1987
After Tax Contribution Account.

(k) All loans shall comply with the Plan's Participant Loan
Procedures adopted from time to time by the Pension Committee,
which shall be deemed to constitute a part of this Plan

6.11 Direct Rollover Option. (Effective for distributions made on or after
January 1, 1993) A distributee may elect, at the time and in the manner
prescribed by the Employer, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover. For purposes of this paragraph,
the following terms shall be defined as follows:

(a) An "eligible rollover distribution" is any distribution of all
or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a

47
<PAGE> 54
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion
of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).

(b) An "eligible retirement plan" is an individual retirement
account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.

(c) A "distributee" includes an Employee or Former Employee. In
addition, the Employee's or Former Employee's surviving spouse
and the Employee's or Former Employee's spouse or former
spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse.

(d) A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.

48
<PAGE> 55
ARTICLE VII
TRUST FUND

7.1 Exclusive Benefit of Eligible Employees and Beneficiaries. All
contributions under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. All assets of the Trust Fund, including
investment Income, shall be retained for the exclusive benefit of
Participants, Former Participants and Beneficence and shall be used to
pay benefits to such persons or to pay administrative expenses of the
Plan and Trust Fund to the extent not paid by the Employer. Except as
provided in Sections 4.4 or 12.2 or as otherwise permitted by law, the
assets of the Trust Fund shall not revert to or inure to the benefit of
the Employer.

7.2 Investment Directions by Participants.

(a) Investment Funds. All Accounts will be invested in the common
Investment Funds that the Pension Committee may designate from
time to time. The respective assets of each Investment Fund
will be accounted for separately from those of each other
Investment Fund and will be invested in accordance with the
objectives prescribed by the Pension Committee. A portion of
an Investment Fund may be invested in short-term securities
issued or guaranteed by the United States of America or any of
its agencies or instrumentalities or any other investments of
a short-term nature, including corporate obligations or
participation therein, and through the medium of any common,
collective, or commingled trust fund maintained by the Trustee
which is invested principally in property of the kind
specified in this subsection. A portion of an Investment Fund
may be maintained in cash.

(b) Participant Direction (Prior to 1994.)

(i) Future Contributions. A Participant may direct the
investment of future contributions to his Accounts
among the Investment Funds. A Participant may elect
to change the manner in which future contributions to
his Accounts are invested effective as of the first
pay date in the following month, upon written
notification to the Pension Committee no later than
the 20th day of the month immediately preceding that
month (or such other date as established by the
Pension Committee); provided that, unless the Pension
Committee determines otherwise, in no event shall a
Participant be permitted to make another change
regarding investment of future contributions under
this Section more frequently than once every three
months.

49
<PAGE> 56
(ii) Rollover Contributions. A Participant for whom
amounts are rolled over to the Plan pursuant to
Section 4.10 shall make a separate election with
respect to the initial investment of those amounts.

(iii) Current Accounts. A Participant may, effective as of
the last day of any calendar month elect to
reallocate the value of all of his Accounts (in
accordance with a single election to be applied
uniformly to all of his Accounts) among the
Investment Funds, in multiplies of ten percent (10%)
by giving written notice to the Pension Committee no
later than the 20th day (or such other date as the
Pension Committee may determine) of that month. The
Pension Committee may, on a uniform and
nondiscriminatory basis, adopt such rules and
procedures as it deems necessary to limit the
frequently with which Participants may reallocate the
value of these Accounts; provided that, unless the
Pension Committee determines otherwise, in no event
shall a Participant be permitted to make such a
reallocation of Accounts under this Section more
frequently than once every three months.

(iv) Raff-Hughes Participants. Participants who elected to
have amounts transferred on their behalf to this Plan
from the Raff-Hughes Plan may, effective as of any
June 30 or December 31, elect to invest the
transferred amounts among the Investment Funds in
percentages of ten percent (10%).

(v) Robinson-Conner Participants. Prior to the merger of
the Robinson-Conner Plan with this Plan, effective
January 1, 1992, each Participant who was a
participant in the Robinson-Conner Plan and whose
accounts in the Robinson-Conner Plan were invested in
life insurance policies, was permitted to designate
by December 20, 1991, one of the following three
options for disposition of those policies;

(a) Cancellation of existing policies, upon
which the cash surrender value of the policy
was added to the Participant's Accounts;

(b) Purchase by the Participant of existing
policies equal to the fair market value plus
any premium deficit;

Any Participant who failed to make a written election
by December 20, 1991, was deemed to have elected
option (a). Subsequent to disposition of the
policies, Participants were offered the investment
opportunities set forth in this Section for
investment of their Accounts held under this Plan.

50
<PAGE> 57
(vi) Failure to Direct Investments. In the event that a
Participant fails to make an investment election, the
Trustee shall invest his Accounts in an Investment
Fund designated from time to time by the Pension
Committee.

(i) Future Contributions. A Participant may direct the
investment of future contributions to his Accounts
among the Investment Funds by providing notice to the
Pension Committee in the manner and subject to the
procedures specified by the Pension Committee. A
Participant may elect to change the manner in which
future contribution to his Accounts are invested as
of any business day, but not more than once each
calendar month, by providing notice to the Pension
Committee in the manner and subject to the procedures
specified by the Pension Committee.

(ii) Existing Accounts. A Participant may, effective as of
any business day, elect to reallocate the value of
all of his Accounts in the Plan (in accordance with a
single election to be applied uniformly to all of his
Accounts), in multiplies of ten percent (10%) among
the Investment Funds, by giving notice to the Pension
Committee in the manner and subject to the procedures
specified by the Pension Committee. The Pension
Committee may, on a uniform and nondiscriminatory
basis, adopt such rules and procedures as it deems
necessary to limit the frequency with which
Participants may reallocate the value of their
Accounts.

(iii) Effective Date of Investment Elections.
Notwithstanding the foregoing, the Pension Committee
is not obligated to effect investment election
changes as of the business day the Participant gives
notice of the change to the Pension Committee; the
Pension Committee is only obligated to apply its best
efforts to effectuate the Participant's investment
election as soon as administratively feasible.

(iv) Failure to Direct Investments. In the event that a
Participant fails to make an investment election, the
Trustee shall invest his Accounts in an Investment
Fund designated from time to time by the Pension
Committee.

(d) Effect of Participant Direction on Fiduciaries. When a
Participant exercises his option to direct the investment of
his Accounts in accordance with this Section, then to the
extent permitted by ERISA, no person who is otherwise a
fiduciary under the Plan shall be liable under ERISA for any

51
<PAGE> 58
loss, or by reason of any breach, that results from the
Participant's exercise of that option.

7.3 Acordia Stock.

(a) Limitation on Acordia Stock Investment. Notwithstanding any
other provisions of the Plan, the following rules shall apply
with respect to the investment of a Participant's Accounts in
Acordia Stock:

(1) As of the Effective Date, in accordance with rules
prescribed by the Pension Committee, a Participant
may direct the investment of up to 20% of the total
amount in his Accounts as of August 31, 1992 into
Acordia Stock;

(2) The maximum amount of future contributions to a
Participant's Accounts that may be invested in
Acordia Stock shall be 20%; and

(3) The maximum amount of a Participant's Accounts that
may be reallocated to Acordia Stock shall be an
amount, which when added to amounts already invested
in Acordia Stock, results in no more than 20% of the
total of a Participant's accounts being invested in
Acordia Stock.

(b) Voting Rights. Each Participant (or Beneficiary of a deceased
Participant) is designated, for purposes of this Section
73(b), a "named fiduciary" (within the meaning of ERISA) with
respect to the shares of Acordia Stock held in his Accounts,
and he shall have the right to direct the Trustee with respect
to the voting of the shares of Acordia Stock held in his
Accounts on each matter brought before any meeting of
shareholders; provided that the right shall only apply with
respect to shares of Acordia Stock held in the Participant's
Accounts as of the most recent Valuation Date coincident with
or preceding the applicable record date. Before each meeting
of shareholders, the Company shall cause to be furnished to
each Participant (or Beneficiary of a deceased Participant) a
copy of the proxy solicitation material. At least 10 days
prior to the date of the shareholders' meeting at which such
voting rights will be exercised, the Participant (or
Beneficiary) may complete and file with the Trustee a written
direction, in the form and manner prescribed by the Pension
Committee, as to how the shares of Acordia stock held in his
Accounts shall be voted. Upon timely receipt of the
directions, the Trustee shall vote as directed the number of
shares (including fractional shares) of Acordia Stock held in
the Participant's Accounts, and the Trustee shall have no
discretion as to the manner. The instructions received by the
Trustee from Participants (or Beneficiaries) shall be held by
the Trustee in confidence and shall not be divulged or
released to any person, including the Pension Committee or

52
<PAGE> 59
officers or employees of the Company or any Employer or
Affiliate. The Pension Committee, in its discretion, shall
direct the Trustee as to the voting of any shares of Acordia
Stock held in the Plan for which the Trustee has not received
a specific direction from a Participant (or Beneficiary).

(c) Response to Tender Offers. Each Participant (or Beneficiary of
a deceased Participant) is designated, for purposes of this
Section 7.3(c), a "named fiduciary" (within the meaning of
ERISA) with respect to the shares of Acordia Stock held in his
Accounts, and he shall have the right to direct the Trustee as
to how to respond with respect to those shares to a tender
offer or to any other offer made to shareholders generally to
purchase, exchange, redeem, or otherwise transfer shares;
provided that the right shall only apply to the Acordia Stock
held in the Participant's Account as of the Valuation Date
coincident with or immediately preceding the first day for
delivering shares or otherwise responding to the tender offer
or other offer. At least 10 days prior to the last date for
delivering shares or otherwise responding to the tender offer
or other offer, the Participant or Beneficiary may complete
and file with the Trustee a written direction in the form and
manner prescribed by the Pension Committee. Upon timely
receipt of a written direction to deliver the shares of
Acordia Stock in the Participant's Accounts in response to the
tender or other offer, the Trustee shall deliver the shares to
which the direction applies. The Trustee shall not deliver, in
response to the tender or other offer, any shares as to which
the Trustee has received a direction from a Participant (or
Beneficiary) not to deliver the shares. The directions
received by the Trustee from Participants (or Beneficiaries)
shall be held by the Trustee in confidence and shall not be
divulged or released to any person, including the Pension
Committee or officers or employees of the Company or any
Employer or Affiliate. The Pension Committee, in its
discretion, shall direct the Trustee as to how to respond to
the tender or other offer with respect to any shares of
Acordia Stock held in the Plan for which the Trustee has not
received a specific direction from a Participant (or
Beneficiary).

7.4 Special Rules Applicable to Persons Subject to Section 16(b) of the
Securities Exchange Act of 1934. Notwithstanding any other provisions
of the Plan, the following special rules shall apply to Participants or
former Participants who are subject to the requirements of Section
16(b) of the Securities Exchange Act of 1934 ("Insiders"):

(a) If an Insider completely suspends the authorization of future
Before Tax Contributions and/or post-1986 After Tax
Contributions that are to be invested in Acordia Stock, then
until the day after six months from the date of that
suspension the Insider shall not be permitted to:

53
<PAGE> 60
(i) Once again authorize the investment of future Before
Tax Contributions and/or post-1986 After Tax
Contributions in Acordia Stock; or

(ii) Reallocate the investment of amounts held in his
Accounts into Acordia Stock pursuant to Section 7.2.

(b) At the option of the Insider, an Insider may make a withdrawal
from his Accounts under Section 6.10 under the procedures set
forth in (i) or (ii):

(i) If the withdrawal will result in a reduction in the
number of shares of Acordia Stock in his Accounts,
the withdrawal must be made pursuant to an election
that becomes irrevocable at least six months prior to
the date of receipt of the withdrawal. If the
withdrawal is made, then until the day after the
six-months from the Insider's receipt of the
withdrawal, the Insider shall not be permitted to:

(A) once again authorize or continue to
authorize the investment of any future
Before Tax Contributions and/or post-1986
After Tax Contributions to the Plan to be
invested in Acordia Stock; or

(B) reallocate the investment of amounts held in
his Accounts into Acordia Stock pursuant to
Section 7.2.

(ii) An Insider may make a withdrawal from his Accounts
under Section 6.10 other than pursuant to the
six-month irrevocable election described in
subparagraph (i) only if the withdrawal does not
result in a reduction in the number of shares of
Acordia Stock in his Accounts. If the withdrawal is
made, the Insider's ability to authorize investment
of future Before Tax Contributions and/or post-1986
After Tax Contributions to the Plan to be invested in
Acordia Stock or to reallocate the investment of
amounts held in his Accounts into Acordia Stock shall
not be affected.

(c) (i) An Insider may elect to reallocate amounts held
in his Accounts pursuant to Section 7.2 in a manner
that would increase or decrease the number of shares
of Acordia Stock in his Accounts only pursuant to an
election that becomes irrevocable at least six months
prior to date as of which the reallocation would be
effective.

(ii) At the option of the Insider, the six-month prior
irrevocable election described in subparagraph (i)
shall not be required with respect to elections
pursuant to Section 7.2 to reallocate the investment
of amounts held in his Accounts that will result in
an

54
<PAGE> 61
increase or decrease in the number of shares of
Acordia Stock in his Accounts if such elections are
made during the quarterly window period described in
the following sentence. The quarterly window period
shall be the period beginning on the third business
day that begins following the date of release to the
public of quarterly or annual statements of sales and
earnings on each March 31, June 30, September 30, and
December 31, respectively, and ending on the 12th
business day following such release. The foregoing
option shall not be available if any such election to
reallocate the investment of amounts held in his
Accounts pursuant to Section 7.2 has been made during
the six-month period ending on the date on which the
most recent such election would have been effective.

(d) None of the special rules described in this Section shall
preclude the Trustee from using cash dividends paid on Acordia
Stock to purchase additional shares of such stock for any
Insider.

(e) The restrictions imposed under Section 7.4(a)(i) above shall
not apply if the reason an Insider has suspended future Before
Tax Contributions and/or post-1986 After Tax Contributions to
the Plan is because he has reached the limit on such
contributions set forth in Section 402(g) of the Code or
because the Pension Committee has taken action pursuant to
Section 4.6.

(f) The provisions of this Plan are intended to comply with all
applicable provisions of Rule 16(b)-3 of the Securities
Exchange Act of 1934 and its successors with respect to
Insiders. To the extent any provision of the Plan or action by
the Pension Committee on behalf of an Insider fails to so
comply, such provision action shall be deemed null and void to
the extent permitted by law and deemed advisable by the
Pension Committee.

(g) Any amendment affecting the ability of an Insider to authorize
the investment of contributions to his Accounts in Acordia
Stock, reallocate the investment of amounts held in his
Accounts into or out of Acordia Stock, or otherwise to affect
voluntarily the amount of Acordia Stock held in his Accounts
shall be effective with respect to Insiders no earlier than
the day after six months from the effective date of the last
such amendment under the Plan, unless that amendment must be
effective earlier to comply with the requirements of ERISA or
the Code.

55
<PAGE> 62
ARTICLE VIII
ADMINISTRATION

8.1 Duties and Responsibilities of Fiduciaries; Allocation of
Responsibility Among Fiduciaries for Plan and Trust Administration. A
Fiduciary shall have only those specific powers, duties,
responsibilities and obligations as are specifically given him under
this Plan or the Trust. In general, the Employer, shall have the sole
responsibility for making the contributions provided for under Section
4.1. The Board of Directors shall have the sole authority to appoint
and remove the Pension Committee and to amend or terminate, in whole or
in part, this Plan or the Trust. The Pension Committee shall have the
sole responsibility for the administration of this Plan, which
responsibility is specifically described in this Plan and the Trust and
the right to appoint and remove the Trustee and any Investment Manager
which may be provided for under the Trust and to designate investment
and funding policies under which the Trustee and any Investment Manager
shall act. Except as provided in the Trust agreement and within the
scope of any funding and investment policies designated by the Pension
Committee, the Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held under
the Trust. It is intended that each Fiduciary shall be responsible for
the proper exercise of his own powers, duties, responsibilities and
obligations under this Plan and the Trust and generally shall not be
responsible for any act or failure to act of another Fiduciary. A
Fiduciary may serve in more than one fiduciary capacity with respect to
the Plan (including service both as Trustee and as a member of the
Pension Committee).

8.2 Allocation of Duties and Responsibilities. The Pension Committee may
designate in writing persons other than its members to carry out any of
its duties and responsibilities. Any duties and responsibilities thus
allocated must be described in the written instrument. If any person
other than an Eligible Employee of the Employer is so designated, such
person must acknowledge in writing his acceptance of the duties and
responsibilities thus allocated to him. All such instruments shall be
attached to, and shall be made a part of, the Plan.

8.3 Expenses. The Employer shall pay all expenses authorized and incurred
by the Pension Committee in the administration of the Plan except to
the extent such expenses are paid from the Trust.

8.4 Claims Procedure.

(a) Filing of Claim. Any Participant, Former Participant or
Beneficiary under the Plan ("Claimant"), may file a written
claim for a Plan benefit with the Pension Committee or with a
person named by the Pension Committee to receive claims under
the Plan.

56
<PAGE> 63
(b) Notification on Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by
any Claimant, he shall be given a written notification
containing specific reasons for the denial or limitation of
his benefit. The written notification shall contain specific
reference to the pertinent Plan provisions on which the denial
or limitation of benefits is based. In addition, it shall
contain a description of any additional material or
information necessary for the Claimant to perfect a claim and
an explanation of why such material or information is
necessary. Further, the notification shall provide appropriate
information as to the steps to be taken if the Claimant wishes
to submit his claim for review. This written notification
shall be given to a Claimant within 90 days after receipt of
his claim by the Pension Committee unless special
circumstances require an extension of time to process the
claim. If such an extension of time for processing is
required, written notice of the extension shall be furnished
to the Claimant prior to the termination of said 90-day period
and such notice shall indicate the special circumstances which
make the postponement appropriate.

(c) Right of Review. In the event of a denial or limitation of
benefits, the Claimant or his duly authorized representative
shall be permitted to review pertinent documents and to submit
to the Pension Committee issues and comments in writing. In
addition, the Claimant or his duly authorized representative
may make a written request for a full and fair review of his
claim and its denial by the Pension Committee provided,
however, that such written request must be received by the
Pension Committee (or his delegate to receive such requests)
within sixty days after receipt by the Claimant of written
notification of the denial or limitation of the claim. The
sixty day requirement may be waived by the Pension Committee
in appropriate cases.

(d) Decision on Review.

(i) A decision shall be rendered by the Pension Committee
within 60 days after the receipt of the request for
review, provided that where special circumstances
require an extension of time for processing the
decision, it may be postponed on written notice to
the Claimant (prior to the expiration of the initial
60 day period), for an additional 60 days, but in no
event shall the decision be rendered more than 120
days after the receipt of such request for review.

(ii) Notwithstanding subparagraph (i), if the Pension
Committee specifies a regularly scheduled time at
least quarterly to review such appeals, a Claimant's
request for review will be acted upon at the
specified time immediately following the receipt of
the Claimant's request unless such request is filed
within 30 days

57
<PAGE> 64
preceding such time. In such instance, the decision
shall be made no later than the date of the second
specified tune following the Pension Committee's
receipt of such request. If special circumstances
(such as a need to hold a hearing) require a further
extension of time for processing a request, a
decision shall be rendered not later than the third
specified time of the Pension Committee following the
receipt of such request for review and written notice
of the extension shall be furnished to the Claimant
prior to the commencement of the extension.

(iii) Any decision by the Pension Committee shall be
furnished to the Claimant in writing and in a manner
calculated to be understood by the Claimant and shall
set forth the specific reason(s) for the decision and
the specific Plan provision(s) on which the decision
is based.

8.5 Records and Reports. The Pension Committee shall exercise such
authority and responsibility as it deems appropriate in order to comply
with ERISA and governmental regulations issued thereunder relating to
records of Participants' account balances and the percentage of such
account balances which are nonforfeitable under the Plan; notifications
to Participants; and annual reports and registration with the Internal
Revenue Service.

8.6 Other Powers and Duties. The Pension Committee shall have such duties
and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:

(a) discretion to construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and
time of payment of any benefits hereunder;

(b) to prescribe procedures to be followed by Participants, Former
Participants or Beneficiaries filing applications for
benefits;

(d) to receive from the Employer and from Participants, Former
Participants and Beneficiaries such information as shall be
necessary for the proper administration of the Plan;

(e) to furnish the Employer, upon request, such annual reports
with respect to the administration of the Plan as are
reasonable and appropriate;

58
<PAGE> 65
(f) to receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, and of the
receipts and disbursements, of the Trust Fund from the
Trustees;

(g) to appoint or employ advisors including legal and actuarial
counsel to render advice with regard to any responsibility of
the Pension Committee under the Plan or to assist in the
administration of the Plan; and

(h) to determine the status of qualified domestic relations orders
under Section 414(p) of the Code.

The Pension Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any
benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.

8.7 Rules and Decisions. The Pension Committee may adopt such rules as it
deems necessary, desirable, or appropriate. All rules and decisions of
the Pension Committee shall be applied uniformly and consistently to
all Participants in similar circumstances. When making a determination
or calculation, the Pension Committee shall be entitled to rely upon
information furnished by a Participant, Former Participant or
Beneficiary, the Employer, the legal counsel of the Employer or the
Trustee.

8.8 Authorization of Benefit Payments. The Pension Committee shall issue
proper directions to the Trustee concerning all benefits which are to
be paid from the Trust Fund pursuant to the provisions of the Plan.

8.9 Application and Forms for Benefits. The Pension Committee may require a
Participant, Former Participant or Beneficiary to complete and file
with it an application for a benefit, and to furnish all pertinent
information requested by it. The Pension Committee may rely upon all
such information so furnished to it, including the Participant's,
Former Participant's or Beneficiaries current mailing address.

8.10 Facility of Payment. Whenever, in the Pension Committee's opinion, a
person entitled to receive any payment of a benefit or installment
thereof hereunder is under a legal disability or is incapacitated in
any way so as to be unable to manage his financial affairs, the Pension
Committee may direct the Trustee to make payments to such person or to
his legal representative or to a relative or friend of such person for
his benefit, or the Pension Committee may direct the Trustee to apply
the payment for the benefit of such person in such manner as it
considers advisable, which shall be a complete discharge of any
liability of the Plan to the Participant or Beneficiary.

59
<PAGE> 66
8.11 Indemnification. The Employer shall indemnity each individual who is an
officer, director or Employee of the Employer and who may be called
upon or designated to perform fiduciary duties or to exercise fiduciary
authority or responsibility with respect to the Plan and shall save and
hold him harmless from any and all claims, damages, and other
liabilities, including without limitation all expenses (including
attorneys' fees and costs), judgments, fines and amounts paid in
settlement and actually and reasonably incurred by him in connection
with any action, suit or proceeding, resulting from his alleged or
actual breach of such duties, authority or responsibility, whether by
negligence, gross negligence or misconduct, to the maximum extent
permitted by law, provided, however, that this indemnification shall
not apply with respect to any actual breach of such duties, authority
or responsibility, if the individual concerned did not act in good
faith and in the manner he reasonably believed to be in (or not opposed
to) the best interest of the Employer, or, with respect to any criminal
action or proceeding, had reasonable cause to believe his conduct was
unlawful.

8.12 Resignation or Removal of the Pension Committee. A Pension Committee
member may resign at any time by giving ten days' written notice to the
Employer and the Trustee. The Board of Directors may remove any member
of the Pension Committee by giving written notice to him and the
Trustee. Any such resignation or removal shall take effect at a date
specified on such notice, or upon delivery to the Pension Committee if
no date is specified.

8.13 Notices and Forms. The Pension Committee, at its discretion may
establish procedures for the submission to the Pension Committee by the
Participants of the elections, designations and applications required
of Participants, Former Participants and Beneficiaries by the Plan.
With reasonable notice to the Participants, Former Participants and
Beneficiaries, as appropriate, the Pension Committee may establish
procedures for the submission of written elections, designations and
applications, including applications, for a loan, withdrawal or
distribution, or may provide that any of such elections, designations
and applications may be made by an interactive voice response system.

The Pension Committee, at its discretion, may also direct that the
Participant, Former Participant or Beneficiary shall direct any
election, designation or application to the recordkeeper for the Plan
named from time to time by the Pension Committee.

60
<PAGE> 67
ARTICLE IX
MISCELLANEOUS

9.1 No Guarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any
Eligible Employee, or as a right of any Eligible Employee to be
continued in the employment of the Employer, or as a limitation of the
right of the Employer to discharge any of its Eligible Employees, with
or without cause.

9.2 Rights to Trust Assets. No Eligible Employee or Beneficiary shall have
any right to, or interest in, any assets of the Trust Fund upon
Termination of his employment or otherwise, except as provided from
time to time under this Plan, and then only to the extent of the
benefits payable under the Plan to such Eligible Employee out of the
assets of the Trust Fund. All payments of benefits as provided for in
this Plan shall be made solely out of the assets of the Trust Fund.

9.3 No Alienation of Benefits. Except as may be permitted by law, and
except as may be required or permitted by a qualified domestic
relations order as defined in Section 414(p) of the Code, benefits
payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, including any such liability which is
for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the Eligible Employee, prior to
actually being received by the person entitled to the benefit under the
terms of the Plan; and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any
right to benefits payable hereunder shall be void. The Trust Fund shall
not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits
hereunder.

Benefits payable to an alternate payee pursuant to a qualified domestic
relations order under Section 414(p) of the Code shall be paid
immediately in a lump sum, except that if the benefit payable to the
alternate payee exceeds $3,500, the benefit shall not be distributed
immediately without the alternate payee's consent.

9.4 Discontinuance of Employer Contributions. In the event of permanent
discontinuance of contributions to the Plan by the Employer, the
accounts of all Participants shall become fully-vested and
nonforfeitable as of the date of such discontinuance.

61
<PAGE> 68
ARTICLE X
AMENDMENTS AND ACTION BY COMPANY

10.1 Amendments Generally. The Board of Directors reserves the right to make
from time to time any amendment or amendments to this Plan or Trust
which do not cause any part of the Trust Fund to be used for, or
diverted to, any purpose other than the exclusive benefit of
Participants, Former Participants or their Beneficiaries; provided,
however, that the Company may make any amendment it determines
necessary or desirable, with or without retroactive effect, to comply
with the Code and ERISA. The Board of Directors shall exercise its
right to amend the Plan or Trust by the adoption of a resolution of the
Board of Directors approving an amendment of the Plan or by authorizing
an appropriate executive officer of the Company to execute amendments
to the Plan on behalf of the Company.

No amendment to the Plan shall decrease a Participant's Accounts or
eliminate an optional form of distribution except as may be permitted
by the Code or ERISA. No amendment to the Plan shall discriminate in
favor of the Highly Compensated Eligible Participants.

10.2 Amendments to Vesting Schedule. Any amendment to the Plan which alters
the vesting schedule set forth in Section 6.4 shall be deemed to
include the following terms:

(a) The vested percentage of a Participant in that portion of his
HMI Company Regular Account or Raff-Hughes Company Regular
Account under the Plan derived from Employer contributions
made for Plan Years ending with or within the later of the
date such amendment is adopted or the date such amendment
becomes effective shall not be reduced; and

(b) Effective January 1, 1989 with respect to Merged Plan II and
otherwise effective January 1, 1991, each Participant having
not less than three Years of Service at the later of the date
such amendment was effective shall be permitted to elect
irrevocably to have his vested percentage computed under the
Plan without regard to such amendment. Such election must be
made within 60 days from the later of (i) the date the
amendment was adopted, (ii) the date the amendment became
effective, or (iii) the date the Participant is issued written
notice of such amendment by the Pension Committee.

Notwithstanding the preceding sentence, no election need be provided
for any Participant whose nonforfeitable percentage in his HMI Company
Regular Account under the Plan, as amended at any time, cannot be less
than such percentage determined without regard to such amendment.

62
<PAGE> 69
10.3 Action by Company. Any action by the Company under this Plan shall be
by a duly adopted resolution of its Board of Directors, or by any
person or persons duly authorized by a duly adopted resolution of that
Board to take such action.

63
<PAGE> 70
ARTICLE XI
SUCCESSOR EMPLOYER AND MERGER OR
CONSOLIDATION OF PLANS

11.1 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of the Employer, provision may be made
by which the Plan and Trust will be continued by the successor; and, in
that event, such successor shall be substituted for the Employer under
the Plan. The substitution of the successor shall constitute an
assumption of Plan liabilities by the successor, and the successor
shall have all of the powers, duties and responsibilities of the
Employer under the Plan.

11.2 Plan Assets. There shall be no merger or consolidation of the Plan
with, or transfer of assets or liabilities of the Trust Fund to, any
other plan of deferred compensation maintained or to be established for
the benefit of all or some of the Participants of the Plan, unless each
Participant would (if either this Plan or the other plan then
terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated), and
unless a duly adopted resolution of the Board of Directors authorizes
such merger, consolidation or transfer of assets.

11.3 Merged Plans. If the Pension Committee or the Internal Revenue Service
determines that a Merged Plan is not qualified under Section 401(a) of
the Code, the assets attributable to the Merged Plan shall be
distributed from the Trust as the Pension Committee deems necessary to
preserve or restore the qualified status of this Plan.

64
<PAGE> 71
ARTICLE XII
PLAN TERMINATION

12.1 Right to Terminate. In accordance with the procedures set forth herein,
the Board of Directors may terminate the Plan at any time in whole or
in part. To the extent permitted by the Code and regulations
thereunder, in the event of the dissolution, merger, consolidation or
reorganization of the Company, the Plan shall terminate and the Trust
Fund shall be liquidated unless the Plan is continued by a successor to
the Company in accordance with Section 11.1.

12.2 Liquidation of the Trust Fund. Upon the complete or partial termination
of the Plan, the Accounts of all Participants affected thereby shall
become fully-vested and nonforfeitable, to the extent funded, and the
Pension Committee shall direct the Trustee to distribute the assets
remaining in the Trust Fund, after payment of any expenses properly
chargeable thereto, to Participants, Former Participants and
Beneficiaries in proportion to their respective account balances. If
any amounts attributable to Forfeitures shall still remain, such
amounts shall be returned to the Employer.

12.3 Manner of Distribution. To the extent that no discrimination in value
results, any distribution after termination of the Plan may be made, in
whole or in part, in cash, or in securities or other assets in kind, as
the Pension Committee may determine. All non-cash distributions shall
be valued at fair market value at date of distribution.

65
<PAGE> 72
ARTICLE XIII
DETERMINATION OF TOP-HEAVY STATUS

13.1 General. Notwithstanding any other provision of the Plan to the
contrary, for any Plan Year in which the Plan is a Top-Heavy Plan or
Super Top-Heavy Plan, as defined below, the provisions of this Article
shall apply, but only to the extent required by Section 416 of the Code
and the regulations thereunder.

(a) If the Plan is not included in a Required Aggregation Group
with other plans, then it shall be Top-Heavy only if (i) when
considered by itself it is a Top-Heavy Plan and (ii) it is not
included in a Permissive Aggregation Group that is not a
Top-Heavy Group.

(b) If the Plan is included in a Required Aggregation Group with
other plans, it shall be Top-Heavy only if the Required
Aggregation Group, including any permissively aggregated
plans, is Top-Heavy.

13.3 Super Top-Heavy Plan. This Plan shall be a Super Top-Heavy Plan if it
would be a Top-Heavy Plan under Section 13.2, but substituting 90% for
60%.

13.4 Cumulative Accrued Benefits and Cumulative Accounts. The determination
of the Cumulative Accrued Benefits and Cumulative Accounts under the
Plan shall be made in accordance with Section 416 of the Code and the
regulations thereunder. The determination of the Plan's Top-Heavy,
status shall relate to the proper Determination Date and Valuation
Date.

13.5 Definitions.

(a) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group.

(b) "Determination Date" means with respect to any Plan Year, the
last day of the preceding Plan Year or in the case of the
first Plan Year of any plan, the last day of such Plan Year or
such other date as permitted by the Secretary of the Treasury
or his delegate.

(c) "Corporation" means the Employer that adopts this Plan and all
members of a controlled group of corporations (as defined in
Section 414(b) of the Code), all commonly controlled trades or
businesses (as defined in Section

66
<PAGE> 73
414(c) of the Code) or affiliated service groups (as defined
in Section 414(m) of the Code) of which the Employer is a
part.

(d) "Key Eligible Employee" means those individuals described in
Section 416(i)(1) of the Code and the regulations hereunder.

(e) "Non-Key Eligible Employee" means those individuals who are
not Key Eligible Employees and includes former Key Eligible
Employees.

(f) "Permissive Aggregation Group" means a Required Aggregation
Group plus any other plans selected by the Company provided
that all such plans when considered together satisfy the
requirements of Sections 401(a)(4) and 410(b) of the Code.

(g) "Required Aggregation Group" means a plan maintained by the
Employer in which a Key Eligible Employee is a participant or
which enables any plan in which a Key Eligible Employee is a
participant to meet the requirements of Section 401(a)(4) or
Section 410(b) of the Code (including any terminated plan
which terminated within five years of the Determination Date).

(h) "Valuation Date" means the first day of each Plan Year.

13.6 Vesting. For each Plan Year in which the Plan is Top-Heavy or Super
Top-Heavy, a Participant who is credited with one Hour of Service in
any Plan Year in which the Plan is Top-Heavy or Super Top-Heavy shall
have a nonforfeitable interest in that portion of his HMI Company
Regular Account and Raff-Hughes Company Regular Account in accordance
with Section 6.4.

13.7 Compensation. Compensation means compensation as defined in Section
414(q)(7) of the Code, not in excess of $200,000 (such amount to be
adjusted annually for increases in the cost of living in accordance
with Section 415(d) of the Code). Effective January 1, 1989,
Compensation shall be limited in accordance with Section 401(a)(17) of
the Code.

13.8 Minimum Contributions. For each Plan Year in which the Plan is
Top-Heavy or Super Top-Heavy, minimum Employer contributions for a
Participant who is a Non-Key Eligible Employee shall be required to be
made on behalf of each Participant who is employed by the Employer on
the last day of the Plan Year, regardless of the level of his
Compensation and regardless of the number of Hours of Service he has
completed during such Plan Year. The amount of the minimum contribution
shall be the lesser of the following percentages of compensation (as
defined in Section 415(c)(3) of the Code):

67
<PAGE> 74
(i) Three percent, or

(ii) The highest percentage at which Employer
Contributions are made under the Plan for the Plan
Year on behalf of any Key Eligible Employee.

(A) For purposes of subparagraph (ii), all defined
contribution plans included in a Required Aggregation
Group shall be treated as one plan.

(B) This paragraph (ii) shall not apply if the Plan
is included in a Required Aggregation Group and the
Plan enables a defined benefit plan included in the
Required Aggregation Group to meet the requirements
of Section 401(a)(4) or 410(b) of the Code.

In determining whether a Non-Key Eligible Employee has
received any required minimum contribution, the contributions
allocated to such Non-Key Eligible Employee made pursuant to
Section 4.1(a) or (b) shall not be considered minimum
contributions.

This Section shall not apply to the extent a Participant other
than a Key Eligible Employee is covered by another qualified
plan(s) of the Corporation and the Corporation has provided
that the minimum contribution requirements applicable to this
Plan will be satisfied by the other plan(s).

13.9 Defined Benefit and Defined Contribution Plan Fractions. For any Plan
Year in which the Plan is Super Top-Heavy, or for any Plan Year in
which the Plan is Top-Heavy and the additional minimum contributions or
benefits required under Section 416(h) of the Code are not provided,
the dollar limitations in the denominator of the defined benefit plan
fraction and defined contribution plan fraction as defined in Section
415(e) of the Code shall be adjusted as set forth in Section 416(h) of
the Code. If the application of the provisions of this Section 13.9
would cause any Participant to exceed 1.0 for any Limitation Year, then
the application of this Section 13.9 shall be suspended as to such
Participant until such time as he no longer exceeds 1.0. During the
period of such suspension, there shall be no Corporation contributions,
Forfeitures or voluntary nondeductible contributions allocated to such
Participant under this Plan or under any other defined contribution
plan of the Corporation and there shall be no benefit accruals for such
Participant under any defined benefit plan of the Corporation.

68
<PAGE> 75
IN WITNESS WHEREOF, the Company has executed this restated Plan this
14th day of November, 1994.

ACORDIA, INC.

By:______________________________
L. Ben Lytle
Chief Executive Officer

Attest:

__________________________

69
<PAGE> 76
APPENDIX A
ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

<TABLE>
<CAPTION>
Matching
Contribution
Percentage If
Other Than 50% Acordia
Participating Affiliates as of 12/31/94 On First 6% Employer
- ---------------------------------------------- ------------------ -----------
<S> <C> <C>
Acordia, Inc.
Acordia Benefits of Florida, Inc.
Acordia Benefits of Northern California, Inc.
Acordia of Southern California, Inc.
Acordia of The South, Inc.
Acordia Benefits of Texas, Inc.
Acordia of Evansville, Inc.
Acordia Collegiate Benefits, Inc.
Acordia Educational Benefits of Texas, Inc.
Acordia Health Industry Services, Inc.
Acordia Local Government Services, Inc.
Acordia of Cleveland, Inc.
Acordia of Central Indiana, Inc.
Acordia of Louisville, Inc.
Acordia Personal Benefits, Inc.
Acordia Personal Benefits of Utah, Inc. 0%
Acordia School Benefits, Inc.
Acordia Senior Benefits, Inc.
Acordia Small Business Benefits, Inc.
Acordia Small Business Benefits of the Southwest, Inc.
Business Insurance Resources, Inc.
Acordia of Northeast Indiana, Inc.
Acordia of Lexington, Inc.
Acordia of North Carolina, Inc.
Acordia of Central Pennsylvania, Inc.
Acordia of Colorado, Inc.
Acordia of Phoenix, Inc.
Acordia of Mississippi, Inc.
Acordia of South Florida, Inc.
Preslan Agency, Inc.
</TABLE>

70
<PAGE> 77
EXHIBIT A

ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

Merged Plan: HMI Employees' Profit Sharing Plan

Special Payment Options:

A Participant may elect one of the following options for payment of that portion
of his HMI Account attributable to participation under Merged Plan II, and
income allocated thereto ("Merged HMI Account"):

(i) A lump sum;

(ii) Substantially equal periodic installments payable over the lifetime of the
Participant or over the joint lifetimes of the Participant and his
Beneficiary; or

(iii) Purchase of an annuity.

The following provisions shall apply only if a Participant elects option (iii),
"purchase of an annuity".

(a) Unless a Participant elects otherwise with the consent of his Spouse, if
applicable, to have his benefits paid in other than a qualified joint and
50% survivor annuity, the Participant shall be deemed to have elected to
receive that portion of his benefits under the Plan in (i) a single life
annuity if the Participant is not married on the Annuity Starting Date;
and (ii) a qualified joint and 50% survivor annuity if the Participant is
married on the Annuity Starting Date. The Employer shall purchase the
applicable annuity with that portion of the Participant's vested Merged
HMI Account balance.

In order for the Spouse to be eligible for the survivor annuity, the
Participant or Former Participant must have:

(1) Terminated his employment with the Employer at any time and not have
died before his Annuity Starting Date,

(2) The Participant or Former Participant must not have waived such
qualified joint and survivor annuity and elected an optional form of
payment pursuant to paragraph (c) within the 90 day period ending on
the Annuity Starting Date and obtained the consent of his Spouse to
such waiver pursuant to paragraph (c), and

71
<PAGE> 78
(3) The Participant or Former Participant must be married on his Annuity
Starting Date.

(b) Notice and Election or Revocation of Survivor Annuity. The Pension
Committee shall furnish each Participant or Former Participant with the
following information regarding benefits payable under the Plan in written
nontechnical language not less than 30 and not more than 90 days prior to
the Annuity Starting Date including:

(1) A general description or explanation of the terms and conditions of
the qualified joint and survivor annuity benefit and notification of
the Participant's or Former Participant's right to waive the right
to receive his retirement benefits in a qualified joint and survivor
annuity and to elect another form of payment and the right to make
or to revoke a previous election to waive the qualified joint and
survivor annuity;

(2) A general explanation of the rights of a Participant's or Former
Participant's Spouse.

A Participant or Former Participant may elect to waive the single life
annuity or qualified joint and survivor annuity, as applicable, and to
receive such benefits in any other annuity form permitted by the Plan by
giving written notification to the Pension Committee during the election
period of his intent to receive his benefits in such other form. Such
election period shall be the 90 day period ending on the Annuity Starting
Date.

Any election to waive the qualified joint and survivor annuity shall not
take effect unless the Spouse of the Participant or Former Participant
consents irrevocably in writing to such election and the Spouse's consent
acknowledges the effect of such election, including the spouse's voluntary
election to waive the right to consent to the designation of a specific
Beneficiary and the alternate form of payment and is witnessed by a notary
public. Any consent necessary under this provision will be valid only with
respect to the Spouse who signs the consent, or in the event of a deemed
qualified election, the designated Spouse and must be limited to a benefit
for a specific alternate Beneficiary. Any new waiver will require a new
spousal consent. The requirements of this paragraph may be waived if it is
established to the satisfaction of the Pension Committee that the consent
may not be obtained because there is no Spouse or because the Spouse
cannot be located or because of such other circumstances as may be
prescribed by regulation in which case a waiver will be deemed a qualified
election.

Any election made under this Section may be revoked by the Participant or
Former Participant during the specified election period. Such revocation
shall be effected by written notification to the Pension Committee.
Following such revocation, another election under this Section may be made
at any time during the specified election period. A revocation of a prior
waiver may be made at any

72
<PAGE> 79
time by a Participant or Former Participant without the consent of the
Spouse before the commencement of benefits.

Any actual or constructive election under this paragraph (b) having the
effect of providing a Spouse's benefit automatically shall be revoked if
the electing person ceases to have a Spouse during the election period,
except to the extent required under a qualified domestic relations order.
However, if the electing person subsequently remarries, the election will
automatically be reinstated at that time, but will be treated as a new
election.

(c) Qualified Preretirement Survivor Annuity. The surviving Spouse of a
Participant who meets the requirements of this Section shall be entitled
to a qualified preretirement survivor annuity payable if the Participant
has elected an annuity form of payment and dies before his Annuity
Starting Date. The preretirement survivor annuity will be a survivor
annuity for the life of the surviving Spouse of the Participant, that can
be purchased with the vested Merged HMI Account balance as of the date of
death.

If so elected by the surviving Spouse, the preretirement survivor annuity
shall be payable as soon as administratively feasible following the
Participant's death. If the surviving Spouse does not make the election
referred to in the preceding sentence, payment of the preretirement
survivor annuity shall not commence until the Participant would have
attained Normal Retirement Date.

In order for such Spouse's benefit to be payable, the Participant must
have satisfied the conditions set forth in (1), (2), (3) and (4) below.

(1) The Participant must have died before his Annuity Starting Date, but
after having elected an annuity form of payment.

(2) The Participant must be married on the date of the Participant's
death.

(3) The Participant must not have designated an alternate Beneficiary in
the manner described in paragraph (e) to receive any death benefits
payable upon his death and otherwise payable to the Spouse in a
preretirement survivor annuity in an alternate form of payment
described in paragraph (f). Notwithstanding the foregoing, such
consent shall have no effect with respect to the survivor benefits
payable under paragraph (a), to the surviving Spouse of a
Participant who dies after his Annuity Starting Date, unless the
spouse has consented to a waiver of the qualified joint and survivor
annuity pursuant to paragraph (b).

(4) The Participant must not have designated his Spouse as his
Beneficiary in the manner described in paragraph (e) to receive any
benefits payable upon his death and otherwise payable to the Spouse
in a preretirement survivor

73
<PAGE> 80
annuity, in an alternate form of payment described in paragraph (f).
Notwithstanding the foregoing, such consent shall have no effect
with respect to the survivor benefits payable under paragraph (a) to
the surviving Spouse of a Participant who dies after his Annuity
Starting Date, unless the Spouse has consented to a waiver of the
qualified joint and survivor annuity pursuant to paragraph (b).

(d) Information to Participants. The Pension Committee shall provide a
Participant with information with respect to the preretirement survivor
annuity which information shall be provided in a manner similar to the
information with respect to the qualified joint and survivor annuity and
in a manner which will reasonably assure that it will be received within
the "applicable time period". For purposes of this paragraph, the term
"applicable time period" means, with respect to a Participant, whichever
of the following periods ends last:

(1) The period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age
35;

(2) A reasonable period after the individual becomes a Participant. For
this purpose, in the case of an individual who becomes a Participant
after age 35, the explanation must be provided by the end of the
one-year period beginning with the first day of the first Plan Year
for which the individual is a Participant; or

(3) A reasonable period after separation from service in the case of a
Participant who separates before attaining age 35. For this purpose,
the Pension Committee must provide the explanation beginning one
year before the separation from service and ending one year after
separation.

(e) Election to Waive Preretirement Survivor Annuity. A Participant who is
entitled to have his Spouse receive benefits in the form described in
paragraph (c) may waive the qualified preretirement survivor annuity and
may (i) designate an alternate Beneficiary to receive such benefits in any
other form permitted under paragraph (f) by designating an alternate
Beneficiary during the election period, or (ii) designate his spouse as
his Beneficiary to receive such benefits in any form permitted under
paragraph (f) by designating an alternate form of payment other than the
qualified preretirement survivor annuity during the election period, in
each case in the manner described in this subsection.

The election period to waive the preretirement survivor annuity shall be
the period which begins on the first day of the Plan Year in which the
Participant attains age 35 and ends on the earlier of the date of the
Participant's death or the Annuity Starting Date. In the case of a
Participant who is separated from service, the

74
<PAGE> 81
applicable election period with respect to benefits accrued before the
date of such separation from service shall not begin later than such date.

Notwithstanding the foregoing, the election period to waive the
preretirement survivor annuity shall not begin earlier than the date on
which the preretirement survivor annuity first would apply to a
Participant.

Any election to waive the preretirement survivor annuity shall not take
effect unless the Spouse of the Participant consents irrevocably in
writing to such election and the Spouse's consent acknowledges the effect
of such election including the Spouse's voluntary election to waive the
right to consent to the designation of a specific alternate Beneficiary
and the alternate form of payment and the Spouse's consent is witnessed by
a notary public or a representative designated by the Pension Committee.
Any consent necessary under this provision will be valid only with respect
to the spouse who signs the consent, or in the event of a deemed qualified
election, the designated Beneficiary and must be limited to a benefit for
a specific alternate Beneficiary. Any new waiver will require a new
spousal consent. The requirements of this paragraph may be waived if it is
established to the satisfaction of the representative designated by the
Pension Committee that the consent may not be obtained because there is no
Spouse or because the spouse cannot be located or because of such other
circumstances as may be prescribed by regulation in which case a waiver
will be deemed a qualified election.

Any election to waive the preretirement survivor annuity made under this
Section may be revoked by the Participant during the specified election
period. Such revocation shall be effected by written notification to the
representative designated by the Pension Committee. Following such
revocation, another waiver under this Section may be made at any time
during the specified election period. A revocation of a prior waiver may
be made at any time by a Participant without the consent of the Spouse
before the Annuity Staring Date. Any actual or constructive election under
this paragraph having the effect of providing a Spouse's benefit
automatically shall be revoked if the electing Participant ceases to have
a Spouse during the election period, except to the extent required under a
qualified domestic relations order. However, if the electing person
subsequently remarries, the election automatically will be reinstated at
that time but will be treated as a new election.

(f) Optional Form of Benefit Payments Upon Death. Subject to the requirements
of paragraph (e), if (i) the Participant has designated an alternate
Beneficiary to receive any benefits payable on account of his death prior
to his Annuity Starting Date pursuant to paragraph (e) which are otherwise
payable to the Spouse in a preretirement survivor annuity, or (ii) the
Participant has designated his surviving Spouse as his Beneficiary to
receive any benefits payable on account of his death prior to his Annuity
Starting Date which are otherwise payable to the Spouse in

75
<PAGE> 82
a preretirement survivor annuity, in the alternate form permitted under
this paragraph (f) pursuant to paragraph (e), any amount to which a
Beneficiary is entitled shall be distributed in accordance with Section
6.7.

Notwithstanding the foregoing, if the qualified preretirement survivor
annuity has not been waived by the Participant in accordance with
paragraph (e), upon written notice to the representative designated by the
Pension Committee within the 90 day period ending on the date the
preretirement survivor annuity is due to commence, the Spouse may elect to
have any benefits to which he or she otherwise is entitled in the form of
a qualified preretirement survivor annuity (on account of the
Participant's death prior to commencement of benefits) distributed in a
lump sum. Any election to waive the preretirement surviving annuity made
under this Section may be revoked by the Spouse during the specified
election period. Such revocation shall be effected by written notification
to the representative designated by the Pension Committee. Following such
revocation, another waiver under this Section may be made at any time
during the specified 90 day election period.

(g) Special Rule for Small Annuities. The present value of any annuity
provided by the Plan shall be immediately distributed to the Participant,
Former Participant or Beneficiary if the Participant's or Former
Participant's vested Merged HMI Account balance does not exceed $3,500.

No distribution may be made pursuant to this paragraph (g) after benefits
have commenced to be paid to the Participant or Former Participant or the
surviving Spouse where the Participant or Former Participant has died.

(h) Nontransferability of Annuities. Any annuity contract distributed herefrom
shall be nontransferable.

(i) Annuity Starting Date. Annuity Starting Date means the first day of the
first period for which an annuity is payable as an annuity. In the case of
a benefit not payable as an annuity, Annuity Starting Date means the first
day on which all conditions have been met which entitle the Participant or
Former Participant to such benefit.

76
<PAGE> 83
EXHIBIT B

ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

Merged Plan: Price & MacDonald, Inc. Profit Sharing Plan (PriMac Plan).

Merger Date: May 31, 1993. PriMac shall become an Employer in the Plan on that
date.

Participation: All participants in the PriMac Plan on the Merger Date shall
become Participants in the Plan, and if the individual is an Eligible Employee
on the Merger Date, he shall be eligible to make Before Tax Contributions in
accordance with the Plan.

Accounts: The accounts maintained under the PriMac Plan shall be held in the
similar Accounts under the Plan and shall be subject to the provisions of the
Plan. A Company Contribution Account shall be established for any PriMac Plan
participant who was credited with Company contributions (discretionary
contributions under the PriMac Plan).

Vesting: A PriMac participant's interest in his accounts shall become fully
vested and nonforfeitable upon the Merger Date.

77
<PAGE> 84
EXHIBIT C

78
<PAGE> 85
ACORDIA
401(k) LONG TERM SAVINGS INVESTMENT PLAN
PARTICIPANT LOAN PROVISIONS

Effective October 21, 1992, the Acordia Pension Benefits Administration and
Compliance Committee (the "Committee"), for the Acordia 401(k) Long Term Savings
Investment Plan (the "Plan"), adopted the following program for loans under the
Plan, which shall thereafter form part of the Plan document.

1. Administration of the Participant loan program

The loan program under the Plan is administered by the Pension Benefits
Administration and Compliance Committee. The Committee has delegated to
the Benefits Administrator and Recordkeeper the authority to approve loans
to Participants in accordance with the terms of the Plan, including this
document, which forms a part of the Plan.

All applications for loans under the Plan shall be filed with the
Recordkeeper at the following address:

Wyatt Preferred Choice
Attn: Acordia 401 (k) Long Term Savings
Investment Plan
6483 City West Parkway
Eden Prairie, MN 55344-7835

2. Eligibility for Participant Loans

All Participants who are actively employed by the Company are eligible for
Plan loans without regard to race, color, religion, sex, age or national
origin. Effective 1/1/96, a Participant may not obtain a loan if he
already has two outstanding loans under the plan. Prior to 1/1/96, a
Participant could not obtain a loan if he (f) already had an outstanding
loan under the Plan or (ii) had completely prepaid an existing loan within
the three-month period immediately preceding the application for a new
loan.

3. Term of Loans

The term of the loan can be for one, two, three, four or five years as
elected by the Participant. If the loan proceeds will be used to purchase
the Participant's primary residence, the loan term can be six, seven,
eight, nine or ten years.

79
<PAGE> 86
4. Repayment of Loans

A loan to a Participant must be repaid, in level installment payments of
principal and interest, by automatic payroll deduction beginning with his
paycheck no later than the second full payroll period following approval
of the loan. If the Participant subsequently is granted an unpaid leave of
absence or is transferred to a group or location which is not covered
under the Plan, no loan payments will be made. If a participant does not
make loan repayments and returns to normal pay status, the plan will
either:

(a) Extend the term of the loan by the number of payments for
which repayments were missed, to the extent permitted by law,
or

(b) immediately double repayments for as many pay periods as
repayments were missed.

80
<PAGE> 87
ACORDIA

401(k) LONG TERM SAVINGS INVESTMENT PLAN

(RESTATED EFFECTIVE OCTOBER 21, 1992)

<PAGE> 88
FIRST AMENDMENT OF
ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

The Acordia 401(k) Long Term Savings Investment Plan (the "Plan") is
hereby amended as follows:

1. Effective January 1, 1996, Section 6.10 of the Plan is amended to
delete the second sentence in its entirety and replace it with the following:

The Participant may have up to two loans outstanding at any time.

2. Effective April 1, 1995, Paragraph 4.1(a)(i) of the Plan is
hereby amended to add the following language to the end of that Paragraph:

Notwithstanding the foregoing, in the case of a Participant who is
an employee of Bain Hogg Corporation who became eligible to
participate in the Plan as of April 1, 1995, limits referred to
above shall be doubled for a number of pay periods beginning on
April 1 equal to the number of pay periods between January 1, 1995
and March 31, 1995.

3. Effective September 1, 1995, Subsection 7.3(a) is amended to read
as follows:

7.3 Acordia Stock

(a) Limitation on Acordia Stock Investment.
Notwithstanding any other provisions of the Plan, the following
rules shall apply with respect to the investment of a Participant's
Accounts in Acordia Stock;

(1) As of the Effective Date, in accordance with rules
prescribed by the Pension Committee, a Participant may direct the
investment of up to 20% of the total amount in his Accounts as of
August 31, 1992 into Acordia Stock;

(2) The maximum amount of future contributions to a
Participant's Accounts that may be invested in Acordia Stock shall
be 20% (50% effective September 1, 1995); and

<PAGE> 89
(3) The maximum amount of a Participant's Accounts that
may be reallocated to Acordia Stock shall be an amount, which when
added to amounts already invested in Acordia Stock, results in a no
more than 20% (50% effective September 1, 1995) of the total of a
Participant's accounts being invested in Acordia Stock.

4. Effective January 1, 1996, Subsection 6.10(b) of the Plan
shall be amended to revise the sixth sentence of that Section to read as
follows:

Loans may be prepaid in full at any time without penalty.

5. Effective January 1, 1995, new Sections 2.18A, 2.18B and 2.81
are added to the Plan to read as follows:

2.18A Early Retirement means, with respect to a Participant,
termination of the Participant's employment with the Employer
at or after the Participant's Early Retirement Date.

2.18B Early Retirement Date means, with respect to a
Participant, the date on which the Participant has both
attained age 55 and complete at least five years of Service.

2.81 Year of Service means a "Year of Service" as defined
under the terms of the Acordia, Inc. Pension Plan.

6. Effective January 1, 1996, the first paragraph of Section
2.17 of the Plan is amended and restated in its entirety to read as follows:

2.17 Compensation means for any Plan Year base salary,
commissions, overtime pay and cash bonuses actually received
by a Participant. Compensation shall also include cash
received from the Flexible Benefits program and the amount of
any elective deferrals the Participant has authorized the
Employer to make on his behalf under the plans maintained by
the Employer in accordance with Sections 125 and 401(k) of the
Code but shall exclude all other forms of compensation such as
imputed income, car allowances, non-qualified deferred
compensation, severance payments, payments under the directed
executive compensation program, income from the exercise of
qualified or non-qualified stock options, payments under the
Company's

83
<PAGE> 90
long-term incentive plan or similar items. Notwithstanding the
last sentence, in no event shall Compensation exceed the
limitations of Section 401(a)(17) of the Code (as adjusted).

IN WITNESS WHEREOF, the Company has executed this First Amendment
this 29th day of December, 1995.

ACORDIA, INC.

___________________ Daniel W.
Kendall
Chair, Acordia Pension Benefit
Administration and Compliance Committee

84
<PAGE> 91
APPENDIX A - PARTICIPATING EMPLOYERS

ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

12/31/95

1995 L1L2 1996 L1L2 NAME

ACAA CAAC ACORDIA, INC.
ACBA CBAC ACORDIA BENEFIT SERVICES OF NORTHERN CALIFORNIA INC.
ACCA CCAC ACORIDA OF SOUTHERN CALIFORNIA
ACCB CCBC AA & C
ACDA CDAC ACORDIA BENEFITS OF EVANSVILLE, INC.
ACDB CDBC ACORDIA OF EVANSVILLE (SE EES)
ACEA CEAC ACORDIA BENEFITS OF FLORIDA INC.
ACFA CFAC ACORDIA BENEFITS OF TEXAS, INC.
ACGA CGAC ACORDIA BENEFITS OF THE SOUTH, INC.
ACHA CHAC ACORDIA MANAGED CARE SOLUTIONS d/b/a ADMIN SOL
ACHB CHBC ACORDIA COLLEGIATE
ACIA CIAC ACORDIA BENEFITS OF LOUISVILLE
ACJA CJAC ACORDIA OF LEXINGTON
ACKA CKAC ACORDIA OF CENTRAL INDIANA
ACLA CLAC ACORDIA EDUCATIONAL BENEFITS OF TEXAS, INC.
ACLB CLBC ACORDIA RAUH (SE EES)
ACMA CMAC ACORDIA OF NORTHEAST INDIANA
ACMB CMBC ACORDIA OF WESTERN VIRGINIA (SE EES)
ACMC CMCC ACORDIA OF NORTHEAST INDIANA
ACMP CMPC ACORDIA OF YOUNGSTOWN (MOORE-PETERSON)
ACOA COAC ACORDIA BENEFITS OF OHIO INC. DBA ACORDIA OF OH
ACPA CPAC ACORDIA OF MISSISSIPPI
ACPT CPTC ACORDIA OF THE NORTHWEST-PETTIT-MORRY
ACPU CPUC LWP SERVICES INC.
ACPV CPVC PETTIT-MORRY OF CALIFORNIA
ACPW CPWC PETTIT-MORRY OF OREGON
ACPX CPXC PUGET SOUND UNDERWRITERS
ACQA CQAC ACORDIA PERSONAL BENEFITS INC.
ACSA CSAC ACORDIA OF NORTHWEST INDIANA
ACTA CTAC INSURANCE MANAGEMENT BUREAU (RISK GROUP INC.)
ACUA CUAC ACORDIA SENIOR BENEFITS INC.
ACUB CUBC ACORDIA SENIOR OF THE SOUTHEAST
ACVA CVAC ACORDIA TEXAS GULF COAST
ACWA CWAC ACORDIA SMALL BUSINESS BENEFITS, INC.
ACWC CWCC ACORDIA SMALL BUSINESS BENEFITS, INC.
ACXA CXAC ACORDIA OF ERIE
ACYA CYAC ACORDIA BENEFITS OF SOUTHERN FLORIDA
AC10 C10C THE PRESLAN AGENCY
AC15 C15C HOGG ROBINSON OF NEW YORK
AC16 C16C HOGG ROBINSON OF NEW ENGLAND
AC17 C17C HOGG ROBINSON OF NEW HAMPSHIRE
AC18 C18C HOGG ROBINSON CONSULTING GROUP
AC25 C25C HOGG ROBINSON OF MICHIGAN
AC26 C26C PENN GENERAL - MICHIGAN
AC27 C27C HOGG ROBINSON OF GEORGIA
AC28 C28C HOGG ROBINSON OF FLORIDA
AC30 C30C ACCORDIA OF UTAH
AC35 C35C PENN GENERAL - LUBBOCK
AC40 C40C ACORDIA OF COLORADO
AC45 C45C RHR UNDERWRITERS
AC50 C50C ACORDIA OF NORTH CAROLINA, INC.
AC55 C55C HOGG ROBINSON OF VIRGINIA
AC60 C60C ACORDIA OF ARIZONA
AC65 C65C HOGG ROBINSON OF OHIO
AC70 C70C ACORDIA OF CENTRAL PENNSYLVANIA, INC.
AC71 C71C HOGG ROBINSON OF PENNSYLVANIA
AC75 C75C PENN GENERAL - OTHER SOUTHWEST
AC80 C80C TEXAS PROFESSIONAL INSURANCE AGENCY

85
<PAGE> 92
SECOND AMENDMENT OF ACORDIA
401(k) LONG TERM SAVINGS INVESTMENT PLAN

The Accordia 401(k) Long Term Savings Investment Plan (the "Plan")
is hereby amended as follows:

1. Effective October 21, 1992, Section 2.17 is amended to read as
follows:

In no event shall a Participant's Compensation considered under the
Plan for a Plan Year beginning before January 1, 1994 exceed
$200,000, as adjusted to reflect increases pursuant to Section
401(a)(17) of the Code. In no event shall a Participant's
Compensation considered under the Plan for a Plan Year beginning
after December 31, 1993 exceed $150,000, as adjusted to reflect
increases pursuant to Section 401(a)(17) of the Code. In determining
a Participant's Compensation, the rules of Section 414(q)(6) of the
code shall apply, except that in applying those rules, the term
"family" shall include only the Participant's Spouse and lineal
descendants who have not attained age 19 before the close of the
Plan Year. If as a result of the application of the rules of Section
414(q)(6) the adjusted $200,000 or $150,000 limitation is exceeded,
the limitation shall be prorated among the affected individuals in
proportion to each individual's Compensation as determined under
this Section prior to the application of the limitation.

For purposes of Section 4.1 and 4.2, notwithstanding any provision
of this Plan to the contrary, for purposes of determining Before Tax
Contributions and Employer Matched Contributions for a Participant,
Compensation shall include such Participant's Compensation during
each pay period beginning with the Entry Date coincident with or
next following participation in the Plan pursuant to Section 3.2; or
if the

86
<PAGE> 93
individual elects to authorize Before Tax Contributions to the Plan
pursuant to Section 3.2; or if the individual elects to authorize
Before Tax Contributions to the Plan at a later date, the
Participant's Compensation during each pay period beginning with the
pay period with respect to which such election is first effective.

For purposes of Section 4.6 and 4.8, Compensation shall mean, with
respect to any determination period, a definition of Compensation
selected by the Pension Committee in accordance with, and from among
alternatives permissible under, Treas. Reg. 1.414(s)-1T (for years
prior to September 19, 1991) and 1.414(s)-1 or any successor
thereto. Any definition of Compensation selected by the Pension
Committee for use in satisfying the requirements of Section 4.6 or
4.8 for a determination period shall be used consistently to define
the Compensation of all Employees to be taken into account in
satisfying those requirements for that determination period.

2. Effective January 1, 1996, the first paragraph of Section 2.17 of
the Plan is amended to read as follows:

2.17 Compensation means, for any Plan Year, base salary,
commissions, overtime pay and cash bonuses actually received by a
Participant. Compensation shall also include cash received from the
Flexible Benefits program and the amount of any elective deferrals
the Participant has authorized the Employer to make on his behalf
under the plans maintained by the Employer in accordance with
Section 125 and 401(k) of the Code but shall exclude all other forms
of compensation such as imputed income, car allowances,
non-qualified deferred compensation, severance payments, payments
under the directed executive compensation program, income for the
exercise of qualified or non-qualified stock options, payments under
the Company's long-term incentive plan or similar items.
Notwithstanding the last sentence, in no event shall Compensation
exceed $150,000, as adjusted to reflect increases pursuant to
Section 401(a)(17) of the Code. In determining a Participant's
Compensation, the rules of Section 414(q)(6) of the Code shall
apply, except that in applying those rules, the term "family" shall
include only the Participant's Spouse and lineal descendants who
have not attained age 19 before the close of the Plan Year. If as a
result of the application of the rules of Section 414(q)(6) the
adjusted $150,000 limitation is exceeded, the limitation shall be
prorated among the affected individuals in proportion to each
individual's Compensation as determined under this Section prior to
the application of the limitation.

87
<PAGE> 94
3. Effective January 1, 1994, Section 2.75 is amended to read as
follows:

2.75 Temporary Employee means an Employee whose customary annual
employment is six months or less.

4. Effective October 21, 1992, Section 3.2(a)(ii) is amended to read
as follows:

(ii) Temporary Employees shall begin participation in the Plan on
the day following the day they complete one "year of eligibility
service." A "year of eligibility service" is an eligibility
computation period during which the Temporary Employee completes at
least 1,000 Hours of Service. The first eligibility computation
period of a Temporary Employee is the 12-month period beginning on
the day he first completes an Hour of Service. Thereafter, the
Temporary Employee's eligibility computation period is the Plan
Year.

5. Effective October 21, 1992, Sections 4.1(a)(i) and (ii) are
amended to read as follows:

(a)(i) Before Tax Matched Contributions. Subject to the limitations
of Section 4.6, 4.10 and 5.4, each Participant shall have the option
to authorize the Employer in accordance with procedures established
by the Pension Committee, to contribute to the Plan for a Plan Year
on his behalf, an amount equal to any whole percentage of his
Compensation from one percent (1%) up to six percent (6%) (as
determined without regard to this Section 4.1(a)) for such Plan
Year. Such authorization shall be in the form of an election by the
Participant to have his Compensation reduced by payroll withholding.
The election of a new Participant shall be effective as soon as
administratively feasible following receipt of the election by the
Pension Committee. Such withheld amounts are to be transmitted by
the Employer to the Trustee as of the earliest date on which such
amounts can reasonably be segregated from the Employer's general
assets, but in no event later than 90 days after such amounts are
withheld from the Participant's Compensation.

(ii) Before Tax Supplemental Contributions. Subject to the
limitations of Section 4.6, 4.10 and 5.4, each Participant shall
have the option to authorize the Employer in accordance with
procedures established by the Pension Committee, to contribute to
the Plan for a Plan Year on his

88
<PAGE> 95
behalf, an amount equal to any whole percentage of his Compensation
from seven percent (7%) up to sixteen percent (16%) (as determined
without regard to this Section 4.1(a)) for such Plan Year. Such
authorization shall be in the form of an election by the Participant
to have Compensation reduced by payroll withholding. The election of
a new Participant shall be effective as soon as administratively
feasible following receipt of the election by the Pension Committee.
Such withheld amounts are to be transmitted by the Employer to the
Trustee as of the earliest date on which such amounts can reasonably
be segregated from the Employer's general assets, but in no event
later than 90 days after such amounts are withheld from the
Participant's Compensation.

6. Effective October 21, 1992, Sections 4.1(b) and (c) are amended
to read as follows:

(b) Employer Matched Contributions. Subject to the limitations
of Sections 4.8 and 5.4 and except for those Participating Employers
listed differently on Appendix A, an Employer shall contribute with
respect to each pay period an amount equal to 50% of a Participant's
Before Tax Matched Contributions that a Participant has authorized
the Employer to make on his behalf for the Plan Year. In the event a
Participant who is not a Highly Compensated Employee for the Plan
Year and who is not participating in one of the nonqualified
deferred compensation plans sponsored by the Company elected to make
Before Tax Matched Contributions in such amount that the limitations
under Section 402(g) of the Code restricted the Participant's Before
Tax Contributions, that Participant shall receive an Employer
Matched Contribution as if the full amount of the Before Tax
Contributions of the Participant has been made. The amount of such
contribution shall not exceed the maximum amount allowable as a
deduction under the Code for such Plan Year.

(c) ONECS. Subject to the limitations of Section 4.6 or 4.8,
whichever is applicable, and 5.4, the Employer shall contribute for
each Plan Year an amount, if any, as determined by the Board of
Directors on behalf of some or all Participants who are not Highly
Compensated Eligible Participants. The amount of such contribution
shall not exceed the maximum amount allowable as a deduction under
the Code for such Plan Year. It is intended that this contribution
shall constitute a qualified nonelective contribution within the
meaning of Treas. Reg. 1.401(k)-1(g)(13)(ii) or any successor
thereto.

89
<PAGE> 96
7. Effective October 21, 1992, Section 4.2 is amended to read as
follows:

4.2 Post 1986 After Tax Contributions. Subject to the limitations of
Sections 4.8, 4.10 and 5.4, each Participant shall have the option
to contribute to the Plan for a Plan Year an amount equal to any
percentage of his Compensation up to ten percent (10%) for such Plan
Year. Such authorization shall be in the form of an election by the
Participant to have his Compensation reduced on an after-tax basis
by payroll deduction in accordance with procedures established by
the Pension Committee. Such amounts are to be transmitted by the
Employer to the Trustee as of the earliest date on which such
amounts can be reasonably segregated from the Employer's general
assets, but in no event later than 90 days after such amounts have
been withheld from Participants' Compensation. Effective April 1,
1993, Participants shall not have the option to contribute to the
Plan on an after-tax basis. Pre-April 1, 1993, after-tax
contributions shall continue to be held by the Plan in accordance
with the provisions of the Plan.

8. Effective October 21, 1992, Section 4.4(e) is amended to read as
follows:

(e) The amount of any Employer contribution shall be subject
to the limitations prescribed in Section 5.4.

9. Effective October 21, 1992, Section 4.7 is amended to read as
follows:

4.7 Income Attributable to Excess Contributions. The Income
attributable to a Participant's Excess Contributions pursuant to
Section 4.6 for the Plan Year during which such Excess Contributions
arose shall be determined by multiplying the Income for the Plan
Year and, if the Pension Committee so provides, for the period
between the end of the Plan Year and the date the Excess
Contributions are distributed, the "gap period," allocable to Before
Tax Contributions, and amounts treated as Before Tax Contributions
pursuant to Section 4.1(c), by a fraction. The numerator of the
fraction is the Excess Contributions for the Employee for the Plan
Year. The denominator of the fraction is equal to the sum of (1) and
(2) where (1) is the Employee's total account balance attributable
to Before Tax Contributions and amounts treated as such as of the
beginning of the Plan Year and (2) is the Employee's Before Tax
Contributions and amounts treated as such for

90
<PAGE> 97
the Plan Year and, if the Pension Committee so provides, for the gap
period.

10. Effective October 21, 1992, Section 4.9 is amended to read as
follows:

4.9 Income Attributable to Excess Aggregate Contributions. The
Income attributable to a Participant's Excess Aggregate
Contributions pursuant to Section 4.8 for the Plan Year during which
such Excess Aggregate Contributions arose shall be determined by
multiplying the Income for the Plan Year and, if the Pension
Committee so provides, for the period between the end of the Plan
Year and the date the Excess Aggregate Contributions are
distributed, the "gap period," allocable to the Employer Matched
Contributions, Post 1986 After Tax Contributions and amounts treated
as Employer Matched and Post 1986 After Tax Contributions pursuant
to Section 4.1(c), by a fraction. The numerator of the fraction is
the Excess Aggregate Contributions for the Employee for the Plan
Year. The denominator of the fraction is equal to the sum of (1) and
(2) where (1) is the Employee's total account balance attributable
to Employer Matched Contributions, Post 1986 After Tax
Contributions, and amounts treated as such as of the beginning of
the Plan Year and (2) is the Employee's Employer Matched
Contributions, Post 1986 After Tax Contributions and amounts treated
as such for the Plan Year and, if the Pension Committee so provides,
for the gap period.

11. Effective October 21, 1992, Section 6.4 is amended to read as
follows:

6.4 Vesting. A Participant shall have a fully vested and
non-forfeitable interest in all of his Accounts other than his HMI
Company Regular Account. A Participant's vested interest in his HMI
Company Regular Account shall be determined in accordance with the
following schedule:

<TABLE>
<CAPTION>
12 Month Period of Service Vested Percentage
-------------------------- -----------------
<S> <C>
Less than 1 0%
1 but less than 2 20%

2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
</TABLE>

91
<PAGE> 98
<TABLE>
<S> <C>
5 or more 100%
</TABLE>

A Participant who is employed by the Employer or an Affiliate upon
attainment of Normal Retirement Age shall be 100% vested in his HMI
Company Regular Account.

12. Effective October 21, 1992, a new Section 6.10(1) is added to
read as follows:

(1) If amounts attributable to a Participant's HMI company Regular
Account are to be used as security for a loan, and the Participant's
total accrued benefit under the Plan has ever exceeded $3,500, the
Participant's Spouse, if any, must consent to the use of the amounts
as security for the loan. The Spouse must consent no earlier than
the 90- day period ending on the date the loan is to be secured. The
consent must be in writing, acknowledge the effect of the loan and
be witnessed by a Plan representative or notary public.

13. Effective October 21, 1992, Section 13.2 is amended to read as
follows:

13.2 Top-Heavy Plan. This Plan shall be Top-Heavy and an Aggregation
Group shall be a Top-Heavy Group if as of the Determination Date for
such Plan Year the sum of the Cumulative Accrued Benefits and
Cumulative Accounts of Key Eligible Employees for the Plan Year
exceeds 60% of the aggregate of all the Cumulative Accounts and
Cumulative Accrued Benefits. For this purpose, the Benefits and
Accounts of an individual who has not completed an Hour of Service
in the 5-year period ending on the applicable Determination Date
shall not be taken into account.

(a) If the Plan is not included in a Required Aggregation
Group with other plans, then it shall be Top-Heavy only if (i) when
considered by itself it is a Top-Heavy Plan and (ii) it is not
included in a Permissive Aggregation Group that is not a Top-Heavy
Group.

(b) If the Plan is included in a Required Aggregation Group
with other plans, it shall be Top-Heavy only if the Required
Aggregation group, including any permissively aggregated plans, is
Top-Heavy.

92
<PAGE> 99
14. Effective October 21, 1992, Exhibit A of the Plan, at Section
(a), is amended to read as follows:

The following provisions shall apply only if a Participant elects
option (iii), "purchase of an annuity".

(a) Unless a Participant elects otherwise with the consent of
his Spouse, if applicable, to have his benefits paid in other than a
qualified joint and 50% survivor annuity, the Participant shall be
deemed to have elected to receive that portion of his benefits under
the Plan in (i) a single life annuity if the Participant is not
married on the Annuity Starting Date; and (ii) a qualified joint and
50% survivor annuity if the Participant is married on the Annuity
Starting Date. Payments under the single life annuity and the
qualified joint and 50% survivor annuity shall commence immediately
after the annuity is purchased. The Employer shall purchase the
applicable annuity with that portion of the Participant's vested
Merged HMI Account balance.

IN WITNESS WHEREOF, the Company has executed this Second Amendment
of Acordia 401(k) Long Term Savings Investment Plan this __ day of _______,
1997.

Accordia, Inc.

By: ________________
Daniel W. Kendall
Chair, Acordia Pension
Benefit Administration Compliance
Committee

93
<PAGE> 100
THIRD AMENDMENT OF ACORDIA
401(k) LONG TERM SAVINGS INVESTMENT PLAN

The Acordia 401(k) Long Term Savings Investment Plan (the "Plan") is
hereby amended as follows:

1. Effective July 1, 1996, (1) the term "Anthem Insurance Companies,
Inc." shall be substituted for the term "Associated Insurance Companies, Inc.",
(2) the term "Anthem Savings Plan" shall be substituted for the term "TAG
Savings Plan", (3) the term "The Anthem 401(k) Long Term Savings Investment
Plan" shall be substituted for the term "The Associated Group 401(k) Long Term
Savings Investment Plan", and (4) the term "Anthem Employer" shall be
substituted for the term "TAG Employer", each place in the Plan that the term
appears.

2. Effective January 1, 1996, the Introduction to the Plan is hereby
amended to add the following two new paragraphs to the end of the Introduction:

Effective January 1, 1996, The Rudy E. Facciani Co. Ins. Marketing
Inc. 401(k) Plan ("Merged Plan VII") is merged into the Plan. The
rights of any eligible participant in Merged Plan VII who terminated
employment prior to the merger of Merged Plan VII into the Plan
shall be determined under the terms of Merged Plan VII in effect
prior to the date of the merger. The specific provisions applicable
to Merged Plan VII are set forth in Exhibit C to the Plan.

Effective February 1, 1996, the O'Rourke, Andrews & Maroney, Inc.
401(k) Plan ("Merged Plan VIII") is merged into the Plan. The rights
of any eligible participant in Merged Plan VIII who terminated
employment prior to the merger of Merged Plan VIII into the Plan
shall be determined under the terms of Merged Plan VIII in effect
prior to the date of the merger. The specific provisions applicable
to Merged Plan VIII are set forth in Exhibit D to the Plan.

3. Effective January 1, 1996, Section 2.8 of the Plan is amended to
read as follows:

94
<PAGE> 101
2.8 Before Tax Matched Account means the account maintained for a
Participant to record (i) his share of Before Tax Matched
Contributions under Paragraph 4.1(a)(i); (ii) his share of
before tax matched contributions under Merged Plans I, II, IV,
V and VII, if any; (iii) his share of before tax matched
contributions that he made under the Raff-Hughes Plan, which
he has elected to transfer to this Plan, if any; and (iv)
adjustments relating thereto.

4. Effective January 1, 1996, the first paragraph of Section 2.39(d)
of the Plan is amended to read as follows:

(d) Equivalencies. To the extent that the Plan requires Hours
of Service to be counted, the Pension Committee shall have the
authority to adopt any of the following equivalency methods for
counting Hours of Service that are permissible under regulations
issued by the Department of Labor: (1) Working Time, (2) Periods of
Employment, or (3) Earnings.

5. Effective January 1, 1996, Section 2.51 of the Plan is hereby
amended to designate the existing paragraph as Subsection (a) and add new
Subsections (b) and (c) to read as follows:

(b) Merged Plan VII means The Rudy E. Facciani Co. Ins.
Marketing, Inc. 401(k) Plan, which was in effect prior to its merger
into the Plan on January 1, 1996.

(c) Merged Plan VIII means the O'Rourke, Andrews & Maroney,
Inc. 401(k) Plan, which was in effect prior to its merger into the
Plan on February 1, 1996.

6. Effective February 1, 1996, new Sections 2.81, 2.82 and 2.83 are
added to the Plan to read as follows:

2.81 O'Rourke Before Tax Contribution Account means the Account
maintained for a Participant to record the before tax
contributions made on his behalf under Merged Plan VIII and
the income on those contributions.

95
<PAGE> 102
2.82 O'Rourke Company Account means the Account maintained for a
Participant to record the discretionary employer contributions
made on his behalf under Merged Plan VIII and the income on
those contributions.

2.83 O'Rourke Matched Account means the Account maintained for a
Participant to record the matching employer contributions made
on his behalf under Merged Plan VIII and the income on those
contributions.

7. Effective January 1, 1996, Section 3.2 of the Plan is hereby
amended to add new Subsections (d) and (e) to read as follows:

(d) Effective January 1, 1995, any Eligible Employee who was
previously a participant in Merged Plan VIII, or who was eligible to
participate in Merged Plan VIII but had not yet met the service
requirement applicable to Merged Plan VIII shall become a
Participant in this Plan on January 1, 1995.

(e) Effective January 1, 1996, any Eligible Employee who was
previously a participant in Merged Plan VII, or who was eligible to
participate in Merged Plan VII but had not yet met the service
requirement applicable to Merged Plan VII shall become a Participant
in this Plan on January 1, 1996.

8. Effective January 1, 1996, Subsection 4.1(b) of the Plan is
amended to read as follows:

(b) Employer Matched Contributions. Subject to the limitations
of Section 4.8 and 5.4, an Employer shall contribute with respect to
each pay period an amount equal to 50% of a Participant's Before Tax
Matched Contributions that a Participant has authorized the Employer
to make on his behalf of the Plan Year. If a Participant is not a
Highly Compensated Employee for the Plan Year and is not
participating in one of the nonqualified deferred compensation plans
sponsored by the Company, that Participant shall receive an
additional Employer Matched Contribution equal to the difference, if
any, between the amount contributed pursuant to the preceding
sentence and an amount equal to 50% of the Participant's Before Tax
Matched Contribution for the Plan Year. The amount of the
contribution made pursuant to this Subsection shall not exceed the
maximum amount allowable as deduction under the Code for such Plan
Year.

96
<PAGE> 103
9. Effective January 1, 1996, Subsection 6.9(a)(C) of the Plan is
amended to read as follows:

(C) The payment of tuition and related educational fees
(including applicable room and board) for the next twelve months of
post-secondary education for the Participant, his Spouse, children
or dependents (as defined in Section 152 of the Code); or

10. Effective January 1, 1996, Paragraph 6.9(d)(2) of the Plan is
amended to read as follows:

Except as provided in Exhibits C and D only two withdrawals in any
Plan Year shall be permitted.

11. Effective January 1, 1996, Paragraph 6.9(d)(4) of the Plan is
amended to read as follows:

Except as provided in Exhibit D, the minimum amount allowable for
withdrawal shall be $300.00; provided, however, that a Participant
may make a hardship withdrawal in accordance with Subsection 6.10(a)
in an amount less than $300.00.

12. Effective July 1, 1996, Subsection 6.10(b) of the Plan is
amended to read as follows:

(b) The period of repayment for any loan shall be determined
by mutual agreement between the Pension Committee and the borrower,
but such period shall not exceed five years except for loan used to
acquire the Participant's principal residence. Loans used to acquire
a Participant's principal residence shall not exceed ten (10) years.
All loan terms shall be in multiples of one year. Repayment of
interest and principal shall be according to a substantially level
amortization schedule of payments beginning as soon as
administratively feasible following receipt of the loan. Repayment
of interest and principal shall be by payroll deduction, except for
those Participants who are not receiving a pay check or who are laid
off with recall rights, with respect to whom a loan repayment check
shall be due in accordance with the amortization schedule in effect.
Loans may be prepaid in full at any time without penalty. Loan
repayments shall be allocated to a Participant's Accounts in reverse
order to those Accounts from which the loan was distributed as set
forth in Section 6.10(j) below and shall

97
<PAGE> 104
be invested pursuant to a Participant's current investment
elections. If a Participant has no investment election in effect
with respect to an Account to which a loan repayment is allocated,
the Trustee shall invest the loan repayment in an Investment Fund
designated from time to time by the Pension Committee or its
designees.

13. Effective January 1, 1996, Subsection 6.10(f) of the Plan is
amended to read as follows:

(f) The procedure to be followed by a Participant in applying
for a loan shall be determined by the Pension Committee and
documented by a duly approved set of rules of the Pension Committee.
Such rules shall be attached to and shall be deemed to be part of
the Plan. Loans made pursuant to Merged Plans III, IV and V were
made in accordance with rules established under those Merged Plans
as in effect prior to their mergers into the Plan. Loans with
respect to any amounts transferred to this Plan from the Anthem
Savings Plan attributable to the Raff-Hughes Plan were made in
accordance with rules established under the Raff-Hughes Plan.

14. Effective January 1, 1996, Section 7.2(b)(ii) of the Plan is
amended to read as follows:

(ii) Rollover Contributions. A Participant for whom amounts
are rolled over to the Plan pursuant to Section 4.11 shall make a
separate election with respect to the initial investment of those
amounts.

15. Effective July 1, 1996, Paragraph 7.2(c)(iv) of the Plan is
amended to read as follows:

(iv) Failure to Direct Investments. If a Participant fails to
make an investment election with respect to any amounts allocated to
his Accounts, including amounts contributed to the Plan pursuant to
Section 4.1 (Employer Contributions), Section 4.11 (rollovers), and
amounts transferred to the Plan from a Merged Plan, the Trustee
shall invest the amounts in an Investment Fund designated from time
to time by the Pension Committee or its designees.

16. Effective October 1, 1996, Section 7.4 of the Plan is amended to
read as follows:

98
<PAGE> 105
7.4 Special Rules Applicable to Persons Subject to Section 16(b)
of The Securities Exchange Act of 1934. Notwithstanding any
other provisions of the Plan, the following special rules
shall apply to Participants or former Participants who are
subject to the requirements of Section 16(b) of the Securities
Exchange Act of 1934 ("Insiders"):

(a) At the option of the Insider, an Insider may make a
withdrawal pursuant to Section 6.9 from his Accounts only under the
procedures set forth in (i) or (ii):

(i) If the withdrawal will result in a reduction in the
number of shares of Acordia Stock in his Accounts, the
withdrawal must be made pursuant to an election made at least
six months prior to the date of the most recent election, with
respect to the Plan or any other plan of the Company, that
effected an acquisition of Acordia Stock. If the withdrawal is
made, then until the date at least six months after the
Insider's election to receive the withdrawal, the Insider
shall not be permitted to elect, with respect to the Plan or
any other plan of the Company, to effect an acquisition of
Acordia Stock notwithstanding Section 7.2 hereof.

(ii) In the event of a withdrawal, the withdrawal shall
be taken first from assets in the Participant's Accounts other
than Acordia Stock. An Insider may elect to reallocate amounts
held in his Accounts pursuant to Section 7.2 in a manner that
would increase or decrease the number of shares of Acordia
Stock in his Accounts only pursuant to an election made at
least six months after the most recent election, with respect
to the Plan or any other plan of the Company, to reallocate
amounts or otherwise effect a transaction in the opposite way
of the current election (i.e., an election of a reallocation
which is an acquisition must be made at least six months
following an election which is a disposition).

(b) None of the special rules described in this Section shall
preclude the Trustee from using cash dividends paid on Acordia Stock
to purchase additional shares of such Stock for any Insider.

(c) To provisions of this Plan are intended to comply with all
applicable provisions of Rule 16(b)-3 of the Securities Exchange Act
of 1934 and its successors with respect to Insiders. To the extent
any provision of the Plan or action by the Pension Committee on
behalf of an Insider fails to so comply, such provision or action
shall be deemed

99
<PAGE> 106
null and void to the extent permitted by law and deemed advisable by
the Pension Committee.

17. The Plan is further amended to add the attached Exhibits C and D
to the end of the Plan.

18. Effective December 31, 1996, the Plan is further amended to add
the revised Appendix A attached hereto.

IN WITNESS WHEREOF, Acordia Inc. has executed this Third Amendment
of the Acordia 401(k) Long Term Saving Investment Plan this __ day of December
6, 1997.

ACORDIA, INC.

By: __________________
Keith A. Maib
Chair, Acordia Pension
Committee

100
<PAGE> 107
EXHIBIT C

ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

Merged Plan:The Rudy E. Facciani Co. Ins. Marketing,
Inc. 401(k) Plan ("Facciani Plan")

Merger Date:January 1, 1996

Participation: An Eligible Employee who was a participant in the Facciani Plan
on the Merger Date, or who was eligible to participate in the
Facciani Plan on the Merger Date but had not yet met the service
requirements applicable to the Facciani Plan, shall become a
participant in the Plan on the Merger Date and shall be eligible to
make Before Tax Contributions in accordance with the Plan.

Accounts: A Participant's account under the Facciani Plan shall be held
in a similar Account under the Plan and shall be subject to
the provisions of the Plan except as provided in this Exhibit
C.

Vesting: Notwithstanding any provision of the Facciani Plan to the
contrary, a participant in the Facciani Plan on the Merger
Date shall have a fully vested and nonforfeitable interest in
his accounts under the Facciani Plan on the Merger Date.

Withdrawals: Notwithstanding Paragraphs 6.9(d)(2) and (4) of the Plan, a
Participant who was a participant in the Facciani Plan may make a
withdrawal of any portion of his Before Tax Matched Account
attributable to contributions (but not the income on those
contributions) made under the Facciani Plan any number of times
during a Plan Year if the withdrawal is (1) on account of an
immediate and heavy financial need described in Subsection 6.9(a) of
the Plan or an event that the Internal Revenue Service deems to
constitute an immediate and heavy financial need under Code
subsection 401(k), or (2) on or after the Participant attains age 59
1/2.

Investments: Participants in the Facciani Plan shall have the opportunity to
make investment directions with respect to their Accounts held under
the Plan, including those Accounts attributable to the Facciani
Plan, in accordance with Section 7.2 of the Plan, as soon as
administratively feasible following the Merger Date.

101
<PAGE> 108
EXHIBIT D

ACORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

Merged Plan:O'Rourke, Andrews & Maroney, Inc. 401(k) Plan ("O'Rourke Plan")

Merger Date:February 1, 1996

Participation: An Eligible Employee who was a participant in the O'Rourke Plan
on the Merger Date, or who was eligible to participate in the
O'Rourke Plan on the Merger Date but had not yet met the service
requirements applicable to the O'Rourke Plan, shall become a
participant in the Plan on the Merger Date and shall be eligible
to make Before Tax Contributions in accordance with the Plan.

Accounts: A Participant's account under the O'Rourke Plan shall be held
in a separate Accounts under the Plan and shall be subject to
the provisions of the Plan except as provided in this Exhibit
D.

Vesting: A Participant shall have a fully vested and nonforfeitable
interest in his accounts under the O'Rourke Plan on January 1,
1996.

Special
Payment
Provisions: That portion of a Participant's Accounts attributable to
contributions made under the O'Rourke Plan and the income on those
contributions ("O'Rourke Accounts") shall be paid as described in
this section. The provisions of (a), (b), (e) and (f) apply only if
a Participant terminates his employment with the Employer and does
not die before the Annuity Starting Date. The provisions of (c),
(d), (e) and (f) apply only if a Participant dies before the Annuity
Starting Date.

(a) Single Life Annuity and Qualified Joint and Survivor
Annuity. Unless a Participant elects otherwise with the
consent of his Spouse, if applicable, he shall receive his
termination benefits attributable to his O'Rourke Accounts in
the form of (i) a single life annuity or (ii) a qualified
joint and 50% survivor annuity. Payment of the applicable
annuity will begin as of the later of the date the Participant
terminates employment or the date the Participant attains his
Normal Retirement Age, unless the Participant elects earlier
payment. The Participant shall be entitled to receive a
qualified joint and 50% survivor annuity if he was married on
the Annuity Starting Date.

102
<PAGE> 109
(b) Notice and Election to Waive Single Life Annuity and
Qualified Joint and Survivor Annuity. The Pension Committee or
its designees shall furnish each Participant with the
following information regarding the single life annuity and
qualified joint and survivor annuity not less than 30 and not
more than 90 days prior to the Annuity Starting Date:

(1) A general explanation of the terms and
conditions of the single life annuity or qualified joint
and 50% survivor annuity, as applicable;

(2) The Participant's right to waive the single
life annuity or qualified joint and 50% survivor
annuity, as applicable, and to elect another form of
payment;

(3) The Participant's right to revoke a previous
waiver of the single life annuity or qualified joint and
50% survivor annuity; and

(4) A general explanation of the rights of a
Participant's Spouse, if applicable.

A Participant may waive the single life annuity or qualified
joint and 50% survivor annuity, as applicable, and receive his
benefits in a lump sum or in any annuity form permitted by the
O'Rourke Plan by giving written notification to the Pension
Committee during the election period. The O'Rourke Plan
permitted any annuity form payable for a period not exceeding
either the life of the Participant (or the lives of the
Participant and his designated Beneficiary) or the life
expectancy of the Participant (or the life expectancies of the
Participant and his designated Beneficiary). The election
period is the 90-day period ending on the Annuity Starting
Date. Payment of the alternate form will begin as of the later
of the date the Participant terminates employment or the date
the Participant attains his Normal Retirement Age, unless the
Participant elects earlier payment.

Any waiver of the qualified joint and 50% survivor annuity and
election of an alternate benefit shall not take effect unless
the Participant's Spouse consents irrevocably in writing to
the waiver and the Spouse's consent acknowledges the effect of
the waiver and is witnessed by a Plan representative or notary
public. A Spouse's consent will be valid only with respect to
that Spouse.

103
<PAGE> 110
Any new waiver will require a new Spousal consent. The Spousal
consent requirements may be waived if it is established to the
satisfaction of the Pension Committee that the Spouse's
consent may not be obtained because there is no Spouse or the
Spouse cannot be located, or under other circumstances
prescribed by federal regulation.

Any waiver of the single life annuity or qualified joint and
50% survivor annuity may be revoked by the Participant during
the election period by written notification to the Pension
Committee. Following the revocation, another waiver may be
made at any time during the election period. A revocation of a
prior waiver may be made by a Participant at any time before
commencement of benefits without the consent of the Spouse.

(c) Qualified Pre-retirement Survivor Annuity. Unless a
Participant who is married on the date of his death has
elected otherwise with the consent of his Spouse, or after his
death his Spouse elects otherwise, his Spouse shall receive
death benefits attributable to one-half of his O'Rourke
Accounts in the form of a qualified preretirement survivor
annuity. Payment of the annuity will begin as of the date of
the Spouse elects. The Participant's Beneficiary shall receive
the other one-half of his O'Rourke Accounts in the form of a
lump sum or, if the Beneficiary is his Spouse, apply the other
one-half to increase the amount of the qualified preretirement
survivor annuity.

The Beneficiary of a Participant who is not married on the
date of his death shall receive the entire amount in the
Participant's O'Rourke Accounts in the form of a lump sum.

(d) Notice and Election to Waive Qualified Preretirement Survivor
Annuity. The Pension Committee shall furnish each Participant
with information regarding the qualified preretirement
survivor annuity that is similar to the information furnished
regarding the single life annuity and qualified joint and 50%
survivor annuity. The information shall be provided within
whichever of the following periods ends last:

(1) The period beginning with the first day of the Plan Year
in which the participants attains age 32 and ending with
the close of the Plan Year in which the Participant
attains age 34;

104
<PAGE> 111
(2) A reasonable period after the individual becomes a
Participant. If an individual becomes a Participant
after age 35, the reasonable period is the one-year
period beginning with the first day of the first Plan
Year for which the individual is a Participant; or

(3) A reasonable period after the individual separates from
service. If an individual before attaining age 35, the
reasonable period is the period beginning one year
before the separation and ending one year after the
separation.

A Participant may waive the qualified preretirement survivor
annuity and designate his Spouse or another Beneficiary to
receive the benefits in a lump sum by giving written
notification to the Pension Committee during the election
period. The election period is the period which begins on the
first day of the Plan Year in which the Participant attains
age 35 and ends on the earlier of the date of the
Participant's death or the Annuity Starting Date. An earlier
waiver may be made provided the information regarding the
qualified preretirement survivor annuity described above is
given to the Participant prior to the waiver and the waiver
becomes invalid at the beginning of the Plan Year in which the
Participants attains 35. If a Participant separates from
service, the election period with respect to benefits accrued
before his separation shall begin on his separation date.

Any waiver of the qualified preretirement survivor annuity and
election of an alternate benefit shall not take effect unless
the Participant's Spouse consents irrevocably in writing to
the waiver and the Spouse's consent acknowledges the effect of
the waiver and is witnessed by a notary public or Plan
representative. A Spouse's consent will be valid only with
respect to that Spouse. Any new waiver will require a new
Spousal consent. The Spousal consent requirements may be
waived if it is established to the satisfaction of the Pension
Committee that the Spouse's consent may not be obtained
because there is no Spouse or the Spouse cannot be located, or
under other circumstances prescribed by federal regulation.

Any waiver of the qualified preretirement survivor annuity may
be revoked by the Participant during the election period by
written notification to the Pension Committee. Following the
revocation, another waiver may be made at any time during the
election period. A revocation of a prior waiver may be made at

105
<PAGE> 112
any time by a Participant before death without the consent of
the Spouse.

(e) Special Rule for Small Payments. The Participant's O'Rourke
Accounts shall be paid in a lump sum if at the time of
distribution, and at the time of any prior distribution, the
Participant's O'Rourke Accounts together with his Accounts in
the Plan, do not exceed and did not exceed, $3,500.

(f) Annuity Starting Date. Annuity Starting Date means the first
day of the first period for which an annuity is payable as an
annuity. In the case of a benefit not payable as an annuity,
Annuity Starting Date means the first day on which all
conditions have been met with entitle the Participant to the
benefit.

Withdrawal: Notwithstanding Paragraph 6.9(d)(2) of the Plan, a Participant who
was a participant in the O'Rourke Plan may make a withdrawal of any
portion of his before tax contributions (and income on those
contributions earned prior to January 1, 1989) made under the
O'Rourke Plan any number of times during a Plan Year. A
Participant's withdrawal are subject to (a), (b), (e) and (f) of the
Special Payment Provisions above.

Investment: Participants in the O'Rourke Plan shall have the opportunity to make
investment directions with respect to their Accounts held under the
Plan, including those Accounts attributable to the O'Rourke Plan, in
accordance with Section 7.2 of the Plan, as soon as administratively
feasible following the Merger Date.

106
<PAGE> 113
APPENDIX A - PARTICIPANTS EMPLOYERS

ACCORDIA 401(k) LONG TERM SAVINGS INVESTMENT PLAN

12/31/96

Acordia Benefits of Florida, Inc.
Acordia Benefits of Northern California, Inc.
Acordia Educational Benefits of Texas Agency,Inc.
Acordia Healthcare Solutions, Inc.
Acordia, Inc.
Acordia Northeast, Inc.
Acordia of Central Indiana, Inc.
Acordia of Northwest Indiana, Inc.
Acordia of Central Pennsylvania, Inc.
Acordia of Cincinnati, Inc.
Acordia of Cleveland, Inc.
Acordia of Colorado, Inc,
Acordia of Dallas, Inc.
Acordia of Evansville, Inc.
Acordia of Lexington, Inc.
Acordia of Louisville, Inc.
Acordia of Michigan, Inc.
Acordia of Mississippi, Inc.
Acordia of North Carolina, Inc.
Acordia of Northeast Indiana, Inc.
Acordia of Pennsylvania, Inc.
Acordia of Phoenix, Inc.
Acordia of South Florida, Inc.
Acordia of Southern California, Inc.
Acordia of West Virginia, Inc.
Acordia Personal Benefits Agency, Inc.
Acordia Personal Benefits of Utah, Inc.
Acordia/Pettit-Morry Co. of California,Inc.
Acordia/Pettit-Morry Co. of Oregon, Inc.
Acordia Senior Benefits, Inc.
Acordia Senior of the Southeast, Inc.
Acordia Small Business Benefits, Inc.
Acordia Texas Gulf Coast, Inc.
Acordia West Texas, Inc.
Anthem Marketing Services, Inc.
Group Plan Consultants, Inc.
Hogg Robinson Consulting Group, Inc.

107
<PAGE> 114
Hogg Robinson of New York, Inc.
Hogg Robinson of Virginia, Inc.
LWP Services, Inc.
Moore-Peterson Insurance Agency Company, Inc.
Puget Sound Underwriters, Inc.
Risk Group, Inc.

108

<PAGE> 1
EXHIBIT (c)(7)

TRANSACTION AGREEMENT

This Agreement is made this 17th day of March, 1997, by and
between Acordia, Inc., a Delaware company (the "Company") and Frank C. Witthun
(the "Executive").

WHEREAS, the Company, in anticipation of a possible Change in
Control (as hereinafter defined) desires to provide the Executive additional
compensation and benefits to assure the Company of the services of Executive
prior to the Change in Control and to effect a smooth transition by providing
for consulting services by the Executive; and

WHEREAS, the Company and the Executive have entered into an
Employment Agreement dated January 1, 1997, (the "Employment Agreement"), which
may be modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify
the Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in
writing by the Executive on Attachment 1 hereof as the recipient of benefits in
the event of the death of the Executive.

"Board" shall mean the Board of Directors of the
Company.

"Cause" shall mean a reasonable determination by
the Board that Executive (i) failed to obey the reasonable and lawful orders of
the Company; (ii) acted with gross negligence in the performance of his
obligations or in a manner materially detrimental to the Company and/or its
subsidiaries; (iii) willfully breached or habitually neglected his duty; (iv)
has been convicted of a felony; (v) committed any act involving dishonesty or
fraud; or (vi) violated any of the provisions of Section 6 hereof.

"Change in Control" shall mean (i) a merger or
consolidation in which the Company is not the surviving entity; (ii) a change in
majority of the Board over a twenty-four (24) month period, not taking into
account directors nominated by a majority of the current directors; (iii) a
complete liquidation of the Company; or (iv) sale or disposition of all or a
substantial part of the Company's
<PAGE> 2
assets, such as disposition of the assets relating to the brokerage business of
the Company.

"Compensation Committee" shall mean the
Compensation Committee of the Board.

"Disability" shall have the meaning set forth in
the Company's long term executive disability plan as in effect at the time of
execution of this Agreement.

"Salary" shall mean an annual base salary existing
at the time of execution of this Agreement ($330,018), expressed in monthly
increments, plus increments thereon as of the time of a Termination as a result
of a Change in Control.

"Successor" shall mean any acquiror of a
substantial portion of the assets of the Company, and shall include an acquiror
of the assets relating to the brokerage business of the Company.

"Termination as a result of a Change in Control"
shall occur if upon or following a Change in Control or, with respect to (ii),
if in anticipation of a Change in Control,

(i) Anthem Insurance Companies, Inc., or
one of its affiliates ("Anthem"), or a Successor does not (x)
assume both the Employment Agreement and this Agreement in the
whole, (y) extend the term of the Employment Agreement to result
in a total contract duration of 36 months from the Change in
Control, and (z) offer Executive a position comparable to his
position at the time of execution of this Agreement; or

(ii) Executive's position with the Company
is not comparable to his position at the time of execution of
this Agreement.

2
<PAGE> 3
in Control; (ii) Executive's Salary or target annual incentive or long term
incentive opportunities are materially reduced as compared to his Salary and
target annual incentives and long term incentive opportunities immediately prior
to the Change in Control; or (iii) Executive is assigned to duties or
responsibilities involving a residence relocation or business travel obligations
substantially greater than existing prior to the Change in Control. If Executive
accepts a position at Anthem, or a Successor, it shall be deemed to be
comparable for the purposes of this Agreement.

An event shall be deemed to be in anticipation of a Change in Control if it
occurs after the execution of this Agreement and if a Change in Control in fact
occurs within 12 months following the event.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth
in the Employment Agreement.

1.3. In the event of any inconsistency between this Agreement and
the Employment Agreement, this Agreement shall control.

1.4. Other than sections 3 and 10 hereof, no provision of this
Agreement shall operate to reduce any amounts or benefits payable under the
Employment Agreement, standing alone or in aggregate, however, any benefit
provided under both agreements shall be paid only once.

2. Term. This Agreement shall expire on the earlier of (a) December 31, 1997 or
(b) the date on which Acordia and Anthem Insurance Companies Inc. publicly
announce that the companies are no longer pursuing the possible disposition of
the brokerage business of Acordia, provided, however, that if on or before
December 31, 1997, the Board has approved the general terms of a transaction
that would be a Change in Control, this Agreement shall be extended to the
earlier of the closing of the Change in Control or December 31, 1998.

3. Services and Compensation of Executive.

3.1. Consulting Services. In the event of a Termination as a
result of a Change in Control, in lieu of payments as provided in Section 11 of
the Employment Agreement, and any other severance, Executive shall be paid,
compensation under this Agreement for services as an employee/consultant.
Executive shall receive consulting compensation of $314,324 his Salary until
November 1, 1998. Executive shall be available until November 1, 1998 to provide
consulting services reasonably requested by such Company,

3
<PAGE> 4
Anthem, or a Successor. Subject to the obligations under Section 6 hereof, this
provision shall not be construed to preclude Executive from accepting full time
employment elsewhere.

3.2. Severance Compensation. In the event of a Termination as a
result of a Change in Control, Executive shall receive a severance payment equal
to 36 months' Salary, less any compensation paid pursuant to Section 3.1 hereof.

4. Incentive Plans.

4.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be
determined and paid under the AIP for the 1997 Plan Year based on the
performance goals established by the Compensation Committee. However, in the
event of a Change in Control prior to the payment of the 1997 Plan Year Award,
such AIP Award payable to Executive for the 1997 Plan Year shall be in an amount
at least equal to the full "target" level amount for the year.

4.2. Long Term Incentive Plan ("LTI") for 1997. The performance
goals for award of LTI payments based on 1997 performance shall include a Change
in Control. In the event of a Change in Control prior to the award of the 1997
Plan Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at
least equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.

4.3. 1998 and 1999 and 2000 AIP. In the event of a Termination as
a result of a Change in Control, Executive shall be paid an amount equal to 50%
of the target AIP award for each of the 1998, 1999, and 2000 Plan Years, which
target amounts shall each be at least equal to the 1997 AIP target award
applicable to the Executive.

4.4 1998 and 1999 and 2000 LTI. In the event of a Termination as
a result of a Change in Control, Executive shall be paid an amount equal to 50%
of the target LTI awards for each of the 1998, 1999, and 2000 Plan Years, which
target shall each be at least equal to the 1997 LTI target award applicable to
the Executive.

4.5 Prior Stock Awards. All Company 1992 Stock Compensation
Plan awards will fully vest in the event of a Change in Control.

5. Benefits.

5.1. Retirement Programs. In the event of a Termination as a
result of a Change in Control, Executive shall continue to accumulate benefit
service as an employee for purposes of the Company's Cash Balance Pension Plan,

4
<PAGE> 5
401(k) Plan, and the Supplemental Executive Retirement Plan through October 31,
1998.

5.2. Health, Dental and Other. In the event of a Termination as a
result of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period ending October 31, 1998 for which compensation or benefits are paid under
this Agreement at an after tax cost to the Executive no greater than that
incurred by similarly situated employees of Anthem Insurance Companies Inc.
during that same period. Such coverage shall be provided either through the
plans or by reimbursing the Executive for the cost of COBRA coverage. Executive
shall have rights to elect COBRA coverage without any offset for periods of
extended coverage under this Agreement upon expiration of the period of coverage
under this section.

5.3. Retiree Medical/Life. In the event of a Termination as a
result of a Change in Control, the Company shall provide post-retirement medical
and life benefits under whatever Plan provisions and cost-sharing arrangements
exist for similarly situated employees of Anthem retiring as of November 1,
1998. For purposes of determining the cost of retiree medical/life benefits to
Executive, Executive shall be credited with service to October 31, 1998.

6. Restrictions on Executive. The provisions of the Employment Agreement
relating to Non-Disclosure, Return of Property and Competition (Sections 12, 13,
and 14) shall continue in full force and effect for all the periods of
employment, and, in the event of a Termination as a result of a Change in
Control, for a two year period following the later of (i) termination of
Executive's consulting services, or (ii) November 1, 1998. In return for
the extension of the additional two year covenant not to compete, in connection
with a Termination as a result of a Change in Control, Executive shall be paid
$1,572,000 following his termination of consulting services, as set forth in
Section 7.2 hereof. If Executive is employed by Anthem, the terms "Company" and
"Assigned Subsidiary" in those provisions shall refer to Anthem, as applicable.

7. Timing of Payments.

7.1. Consulting Services. Subject to Section 8 hereof, consulting
payments pursuant to Section 3.1 hereof, shall begin upon the date of
Termination as a result of a Change

5
<PAGE> 6
in Control and shall continue to be paid bi-weekly is paid, over the term of the
consulting services (without regard to any Disability of Executive), or, in the
event of the Executive's death, any balance remaining due (i.e., amounts which
would have been paid had the death not occurred) shall be paid in a lump sum,
within 30 days of the death, to the Executive's Beneficiary.

7.2. Non-Compete Severance. Subject to Sections 8 hereof, the
payments provided for in Section 6 hereof shall be paid ratably in bi-weekly
installments over the period beginning November 1, 1998, and ending on November
1, 2000 (without regard to any disability of Executive), or in the event of the
Executive's death, any balance remaining due (i.e., amounts which would have
been paid had the death not occurred) shall be paid in a lump sum, within 30
days of the death, to the Executive's beneficiary.

7.3. Other. Subject to Section 8 hereof, all other payments shall
be made in accordance with Executive's deferral election, or, if no election
exists, in cash within 30 days of the date of Termination as a result of a
Change in Control.

8. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.

9. Anthem Guarantee. In the event the Successor to the Company does not assume
the obligations under this Agreement and the Employment Agreement, Anthem
Insurance Companies Inc. shall guarantee the obligations of the Company under
both agreements. In the event the Successor does assume such agreements, but
does not fulfill its obligations under Section 5, Anthem Insurance Companies,
Inc. shall provide comparable benefits under its plans or programs.

6
<PAGE> 7
10. Tax Provisions.

Notwithstanding any other provision of this Agreement, if there
occurs a Change in Control and any payments made by the Company, Anthem, or a
Successor to Executive hereunder or otherwise would be subject to the excise tax
or taxes imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended ("Code") (hereinafter "Change in Control Payments"), then the amount of
such Change in Control Payments hereunder shall be determined by comparing:

(a) amounts payable pursuant to this Agreement
reduced by excise taxes, and

(b) the present value (as determined for purposes
of Section 280G of the Code) of not more in the aggregate than
2.99 times Executive's applicable base amount under Section 280G
of the Code.

The greater of (a) or (b) above shall be paid to Executive as Change in Control
Payments. Any applicable reductions shall be conclusively determined by an
independent auditor. If (a) is applicable, excise taxes deducted pursuant to
paragraph (a) will be paid directly to the Internal Revenue Service.

11. Miscellaneous.

11.1. Assignment. The Company, in its sole discretion, may assign
its rights and duties under this Agreement, but Executive may not. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
(a) the Company and its Successors and assigns and any purchaser of the Company
or all or a substantial part of the Company's assets, such as the assets
relating to the brokerage business of the Company, and (b) Executive, and his
designees and his estate.

11.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.

11.3. Severability. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable in whole or in part, neither
the validity of the remaining part of such provision nor the validity of any
other provision of this Agreement shall in any way be affected. Should any
particular non-disclosure or non-competition covenant, provision or clause of
this Agreement be held unreasonable or unenforceable for any reason, including
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive

7
<PAGE> 8
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.

11.4. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power under this Agreement at any one or more
times be deemed a waiver or relinquishment of such right or power at any other
time or times.

11.5. Modifications. This Agreement may be modified or amended
only by an instrument in writing signed by all parties affected by the
modification or amendment.

11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

11.7. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any of its provisions.

11.8 Remedies.

a. Suspension of Non-Compete Payments. Executive acknowledges
that the payments made pursuant to section 6 hereof are made on condition that
the Executive observes the restrictions incorporated therein. If the Company,
Anthem, or a Successor, as applicable, determines that Executive has breached
any of those restrictions, that entity shall give notice to the Executive which
notice shall (i) state in detail the basis of the determination and (ii) state
that payments under section 6 shall be suspended within 30 days of the date of
the notice unless Executive shall demonstrate that the breach has been cured. If
Executive fails to so demonstrate, the payments shall be suspended. In the event
payments are suspended and it is later determined by a court of competent
jurisdiction that there was no breach, Executive shall receive all of the
payments plus interest determined at the applicable federal rate. Notice shall
be given to Executive in writing at the following address, or such other address
as Executive shall provide in writing to the Company:

Frank C. Witthun
8748 Otter Cove Circle

8
<PAGE> 9
Indianapolis, IN 46236

b. General. Executive acknowledges that a remedy at law for any
breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled, in addition to all other remedies to which the Company may be
entitled under this Agreement, to recover from Executive all reasonable attorney
fees incurred by the Company in enforcing this Agreement. The Company
acknowledges and agrees that in the event the Executive is the prevailing party
in an action by the Company to enforce this Agreement, the Executive shall be
entitled to recover from the Company all reasonable attorneys' fees incurred by
the Executive in defending the action.

11.9 Mitigation. Executive shall have no duty to mitigate nor
shall the obligations of the Company under this Agreement be reduced by any
other compensation earned by Executive.

11.10 Prior Agreement. This Agreement supersedes any prior
Transaction Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Frank C. Witthun
______________________________

By:_________________________________

Signed:_____________________________

Printed: L. Ben Lytle
____________________________

Title: Chairman of the Board
______________________________

ANTHEM INSURANCE COMPANIES, INC.

By:_________________________________

Printed: Patrick M. Sheridan
____________________________

Title: Executive Vice President and
Chief Financial Officer
______________________________

9
<PAGE> 10
ATTACHMENT I

Beneficiary Designation: I hereby designate the beneficiary on file with the
Company's retirement plan as my Beneficiary for purposes of this Agreement. If I
have not designated a beneficiary under the Acordia Deferred Compensation
Program, I hereby designate _______________________ as my Beneficiary.

Signed:__________________________________
Executive

Date:____________________________________

<PAGE> 1
EXHIBIT (c)(8)

TRANSACTION AGREEMENT

This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and John J. O'Connor (the
"Executive").

WHEREAS, the Company, in anticipation of a possible Change in Control
(as hereinafter defined) desires to provide the Executive additional
compensation and benefits to assure the Company of the services of Executive
prior to the Change in Control and to effect a smooth transition after the
Change in Control, by providing for consulting services by the Executive;

WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated January 1, 1994, (the "Employment Agreement"), which may be
modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by
the Executive on Attachment 1 hereof as the recipient of benefits in the event
of the death of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Cause" shall mean a reasonable determination by the Chief
Executive Officer of the Company that Executive (i) failed to obey the
reasonable and lawful orders of the Company; (ii) acted with gross negligence in
the performance of his obligations or in a manner materially detrimental to the
Company and/or its subsidiaries; (iii) willfully breached or habitually
neglected his duty; (iv) has been convicted of a felony; (v) committed any act
involving dishonesty or fraud; or (vi) violated any of the provisions of Section
7 hereof.

"Change in Control" shall mean (i) a merger or consolidation
in which the Company is not the surviving entity; (ii) a change in majority of
the Board over a twenty-four (24) month period, not taking into account
directors nominated by a majority of the current directors;
<PAGE> 2
(iii) a complete liquidation of the Company; or (iv) sale or
disposition of all or a substantial part of the Company's assets, such as
disposition of the assets relating to the brokerage business of the Company.

"Compensation Committee" shall mean the Compensation Committee
of the Board.

"Disability" shall have the meaning set forth in the Company's
long term Executive disability plan as in effect at the time of execution of
this Agreement.

"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($100,022), plus increments thereon as of the
time of a Termination as a result of a Change in Control.

"Successor" shall mean any acquiror of a substantial portion
of the assets of the Company, and shall include an acquiror of the assets
relating to the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur
if upon or following a Change in Control or, with respect to (ii), if in
anticipation of a Change in Control,

(i) Anthem Insurance Companies, Inc. or one
of its affiliates ("Anthem"), or a Successor does not (x) assume both the
Employment Agreement and this Agreement and (y) offer Executive a position
comparable to his position at the time of execution of this Agreement; or

(ii) Executive's position with the Company is
not comparable to his position at the time of execution of this Agreement.

For purposes of this Agreement, a position shall not be comparable if (i)
Executive is assigned to any duties substantially inconsistent with his
position, duties or responsibilities with the Company immediately prior to the
Change in Control or his duties or responsibilities are substantially reduced as
compared with such duties and responsibilities immediately prior to the Change
in Control; (ii) Executive's Salary or target annual incentive or long term
incentive opportunities are materially reduced as compared to his Salary and
target annual incentives and long term incentive opportunities immediately prior
to the Change in Control; or (iii) Executive is assigned to duties or
responsibilities involving a residence relocation or business travel obligations
substantially greater than existing prior to the Change in Control. If Executive

2
<PAGE> 3
accepts a position at Anthem, or a Successor, it shall be deemed to be
comparable for the purposes of this Agreement.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth in
the Employment Agreement.

1.3. In the event of any inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.

1.4. No provision of this Agreement shall operate to reduce any amounts
or benefits payable under the Employment Agreement, standing alone or in
aggregate, except for Section 5 hereof.

2. Term.

2.1. Term of this Agreement. This Agreement shall expire on the earlier
of (a) December 31, 1997 or (b) the date on which Acordia and Anthem Insurance
Companies Inc. publicly announce that the companies are no longer pursuing the
possible disposition of the brokerage business of Acordia, provided, however,
that if on or before December 31, 1997, the Board has approved the general terms
of a transaction that would be a Change in Control, this Agreement shall be
extended to the earlier of the closing of the Change in Control or December 31,
1998.

2.2 Term of the Employment Agreement. If the term of this Agreement is
extended past December 31, 1997, the term of the Employment Agreement shall be
extended to December 31, 1998.

3. Incentive Plans.

3.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be determined
and paid under the AIP for the 1997 Plan Year based on the performance goals
established by the Compensation Committee. However, in the event of a Change in
Control prior to the payment of the 1997 Plan Year Award, such AIP Award payable
to Executive for the 1997 Plan Year shall be in an amount at least equal to the
full "target" level amount for the year.

3
<PAGE> 4
3.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals
for award of LTI payments based on 1997 performance shall include a Change in
Control. In the event of a Change in Control prior to the award of the 1997 Plan
Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at least
equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.

3.3. Prior Stock Awards. All Company 1992 Stock Compensation Plan
awards will fully vest in the event of a Change in Control.

4. Services of Executive. During any period for which Executive is receiving
compensation or benefits pursuant to this Agreement or the Employment Agreement
from the Company, Anthem, or a Successor, Executive shall be available to
provide consulting services reasonably requested by such Company, Anthem, or a
Successor. Subject to the obligations under Section 7, this provision shall not
be construed to preclude Executive from accepting full-time employment
elsewhere.

5. Consulting Payments. In lieu of severance under Executive's Employment
Agreement, in the event of Termination as a result of a Change in Control,
Executive shall be treated as an employee of Anthem or an Anthem affiliate for a
12 month period following the Termination as a result of a Change in Control;
and shall receive compensation equal to 12 months Salary, reduced by any amount
paid under the Employment Agreement.

6. Benefits.

6.1. Retirement Programs. In the event of a Termination as a result of
a Change in Control, Executive shall continue to accumulate benefit service as
an employee under the Company's Cash Balance Pension Plan, 401(k) Plan, and the
Supplemental Executive Retirement Plan shall continue for a period of 12 months
from the date of Termination as a result of Change in Control.

6.2. Health, Dental and Other. In the event of a Termination as a
result of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which compensation and benefits are paid under the Employment
Agreement or this Agreement at an after tax cost to the Executive no greater
than that incurred by similarly situated employees of Anthem Insurance Companies
Inc. during that same period. Such coverage shall be provided either through the
plans or by reimbursing the Executive for the cost of COBRA coverage. Executive
shall have rights to elect

4
<PAGE> 5
COBRA coverage without any offset for periods of extended coverage under this
Agreement or the Employment Agreement upon expiration of the severance period.

6.3. Retiree Medical/Life. In the event of a Termination as a result of
a Change in Control, the Company shall provide post-retirement medical and life
benefits under whatever Plan provisions and cost-sharing arrangements exist for
similarly situated employees of Anthem Insurance Companies Inc. retiring as of
12 months from the Termination as a result of Change in Control.

7. Restrictions on Executive. The provisions of the Employment Agreement
relating to Non-Disclosure, Return of Property and Competition (Sections 12, 13,
and 14) shall continue in full force and effect, and, if Executive is employed
by Anthem, the terms "Company" and "Assigned Subsidiary" in those provisions
shall refer to Anthem, as applicable.

8. Timing of Payments.

8.1. Consulting Services. Subject to Section 9 hereof, consulting
payments shall begin upon the date of Termination as a result of a Change in
Control and shall continue to be paid on the same basis as Salary is paid, until
paid in full (without regard to any Disability of Executive), or, in the event
of the Executive's death, any balance remaining due shall be paid in a lump sum,
within 30 days of the death, to the Executive's Beneficiary in lieu of any other
severance.

8.2. Other. Subject to Section 9 hereof, all other payments shall be
made in accordance with Executive's deferral election, or, if no election
exists, in cash within 30 days of the date of Termination as a result of a
Change in Control.

9. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.

10. Anthem Undertakings.

10.1. Anthem Guarantee. In the event the Successor to the Company does
not assume the obligations under this Agreement and the Employment Agreement,
Anthem Insurance Companies Inc. shall guarantee the obligations of the Company
under both agreements. In the event the Successor does assume such agreements,
but does not fulfill its obligations under Section 6, Anthem Insurance Companies
Inc. shall provide comparable benefits under its plans or programs.

5
<PAGE> 6
10.2. Acceleration. Anthem Insurance Companies Inc. shall vest all Long
Term Incentive compensation under Anthem plans and shall pay such compensation
pursuant to the plans and any applicable deferral agreements.

11. Miscellaneous.

11.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.

11.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana.

11.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.

11.5. Modifications. This Agreement may be modified or amended only by
an instrument in writing signed by all parties affected by the modification or
amendment.

11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

6
<PAGE> 7
11.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

11.8 Remedies. Executive acknowledges that a remedy at law for any
breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled, in addition to all other remedies to which the Company may be
entitled under this Agreement, to recover from Executive all reasonable attorney
fees incurred by the Company in enforcing this Agreement. The Company
acknowledges and agrees that in the event the Executive is the prevailing party
in an action by the Company to enforce this Agreement, the Executive shall be
entitled to recover from the Company all reasonable attorneys' fees incurred by
the Executive in defending the action.

11.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: John J. O'Connor

By:_________________________________

Signed:_____________________________

Printed: Frank C. Witthun
Title: President and Chief Executive
Officer

ANTHEM INSURANCE COMPANIES, INC.

By:________________________________

Printed: Patrick M. Sheridan
Title: Executive Vice President and
Chief Financial Officer

7
<PAGE> 8
ATTACHMENT I

Signed:__________________________________
Executive

Date:____________________________________

<PAGE> 1
EXHIBIT (c)(9)

TRANSACTION AGREEMENT

This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Ernest J. Newborn Jr. (the
"Executive").

WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated June 1, 1994, (the "Employment Agreement"), which may be
modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by
the Executive on Attachment 1 hereof as the recipient of benefits in the event
of the death of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Change in Control" shall mean (i) a merger or consolidation
in which the Company is not the surviving entity; (ii) a change in majority of
the Board over a twenty-four (24) month period, not taking into account
directors nominated by a majority of the current directors; (iii) a complete
liquidation of the Company; or (iv) sale or disposition of all or a substantial
part of the Company's
<PAGE> 2
assets, such as disposition of the assets relating to the brokerage business of
the Company.

"Compensation Committee" shall mean the Compensation Committee
of the Board.

"Disability" shall have the meaning set forth in the Company's
long term Executive disability plan as in effect at the time of execution of
this Agreement.

"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($120,010), plus increments thereon as of the
time of a Termination as a result of a Change in Control.

"Successor" shall mean any acquiror of a substantial portion
of the assets of the Company, and shall include an acquiror of the assets
relating to the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur
if upon or following a Change in Control or, with respect to (ii), if in
anticipation of a Change in Control,

(i) Anthem Insurance Companies, Inc., or one
of its affiliates ("Anthem"), or a Successor does not (x) assume both the
Employment Agreement and this Agreement and (y) offer Executive a position
comparable to his position at the time of execution of this Agreement; or

(ii) Executive's position with the Company is
not comparable to his position at the time of execution of this Agreement.

2
<PAGE> 3
An event shall be deemed to be in anticipation of a Change in Control if it
occurs after the execution of this Agreement and if a Change in Control in fact
occurs within 12 months following the event.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth in
the Employment Agreement.

1.3. In the event of any inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.

1.4. No provision of this Agreement shall operate to reduce any amounts
or benefits payable under the Employment Agreement, standing alone or in
aggregate.

2. Term.

2.2 Term of the Employment Agreement. If the term of this Agreement is
extended past December 31, 1997, the term of the Employment Agreement shall be
extended to December 31, 1998.

3. Incentive Plans.

3.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals
for award of LTI payments based on 1997 performance shall include a Change in
Control. In the event

3
<PAGE> 4
of a Change in Control prior to the award of the 1997 Plan Year LTI Award, such
1997 LTI Plan Year Award shall be of an amount at least equal to the "target"
level LTI for the 1997 Plan Year, and shall be fully vested and paid to the
Executive in accordance with Section 6.2.

3.3. Prior Stock Awards. All Company 1992 Stock Compensation Plan
awards will fully vest in the event of a Change in Control.

4. Benefits.

4.1. Retirement Programs. Service under the Company's Cash
Balance Pension Plan, 401(k) Plan, and the Supplemental Executive Retirement
Plan shall cease as of the date of a Termination as a result of a Change in
Control.

4.2. Health, Dental and Other. In the event of a Termination as a
result of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which severance is paid under the Employment Agreement or this
Agreement at an after tax cost to the Executive no greater than that incurred by
similarly situated employees of Anthem Insurance Companies Inc. during that same
period. Such coverage shall be provided either through the plans or by
reimbursing the Executive for the cost of COBRA coverage. Executive shall have
rights to elect COBRA coverage without any offset for periods of extended
coverage under this Agreement or the Employment Agreement upon expiration of the
severance period.

5. Restrictions on Executive. The provisions of the Employment Agreement
relating to Non-Disclosure, Return of Property and Competition (Sections 12, 13,
and 14) shall continue in full force and effect, and, if Executive is employed
by Anthem, the terms "Company" and "Assigned Subsidiary" in those provisions
shall refer to Anthem, as applicable.

6. Timing of Payments.

6.1. Severance. Subject to Section 7 hereof, severance payments shall
begin upon the date of Termination as a result of a Change in Control and shall
continue to be paid on the same basis as Salary is paid, until paid in full
(without regard to any Disability of Executive), or, in the event of the
Executive's death, any balance remaining due shall be paid in a lump sum, within
30 days of the death, to the Executive's Beneficiary in lieu of any other
severance.

4
<PAGE> 5
6.2. Other. Subject to Section 7 hereof, all other payments shall be
made in accordance with Executive's deferral election, or, if no election
exists, in cash within 30 days of the date of Termination as a result of a
Change in Control.

7. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written release
in a form acceptable to the Company.

8. Anthem Guarantee. In the event the Successor to the Company does not assume
the obligations under this Agreement and the Employment Agreement, Anthem
Insurance Companies Inc. shall guarantee the obligations of the Company under
both agreements. In the event the Successor does assume such agreements, but
does not fulfill its obligations under Section 4, Anthem Insurance Companies
shall provide comparable benefits under its plans or programs.

9. Miscellaneous.

9.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.

9.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana.

9.3. Severability. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable in whole or in part, neither
the validity of the remaining part of such provision nor the validity of any
other provision of this Agreement shall in any way be affected. Should any
particular non-disclosure or non-competition covenant, provision or clause of
this Agreement be held unreasonable or unenforceable for any reason, including
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.

9.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this

5
<PAGE> 6
Agreement shall not be deemed a waiver of such term, covenant or condition, nor
shall any waiver or relinquishment of any right or power under this Agreement at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times.

9.5. Modifications. This Agreement may be modified or amended only by
an instrument in writing signed by all parties affected by the modification or
amendment.

9.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

9.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

9.8 Remedies. Executive acknowledges that a remedy at law for any
breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled, in addition to all other remedies to which the Company may be
entitled under this Agreement, to recover from Executive all reasonable attorney
fees incurred by the Company in enforcing this Agreement. The Company
acknowledges and agrees that in the event the Executive is the prevailing party
in an action by the Company to enforce this Agreement, the Executive shall be
entitled to recover from the Company all reasonable attorneys' fees incurred by
the Executive in defending the action.

9.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Ernest J. Newborn Jr.

By:_________________________________

Signed:_____________________________

Printed: Frank C. Witthun
Title: President and Chief Executive
Officer

ANTHEM INSURANCE COMPANIES, INC.

By:_________________________________

Printed: Patrick M. Sheridan

Title: Executive Vice President and
Chief Financial Officer

7
<PAGE> 8
ATTACHMENT I

Signed:__________________________________
Executive

Date:____________________________________

<PAGE> 1
EXHIBIT (c)(10)

TRANSACTION AGREEMENT

This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Keith A. Maib (the
"Executive").

WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated August 1, 1996, (the "Employment Agreement"), which may be
modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by the
Executive on Attachment 1 hereof as the recipient of benefits in the event of
the death of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Cause" shall mean a reasonable determination by the Chief Executive
Officer of the Company that Executive (i) failed to obey the reasonable and
lawful orders of the Company; (ii) acted with gross negligence in the
performance of his obligations or in a manner materially detrimental to the
Company and/or its subsidiaries; (iii) willfully breached or habitually
neglected his duty; (iv) has been convicted of a felony; (v) committed any act
involving dishonesty or fraud; or (vi) violated any of the provisions of Section
6 hereof.

"Change in Control" shall mean (i) a merger or consolidation in
which the Company is not the surviving entity; (ii) a change in majority of the
Board over a twenty-four (24) month period, not taking into account directors
nominated by a majority of the current directors; (iii) a complete liquidation
of the Company; or (iv) sale or disposition of all or a substantial part of the
Company's
<PAGE> 2
assets, such as disposition of the assets relating to the brokerage business of
the Company.

"Compensation Committee" shall mean the Compensation Committee of
the Board.

"Disability" shall have the meaning set forth in the Company's long
term Executive Disability plan as in effect of execution of this Agreement.

"Salary" shall mean an annual base salary existing at the time of
execution of this Agreement ($225,004), plus increments thereon as of the time
of a Termination as a result of a Change in Control.

"Successor" shall mean any acquiror of a substantial portion of the
assets of the Company, and shall include an acquiror of the assets relating to
the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur if upon
or following a Change in Control or, with respect to (ii), if in anticipation of
a Change in Control,

(i) Anthem Insurance Companies, Inc., or one
of its affiliates ("Anthem"), or a Successor does not (x)
assume both the Employment Agreement and this Agreement and
(y) offer Executive a position comparable to his position at
the time of execution of this Agreement; or

(ii) Executive's position with the Company
is not comparable to his position at the time of execution of
this Agreement.

2
<PAGE> 3
accepts a position at Anthem, or a Successor, it shall be deemed to be
comparable for the purposes of this Agreement.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth in the
Employment Agreement.

1.3. In the event of any inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.

1.4. Other than Section 10 hereof, no provision of this Agreement shall
operate to reduce any amounts or benefits payable under the Employment
Agreement, standing alone or in aggregate, however, any benefit provided under
both agreements shall be paid only once.

2. Term of this Agreement. This Agreement shall expire on the earlier of (a)
December 31, 1997 or (b) the date on which Acordia and Anthem Insurance
Companies Inc. publicly announce that the companies are no longer pursuing the
possible disposition of the brokerage business of Acordia, provided, however,
that if on or before December 31, 1997, the Board has approved the general terms
of a transaction that would be a Change in Control, this Agreement shall be
extended to the earlier of the closing of the Change in Control or December 31,
1998.

3. Severance Compensation. In the event of a Termination as a result of a Change
in Control, Executive shall receive a severance payment equal to his Salary for
24 months' payable in accordance with Section 7.1 hereof, which should be in
lieu of any other severance.

4. Incentive Plans.

4.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be determined
and paid under the AIP for the 1997 Plan Year based on the performance goals
established by the Compensation Committee. However, in the event of a Change in
Control prior to the payment of the 1997 Plan Year Award, such AIP Award payable
to Executive for the 1997 Plan Year shall be in an amount at least equal to the
full "target" level amount for the year.

3
<PAGE> 4
4.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals for
award of LTI payments based on 1997 performance shall include a Change in
Control. In the event of a Change in Control prior to the award of the 1997 Plan
Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at least
equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.

4.3. 1998 and 1999 AIP. In the event of a Termination as a result of a
Change in Control, Executive shall be paid an amount equal to 50% of the target
AIP award for each of the 1998 and 1999 Plan Years, which target amounts shall
each be at least equal to the 1997 AIP target award applicable to the Executive.

4.4. 1998 and 1999 LTI. In the event of a Termination as a result of a
Change in Control, Executive shall be paid an amount equal to 50% of the target
LTI awards for each of the 1998 and 1999 Plan Years, which target amounts shall
each be at least equal to the 1997 LTI target award applicable to the Executive.

4.5. Prior Stock Awards. All Company 1992 Stock Compensation Plan awards
will fully vest in the event of a Change in Control.

5. Benefits.

5.1. Retirement Programs. Service under the Company's Cash Balance Pension
Plan, the 401(k) Plan, and the Supplemental Executive Retirement Plan shall
cease as of the date of a Termination as a result of a Change in Control.

5.2. Health, Dental and Other. In the event of a Termination as a result
of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which severance is paid under this Agreement at an after tax cost to
the Executive no greater than that incurred by similarly situated employees of
Anthem Insurance Companies Inc. during that same period. Such coverage shall be
provided either through the plans or by reimbursing the Executive for the cost
of COBRA coverage. Executive shall have rights to elect COBRA coverage without
any offset for periods of extended coverage under this Agreement upon expiration
of the severance period.

4
<PAGE> 5
Subsidiary" in those provisions shall refer to Anthem, as applicable.

7. Timing of Payments.

7.1. Severance. Subject to Section 8 hereof, severance payments shall
begin upon the date of Termination as a result of a Change in Control and shall
continue to be paid on the same basis as Salary is paid, until paid in full
(without regard to any Disability of Executive), or, in the event of the
Executive's death, any balance remaining due shall be paid in a lump sum, within
30 days of the death, to the Executive's Beneficiary in lieu of any other
severance.

7.2. 1998 and 1999 AIP and LTI. Subject to Section 8 hereof, the 1998 and
1999 AIP and LTI payments provided for in Sections 4.3 and 4.4 hereof shall be
paid ratably in equal bi-weekly installments over the period beginning on the
date of the Termination as a result of a Change in Control and ending on the
second anniversary of the Termination as a result of a Change in Control
(without regard to any disability of Executive), or in the event of the
Executive's death, any balance remaining due (i.e., amounts which would have
been paid had the death not occurred) shall be paid in a lump sum within 30 days
of the death, to the Executive's beneficiary.

8. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.

9. Anthem Guarantee. In the event the Successor to the Company does not assume
the obligations under this Agreement and the Employment Agreement, Anthem
Insurance Companies Inc. shall guarantee the obligations of the Company under
both agreements. In the event the Successor does assume such agreements, but
does not fulfill its obligations under Section 5, Anthem Insurance Companies
Inc. shall provide comparable benefits under its plans or programs.

10. Tax Provisions. Notwithstanding any other provision of this Agreement, if
there occurs a Change in Control and any payments made by the Company, Anthem,
or a Successor to Executive hereunder or otherwise would be subject to the
excise tax or taxes imposed by Section 4999 of the Internal Revenue Code of
1986, as amended ("Code") (hereinafter "Change in Control Payments"), then the
amount of such Change in Control Payments hereunder shall be determined by
comparing:

(a) amounts payable pursuant to this Agreement reduced by excise
taxes (and further reduced by

5
<PAGE> 6
all other applicable taxes) using the highest marginal tax rates;
and

(b) the present value (as determined for purposes of Section 280G of
the Code) of not more in the aggregate than 2.99 times Executive's
applicable base amount under Section 280G of the Code.

The greater of (a) or (b) above shall be paid to Executive as Change
in Control Payments. Any applicable reductions shall be conclusively
determined by an independent auditor.

11. Miscellaneous.

11.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.

11.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.

11.3. Severability. If any provision of this Agreement shall be determined
to be invalid, illegal or unenforceable in whole or in part, neither the
validity of the remaining part of such provision nor the validity of any other
provision of this Agreement shall in any way be affected. Should any particular
non-disclosure or non-competition covenant, provision or clause of this
Agreement be held unreasonable or unenforceable for any reason, including
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.

11.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.

6
<PAGE> 7
11.5. Modifications. This Agreement may be modified or amended only by an
instrument in writing signed by all parties affected by the modification or
amendment.

11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

11.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

11.8 Remedies. Executive acknowledges that a remedy at law for any breach
or threatened breach of the provisions of this Agreement would be inadequate and
therefore agrees that the Company shall be entitled to injunctive relief, both
preliminary and permanent, in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available for any such breach or threatened breach.
Executive further acknowledges and agrees that in the event of a breach by
Executive of any provision of this Agreement, the Company shall be entitled, in
addition to all other remedies to which the Company may be entitled under this
Agreement, to recover from Executive all reasonable attorney fees incurred by
the Company in enforcing this Agreement. The Company acknowledges and agrees
that in the event the Executive is the prevailing party in an action by the
Company to enforce this Agreement, the Executive shall be entitled to recover
from the Company all reasonable attorneys' fees incurred by the Executive in
defending the action.

11.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Keith A. Maib
________________________________

By:_____________________________

Signed:_____________________________

Printed: Frank C. Witthun
_____________________________

Title: President and Chief Executive Officer

7
<PAGE> 8
ANTHEM INSURANCE COMPANIES, INC.

By:_____________________________

Printed: Patrick M. Sheridan
________________________________

Title: Executive Vice President and
Chief Financial Officer
____________________________________

8
<PAGE> 9
ATTACHMENT I

Signed:__________________________________
Executive

Date:____________________________________

<PAGE> 1
EXHIBIT (c)(11)

TRANSACTION AGREEMENT

This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Robert C. Nevins (the
"Executive").

WHEREAS, the Company, in anticipation of a possible Change in Control (as
hereinafter defined) desires to provide the Executive additional compensation
and benefits to assure the Company of the services of Executive prior to the
Change in Control and to provide incentives for the Executive to remain in the
employment of the Company and its Successors (as hereinafter defined); and

WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated April 1, 1996, (the "Employment Agreement"), which may be
modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by the
Executive as the recipient of benefits in the event of the death or disability
of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Cause" shall mean a reasonable determination by the Chief Executive
Officer of the Company, that Executive (i) failed to obey the reasonable and
lawful orders of the Company; (ii) acted with gross negligence in the
performance of his obligations or in a manner materially detrimental to the
Company and/or its subsidiaries; (iii) willfully breached or habitually
neglected his duty; (iv) has been convicted of a felony; (v) committed any act
involving dishonesty or fraud; or (vi) violated any of the provisions of
Section 6 hereof.

"Change in Control" shall mean (i) a merger or consolidation in
which the Company is not the surviving entity; (ii) a change in majority of the
Board over a twenty-four (24) month period, not taking into account directors
nominated by a majority of the current directors; (iii) a complete liquidation
of the Company; or (iv) sale or disposition of all or a substantial part of the
Company's assets, such as disposition of the assets relating to the brokerage
business of the Company.

"Compensation Committee" shall mean the Compensation Committee of
the Board.
<PAGE> 2

"Disability" shall have the meaning set forth in the Company's long-
term Executive disability plan as in effect at the time of execution of this
Agreement.

"Salary" shall mean an annual base salary existing at the time of
execution of this Agreement ($225,004), plus increments thereon as of the time
of a Change in Control or Termination as a result of a Change in Control.

"Successor" shall mean any acquiror of a substantial portion of the
assets of the Company, and shall include an acquiror of the assets relating to
the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur if upon
or following a Change in Control or, with respect to (ii), if in anticipation of
a Change of Control,

(i) a Successor does not (x) assume both the Employment
Agreement and this Agreement and (y) offer Executive a
position comparable to his position at the time of
execution of this Agreement; or

(ii) Executive's position with the Company is not comparable
to his position at the time of execution of this
Agreement.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth in the
Employment Agreement.
<PAGE> 3

1.3 in the event of an inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.

1.4. No provision of this Agreement shall operate to reduce any amounts or
benefits payable under the Employment Agreement, standing alone or in aggregate.

2. Term of the Agreement. This Agreement shall expire on the earlier of (a)
December 31, 1997 or (b) the date on which the Company and Anthem insurance
Companies, Inc. publicly announce that the companies are no longer pursuing the
possible sale of the brokerage operations of the Company, provided, however,
that if on or before December 31, 1997, the Board has approved the general terms
of a transaction which would be a Change in Control, this Agreement shall be
extended to the earlier of the closing of the Change in Control or December 31,
1998.

3. Prior Stock Awards. All Company 1992 Stock Compensation Plan awards will
fully vest in the event of a Change in Control.

4. Benefits.

4.1. Retirement Plan. Service under the Acordia Cash Balance Pension and
the Acordia, Inc. Supplemental Executive Retirement Plan shall cease as of the
date of a Termination as a result of a Change in Control.

4.2. Health, Dental and Other. In the event of a Termination as a result
of a Change in Control, the Company shall provide continued coverage of
Executive and his or her dependents under the Company's welfare plans for the
period for which severance is paid under the Employment Agreement or this
Agreement at an after tax cost to the Executive no greater than that incurred by
similarly situated employees during that same period. Such coverage shall be
provided either through the plans or by reimbursing the Executive for the cost
of COBRA coverage. Executive shall have rights to elect COBRA coverage without
any offset for periods of extended coverage under this Agreement or the
Employment Agreement upon expiration of the severance period.

5. Retention Bonus.

5.1. Initial. If Executive remains in the employment of the Company or its
Successor on the date of the Change in Control (or is earlier terminated by the
Company other than for Cause as defined herein) Executive shall be paid
$130,000.

5.2. Subsequent. If Executive remains in the employment of the Company or
its Successor on the second anniversary of the date of the Change in Control,
Executive shall be paid $170,000. If, prior to the second anniversary of the
date of Change in Control, the Executive dies, becomes disabled, or is
terminated by the Company or its Successor other than for Cause, Executive shall
be paid the subsequent retention bonus referred to herein.
<PAGE> 4

6. Restrictions on Executive. The provisions of the Employment Agreement
relating to Non-Disclosure, Return of Property and Competition (sections 12, 13
and 14) shall continue in full force and effect and shall not be affected by
this Agreement.

7. Timing of Payments.

7.1. Severance. Subject to Section 9 hereof, severance payments shall
begin upon the date of Termination as a result of a Change in Control and shall
continue to be paid on the same basis as salary is paid, until paid in full, or,
in the event of the Executive's death, any balance remaining due shall be paid
in a lump sum within 30 days of the Executive's death to the Executive's
Beneficiary (as designated in Attachment I).

7.2. Other. Subject to Section 8 hereof, all other payments shall be made
in accordance with Executive's deferral election, or if there is no such
election, in cash within 30 days of the date of Termination as a result of a
Change in Control.

8. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release.

9. Miscellaneous.

9.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.

9.3. Severability. If any provision of this Agreement shall be determined
to be invalid, illegal or unenforceable in whole or in part, neither the
validity of the remaining part of such provision nor the validity of any other
provision of this Agreement shall in any way be affected. Should any particular
non-disclosure or non-competition covenant, provision or clause of this
Agreement be held unreasonable or unenforceable for any reason, including,
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.
<PAGE> 5

9.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.

9.5. Modifications. This Agreement may be modified or amended only by an
instrument in writing signed by both the Company or its Successors and
Executive.

9.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

9.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

9.8. Remedies. Executive acknowledges that a remedy at law for any breach
or threatened breach of the provisions of this Agreement would be inadequate and
therefore agrees that the Company shall be entitled to injunctive relief, both
preliminary and permanent, in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available for any such breach or threatened breach.
Executive further acknowledges and agrees that in the event of a breach by
Executive of any provision of this Agreement, the Company shall be entitled, in
addition to all other remedies to which the Company may be entitled under this
Agreement, to recover from Executive all reasonable attorney fees incurred by
the Company in enforcing this Agreement. The Company acknowledges and agrees
that in the event the Executive is the prevailing party in an action by the
Company to enforce this Agreement, the Executive shall be entitled to recover
from the Company all reasonable attorneys' fees incurred by the Executive in
defending the action.

9.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Robert C. Nevins By: /s/ Keith A. Maib
------------------------------ --------------------------------
Signed: /s/ Robert C. Nevins Printed: Keith A. Maib
---------------------------- ---------------------------
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 6

Attachment I

Beneficiary Designation: I hereby designate the beneficiary on file with the
Acordia Deferred Compensation Program as my Beneficiary for purposes of this
Agreement. If I have not designated a beneficiary under the Acordia Deferred
Compensation Program, I hereby designate Estate as my Beneficiary.

Signed: /s/ Robert C. Nevins
-----------------------------
Executive

Date: 3/7/97
----------------

<PAGE> 1
EXHIBIT (c)(12)

TRANSACTION AGREEMENT

This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Daniel W. Kendall (the
"Executive").

WHEREAS, the Company, in anticipation of a possible Change in Control
(as hereinafter defined) desires to provide the Executive additional
compensation and benefits to assure the Company of the services of Executive
prior to the Change in Control and to effect a smooth transition after the
Change in Control, by providing for consulting services by the Executive;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by
the Executive on Attachment I hereto as the recipient of benefits in the event
of the death of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Change in Control" shall mean (i) a merger or consolidation
in which the Company is not the surviving entity; (ii) a change in majority of
the Board over a twenty-four (24) month period, not taking into account
directors nominated by a majority of the current directors; (iii) a complete
liquidation of the Company; or (iv) sale or disposition of all or a substantial
part of the Company's assets, such as disposition of the assets relating to the
brokerage business of the Company.

"Compensation Committee" shall mean the Compensation Committee
of the Board.
<PAGE> 2
"Disability" shall have the meaning set forth in the Company's
long term Executive disability plan as in effect at the time of execution of
this Agreement.

"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($140,010), plus increments thereon as of the
time of a Termination as a result of a Change in Control.

"Successor" shall mean any acquiror of a substantial portion
of the assets of the Company, and shall include an acquiror of the assets
relating to the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur
if upon or following a Change in Control or, with respect to (ii), if in
anticipation of a Change in Control,

(i) Anthem Insurance Companies, Inc., or one of its affiliates
("Anthem"), or a Successor does not (x) assume this Agreement and (y)
offer Executive a position comparable to his position at the time of
execution of this Agreement; or

(ii) Executive's position with the Company is not comparable
to his position at the time of execution of this Agreement.

2
<PAGE> 3
A voluntary termination by Executive or a Termination for Cause shall not
constitute a Termination as a result of a Change in Control.

2. Term of this Agreement. This Agreement shall expire on the earlier of (a)
December 31, 1997 or (b) the date on which Acordia and Anthem Insurance
Companies Inc. publicly announce that the companies are no longer pursuing the
possible disposition of the brokerage business of Acordia, provided, however,
that if on or before December 31, 1997, the Board has approved the general terms
of a transaction which would be a Change in Control, this Agreement shall be
extended to the earlier of the closing of the Change in Control or December 31,
1998.

3. Services of Executive. During any period for which Executive is receiving
compensation and benefits pursuant to this Agreement from the Company, Anthem,
or a Successor, Executive shall be available to provide consulting services
reasonably requested by such Company, Anthem, or Successor. Subject to the
obligations under Section 7, this provision shall not be construed to preclude
Executive from accepting full-time employment elsewhere.

4. Consulting Payments. In the event of a Termination as a result of a Change in
Control, Executive shall be treated as an employee of Anthem for a period ending
on October 31, 1998; and shall receive compensation equal to 12 months' Salary
for the period from Termination as a result of Change in Control to October 31,
1998.

5. Incentive Plans.

5.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be determined
and paid under the AIP for the 1997 Plan Year based on the performance goals
established by the Compensation Committee. However, in the event of a Change in
Control prior to the payment of the 1997 Plan Year Award, such AIP Award payable
to Executive for the 1997 Plan Year shall be in an amount at least equal to the
full "target" level amount for the year.

5.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals
for award of LTI payments based on 1997 performance shall include a Change in
Control. In the event of a Change in Control, prior to the award of the 1997
Plan Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at
least equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.

3
<PAGE> 4
6. Benefits.

6.1. Retirement Programs. In the event of a Termination as a result of
a Change in Control, Executive shall continue to accumulate benefit service as
an employee for purposes of the Company's Cash Balance Pension Plan, 401(k)
Plan, and the Supplemental Executive Retirement Plan through October 31, 1998.

6.2. Health, Dental and Other. In the event of a Termination as a
result of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which compensation or benefits are paid under this Agreement at an
after tax cost to the Executive no greater than that incurred by similarly
situated employees of Anthem Insurance Companies Inc. during that same period.
Such coverage shall be provided either through the plans or by reimbursing the
Executive for the cost of COBRA coverage. Executive shall have rights to elect
COBRA coverage without any offset for periods of extended coverage under this
Agreement upon expiration of the coverage period under this Section.

6.3. Retiree Medical. In the event of a Termination as a result of a
Change in Control, the Company shall provide post-retirement medical and life
benefits, under whatever Plan provisions and cost sharing arrangements exist for
similarly situated employees of Anthem retiring as of November 1, 1998, to
Executive and his eligible dependents. For purposes of determining the cost of
retiree medical coverage to Executive, Executive shall be credited with service
to October 31, 1998.

7. Restrictions on Executive.

7.1. Non-Disclosure. Executive shall not without the prior written
consent of the Chief Executive Officer of the Company (i) use for Executive's
benefit or disclose at any time during Executive's employment by the Company, or
thereafter, except to the extent required by the performance by Executive of his
duties as an executive of the Company, any information obtained or developed by
Executive while in the employ of the Company with respect to any customers,
suppliers, products, employees, financial or legal affairs, business methods or
services of the Company or any of its subsidiaries (including, without
limitation, customer lists, pricing, underwriting, marketing, financial or sales
information, forecasts, business and strategic plans, customer needs and renewal
dates, personnel, applications to or any matters pending or under the
jurisdiction of any regulatory agency or court, any threatened litigation, and
corporate policies and procedures), or any other

4
<PAGE> 5
confidential matter or trade secrets, except information which at the time is
generally known to the public other than as a result of disclosure by Executive
not permitted hereunder, nor (ii) take with Executive upon leaving the employ of
the Company any document, paper or property evidencing or relating to any of the
foregoing.

7.2. Return of Property. Upon termination of Executive's employment for
any reason, or at any other time the Company requests, Executive shall
immediately deliver to the Company all memoranda, notes, plans, records,
reports, manuals, computer disks, computer files and documents (and copies
thereof) and any other property or material in Executive's possession or control
relating to the business of the Company or any of its subsidiaries.

7.3. Competition. During Executive's employment by the Company and
during the time period set forth below commencing on the date of Executive's
termination of employment (and extended by the amount of time of any violation
of this Agreement):

(a) For a period of 24 months, Executive will not make any
statement or do any act that is disloyal to the Company or any of its
subsidiaries, or is inconsistent with the interests of the Company or
any of its subsidiaries;

(b) For a period of 24 months, Executive will not make any
statement or do any act that does or may cause any existing customer of
the Company or any of its subsidiaries to make use of the services or
purchase the products of any business competitive with the Company or
any of its subsidiaries;

(c) For a period of 24 months, Executive will not employ,
solicit for employment, or assist any other person not affiliated with
the Company in recruiting or hiring any person who is then, or within
the preceding three (3) month period was, an employee of the Company or
any of its subsidiaries.

(d) For the period set forth in section 3 hereof, Executive
will neither directly nor indirectly (as director, officer, partner,
sole proprietor, employee, manager, consultant, independent contractor,
advisor, or otherwise) engage in, own any services for, participate in
or be connected with any business or organization that engages in
competition with Anthem or its affiliates in the type of business and
geographic territory in which Anthem and its affiliates do business.

5
<PAGE> 6
8. Timing of Payments.

8.1. Consulting Services. Subject to section 9 hereof, consulting
payments shall begin upon the date of Termination as a result of a Change in
Control (without regard to any Disability of Executive). The total amount shall
be paid in bi-weekly payments, each of which shall be equal to the value of 12
months' Salary divided by the number of pay periods between the date of
Termination as a result of a Change in Control and October 31, 1998. In the
event of the Executive's death, any balance remaining due shall be paid in a
lump sum within 30 days of the death to the Executive's Beneficiary in lieu of
any other severance.

8.2. Other. Subject to section 9 hereof, all other payments shall be
made in accordance with Executive's deferral election or if no election exists
in cash within 30 days of the date of Termination as a result of a Change in
Control.

9. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.

10. Anthem Undertakings.

10.1. Anthem Guarantee. In the event the Successor to the Company does
not assume the obligations under this Agreement, Anthem Insurance Companies Inc.
shall guarantee the obligations of the Company under this Agreement. In the
event the Successor does assume such Agreement, but does not fulfill its
obligations under Section 6, Anthem Insurance Companies shall provide comparable
benefits under its plans or programs.

10.2. Acceleration. Anthem Insurance Companies Inc. shall vest all Long
Term Incentive compensation under Anthem plans and shall pay such compensation
pursuant to the plans and any applicable deferral agreements.

11. Miscellaneous.

11.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.

6
<PAGE> 7
11.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana.

11.3. Severability. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable in whole or in part, neither
the validity of the remaining part of such provision nor the validity of any
other provision of this Agreement shall in any way be affected. Should any
particular non-disclosure or non-competition covenant, provision or clause of
this Agreement be held unreasonable or unenforceable for any reason, including,
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.

11.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.

11.5. Modifications. This Agreement may be modified or amended only by
an instrument in writing signed by all parties affected by the modification or
amendments.

11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

11 7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

11.8. Remedies. Executive acknowledges that a remedy at law for any
breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled,

7
<PAGE> 8
in addition to all other remedies to which the Company may be entitled under
this Agreement, to recover from Executive all reasonable attorney fees incurred
by the Company in enforcing this Agreement. The Company acknowledges and agrees
that in the event the Executive is the prevailing party in an action by the
Company to enforce this Agreement, the Executive shall be entitled to recover
from the Company all reasonable attorneys' fees incurred by the Executive in
defending the action.

11.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Daniel W. Kendall
--------------------------------
By:
--------------------------------
Signed:
--------------------------------

Printed: Frank C. Witthun
--------------------------------
Title: President and Chief Executive Officer
--------------------------------

ANTHEM INSURANCE COMPANIES, INC.

By:
--------------------------------

Printed: Patrick M. Sheridan
--------------------------------
Title: Executive Vice President and
Chief Financial Officer
--------------------------------

ATTACHMENT I

Signed:__________________________________
Executive

Date:____________________________________

____________________________________

<PAGE> 1
EXHIBIT (c)(13)

TRANSACTION AGREEMENT

This Agreement is made this 17th day of March, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Michael B. Henning (the
"Executive").

WHEREAS, the Company, in anticipation of a possible Change in Control
(as hereinafter defined) desires to provide the Executive additional
compensation and benefits to assure the Company of the services of Executive
prior to the Change in Control and to effect a smooth transition by providing
for consulting services by the Executive; and

WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated January 1, 1994, (the "Employment Agreement"), which may be
modified by mutual consent; and

WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;

NOW, THEREFORE, it is hereby agreed as follows:

1. Definitions and Construction.

1.1. Definitions.

"Beneficiary" shall mean the person designated in writing by
the Executive on Attachment 1 hereof as the recipient of benefits in the event
of the death of the Executive.

"Board" shall mean the Board of Directors of the Company.

"Change in Control" shall mean (i) a merger or consolidation
in which the Company is not the surviving entity; (ii) a change in majority of
the Board over a twenty-four (24) month period, not taking into account
directors nominated by a majority of the current directors; (iii) a complete
liquidation of the Company; or (iv) sale or disposition of all or a substantial
part of the Company's
<PAGE> 2
assets, such as disposition of the assets relating to the brokerage business of
the Company.

"Compensation Committee" shall mean the Compensation Committee
of the Board.

"Disability" shall have the meaning set forth in the Company's
long term executive disability plan as in effect at the time of execution of
this Agreement.

"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($190,008), expressed in monthly increments, plus
increments thereon as of the time of a Termination as a result of a Change in
Control.

"Successor" shall mean any acquiror of a substantial portion
of the assets of the Company, and shall include an acquiror of the assets
relating to the brokerage business of the Company.

"Termination as a result of a Change in Control" shall occur
if upon or following a Change in Control or, with respect to (ii), if in
anticipation of a Change in Control,

(i) Anthem Insurance Companies, Inc., or one of its affiliates
("Anthem"), or a Successor does not (x) assume both the Employment
Agreement and this Agreement and (y) offer Executive a position
comparable to his position at the time of execution of this Agreement;
or

(ii) Executive's position with the Company is not comparable
to his position at the time of execution of this Agreement.

A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.

1.2. Terms not otherwise defined shall have the meaning set forth in
the Employment Agreement.

1.3. In the event of any inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.

3. Services and Compensation of Executive. In the event of a Termination as a
result of a Change in Control, in lieu of payments as provided in Section 9 of
the Employment Agreement, and any other severance, Executive shall be paid, in
addition to the amounts referenced in Section 4 hereof, compensation under this
Agreement for services as an employee/consultant. Executive shall receive
consulting compensation of $223,000 until January 31, 2000. Executive shall be
available until January 31, 2000, to provide consulting services reasonably
requested by such Company, Anthem, or a Successor. Subject to the obligations
under Section 6, this provision shall not be construed to preclude Executive
from accepting full time employment elsewhere.

4. Incentive Plans.

4.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be determined
and paid under the AIP for the 1997 Plan Year based on the performance goals
established by the Compensation Committee. However, in the event of a Change in
Control prior to the payment of the 1997 Plan Year Award, such AIP Award payable
to Executive for the 1997 Plan Year

3
<PAGE> 4
shall be in an amount at least equal to the full "target" level amount for the
year.

4.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals
for award of LTI payments based on 1997 performance shall include a Change in
Control. In the event of a Change in Control prior to the award of the 1997 Plan
Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at least
equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.

4.3. Prior Stock Awards. All Company 1992 Stock Compensation Plan
awards will fully vest in the event of a Change in Control.

5. Benefits.

5.1. Retirement Programs. In the event of a Termination as a result of
a Change in Control, Executive shall continue to accumulate benefit service as
an employee for purposes of the Company's Cash Balance Pension Plan, 401(k)
Plan, and the Supplemental Executive Retirement Plan through January 31, 2000.

5.2. Health, Dental and Other. In the event of a Termination as a
result of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which compensation or benefits are paid under this Agreement at an
after tax cost to the Executive no greater than that incurred by similarly
situated employees of Anthem Insurance Companies Inc. during that same period.
Such coverage shall be provided either through the plans or by reimbursing the
Executive for the cost of COBRA coverage. Executive shall have rights to elect
COBRA coverage without any offset for periods of extended coverage under this
Agreement upon expiration of the period of coverage under this section.

5.3. Retiree Medical/Life. In the event of a Termination as a result of
a Change in Control, the Company shall provide post-retirement medical and life
benefits under whatever Plan provisions and cost-sharing arrangements exist for
similarly situated employees of Anthem retiring as of February 1, 2000. For
purposes of determining the cost of retiree medical/life benefits to Executive,
Executive shall be credited with service to January 31, 2000.

4
<PAGE> 5
of a Change in Control, for a one year period following the later of (i)
termination of Executive's consulting services, or (ii) January 31, 2000. In
return for the extension of the additional one year covenant not to compete, in
connection with a Termination as a result of a Change in Control, Executive
shall be paid $450,000 following his termination of consulting services, as set
forth in Section 7.2 hereof. If Executive is employed by Anthem, the terms
"Company" and "Assigned Subsidiary" in those provisions shall refer to Anthem,
as applicable.

7. Timing of Payments.

7.1. Consulting Services. Subject to Section 8 hereof, consulting
payments under Section 3 hereof, shall begin upon the date of Termination as a
result of a Change in Control and shall continue to be paid ratably in bi-weekly
installments, over the term of the consulting services (without regard to any
Disability of Executive), or, in the event of the Executive's death, any balance
remaining due (i.e., amounts which would have been paid had the death not
occurred) shall be paid in a lump sum, within 30 days of the death, to the
Executive's Beneficiary.

7.2. Non-Compete. Subject to Section 8 and 11.8 hereof, the payments
provided for in Section 6 hereof shall be paid ratably in bi-weekly installments
over the period beginning February 1, 2000, and ending on January 31, 2001
(without regard to any disability of Executive), or, in the event of the
Executive's death, any balance remaining due (i.e., amounts which would have
been paid had the death not occurred) shall be paid in a lump sum, within 30
days of the death, to the Executive's Beneficiary.

7.3. Other. Subject to Section 8 hereof, all other payments shall be
made in accordance with Executive's deferral election, or, if no election
exists, in cash within 30 days of the date of Termination as a result of a
Change in Control.

8. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.

9. Anthem Guarantee. In the event the Successor to the Company does not assume
the obligations under this Agreement and the Employment Agreement, Anthem
Insurance Companies Inc. shall guarantee the obligations of the Company under
both agreements. In the event the Successor does assume such agreements, but
does not fulfill its obligations under Section 5, Anthem Insurance Companies
Inc. shall provide benefits under its plans or programs.

5
<PAGE> 6
10. Tax Provisions.

Notwithstanding any other provision of this Agreement, if there occurs
a Change in Control and any payments made by the Company, Anthem, or a Successor
to Executive hereunder or otherwise would be subject to the excise tax or taxes
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
("Code") (hereinafter "Change in Control Payments"), then the amount of such
Change in Control Payments hereunder shall be determined by comparing:

(a) amounts payable pursuant to this Agreement reduced by
excise taxes, and

(b) the present value (as determined for purposes of Section
280G of the Code) of not more in the aggregate than 2.99 times
Executive's applicable base amount under Section 280G of the Code.

11. Miscellaneous.

11.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.

11.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana.

6
<PAGE> 7
such covenant, provision or clause shall be given effect and enforced to
whatever extent would be reasonable and enforceable under applicable law.

11.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.

11.5. Entire Agreement; Modifications; and Conditions. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written, between the
Company or Anthem Insurance Companies Inc. and Executive. This Agreement may be
modified or amended only by an instrument in writing signed by both the Company
or Anthem Insurance Companies Inc. and Executive.

11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

11.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.

11.8 Remedies.

a. Suspension of Non-Compete Payments. Executive acknowledges
that the payments made pursuant to Section 6 hereof are made on condition that
the Executive observes the restrictions incorporated therein. If the Company,
Anthem, or a Successor, as applicable, determines that Executive has breached
any of those restrictions, that entity shall give notice to the Executive which
notice shall (i) state in detail the basis of the determination and (ii) state
that payments under Section 6 shall be suspended within 30 days of the date of
the notice unless Executive shall demonstrate that the breach has been cured. If
Executive fails to so demonstrate, the payments shall be suspended. In the event
payments are suspended and it is later determined by a court of competent
jurisdiction that there was no breach, Executive shall receive all of the
payments plus interest determined at the applicable federal rate. Notice shall
be given to Executive in writing at the following address, or such other address
as Executive shall provide in writing to the Company:

7
<PAGE> 8
Michael B. Henning
12322 Brookshire Parkway
Carmel, Indiana 46033

b. General. Executive acknowledges that a remedy at law for
any breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled, in addition to all other remedies to which the Company may be
entitled under this Agreement, to recover from Executive all reasonable attorney
fees incurred by the Company in enforcing this Agreement. The Company
acknowledges and agrees that in the event the Executive is the prevailing party
in an action by the Company to enforce this Agreement, the Executive shall be
entitled to recover from the Company all reasonable attorneys' fees incurred by
the Executive in defending the action.

11.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.

8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement.

EXECUTIVE ACORDIA, INC.

Name: Michael B. Henning

By:
------------------------------------------
Signed:
------------------------------------------
Printed: Frank C. Witthun
------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------

ANTHEM INSURANCE COMPANIES, INC.

By:
------------------------------------------
Printed: Patrick M. Sheridan
------------------------------------------
Title: Executive Vice President and
Chief Financial Officer

ATTACHMENT I

Signed:__________________________________
Executive

Date:____________________________________

<PAGE> 1
EXHIBIT (c)(14)

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT ("Agreement"), between Acordia, Inc., a
Delaware corporation, (the "Company"), and Ernest J. Newborn, Jr. (the
"Executive"), dated as of the 1st day of June, 1994.

WITNESSETH:

WHEREAS, the Company desires to assure itself of the services
of Executive for the period provided in this Agreement, and Executive is willing
to serve in the employ of the Company on a full-time basis for such period, all
in accordance with the terms and conditions contained in this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs Executive, and
Executive hereby accepts such employment with the Company for the period
provided for in Section 2, all upon the terms and conditions contained in this
Agreement. As a condition to Executive's employment by the Company, Executive
affirms and represents that Executive is under no obligation to any former
employer or other person which is in any way inconsistent with, or which imposes
any restriction upon, Executive's acceptance of employment with the Company, the
employment of Executive by the Company, or Executive's undertakings under this
Agreement.

2. Term of Employment. Unless sooner terminated pursuant to
Section 15, the term of Executive's employment under this Agreement shall be for
a period commencing on the date hereof and continuing for nineteen (19) months
through December 31, 1995 (the "Initial Term"). If no termination has occurred
pursuant to Section 15 of this Agreement on or before November 30 of the then
current year, it being expressly understood and agreed that the Company does not
now, nor hereafter have any obligation to continue Executive in its employ after
expiration of the Initial Term, this Agreement shall automatically be extended
for an additional year term unless either party gives written notice of the
non-renewal to the other party on or before November 30th of the then current
year.

-1-
<PAGE> 2
Except as may otherwise be approved in advance by the Chief Executive Officer,
his designee, or Board of Directors of the Assigned Subsidiary with respect to
memberships on the Boards of Directors of, and other offices or positions in,
companies or organizations which, in their judgment, will not present any
conflict of interest with the Company or any of its subsidiaries or materially
affect the performance of Executive's duties and except during vacation periods
and reasonable periods of absence due to sickness, personal injury or other
disability, Executive shall devote his full time throughout the Employment Term
to the services required of Executive. Executive shall render his services
exclusively to the Company and its subsidiaries during the Employment Term, and
shall use his best efforts, judgment and energy, to improve and advance the
business and interests of the Company and its subsidiaries in a manner
consistent with the duties of Executive's position.

4. Salary. As compensation for the services to be performed by
Executive during the Employment Term, the Company shall pay or shall cause to be
paid to Executive, an annual base salary of not less than Eighty Thousand
Dollars ($80,000) (the "Base Salary"); the Base Salary together with any
adjustments or increments thereto being hereinafter referred to as the "Salary."
Should the Company elect to increase Executive's annual base salary during the
term of this Agreement, the Agreement shall be deemed amended to incorporate the
new increased annual base salary as if the new increased base salary had
originally been set forth herein. The payment of any Salary hereunder shall be
subject to applicable withholding and payroll taxes, and such other deductions
as may be required under the Company's employee benefit plans. Any Salary
payable shall be paid in installments in accordance with the Company's salary
administration practices as they may from time to time exist and subject to
withholdings and payroll deductions.

5. Benefits. In addition to the payments required by section 4
to be paid to Executive during the Employment Term, Executive shall:

(a) be eligible to participate in all employee fringe
benefits, stock option, bonus and incentive compensation programs or
plans and any pension and/or profit sharing plans that may be provided
by the Company for its key executive employees in accordance with the
provisions of any such programs or plans; provided, however, that the
Company expressly reserves the right to alter, modify, amend or
terminate any such programs or plans at any time and for any reason
during the Employment Term;

(b) participate in any life or other similar insurance plans,
medical and health plans or other employee welfare benefit plans that
may be provided by the Company for its key executive employees in
accordance with the provisions of any such plans;

(c) be entitled to annual paid vacation in accordance with
Company policy that may be applicable to key executive employees; and

-2-
<PAGE> 3
(d) be entitled to sick leave and sick pay in accordance with
any Company policy that may be applicable to key executive employees.

6. Expenses. The Company shall, upon submission of expense
reports acceptable to the Company, reimburse Executive in accordance with
existing Company policy for all reasonable and necessary business expenses
incurred by him in connection with the performance of Executive's obligations.

7. Death of Executive. In the event Executive's employment is
terminated as a result of Executive's death, Executive's spouse or, if the
Executive is not married at the time of his death, the estate of Executive shall
be entitled to receive Executive's Salary earned through the date of death.

8. Disability of Executive. In the event Executive's employment
is terminated as a result of Disability, as defined in section 15 of this
Agreement, Executive shall be entitled to receive his Salary and Benefits as
described in sections 4 and 5 of this Agreement through the date of termination.

9. Termination of Executive Other Than for Cause. In the event
Executive's employment is terminated by the Company other than for cause (as
defined in section 15 of this Agreement), Executive shall be entitled to receive
the greater of (i) twelve months Salary or (ii) the Salary remaining to be paid
through the date the Agreement would have expired but for such termination; such
amount to be paid in monthly installments or in one lump sum, at the option of
the Company, as soon as reasonably possible following the termination of
Executive.

10. Employment Relationship. Executive acknowledges that
Executive's employment by the Company creates a relationship of confidence and
trust between Executive and the Company with respect to certain information
applicable to the business of any Existing Client or Potential Client (as the
terms "Existing Client" and "Potential Client" are respectively defined in
Section 15) of the Company or its subsidiaries which may be made known to
Executive during the period of his employment.

11. Proprietary and Confidential Information. Executive
acknowledges that the Company possesses and will continue to possess information
that has been created, discovered or developed by, or otherwise become known to
it (including, without limitation, information created, discovered, developed or
made known by Executive during the period of or arising out of his employment)
or in which property rights have been or may be assigned or otherwise conveyed
to the Company which information has commercial value in the Business and is
treated by the Company as confidential. Executive further acknowledges and
agrees that the success of the Company's Business depends, in part, upon an
in-depth knowledge of the needs of the Company's customers and clients and
serving these needs through frequent contacts, and that the Company has invested
substantial time, money and manpower to develop such relationships.

-3-
<PAGE> 4
12. Non-Disclosure. Executive shall not without the prior written
consent of the Chief Executive Officer of the Company (i) use for Executive's
benefit or disclose at any time during Executive's employment by the Company, or
thereafter, except to the extent required by the performance by Executive of his
duties as an executive of the Company, any information obtained or developed by
Executive while in the employ of the Company with respect to any customers,
suppliers, products, employees, financial affairs, business methods or services
of the Company or any of its subsidiaries (including, without limitation,
customer lists, pricing, underwriting, marketing, financial or sales
information, forecasts, business and strategic plans, customer needs and renewal
dates, personnel, applications to or any matters pending or under the
jurisdiction of any regulatory agency or court, any threatened litigation, and
corporate policies and procedures), or any other confidential matter or trade
secrets, except information which at the time is generally known to the public
other than as a result of disclosure by Executive not permitted hereunder, or
(ii) take with Executive upon leaving the employ of the Company any document or
paper relating to any of the foregoing or any physical property of the Company
or any of its sources with which insurance is placed, policyholders, expiration
or renewal dates, inspection or credit reports, and data on insurance risks
being written.

13. Return of Property. Upon termination of Executive's employment
for any reason, or at any other time the Company requests in writing, Executive
shall immediately deliver to the Company all memoranda, notes, plans, records,
reports and other documents (and copies thereof) and other property in
Executive's possession or control relating to the business of the Company or any
of its subsidiaries.

14. Competition, etc. During Executive's employment by the
Company and during the two (2) year period commencing on the date of Executive's
termination of employment:

(a) Executive will not make any statement or perform any act
intended to advance an interest of any existing or prospective
competitor of the Company or any of its subsidiaries in any way that
will or may materially injure an interest of the Company or any of its
subsidiaries in its relationship and dealings with Existing or
Potential clients, or solicit or encourage any other executive of the
Company or any of its subsidiaries to do any act that is disloyal to
the Company or any of its subsidiaries or inconsistent with the
interests of the Company or any of its subsidiaries interests or in
violation of any provision of this Agreement;

(b) Executive will not discuss with any Existing or Potential
client of the Company or any of its subsidiaries the present or future
availability of services or products by a business, if Executive has or
expects to acquire a proprietary interest in such business or is or
expects to be an employee, officer or director of such business, where
such services or products, are competitive with services or products
which the Company or any Subsidiary provides and where the acquisition
of such proprietary interest or Executive's becoming an employee,
officer or director of such business will or may materially injure an
interest of the Company or any of its subsidiaries;

-4-
<PAGE> 5
(c) Executive will not make any statement or do any act
intended to cause any Existing or Potential client of the Company or
any Subsidiary to make use of the services or purchase the products of
any competitive business in which the Executive has or expects to
acquire a proprietary interest or in which Executive is or expects to
be made an employee, officer or director, if such services or products
in any way relate to or arise out of the services or products sold or
provided or expected to be sold or provided by the Company or any of
its subsidiary to any existing or potential client;

(d) Executive will not directly or indirectly employ, solicit
for employment, or advise or recommend to any other person not
affiliated with the Company or of its subsidiaries that they employ or
solicit for employment, any employee of the Company or of its
subsidiaries.

For purposes of this Section 14, proprietary interest in a
business is ownership, whether through direct or indirect stock holdings or
otherwise, of one percent (1%) or more of such business. Executive shall be
deemed to expect to acquire a proprietary interest in a business or to be made
an officer or director of such business if such possibility has been discussed
with any officer, director, employee, agent, or promoter of such business.
Notwithstanding anything in this Section 14 to the contrary, Executive's
engagement in, ownership of, performance of services for, participation in or
connection with any business or organization other than the Company or a
Subsidiary, with respect to which the Chief Executive Officer of the Company,
has consented in writing shall not be deemed a breach of this Agreement.

15. Termination. Executive's employment shall be terminated
upon the occurrence of any of the following:

(a) the death of Executive;

(b) Executive's disability (as such term is defined pursuant
to the provisions of the Company's long-term executive disability plan,
as in effect from time to time) ("Disability");

(c) the termination of Executive's employment by Executive at
any time for any reason whatsoever (including, without limitation,
resignation or retirement) provided Executive submits 90 days' prior
written notice of such termination to the Chief Executive Officer of
the Company and/or Board of Directors of the Assigned Subsidiary;

(d) the termination of Executive's employment by the Company
at any time "for cause", such termination to take effect immediately
upon written notice by the Company to Executive; or

(e) the termination of Executive's employment by the Company
other than for cause, such termination to take effect immediately upon
written notice by the Company to Executive.

-5-
<PAGE> 6
For purposes of this Agreement, the term "Potential Client"
shall mean a person or entity who was the target of sales or marketing activity
by the Company during the one (1) year period preceding the Executive's
termination of employment or, in the event Executive has been employed by the
Company less than one (1) year at the time of termination, during the period of
Executive's employment with the Company. The term "Existing Client" shall mean a
person or entity who is a customer of the Company at the time of Executive's
termination of employment or with whom the Executive had direct contact on
behalf of the Company at any time during the period of Executive's employment
with the Company.

For purposes of this Agreement, the term "for cause" or
"cause" shall mean a reasonable determination by the Chief Executive Officer of
the Company, that Executive (i) failed to obey the reasonable and lawful orders
of the Company's Chief Executive Officer or the Board of Directors of the
Assigned Subsidiary, (ii) failed to achieve reasonable performance objectives,
(iii) acted with gross negligence in the performance of his obligations or in a
manner materially detrimental to the Company and/or its subsidiaries, (iv)
willfully breached or habitually neglected his duty, (v) has been convicted of a
felony or committed any act involving dishonesty or fraud, or (vi) violated any
provisions of Sections 12 through 14.

16. Nonalienation. Except as may otherwise be required by law,
no right to receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, bankruptcy or hypothecation or to exclusion, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect.

17. Assignment. The Company, in its sole discretion, may
assign its rights and duties under this Agreement, but Executive may not. This
Agreement shall be binding upon and inure to the benefit of (a) the Company
and its successors and assigns and any purchaser of the Company or substantially
all of the assets of the Company and (b) Executive, and his designees and his
estate.

18. Change in Control. Notwithstanding anything to the
contrary expressed or implied herein, Executive shall be entitled to the
benefits set forth in Section 9 (in addition to any change of control benefits
under the Acordia, Inc. 1992 Stock Compensation Plan) if, following a change in
control of the Company, (i) Executive is assigned to any duties substantially
inconsistent with his position, duties or responsibilities with the Company
immediately prior to the change in control or his duties or responsibilities are
substantially reduced as compared with such duties and responsibilities
immediately prior to the change in control; (ii) Executive's Salary is
materially reduced as compared to his Salary immediately prior to the change in
control; (iii) the Company fails to obtain the assumption of its obligations to
perform this Agreement by any successor; or (iv) the Company's long-term
strategic plan is materially changed or abandoned such that the maximum
potential payout of incentive compensation to Executive is substantially
reduced. For purposes of this Agreement, a "change in control" of the Company
shall be deemed to have occurred if (i) any "person" (within the meaning
ascribed to such term in Sections 13(d) and 14(d) of the Securities Exchange Act
of

-6-
<PAGE> 7
1934 (the "Exchange Act"), as in effect on the date of this Agreement) becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act, as in effect on the date of this Agreement), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; (ii) at any time less than a
majority of the members of the Board of Directors of the Company shall be
persons who were either nominated for election by the Board or were elected by
the Board; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.

19. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and will be deemed to
have been given when delivered in person (to Executive if such notice is for
Executive) or five days following mailing by first class certified or registered
mail, postage prepaid, to Executive at his home address, or such addresses as
Executive shall have designated in writing, or if to the Company, to the
attention of the Chief Executive Officer, at the Company's principal place of
business.

20. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.

21. Severability. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable in whole or in part, neither
the validity of the remaining part of such provision nor the validity of any
other provision of this Agreement shall in any way be affected.

22. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power under this Agreement at any one or more
times be deemed a waiver or relinquishment of such right or power at any other
time or times.

23. Entire Agreement; Modifications; and Conditions. This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes (a) all prior agreements, oral and written,
between the Company and Executive with respect to Executive's employment. This
Agreement may be modified or amended only by an instrument in writing signed by
both the Company and Executive.

-7-
<PAGE> 8
24. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

25. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any of its provisions.

26. Remedies. Executive acknowledges that a remedy at law for
any breach or threatened breach of the provisions of this Agreement would be
inadequate and therefore agrees that the Company shall be entitled to injunctive
relief, both preliminary and permanent, in addition to any other available
rights and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available for any such breach or
threatened breach. Executive further acknowledges and agrees that in the event
of a breach by Executive of any provision of this Agreement, the Company shall
be entitled, in addition to all other remedies to which the Company may be
entitled under this Agreement, to recover from Executive all reasonable attorney
fees incurred by the Company in enforcing this Agreement. The Company
acknowledges and agrees that in the event the Executive is the prevailing party
in an action by the Company to enforce this Agreement, the Executive shall be
entitled to recover from the Company all reasonable attorneys' fees incurred by
the Executive in defending the action.

IN WITNESS WHEREOF, the Company and Executive have duly
executed and delivered this Agreement as of the day and year first above
written.

EXECUTIVE

By: /s/ Ernest J. Newborn, Jr.
-----------------------------------

Date: 6-1-94
-----------------------------------

ACORDIA, INC.

By: /s/L. Ben Lytle
-----------------------------------

Name: L. Ben Lytle
-----------------------------------

Title: Chairman of the Board, Chief
Executive Officer and President
-----------------------------------

Date: 6-3-94
-----------------------------------

-8-

<PAGE> 1
EXHIBIT (c)(15)

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT ("Agreement"), between Associated
Insurance Companies, Inc., (the "Company"), and John J. O'Connor (the
"Executive"), dated as of the 1st day of January, 1994.

WITNESSETH:

NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:

2. Term of Employment. Unless sooner terminated pursuant to
Section 15, the term of Executive's employment under this Agreement shall be for
a period commencing on the date hereof and continuing for two (2) years through
December 31, 1995 (the "Initial Term"). If no termination has occurred pursuant
to Section 15 of this Agreement on or before November 30 of the then current
year, it being expressly understood and agreed that the Company does not now,
nor hereafter have any obligation to continue Executive in its employ after
expiration of the Initial Term, this Agreement shall automatically be extended
for an additional year term unless either party gives written notice of the
non-renewal to the other party on or before November 30th of the then current
year.

3. Duties. During the Employment Term, Executive shall render
general administrative and managerial services to the Company, or any Subsidiary
to which the Executive is assigned ("Assigned Subsidiary"), and shall perform
such other reasonable employment duties as the Chief Executive Officer of the
Company, or his designee, or the Board of Directors of the Assigned Subsidiary,
may from time to time prescribe. During the Employment Term, Executive shall
also serve, if elected, as an officer or director of the Company or any of its
subsidiaries, including, but not limited to, the Assigned Subsidiary. Executive
shall perform his duties at such places and times as the Chief Executive Officer
of the Company or the Board of Directors of the Assigned Subsidiary may
reasonably prescribe.
<PAGE> 2
Except as may otherwise be approved in advance by the Chief Executive Officer,
his designee, or Board of Directors of the Assigned Subsidiary with respect to
memberships on the Boards of Directors of, and other offices or positions in,
companies or organizations which, in their judgment, will not present any
conflict of interest with the Company or any of its subsidiaries or materially
affect the performance of Executive's duties and except during vacation periods
and reasonable periods of absence due to sickness, personal injury or other
disability, Executive shall devote his full time throughout the Employment Term
to the services required of Executive. Executive shall render his services
exclusively to the Company and its subsidiaries during the Employment Term, and
shall use his best efforts, judgment and energy, to improve and advance the
business and interests of the Company and its subsidiaries in a manner
consistent with the duties of Executive's position.

4. Salary. As compensation for the services to be performed by
Executive during the Employment Term, the Company shall pay or shall cause to be
paid to Executive, an annual base salary of not less than One Hundred Thousand
Twenty-two Dollars ($100,022) (the "Base Salary"); the Base Salary together with
any adjustments or increments thereto being hereinafter referred to as the
"Salary." Should the Company elect to increase Executive's annual base salary
during the term of this Agreement, the Agreement shall be deemed amended to
incorporate the new increased annual base salary as if the new increased base
salary had originally been set forth herein. The payment of any Salary hereunder
shall be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company's employee benefit plans. Any
Salary payable shall be paid in installments in accordance with the Company's
salary administration practices as they may from time to time exist and subject
to withholdings and payroll deductions.

5. Benefits. In addition to the payments required by section 4
to be paid to Executive during the Employment Term, Executive shall:

(b) participate in any life or other similar insurance
plans, medical and health plans or other employee welfare benefit plans
that may be provided by the Company for its key executive employees in
accordance with the provisions of any such plans;

(c) be entitled to annual paid vacation in accordance with
Company policy that may be applicable to key executive employees; and

- 2 -
<PAGE> 3
(d) be entitled to sick leave and sick pay in accordance
with any Company policy that may be applicable to key executive
employees.

8. Disability of Executive. In the event Executive's
employment is terminated as a result of Disability, as defined in section 15 of
this Agreement, Executive shall be entitled to receive his Salary and Benefits
as described in sections 4 and 5 of this Agreement through the date of
termination.

- 3 -
<PAGE> 4
12. Non-Disclosure. Executive shall not without the prior
written consent of the Chief Executive Officer of the Company (i) use for
Executive's benefit or disclose at any time during Executive's employment by the
Company, or thereafter, except to the extent required by the performance by
Executive of his duties as an executive of the Company, any information obtained
or developed by Executive while in the employ of the Company with respect to any
customers, suppliers, products, employees, financial affairs, business methods
or services of the Company or any of its subsidiaries (including, without
limitation, customer lists, pricing, underwriting, marketing, financial or sales
information, forecasts, business and strategic plans, customer needs and renewal
dates, personnel, applications to or any matters pending or under the
jurisdiction of any regulatory agency or court, any threatened litigation, and
corporate policies and procedures), or any other confidential matter or trade
secrets, except information which at the time is generally known to the public
other than as a result of disclosure by Executive not permitted hereunder, or
(ii) take with Executive upon leaving the employ of the Company any document or
paper relating to any of the foregoing or any physical property of the Company
or any of its sources with which insurance is placed, policyholders, expiration
or renewal dates, inspection or credit reports, and data on insurance risks
being written.

13. Return of Property. Upon termination of Executive's
employment for any reason, or at any other time the Company requests in writing,
Executive shall immediately deliver to the Company all memoranda, notes, plans,
records, reports and other documents (and copies thereof) and other property in
Executive's possession or control relating to the business of the Company or any
of its subsidiaries.

14. Competition, etc. During Executive's employment by the
Company and during the two (2) year period commencing on the date of Executive's
termination of employment:

(a) Executive will not make any statement or perform any
act intended to advance an interest of any existing or prospective
competitor of the Company or any of its subsidiaries in any way that
will or may materially injure an interest of the Company or any of its
subsidiaries in its relationship and dealings with Existing or
Potential clients, or solicit or encourage any other executive of the
Company or any of its subsidiaries to do any act that is disloyal to
the Company or any of its subsidiaries or inconsistent with the
interests of the Company or any of its subsidiaries interests or in
violation of any provision of this Agreement;

(b) Executive will not discuss with any Existing or
Potential client of the Company or any of its subsidiaries the present
or future availability of services or products by a business, if
Executive has or expects to acquire a proprietary interest in such
business or is or expects to be an employee, officer or director of
such business, where such services or products, are competitive with
services or products which the Company or any Subsidiary provides and
where the acquisition of such proprietary interest or Executive's
becoming an employee, officer or director of such business will or may
materially injure an interest of the Company or any of its
subsidiaries;

- 4 -
<PAGE> 5
(c) Executive will not make any statement or do any act
intended to cause any Existing or Potential client of the Company or
any Subsidiary to make use of the services or purchase the products of
any competitive business in which the Executive has or expects to
acquire a proprietary interest or in which Executive is or expects to
be made an employee, officer or director, if such services or products
in any way relate to or arise out of the services or products sold or
provided or expected to be sold or provided by the Company or any of
its subsidiaries to any existing or potential client;

(d) Executive will not directly or indirectly employ,
solicit for employment, or advise or recommend to any other person not
affiliated with the Company or of its subsidiaries that they employ, or
solicit for employment, any employee of the Company or of its
subsidiaries.

15. Termination. Executive's employment shall be terminated
upon the occurrence of any of the following:

(a) the death of Executive;

(b) Executive's disability (as such term is defined
pursuant to the provisions of the Company's long-term executive
disability plan, as in effect from time to time) ("Disability");

(c) the termination of Executive's employment by Executive
at any time for any reason whatsoever (including, without limitation,
resignation or retirement) provided Executive submits 90 days' prior
written notice of such termination to the Chief Executive Officer of
the Company and/or Board of Directors of the Assigned Subsidiary;

(d) the termination of Executive's employment by the
Company at any time "for cause", such termination to take effect
immediately upon written notice by the Company to Executive; or

(e) the termination of Executive's employment by the
Company other than for cause, such termination to take effect
immediately upon written notice by the Company to Executive.

- 5 -
<PAGE> 6
For purposes of this Agreement, the term "Potential Client"
shall mean a person or entity who was the target of sales or marketing activity
by the Company during the one (1) year period preceding the Executive's
termination of employment or, in the event Executive has been employed by the
Company less than one (1) year at the time of termination, during the period of
Executive's employment with the Company. The term "Existing Client" shall mean a
person or entity who is a customer of the Company at the time of Executive's
termination of employment or with whom the Executive had direct contact on
behalf of the Company at any time during the period of Executive's employment
with the Company.

17. Assignment. The Company, in its sole discretion, may
assign its rights and duties under this Agreement, but Executive may not. This
Agreement shall be binding upon and inure to the benefit of (a) the Company and
its successors and assigns and any purchaser of the Company or substantially all
of the assets of the Company and (b) Executive, and his designees and his
estate.

18. Change in Control. Notwithstanding anything to the
contrary expressed or implied herein, Executive shall be entitled to the
benefits set forth in Section 9 if, following a change in control of the
Company, (i) Executive is assigned to any duties substantially inconsistent with
his position, duties or responsibilities with the Company immediately prior to
the change in control or his duties or responsibilities are substantially
reduced as compared with such duties and responsibilities immediately prior to
the change in control; (ii) Executive's Salary is materially reduced as compared
to his Salary immediately prior to the change in control; (iii) the Company
fails to obtain the assumption of its obligations to perform this Agreement by
any successor; or (iv) the Company's long-term strategic plan is materially
changed or abandoned such that the maximum potential payout of incentive
compensation to Executive is substantially reduced. For purposes of this
Agreement, a "change in control" of the Company shall be deemed to have occurred
if (i) any "person" (within the meaning ascribed to such term in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as in
effect on the date of this Agreement) becomes the "beneficial owner" (as defined
in

- 6 -
<PAGE> 7
Rule 13d-3 promulgated under the Exchange Act, as in effect on the date of this
Agreement), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities; (ii) at any time less than a majority of the members of the Board of
Directors of the Company shall be persons who were either nominated for election
by the Board or were elected by the Board; (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.

20. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.

24. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

- 7 -
<PAGE> 8
25. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any of its provisions.

IN WITNESS WHEREOF, the Company and Executive have duly
executed and delivered this Agreement as of the day and year first above
written.

EXECUTIVE

By: /s/ John J. O'Connor
-------------------------------

Date: 12/7/93
-----------------------------

ASSOCIATED INSURANCE COMPANIES, INC.

By: /s/ L. Ben Lytle
-------------------------------

Name: L. Ben Lytle
-----------------------------

Title: President and Chief Executive Officer
-------------------------------------

Date: 1/17/94
-----------------------------

- 8 -

<PAGE> 1
EXHIBIT (c)(16)

SUMMONS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

CRANDON CAPITAL PARTNERS,
Plaintiff

vs.

L. BEN LYTLE, FRANK C. WITTHUN,
PATRICK M. SHERIDAN, JOHN C. ALPIN,
BIRCH E. BAYH, JOHN C. CRANE,
MITCHELL E. DANIELS, JR., CATHERINE CIVIL ACTION NO. 15719-NC
E. DOLAN, ERNIE GREEN, DUANE R.
HOUSER, THOMAS C. ROBERTS, WILLIAM SUMMONS
W. ROSENBLATT, JAMES B. STRADTNER,
MICHAEL L. SMITH, and ACORDIA INC.,
Defendants

TO THE SPECIAL PROCESS SERVER

YOU ARE COMMANDED:

To Summon the above named defendants so that, within 20 days after service
hereof upon defendants, exclusive of the day of service, defendants shall serve
upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O. Box 1070
Wilmington, DE 19899-1070 an answer to the complaint.

To serve upon defendants a copy hereof and of the complaint.

TO THE ABOVE NAMED DEFENDANTS:

In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above an
answer to the complaint, judgment by default will be rendered against you for
the relief demanded in the complaint.

Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------------
Register in Chancery

<PAGE> 2
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

TO THE SPECIAL PROCESS SERVER

YOU ARE COMMANDED:

To Summon the above named individual defendants by service pursuant to 10
Del.C. Sec. 3114 upon Acordia Inc., a Delaware corporation, by serving its
registered agent The Corporation Trust Company, which is designated for service
of process in Delaware, so that within the time required by law, such defendants
shall serve upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O.
Box 1070 Wilmington, DE 19899-1070 an answer to the complaint.

To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).

TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del.C. Sec.
3114*, to serve on plaintiff's attorney named above an answer to the complaint,
judgment by default may be rendered against you for the relief demanded in the
complaint.

Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------- --------------------------------------
Register in Chancery

*The text of 10 Del.C. Sec. 3114 is set out on the reverse of this Summons

<PAGE> 3
CIVIL ACTION NO. 15719-NC

CRANDON CAPITAL PARTNERS,
Plaintiff

vs.

L. BEN LYTLE, ET AL,
Defendant

SUMMONS

1. L. Ben Lytle
2. Frank C. Witthun
3. Patrick M. Sheridan
4. John C. Alpin
5. Birch E. Bayh
6. John C. Crane
7. Mitchell E. Daniels, Jr.
8. Catherine E. Dolan
9. Ernie Green
10. Dwane R. Houser
11. Thomas C. Roberts
12. William W. Rosenblatt
13. James B. Stradtner
14. Michael L. Smith

by serving the registered
agent for: Acordia Inc.

The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801

pursuant to 10 Del.C. section 3114

SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER

<PAGE> 4
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

- ----------------------------------------X
CRANDON CAPITAL PARTNERS, )
a Florida Partnership, )
Individually )
And On Behalf of All Others )
Similarly Situated, ) C.A. No. 15719-NC
)
Plaintiff, )
)
- against - )
) CLASS ACTION COMPLAINT
L. BEN LYTLE, FRANK C. WITTHUN, )
PATRICK M. SHERIDAN, JOHN C. )
ALPIN, BIRCH E. BAYH, JOHN C. )
CRANE, MITCHELL E. DANIELS, JR., )
CATHERINE E. DOLAN, ERNIE GREEN, )
DWANE E. HOUSER, THOMAS C. )
ROBERTS, WILLIAM W. ROSENBLATT, )
JAMES B. STRADTNER, MICHAEL L. )
SMITH, and ACORDIA INC., )
)
Defendants. )
- ----------------------------------------X

Plaintiff, by its attorneys, alleges upon personal knowledge as to its
own acts and upon information and belief as to all other matters, as follows:

NATURE OF THE ACTION

1. Plaintiff brings this action individually and as a class action
on behalf of all persons, other than defendants, who own the securities of
Acordia Inc. ("Acordia" or the "Company") and who are similarly situated (the
"Class"), for injunctive and other relief. Plaintiff seeks the injunctive
relief herein, inter alia, to enjoin the implementation of a proposed
transaction whereby Anthem Insurance Cos. ("Anthem"), which presently owns
<PAGE> 5
approximately 67% of Acordia's outstanding common stock, would buy all of the
outstanding common stock which it does not already own. Alternatively, in the
event that the proposed transaction is implemented, plaintiff seeks to recover
damages caused by the breach of fiduciary duties owed by the defendants.

2. The members of the board of directors who are also directors of
Anthem suffer from irreconcilable conflicts of interest between their fiduciary
duty to maximize value for Acordia's public shareholders and their selfish
interest to pay the lowest possible price. Because of the close personal and
business relationship between these members and other directors of Acordia, it
cannot be expected that any of Acordia's directors will be able to carry out
their fiduciary duties faithfully and impartially to ensure Acordia's public
shareholders are treated fairly and receive maximum value for their investment
in the Company.

3. The individual defendants are obligated to take all necessary
steps to ensure that Acordia's public shareholders will receive the maximum
value realizable for their shares, including implementation of a bidding
mechanism to foster a fair auction of the Company to the highest bidder or the
exploration of strategic alternatives which will return maximum value to
plaintiff and the class. Because of their conflicting interests, the individual
defendants will not fulfill their obligations since an auction or the
exploration of strategic alternatives would force Anthem to pay more for the
Company than they would otherwise be willing to pay.

<PAGE> 6

Parties

4. Plaintiff is and, at all relevant times, has been the owner of
shares of Acordia common stock.

5. Acordia is a holding company with subsidiaries that provide
insurance brokering, risk management consulting, managed health care
integration and administration, workers' compensation administration, and
underwriting. Acordia maintains its principal executive offices at 120 Monument
Circle, Indianapolis, Indiana 46204. Acordia has approximately 13,005,106
shares of common stock outstanding and hundreds of stockholders of record.
Anthem still owns 67% of the Company's stock. Acordia stock trades on the New
York Stock Exchange.

6. Anthem is a corporation duly organized and existing under the laws
of the State of Indiana. Anthem is a mutual insurance company and provider of
health insurance and managed health care services in Indiana, Kentucky, and
Ohio. Anthem maintains its principal executive offices at 120 Monument Circle,
Indianapolis, Indiana 46204.

7. Defendant L. Ben Lytle ("Lytle"), at all times material hereto, has
been Chairman of the Board and a director of Acordia. He served as the
Company's Chief Executive Officer until November 1996 and as President from
March 1993 to November 1994. He has served as President, Chief Executive
Officer, and a director of Anthem since March 1989. From February 1994 until
October 1995 he served as Chairman of the Board of Anthem. Lytle owns
approximately 1% of the outstanding shares of the Company. Lytle,

<PAGE> 7
among other things, serves a member of the Advisory Board of CID Equity
Partners, L.P. ("CID"), a director of IPALCO Enterprises, Inc. ("IPALCO") and
its subsidiary, Indianapolis Power & Light Company ("Indianapolis"), and Bank
One, N.A.

8. Defendant Frank C. Witthun ("Witthun"), at all times material
hereto, has been President, Chief Executive Officer, and a director of Acordia.

9. Defendant Patrick M. Sheridan ("Sheridan"), at all times material
hereto, has been a director of Acordia. From 1989 to August 1996 he served as
Executive Vice President and Chief Financial Officer of the Company. From 1987
until 1991 he served as the Treasurer of Anthem, and has served as Chief
Financial Officer and Executive Vice President of Anthem since 1987.

10. Defendant John C. Aplin ("Aplin"), at all times material hereto,
has been a director of Acordia. Aplin, among other things, is currently a
general partner of CID.

11. Defendant Birch E. Bayh ("Bayh"), at all times material hereto,
has been a director of Acordia.

12. Defendant John C. Crane ("Crane"), at all times material hereto,
has been a director of Acordia.

13. Defendant Mitchell E. Daniels, Jr. ("Daniels"), at all times
material hereto, has been a director of Acordia. Daniels is also a director of
IPALCO and Indianapolis.

14. Defendant Catherine E. Dolan ("Dolan"), at all times material
hereto, has been a director of Acordia.

<PAGE> 8
15. Defendant Ernie Green ("Green"), at all times material hereto, has
been a director of Acordia.

16. Defendant Dwane R. Houser ("Houser") has been a director of the
Company since September 1995. Houser has also been Chairman of the Board of
Anthem since October 1995.

17. Defendant Thomas C. Roberts ("Roberts"), at all times material
hereto, has been a director of Acordia.

18. Defendant William W. Rosenblatt ("Rosenblatt"), at all times
material hereto, has been a director of Acordia.

19. Defendant James B. Stradtner ("Stradtner"), at all times material
hereto, has been a director of Acordia.

20. Defendant Michael L. Smith ("Smith"), at all times material
hereto, has been a director of Acordia. Smith has been the Chief Operating and
Chief Financial Officer of American Health Network, an Anthem subsidiary, since
April 1996.

21. The defendants named in paragraphs 7 through 20 are hereinafter
referred to as the "Individual Defendants."

22. Because of their positions as officers/directors, defendants owe
fiduciary duties of loyalty and due care to plaintiff and the other members of
the Class.

CLASS ACTION ALLEGATIONS

23. Plaintiff brings this case in its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants,

5
<PAGE> 9
or any of the Company's principal stockholders, who will be threatened with
injury arising from defendants' actions as is described more fully below.

24. This action is properly maintainable as a class action.

25. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 3.7 million shares of common
stock. There are hundreds of record and beneficial stockholders.

26. There are questions of law and fact common to the Class including,
inter alia, whether:

a. defendants have breached and will continue to breach their
fiduciary and other common law duties owned by them to plaintiff and the
members of the Class; and

b. plaintiff and the other members of the Class would be
irreparably damaged by the wrongs complained of herein.

27. Plaintiff is committed to prosecuting the action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.

28. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for

6
<PAGE> 10
defendants, or adjudications with respect to individual members of the Class
which would as a practical matter be dispositive of the interests of the other
members not parties to the adjudications or substantially impair or impede
their ability to protect their interests.

29. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.

SUBSTANTIVE ALLEGATIONS

30. By the acts, transactions, and courses of conduct alleged herein,
defendants, in breach of their fiduciary duties, have not dealt fairly with the
plaintiff and the Class.

31. On May 21, 1997, The New York Times reported that the Company was
in discussions with Anthem about a reorganization of its health business,
including Anthem's acquisition of the 33% of Acordia it does not already own.
Anthem also announced that it was in discussions with a third party about a
sale of Acordia's brokerage business.

32. Previously, on February 7, 1997, The Wall Street Journal reported
that the Board of Directors had approved a "strategic review" of Acordia's
relationship with Anthem.

33. On June 2, 1997, Acordia and Anthem announced that they had agreed
to enter into a definitive merger agreement, whereby Anthem will acquire,
through a two step tender offer, all the outstanding shares of Acordia common
stock for $40 per share.

<PAGE> 11
The tender offer is subject to several conditions, including the tender and
nonwithdrawal of at least a majority of the then-outstanding Acordia shares not
owned by Anthem or its subsidiaries.

34. As set forth above, the directors of Acordia suffer from
conflicts of interest either because they are affiliated with Anthem or
maintain close business and personal relationships with the members of
Acordia's senior management. In these circumstances, the Individual Defendants
are not in a position to protect the interests of Acordia's public
shareholders, particularly in determining whether or not Acordia should be sold
at this time. A sale of the Company at this time could well deny Class members
their right to share proportionately in the true value of Acordia's valuable
assets, profitable business, and future growth in profits and earnings, while
usurping the same for the benefit for Anthem.

35. Additionally, defendants have not seriously considered other
potential purchasers of Acordia or its stock although the Anthem offer put the
Company into play in February 1997.

36. Defendants have violated fiduciary and other common law duties
owed to the plaintiff and the other members of the Class in that they have not
and are not exercising independent business judgment, and have acted and are
acting to the detriment of the Class.

37. As a result of defendants' action, plaintiff and the Class have
been and will be damaged by the breaches of fiduciary

<PAGE> 12
duty and, therefore, plaintiff and the Class will not receive the fair value
of Acordia's assets and businesses.

38. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the Class, and will succeed
in their plan to exclude plaintiff and the Class from the fair proportionate
share of Acordia's valuable assets and businesses, all to the irreparable harm
of the Class.

39. Plaintiff and the Class have no adequate remedy of law.

WHEREFORE, plaintiff prays for judgment and relief as follows:

a. declaring that this lawsuit is properly maintainable as a
class action and certifying plaintiff as representative of the Class;

b. declaring that the defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and the other members of the Class;

c. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;

d. in the event the transaction is consummated, rescinding it
and setting it aside;

e. awarding compensatory damages against defendants, jointly
and severally, in an amount to be determined at

9
<PAGE> 13
trial, together with prejudgment interest at the maximum rate allowable by law;

f. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and

g. granting such other and further relief as may be just and proper.

Dated: June 2, 1997

ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.

By: /s/ Harmon M. Monhait
--------------------------------
Suite 214 Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433

Attorneys for Plaintiff

Of Counsel:

WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400

<PAGE> 1
EXHIBIT (c)(17)

SUMMONS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

SHERRY LEVINSON, CIVIL ACTION NO. 15718-NC
Plaintiff

SUMMONS
VS.

ACORDIA, INC., BEN L. LYTLE,
PATRICK M. SHERIDAN, DWANE R.
HOUSER, FRANK C. WITTHUN, and
ANTHEM INSURANCE COMPANIES, INC.,
Defendants

TO THE SPECIAL PROCESS SERVER

YOU ARE COMMANDED:

To Summon the above named defendants so that, within 20 days after
service hereof upon defendants, exclusive of the day of service, defendants
shall serve upon Norman M. Monhait, Esq., plaintiff's attorney whose address is
P.O. Box 1070, Wilmington, DE 19899-1070 an answer to the complaint.

To serve upon defendants a copy hereof and of the complaint.

TO THE ABOVE NAMED DEFENDANTS:

In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above
an answer to the complaint, judgment by default will be rendered against you
for the relief demanded in the complaint.

Dated June 4, 1997 /s/ Duanne M. Kempski
----------------- -------------------------
Register in Chancery

<PAGE> 2
CIVIL ACTION NO. 15718-NC

SHERRY LEVINSON,

Plaintiff

VS.

ACORDIA, INC., ET AL,

Defendant

SUMMONS

Please effectuate service upon:

Acordia, Inc.
by serving its registered agent:

The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801

SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER

Norman M. Monhait, Esq.

Attorney for Plaintiff

<PAGE> 3
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

TO THE SPECIAL PROCESS SERVER

YOU ARE COMMANDED:

To Summon the above named individual defendants by service pursuant to
10 Del C. Sec. 3114 upon Acordia, Inc., a Delaware corporation, by serving its
registered agent The Corporation Trust Company, which is designated for service
of process in Delaware, so that within the time required by law, such
defendants shall serve upon Norman M. Monhait, Esq., plaintiff's attorney whose
address is P.O. Box 1070 Wilmington, DE 19899-1070 an answer to the complaint.

To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).

TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del.C.
Sec. 3114*, to serve on plaintiff's attorney named above an answer to the
complaint, judgment by default may be rendered against you for the relief
demanded in the complaint.

Dated June 4, 1997 /s/ Dianne M. Kempski
------------------------ ------------------------------
Register in Chancery

*The text of 10 Del C. Sec. 3114 is set out on the reverse of this Summons

<PAGE> 4
CIVIL ACTION NO. 15718-NC

SHERRY LEVINSON,

Plaintiff

VS.

ACORDIA, INC., ET AL,

Defendant

SUMMONS

1. Ben L. Lytle
2. Patrick M. Sheridan
3. Dwane R. Houser
4. Frank C. Witthun

by serving the registered
agent for: Acordia, Inc.:

The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801

pursuant to 10 Del.C. Section 3114
------

SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER
<PAGE> 5

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY

SHERRY LEVINSON, on behalf of herself and
all others similarly situated,
C.A. No. 15718NC
Plaintiff.

-against- CLASS ACTION
COMPLAINT
ACORDIA, INC., BEN L. LYTLE, PATRICK
M. SHERIDAN, DWANE R. HOUSER,
FRANK C. WITTHUN and ANTHEM
INSURANCE COMPANIES, INC.

Defendants.

Plaintiff, by her attorneys, alleges upon information and belief,
except as to paragraph 1 which plaintiff alleges upon knowledge, as follows:

1. Plaintiff Sherry Levinson is and was, at all times relevant to this
action, a stockholder of defendant Acordia Inc. ("Acordia" or the "Company")

2. Defendant Acordia is a corporation duly organized and existing
under the laws of the state of Delaware, with its principal offices located at
120 Monument Circle, Indianapolis, Indiana. There are currently approximately
over 13 million shares of Acordia common stock outstanding held by more than
450 stockholders. Acordia is a holding company with subsidiaries which provide
insurance brokerage, risk management consulting, managed health care
integration and administration, workers' compensation
<PAGE> 6
administration, underwriting management and employee benefits consulting
services to government, not-for-profit and private sector employers, groups,
trusts and associations, as well as to individual consumers.

3. Defendant Anthem Insurance Companies Inc. ("Anthem") is a
corporation duly organized and existing under the laws of the State of Indiana
with its principal office located at 120 Monument Circle, Indianapolis,
Indiana, the same address as Acordia. Anthem is a mutually owned insurer and
health insurance provider. Anthem currently owns approximately 67% of Acordia's
outstanding stock.

4. Defendant Ben L. Lytle ("Lytle"), at all times relevant hereto, held
the positions of Chairman of the Board of Acordia and President and Chief
Executive Officer of Anthem.

5. Defendant Patrick M. Sheridan ("Sheridan"), at all relevant times
hereto has been a director of the Company. From 1989 until August 1996, he
served as Executive Vice President and Chief Financial Officer of the Company.
He served as the Treasurer of Anthem from 1987 to 1991, and has served as Chief
Financial Officer and Executive Vice President of Anthem since 1987.

6. Defendant Dwane R. Houser ("Houser") at all relevant times hereto,
has been a director of the Company since September 1995. He has served as
Chairman of the Board of Anthem since October 1995.

7. Defendant Frank C. Witthun ("Witthun"), at all times relevant
hereto, held the positions of President and Chief Executive Officer of Acordia.
<PAGE> 7
8. Defendants Lytle, Sheridan, Houser and Witthun are and were, at all
times relevant hereto, members of the boards of directors of Acordia. they are
sometimes referred to herein as the "Individual Defendants".

9. The Individual Defendants and Anthem as officers, directors and/or
controlling stockholders of Acordia, have a fiduciary relationship and
responsibility to plaintiff and other common public stockholders of Acordia and
owe to plaintiff and the other class members the highest obligations of good
faith, loyalty, fair dealing, due care and candor.

CLASS ACTION ALLEGATIONS

10. Plaintiff brings this action pursuant to Rule 23 of the Rules of
the Court of Chancery on behalf of herself and all other stockholders of the
Company (except defendant and any person, firm, trust, corporation, or other
entity related to or affiliated with any defendant), who are or will be
adversely affected by the conduct of the defendants as more fully described
herein (the "Class").

11. This action is properly maintainable as a class action for the
following reasons:

(a) The Class is so numerous that joinder of all members is
impracticable. As of March 1, 1997, Acordia had approximately 13 million shares
of common stock outstanding held by more than 450 stockholders;
<PAGE> 8
(b) The members of the Class are scattered throughout the United
States and are so numerous as to make it impracticable to bring them all before
this Court;

i. whether defendants are breaching their fiduciary duties
owed by them to plaintiff and members of the class and/or have aided and
abetted in such breach, by virtue of their participation and/or acquiescence
and by their other conduct complained of herein;

ii. whether defendants are breaching their fiduciary
obligations to plaintiff and members of the class by failing and refusing to
attempt in good faith to maximize stockholder value;

iii. whether defendants have wrongfully failed and refused
to seek a purchaser of Acordia and/or any and all of its various assets or
divisions at the best price obtainable; and

iv. whether plaintiff and the other members of the Class
will be irreparably damaged by defendants' wrongful conduct alleged herein and
if so, what is the proper remedy and/or measure of damages.

(d) The claims of plaintiff are typical of the claims of the Class
in that all members of the Class will be damaged by defendants' actions.

<PAGE> 9
(e) Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature.
Plaintiff is an adequate representative of the Class.

(f) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or varying
adjudications with respect to individual members of the Class.

(g) Defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate injunctive relief
and/or corresponding declaratory relief with respect to the Class as a whole.

CLAIM FOR RELIEF

12. On May 20, 1997, Dow Jones Newswire reported that Acordia and
Anthem were discussing a possible reorganization of Acordia's health business.
Acordia announced that the reorganization may include Anthem's acquisition of
the publicly owned shares of Acordia it does not already own.

13. On or about June 2, 1997, Acordia and Anthem, announced that,
as a result of their previously announced strategic reviews, the two companies
had entered into a definitive merger agreement. The merger agreement provides
that, subject to the satisfaction of various conditions. Anthem will acquire
all of the outstanding common stock of Acordia at a price per share of $40.00.
The agreement was approved

<PAGE> 10
unanimously by a special committee of Acordia's outside directors. Anthem
currently owns 66.8% of Acordia's outstanding common stock.

14. As part of the proposed transactions, Anthem and a wholly owned
subsidiary will make a tender offer, which is expected to commence no later than
June 6, 1997, for all of the outstanding shares of Acordia's common stock not
already owned by Anthem at a price per share of $40.00. The tender offer is
subject to several conditions, including the tender and nonwithdrawal of at
least a majority of the then issued and outstanding Acordia shares owned by
persons other than Anthem, its subsidiaries or any of its officers and
directors. Under the terms of the merger agreement, after completion of the
tender offer, all then remaining shares of Acordia common stock not owned by
Anthem will be subsequently acquired in a cash merger of Acordia and an Anthem
subsidiary at the tender offer price of $40.00 per share.

15. As set forth above, Anthem already owns 67% of the outstanding
common stock of Acordia. The loyalties of the Individual Defendants, especially
Lytle, Sheridan and Houser who are directors and/or officers of Anthem are, at
best, divided in the instant transaction. The Individual Defendants are beholden
to Anthem, the majority owner of Acordia, and can not be expected to act in the
best interest of Acordia's minority stockholders.

16. The purpose of the proposed transaction is to enable Anthem to
acquire the remaining shares of Acordia it does not already own and to acquire
Acordia's valuable assets for Anthem's own benefit at the expense of Acordia's
public stockholders.

<PAGE> 11
17. The proposed acquisition comes at a time when Acordia has
performed well and Anthem expects it will continue to perform well because it
is already poised to do so. Anthem and the Individual Defendants have timed
this transaction to capture Acordia's positive performance and use it to their
own ends, without paying an adequate or fair price for Acordia's remaining
shares.

18. Defendant Anthem and the Individual Defendants in particular,
are in a position of control and power over the Acordia minority stockholders
and have access to internal financial information about Acordia, its true
value, expected increase in true value and the benefits to Anthem of 100%
ownership of Acordia to which plaintiff and the Class members are not privy.
Defendants are using their positions of power and control to benefit Anthem in
this transaction, to the detriment of the Acordia common stockholders.

19. The Individual Defendants have clear and material conflicts of
interest and are acting to better the interests of Anthem at the expense of
Acordia's public stockholders.

20. Defendants have breached their fiduciary and other common law
duties owed to plaintiff and other members of the Class in that they have not
and are not exercising independent business judgment and have acted and are
acting to the detriment of the Class in order to benefit themselves. Any
contemplated transaction is not the product of arm's length negotiations and is
not based upon any independent evaluation of the current value of Acordia's
common stock, assets or business.

7
<PAGE> 12
21. Defendants have failed and refused to take those steps necessary to
ensure that the Company's stockholders will receive maximum value of their
shares of Acordia stock. Defendants have thus far failed to announce any active
auction or open bidding procedures best calculated to maximize shareholder value
in selling the Company. As a result, defendants are acting to put their own
interests ahead of the public stockholders, all at the expense and to the
detriment of the Company's public stockholders.

22. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme in breach of
their fiduciary duties and obligations, are attempting unfairly to deprive
plaintiff and the other members of the Class of their investment in Acordia, all
to the detriment of the Company and its stockholders. Defendants have been
engaged in a wrongful effort to further their own personal interests.

23. By virtue of the acts and conduct alleged herein, defendants, who
control the actions of the Company, have carried out a preconceived plan and
scheme to place their own personal interests ahead of the interests of Acordia's
public stockholders. Defendants have violated their fiduciary duties owed to
plaintiff and the Class in that they have not and are not exercising independent
business judgment and have acted and are acting to the detriment of the
Acordia's public stockholders for their own personal benefit.

<PAGE> 13
24. Defendants have breached their fiduciary duties by reason of
the acts and transactions complained of herein, including their apparent
decision to effect a transaction without making an effort to obtain the best
offer possible and by affirmatively attempting to prevent a better offer.

25. As a result of the actions of defendants, plaintiff and the
other members of the Class have been and will be damaged in that they have not
and will not receive their fair proportion of the value of Acordia's assets and
businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their shares of Acordia's common stock.

26. Plaintiff seeks preliminary and permanent injunctive relief and
declaratory relief preventing defendants from inequitably and unlawfully
depriving plaintiff and the Class of their right to realize a full and fair
value for their stock at a substantial premium over the market price, and to
compel defendants to carry out their fiduciary duties to maximize shareholder
value in selling Acordia.

27. Unless enjoined by the Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of the
Class, and will consummate the sale of Acordia at an inadequate and unfair
price, or upon inequitable terms, all to the irreparable harm of plaintiff and
the other members of the Class.

28. Plaintiff and the Class have no adequate remedy at law.

WHEREFORE, plaintiff demands judgment as follows:

9
<PAGE> 14
A. Declaring this to be a proper class action and certifying plaintiff
as representative of the Class:

B. Preliminarily and permanently enjoining Anthem from acquiring the
outstanding shares of Acordia not already owned by Anthem:

C. Ordering defendants to carry out their fiduciary duties to
plaintiff and the other members of the Class by announcing their intention to:

(1) cooperate fully with any person or entity, having a bona
fide interest in proposing any transaction which would maximize shareholder
value, including, but not limited to, a buyout or takeover of the Company;

(2) undertake an appropriate evaluation of Acordia's worth as
a merger/acquisition candidate;

(3) take all appropriate steps to enhance Acordia's value and
attractiveness as a merger/acquisition candidate;

(4) take all appropriate steps to effectively expose Acordia to
the marketplace in an effort to create as active auction of Acordia;

(5) act independently so that the interests of Acordia's
public stockholders will be protected; and

(6) adequately ensure that no conflicts of interest exist
between the Individual Defendants' own interest and their fiduciary obligation
to maximize stockholder value or, if such conflicts exist, to ensure that all
conflicts are resolved in the best interest of Acordia's public stockholders;

10
<PAGE> 15
D. Ordering the Individual Defendants, jointly and severally to
account to plaintiff and the Class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;

E. Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts' fees;
and

F. Granting such other further relief as may be just and proper.

ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.

BY: /s/ Norman M. Monhait
-------------------------------------
919 North Market Street
Mellon Bank Center, Suite 1401
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff

OF COUNSEL:

ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700

FARUQI & FARUQI, L.L.P.
415 Madison Avenue
New York, New York 10017
(212) 986-1074