UNITED AMERICAN  McKinney, Texas United American, our health insurance company, is another excellent example of a company that has capitalized on a niche market, that of selling supplemental health insurance to individuals. It too was started mid-twentieth century by an opportunistic, young entrepreneur, Casey Dunlap, just returned from WWII. The company began selling health insurance to individuals using a megaphone to attract customers on the squares of Texas towns. When Medicare was signed into law in 1966, the company made a decision to focus its attention on the senior market, and the Medicare supplement policy was born. By 1981, the company was nationally recognized as a preeminent writer of Medicare supplements. In 1982, United American was acquired by Torchmark. New management from Torchmark recognized the strength of UA’s marketing expertise, and immediately focused on bringing the company into the computer age. They knew that continued growth would require cost cutting and streamlined procedures if economies of scale were to be realized and the company’s hard won reputation of top-notch customer service was to be maintained. By the mid ‘80s, the company had implemented the first national computer-to-computer claims system that brought Medicare claims directly from Medicare administrators to UA, thus eliminating the onerous paper claim filing by policyholders required by most health insurers. Today, United American is known to be one of the most cost-efficient Medicare supplement insurers. Annually, we process over 9 million claim transactions that result in over 3 million claim checks being issued. We receive about 1.4 million telephone calls from customers of which 98% are answered within the first 30 seconds. We provide websites for In addition, there are stringent limits on commissions paid to agents as well as exhaustive reporting to regulators. Further, as with many other types of health insurance, annual rate increases, which are required to keep pace with changes in the Medicare program and with inflation, require regulatory approval. As a result, all of these regulatory requirements have inhibited many insurers from entering, or staying in the business. Without strong financial underpinnings, strict expense control to maintain an underwriting profit and a discipline to obtain timely rate increases, insurers are not long successful in the Medicare supplement market. We have profitably remained one of the leaders in the individual Medicare supplement market for over 30 years, while many supplement insurance is limited to several standardized benefit plans, and premium rates must meet a 65% loss ratio minimum, meaning that out of every $1.00 of premium collected, $.65 must be paid out in claims benefits. Because of the widely held perception that senior-aged consumers require higher levels of consumer protections than other customers, regulation by both federal and state governments is higher than for other life or health insurance. For example, Medicare United American’s senior-age niche market is defined less by affinity and more by regulation. both our customers and their health care providers to get pertinent information about claims status and other data. We have arranged for a prescription drug discount service that gives our policyholders discounts, on average, of over 25% on most of their prescriptions. Most remarkably, we provide state-of- the-art customer service at the cost of only 5% of premium, about half that of other companies. We have remained one of the leaders in the individual Medicare supplement market for over 30 years.  Torchmark Corporation • About Torchmark 8