UNIVERSAL AMERICAN FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. BUSINESS SEGMENT INFORMATION:

Currently, the Company manages its business, with primary emphasis on its distribution channels, through four operating segments, Senior Market Brokerage, Career Agency, Special Markets and Administrative Services and also maintains a Corporate segment.

Senior Market Brokerage - This distribution channel consists of a general agency system and insurance brokerage system that focus on the sale of products in the senior market segment, including Medicare Supplement, long term care, final expense life insurance and annuities.

Career Agency - The Career Agency Segment was acquired in the 1999 Acquisition in July 1999 and comprises the operations of Pennsylvania Life and PennCorp Life of Canada. PennCorp Life of Canada operates exclusively in Canada, while Pennsylvania Life operates in both the U.S. ("Pennsylvania Life U.S.") and Canada. The Career Agency segment is comprised of a career agency field force, which distributes fixed benefit accident and sickness, life insurance and supplemental senior health insurance in the United States and Canada. The Career Agents are under exclusive contract with Pennsylvania Life and PennCorp Life of Canada.

Special Markets - Through its own operating history and through prior acquisitions, Universal American has accumulated various lines of business that it manages in its Special Markets segments. These products include traditional, interest-sensitive and group life insurance, individual medical and other accident and health insurance.

Administrative Services - In connection with the acquisition of AIAG and CHCS, Universal American has increased its efforts on the development of the Administrative Services segment. The primary services are to act as a third party administrator and service provider on various senior supplemental health insurance products offered by both affiliated and unaffiliated insurance companies. Services performed include policy underwriting, telephone verification, policy-holder services, claims adjudication, clinical case management, care assessment and referral to healthcare facilities.

Corporate - This segment includes the corporate activities of the holding company, including interest on debt. This segment also includes the elimination of intersegment revenues and expenses that are reported gross in each of the operating segments. These eliminations affect the amounts reported on the individual financial statement line items, but do not change operating income before taxes. The significant items eliminated include intersegment revenue and expense relating to services performed by the Administrative Services segment for the Career Agency, Senior Market Brokerage and Special Market segments and interest on notes issued by the Corporate segment to the other operating segments.

Financial data by segment for the three years ended December 31, 2000 is as follows: 

                                                December 31, 2000
                                     Senior
                           Career    Market   Special  Administrative
                           Agents Brokerage   Markets        Services    Corporate    Total 
                                                  (In thousands)
Net premiums and 
   policyholder fees
   earned - Life 
   and Annuity          $  17,258 $   3,669 $  12,773     $        -  $       -  $    33,700
Net premiums and 
   policyholder fees 
   earned - Health        112,100    48,451    25,502              -          -      186,053 
   Net premiums           129,358    52,120    38,275              -          -      219,753
Net investment income      31,714    11,391    14,704             77       (941)      56,945
Realized gains (losses)       147       201      (202)             -          -          146
Fee and other income          647         3       332         24,130    (17,865)       7,247 

   Total revenues         161,866    63,715    53,109         24,207    (18,806)     284,091 

Policyholder benefits      81,432    40,656    31,831              -          -      153,919
Interest credited 
   to policyholders         1,657     4,996     3,477              -          -       10,130
Change in deferred 
   acquisition costs      (12,476)   (5,015)    1,566              -          -      (15,925)
Amortization of present 
   value of future 
   profits and goodwill      (584)      183       230          2,920          -        2,749
Commissions and general 
   expenses                62,264    17,203    11,417         17,443     (8,175)     100,152 
   Total benefits, 
      claims and other
      deductions          132,293    58,023    48,521         20,363     (8,175)     251,025 

Operating income before
   taxes                $  29,573 $   5,692 $   4,588     $    3,844  $ (10,631) $    33,066 

ASSETS                                                                
Deferred policy 
   acquisition costs    $  15,335 $  25,507 $   7,738     $        -  $      71  $    48,651
Goodwill                   (1,944)    4,047         -          2,665      1,944        6,712
Present value 
   of future profits            -       324       644          4,835          -        5,802
Other assets              536,332   328,913   270,317         13,856    (20,917)   1,128,699 

Total assets            $ 549,723 $ 358,791 $ 278,699     $   21,356  $ (18,704) $ 1,189,864 


                                                December 31, 1999 (restated)
                                      Senior
                           Career     Market   Special    Administrative
                           Agents  Brokerage   Markets        Services    Corporate    Total 
                                                  (In thousands)
Net premiums and
   policyholder fees 
   earned - Life and 
   Annuity              $   7,198 $   1,068 $   9,325     $        -  $       -  $    17,591
Net premiums and 
   policyholder
   fees earned - 
   Health                  48,365    31,574    17,947              -          -       97,886 
   Net premiums            55,563    32,642    27,272              -          -      115,477
Net investment income      12,133     9,422     8,662              -       (904)      29,313
Realized gains                 81       (81)     (241)             -          -         (241)
Fee and other income          228        41       246          9,290     (6,218)       3,587 
   Total revenues          68,005    42,024    35,939          9,290     (7,122)     148,136 

Policyholder benefits      30,396    23,643    19,216              -          -       73,255
Interest credited to
   policyholders              437     5,550     2,681              -          -        8,668
Change in deferred 
   acquisition costs       (2,919)   (3,722)      412              -          -       (6,229)
Amortization of 
   present value of
   future profits and 
   goodwill                  (427)      183       314              -          -           70
Commissions and 
   general expenses        28,239    12,580     8,939          7,254       (696)      56,316 
   Total benefits, 
      claims and 
      other deductions     55,726    38,234    31,562          7,254       (696)     132,080 

Operating income before 
   taxes                $  12,279 $   3,790 $   4,377     $    2,036  $  (6,426) $    16,056 

ASSETS
Deferred policy 
   acquisition costs    $   2,944 $  21,879 $  10,120     $        -  $       -  $    34,943
Goodwill                        -     4,201         -              -          -        4,201
Present value of future 
   profits                      -       370       856              -          -        1,226
Other assets              508,785   314,212   287,073          6,122     (3,141)   1,113,051 

Total assets            $ 511,729 $ 340,662 $ 298,049     $    6,122  $  (3,141) $ 1,153,421 


                                                December 31, 1998 (restated)
                                     Senior
                           Career    Market   Special   Administrative
                           Agents  Brokerage   Markets        Services   Corporate     Total 
                                                  (In thousands)
Net premiums and 
   policyholder fees 
   earned - Life and 
   Annuity              $       - $   1,738 $   6,485     $        -  $       -  $     8,223
Net premiums and 
   policyholder fees 
   earned - Health              -    20,069    14,204              -          -       34,273 
   Net premiums                 -    21,807    20,689              -          -       42,496
Net investment income           -     8,166     3,125              -       (570)      10,721
Realized gains                  -     2,580    (2,324)             -          -          256
Fee and other income            -         -       238          8,700     (6,322)       2,616 
   Total revenues               -    32,553    21,728          8,700     (6,892)      56,089 

Policyholder benefits           -    16,589    14,405              -          -       30,994
Interest credited to 
   policyholders                -     5,458     1,782              -          -        7,240
Change in deferred 
   acquisition costs            -    (3,783)      253              -          -       (3,530)
Amortization of 
   present value of
   future profits and
   goodwill                     -       200       145              -          -          345
Commissions and
   general expenses             -     9,425     6,352          6,720     (5,389)      17,108 
   Total benefits, 
   claims and
   other deductions             -    27,889    22,937          6,720     (5,389)      52,157 

Operating income before 
   taxes                $       - $   4,664 $  (1,209)    $    1,980  $  (1,503) $     3,932 

ASSETS
Deferred policy 
   acquisition costs    $       - $  15,109 $   9,174     $        -  $       -  $    24,283
Goodwill                        -     4,354         -              -          -        4,354
Present value of future 
   profits                      -       415     1,154              -          -        1,569
Other assets                    -   181,340    78,249          4,644    (11,137)     253,096 

Total assets            $       - $ 201,218 $  88,577     $    4,644  $ (11,137) $   283,302