A.M. Best Rating 2007

RATING UPGRADE

A.M. Best Company has improved the financial strength rating of QCA Health Plan, Inc., d.b.a. QualChoice to B (Fair) and has improved the issuer credit rating to BB+. They have also assigned a ratings outlook, which indicates the potential direction of a company’s rating, of “Stable”. The company’s prior financial strength rating was C++(Marginal).

The objective of Best’s rating system is to provide an opinion of an insurer’s financial strength and ability to meet ongoing obligations to policyholders. The assigned rating is derived from an in-depth evaluation of a company’s balance sheet strength, operating performance and business profile as compared to Best’s quantitative and qualitative standards. An important component of the evaluation process requires an interactive exchange of information with the insurance company’s management.

RATING RATIONAL

These new ratings reflect the company’s increased capital position, stable and favorable underwriting results, good managed care market position, and significant projected administrative savings. The company’s adjusted capital improved dramatically in 2006. During 2006 QualChoice completed an exchange of its surplus notes and accumulated interest for preferred stock. Continuing favorable operating performance over the past four years has also increased the company’s risk-based capital. Best’s Capital Adequacy Ratio (BCAR) has risen significantly to 90%. In 2005 the company’s BCAR stood at 30%.

QCA is the second largest managed care health plan in the State of Arkansas. The company has continued its strategy of focusing on underwriting performance rather than market share growth. The company has improved its provider network by adding a major hospital in the Central Arkansas region in 2005, and has redesigned its product portfolio, along with underwriting and sales strategies in 2006, which should increase sales and profitability in the medium term.

COMPANY OUTLOOK

Our strategy of diligent underwriting and adequate pricing has proven successful and allowed QualChoice to achieve stable positive operating results. We are pleased that this strategy has led to the improved ratings results from A.M. Best. We will continue to follow the success factors that have worked for us in the past. Our focus will be to leverage this success and grow our membership levels. Key operational elements that are considered cornerstones of anticipated continuing success are our QCARE program, a state of the art population health management system, our new benefit plan designs, an expanded sales force, and leading edge technology resources. These elements combine to make QualChoice an excellent choice to serve employers’ health plan needs throughout the state.