<PAGE>

                     ASSUMPTION AND ADMINISTRATION AGREEMENT


                                  By and Among
                       Wellmark Community Insurance, Inc.
                               An Iowa Corporation


                                       as
                                 Ceding Company


                                       and


                                 Wellmark, Inc.,
                               An Iowa Corporation


                                       and


                  BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
                             a Wisconsin Corporation


                                       and


                       UNITED WISCONSIN INSURANCE COMPANY


                                       as
                                Assuming Company

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SCHEDULES

I.B.       Assumed Policies

XVI.B.     Madison, Wisconsin Employees

XVI.C.     Madison, Wisconsin Office Equipment

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                     ASSUMPTION AND ADMINISTRATION AGREEMENT

           This Assumption and Administration Agreement ("Agreement") is made as
of this 27th day of April 2000, by and between Wellmark, Inc., an Iowa
corporation, ("Wellmark"), Wellmark Community Insurance, Inc., an Iowa
corporation, (the "Ceding Company"), with their corporate offices at 636 Grand
Avenue, Des Moines, Iowa 50309 and Blue Cross & Blue Shield United of Wisconsin,
a Wisconsin insurance corporation, and United Wisconsin Insurance Company
(collectively referred to herein as the "Assuming Company"), with their
corporate offices at 401 West Michigan Street, Milwaukee, Wisconsin 53203.

                                    RECITALS

           WHEREAS, the Ceding Company writes health and dental insurance
products in Wisconsin (the "Assumed Policies" as defined further hereinafter);

           WHEREAS, the Ceding Company desires to cede the liability for one
hundred percent (100%) of the losses and other liabilities arising under the
Assumed Policies, on and following June 1, 2000, (the "Effective Date"), to the
Assuming Company; and

           WHEREAS, Blue Cross & Blue Shield United of Wisconsin desires to
assume the Ceding Company's liabilities under the Assumed Policies, other than
Medicare Supplement Insurance Policies, which United Wisconsin Insurance Company
desires to assume, on and after the Effective Date.

           NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

                                    AGREEMENT

                               I.  BUSINESS COVERED

           A.  Subject to the terms, conditions, and limitations set forth
herein, the Assuming Company agrees to assume, reinsure and indemnify the Ceding
Company for one hundred percent (100%) of each Loss Incurred and all other
liabilities arising under the Assumed Policies on or after the Effective Date
("Covered Loss"). The Ceding Company shall be solely liable for any Loss
Incurred prior to the Effective Date.

           B.  The term "Assumed Policies" shall mean all policies, contracts,
certificates, and other obligations of health and dental insurance, which are or
were issued by the Ceding Company in Wisconsin, and which are in force as of the
Effective Date, including the following:


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<PAGE>

                      1.  Group health and dental insurance policies
                          issued to the Wisconsin Farm Bureau Federation,
                          including the Master Policy/Agreement effective
                          February 1, 1995.

                      2.  Group health insurance policies covering
                          members of the Rural Mutual home office,
                          agents, and board of directors groups.

                      3.  Small employer group health and dental
                          insurance policies.

                      4.  Conversion policies issued under the above.

                      5.  Individual plans reported under the Wisconsin
                          Farm Bureau Member Health Plan.

                      6.  Medicare Supplement insurance policies.

           C.  The Assuming Company shall be responsible for the following
liabilities, all of which are solely attributable to premium earned under the
Assumed Policies after the Effective Date: (1) liability for premium taxes; (2)
liability for assessments in connection with the participation by the Ceding
Company or the Assuming Company, whether voluntary or involuntary, in any
guaranty fund, insolvency fund, plan, pool, association or other similar fund or
association; (3) liability for returns, collection, or refunds of premium; and
(4) liability for all commissions (together, "Ancillary Liabilities"). To the
extent that the Ceding Company incurs any Ancillary Liabilities, the Assuming
Company shall reimburse it for the same.

           D.  A loss is deemed incurred ("Loss Incurred") at the time and date
of the provision of medical services and/or the incurrence of an expense arising
from a covered service under an Assumed Policy.

                       II.  CLOSING DATE, EFFECTIVE DATE,
                        AND ADMINISTRATION TRANSFER DATE

           The Assuming Company shall assume the financial obligations for all
the Assumed Policies at 12:01 a.m., Central Time, on June 1, 2000, the Effective
Date. The Assuming Company shall assume the administration of the Assumed
Policies on August 1, 2000, or on such later date as the parties mutually agree
is reasonable and necessary to assure an orderly transition of the business with
the least customer disruption possible, provided that the parties will use
mutual best efforts to transfer administration by no later than October 1, 2000
(the "Administration Transfer Date"). On April 27, 2000, (the "Closing Date"),
this Agreement shall be executed by the parties and shall continue in effect
until terminated (i) by the mutual agreement of the parties hereto; (ii) by
either party hereto upon the failure of the other party to cure any material
breach hereof within fifteen (15) days following written notice given as
provided in Paragraph I of Article XVIII hereof; or (iii) upon the insolvency of
either party hereto, subject in all events to Article XIV hereof (the
"Termination Date"). Following the


                                       2

<PAGE>

Termination Date, the Ceding Company shall remain liable for any Loss
Incurred during the term of this Agreement.

                                 III.  TERRITORY

           This Agreement applies to all the Assumed Policies set forth on
Schedule I.B. issued by the Ceding Company in Wisconsin and in force as of the
Effective Date.

                                IV.  CONSIDERATION

           As consideration for the Assignment of the Assumed Policies, Assuming
Company shall pay Ceding Company the following sums by confirmed wire transfer
of immediately available funds:

           A.  One Million ($1,000,000) Dollars on the Closing Date;

           B.  One Million ($1,000,000) Dollars ("Contingent Payment")
upon the satisfaction of each of the following conditions:

                      1.  The Medical Loss Ratio on the Assumed Policies
                          ("MLR") as calculated in accordance with
                          paragraph D of this Article on the first
                          anniversary of the Effective Date must be less
                          than ninety percent (90%); and

                      2.  Not less than eighty percent (80%) of the
                          members enrolled under the Assumed Policies as
                          of the Effective Date are enrolled under the
                          Assumed Policies or other policies issued by
                          the Assuming Company and in force on the first
                          anniversary of the Effective Date.

           Provided, however, if the condition specified in paragraph B.1. above
is satisfied but the condition specified in paragraph B.2. is not satisfied, the
Contingent Payment shall be prorated based upon the percentage of the measure
specified in B.2 that has been achieved. For example, if the condition specified
in Section IV.B.1. is met but only sixty percent (60%) of the members are
enrolled under the Assumed Policies or other policies issued by the Assuming
Company at that time, the Ceding Company shall be entitled to seventy-five
percent (75%) of the Contingent Payment ($750,000).

           C.  In the event that the MLR is ninety percent (90%) or greater on
the first anniversary of the Effective Date, the Contingent Payment will be paid
on the second anniversary of the Effective Date upon the satisfaction of each of
the following conditions:

                      1.  The MLR for the Assumed Policies for the
                          twenty-four months from the Effective Date is
                          less than ninety percent (90%); and

                      2.  Not less than eighty percent (80%) of the
                          members enrolled under the Assumed Policies as
                          of the Effective Date are enrolled under the


                                       3

<PAGE>

                          Assumed Policies or other policies issued by
                          the Assuming Company and in force on the second
                          anniversary of the Effective Date.

           Provided, however, if the condition specified in paragraph C.1. above
is satisfied but the condition specified in paragraph C.2. is not satisfied, the
Contingent Payment shall be prorated based upon the percentage of the measure
specified in C.2 that has been achieved. For example, if Section IV.C. is
applicable and the condition specified in Section IV.C.1. is met but only sixty
percent (60%) of the members are enrolled under the Assumed Policies or other
policies issued by the Assuming Company at that time, the Ceding Company shall
be entitled to seventy-five percent (75%) of the Contingent Payment ($750,000).

           D.  Calculation of the MLR shall take place 120 days after the fiscal
year end of the Effective Date, using premium earned from June 1, 2000, through
May 31, 2001, ("Earned Premium") and claims incurred between June 1, 2000, and
May 31, 2001, and settled between June 1, 2000, and September 30, 2001, (a 120
day run-out period) ("Incurred Claims"). The MLR is equal to the dollar amount
of the Incurred Claims divided by the dollar amount of the Earned Premium.
Claims incurred after May 31, 2001, and settled before September 30, 2001, will
not be included in the calculation. Payment of the Contingent Payment for the
first year, if applicable, shall be made as soon as reasonably possible after
the calculation of the MLR, but no later than November 30, 2001. If Section
IV.C. is applicable, the MLR will be calculated based on premium earned from
June 1, 2000, through May 31, 2002, and claims incurred between June 1, 2000,
and May 31, 2002, and settled between June 1, 2000, and September 30, 2002.
Payment of the Contingent Payment after the second anniversary of the Effective
Date, if applicable, shall be made as soon as reasonably possible after the
calculation of the MLR, but no later than November 30, 2002. Assuming Company
and UWIC shall maintain records of the Assumed Policies in such a manner as to
perform the MLR calculations and to measure enrollment as provided in Section
IV.C.2. and shall provide Ceding Company with all calculations of MLR and the
detail, assumptions, reports and all other materials used to prepare such
calculation and measure enrollment. Ceding Company shall have upon reasonable
notice the right to review and examine records reasonably related to such
calculations. Any dispute among the parties in regard to this Article shall be
resolved in the manner prescribed by Article IX of this Agreement.

                             V.  PREMIUM AND REVENUE

           A.  As consideration for the assumption hereunder, the Ceding Company
shall pay the Assuming Company cash equal to the unearned premium reserves and
premium paid in advance for the Assumed Policies as of the Effective Date (the
"Premium"). Ceding Company shall also transfer accounts receivable relating to
the Assumed Polices and cash not yet reconciled to a specific account related to
the Assumed Policies for the period after 12/31/1999. If an accounts receivable
transferred related to the period prior to the Effective Date is deemed
uncollectable, the Ceding Company will reimburse the Assuming Company for such
write off. The Assuming Company shall also be entitled to any premium earned for
the Assumed Policies which relates to time periods following the Effective Date
("Post-Effective Date Premium"). In the event that the Ceding Company collects
or receives any Post-


                                       4

<PAGE>

Effective Date Premium, the Ceding Company shall remit such premium to the
Assuming Company in the mutually agreed upon schedule. During the period of
time between the Effective Date and the Administration Transfer Date, Ceding
Company will continue to bill and collect Post-Effective Date Premium in the
ordinary course and will regularly transfer the collected funds to an account
designated by Assuming Company. The Assuming Company will reimburse the
Ceding Company for any commissions paid prior to the Effective Date which
relate to Post-Effective Date Premiums.

           B.  Ceding Company shall provide Assuming Company with all
calculations of Post-Effective Date Premium and Premium and the detail,
assumptions, reports and all other materials used by Ceding Company in
preparation of such calculations. Any dispute among the parties in regard to the
amounts of Post-Effective Date Premium and Premium shall be resolved in the
manner prescribed by Article IX of this Agreement.

                     VI.  ADMINISTRATION AND LOSS SETTLEMENT

A.  After the Closing Date, the Ceding Company and the Assuming Company will
continue to use mutual best efforts to transition the administration of the
Assumed Policies to the Assuming Company as of the Administration Transfer Date
in an efficient and cost-effective manner with the least customer disruption.
Between the Effective Date and the Administration Transfer Date, the Ceding
Company will continue administration of the Assumed Policies in accordance with
the terms of this Agreement.

                      1.  Administration of the Assumed Policies means,
                          without limitation: policyholder and member
                          services; billing and collection of premiums;
                          distribution of required reports to
                          policyholder and members; issuance of Form
                          1099s to agencies and providers; processing and
                          payment of claims; determination and
                          calculation of reserves for the Assumed
                          Policies; calculation and payment of agent
                          commissions; member communications; customer
                          service, and other services associated with the
                          administration of the Assumed Policies.

                      2.  Ceding Company will notify Assuming Company of
                          the claims settled for health care and pharmacy
                          benefits with a Loss Incurred date on or after
                          the Effective Date on a weekly basis or such
                          other regular time as the parties determine and
                          Assuming Company will wire funds within 2
                          business days to pay Ceding Company for the
                          benefit expense of the settled claims. If a
                          claim incurred between the Effective Date and
                          the Administration Transfer Date exceeds or, in
                          the judgement of the Ceding Company, appears
                          likely to exceed $50,000 in amount, the Ceding
                          Company shall consult with the Assuming Company
                          and obtain approval prior to approving or
                          denying the claim. In addition, from June 1,
                          2000, through the Administration Transfer Date
                          if such date is on or prior to October 1, 2000,
                          Assuming Company shall pay Ceding Company on a
                          monthly basis for the administration of the
                          Assumed Policies on the basis


                                       5

<PAGE>

                                 of eight percent (8%) of the Post-Effective
                                 Date Premium. In the event the Administration
                                 Transfer Date is November 1, 2000, or later,
                                 then effective November 1, 2000, the percentage
                                 payment amount will increase to 9% of Post-
                                 Effective Date Premium.

                      3.         Ceding Company will provide Assuming Company
                                 with financial reports and journal entries as
                                 reasonably necessary after each month end in
                                 connection with the services provided prior to
                                 the Administration Transfer Date.

                      4.         Ceding Company will process commission payments
                                 and request payment from Assuming Company on a
                                 monthly basis in connection with the services
                                 provided prior to the Administration Transfer
                                 Date.

                      5.         The Ceding Company will incur expenses such as
                                 provider network access fees and other
                                 reasonable miscellaneous expenses necessary to
                                 administer the Assumed Policies. The Ceding
                                 Company will provide supporting documentation
                                 and request payment on a monthly basis in
                                 connection with the services provided prior to
                                 the Administration Transfer Date.

                      6.         Beginning with the period eighteen (18) days
                                 prior to the Administration Transfer Date,
                                 which date shall be referred to as the "Cut
                                 Over Date," Ceding Company will cease claims
                                 and membership entry and will forward all
                                 claims it receives to Assuming Company for
                                 entry and adjudication by Assuming Company.
                                 Ceding Company will use its best efforts to
                                 complete the processing with respect to claims
                                 and adjustments submitted to Ceding Company for
                                 payment prior to the Cut Over Date.

                      7.         Pharmacy claims with a Loss Incurred Date prior
                                 to the Administration Transfer Date shall be
                                 administered by the Ceding Company.

           B.         Claims with a Loss Incurred Date on or after January 1,
2000, and prior to the Effective Date that are submitted to Assuming Company
for payment on or after the Cut Over Date are herein referred to as "Run Out
Claims." Assuming Company will provide administration for all such Run Out
Claims in accordance with this Agreement and administration services shall
mean those services specified in paragraph A.1 of this Article.

                      1.         On a monthly basis the Assuming Company will
                                 notify and provide agreed upon reporting to the
                                 Ceding Company for the actual benefit or claims
                                 expense paid by Assuming Company on the Run Out
                                 Claims (the "Settled Claims Amount"). Ceding
                                 Company will wire funds within 2 business days
                                 to pay Assuming Company for the Settled Claims
                                 Amount. If an incurred Run Out Claim exceeds
                                 or, in the judgement of the Assuming Company,
                                 appears likely to exceed $50,000 in amount, the


                                       6
<PAGE>

                                 Assuming Company will consult with and obtain
                                 Ceding Company approval prior to approving or
                                 denying the claim.

                      2.         In addition, Ceding Company will pay Assuming
                                 Company on a monthly basis for the
                                 administrative cost of administering the Run
                                 Out Claims at the rate of $12.00 per Claim
                                 Transaction for Facility services and $9.00 per
                                 Claim Transaction for Professional services.
                                 "Claim Transaction" means any transaction for
                                 which a control number has been assigned for
                                 processing through the Assuming Company's
                                 claims system and that is processed to a final
                                 disposition status including payment,
                                 non-payment, partial payment, and payments
                                 attributed toward deductibles. A Claim
                                 Transaction for Professional services shall not
                                 exceed ten (10) input lines, and a Claim
                                 Transaction for Facility services shall not
                                 exceed twenty (20) input lines. Each additional
                                 segment of ten (10) input lines or less in the
                                 case of Professional services, or twenty (20)
                                 input lines or less in the case of Facility
                                 services counts as an additional Claim
                                 Transaction. Claim Transaction shall not mean
                                 any transaction resulting from error
                                 identification and correction, from adjustments
                                 due to utilization review or other coverage
                                 information, from duplicate submissions by
                                 health care providers, or from retroactive
                                 benefit adjustments.

                      3.         The Assuming Company will process and report to
                                 the Ceding Company on a monthly basis any
                                 retroactive premium and commission activity for
                                 periods prior to the Effective Date.

                      4.         Run Out Claims will not include pharmacy
                                 benefit claims with a Loss Incurred Date prior
                                 to the Administration Transfer Date and Ceding
                                 Company will provide administration for such
                                 claims.

           C.         With respect to claims with a Loss Incurred date prior
to January 1, 2000, that are submitted for payment on or after the Cut Over
Date, Ceding Company will be responsible for settling such claims.

           D.         Assuming Company shall be responsible for creating and
mailing all Assumption Certificates to policyholders and will provide Ceding
Company with the reasonable advance opportunity for review and approval of
Assumption Certificates and other policyholder communications related to the
assumption of the Assumed Policies. Assumption Certificates shall be provided
to policyholders in advance of the Administration Transfer Date.

           E.         Within 25 days following the end of each calendar
quarter, the Assuming Company shall provide the Ceding Company with the
information needed by the Ceding Company to prepare its statutory financial
statements. The form of the report and the information to be provided shall
be as the Ceding Company shall reasonably request for the purpose of
completing such statutory financial statements.


                                       7
<PAGE>

           F.         Assuming Company will provide technical expertise and
resources necessary to transfer the administration of the Assumed Policies
and specifically to map the membership and claims data for the Assumed
Policies to Assuming Company's membership and claims system formats. Assuming
Company will determine, with advice and consultation from Ceding Company, the
timing and calendar of all transfer of administration steps required for a
successful and smooth transition. Ceding Company will cooperate and assist
with the technical work required to transfer the administration of the
Assumed Policies, will provide necessary data in its standard formats and
procedures as reasonably requested, and will dedicate the necessary personnel
and resources to respond to such requests in a timely and effective manner.

                      1.         Without assessment of additional fees or
                                 charges to Assuming Company, Ceding Company
                                 shall provide to Assuming Company electronic
                                 data files, or hardcopy or microfilm records if
                                 electronic records are unavailable, as
                                 reasonably requested on the following matters
                                 related to the Assumed Policies: membership
                                 history, accumulators,
                                 pre-certification/pre-authorization, case
                                 management, claim history, inquiry history, COB
                                 and any corresponding information reasonably
                                 and necessarily required for Assuming Company
                                 to adjudicate claims, process membership, and
                                 bill premium accurately. If Assuming Company
                                 requests data or technical assistance not
                                 typically and customarily furnished by a ceding
                                 company to an assuming company in transactions
                                 of this kind, Ceding Company will estimate the
                                 cost of providing such data or assistance and
                                 advise Assuming Company of the cost prior to
                                 furnishing the data or assistance. Assuming
                                 Company will then promptly notify Ceding
                                 Company whether to proceed with providing the
                                 data or assistance and will pay Ceding Company
                                 the cost of such data or assistance.

                      2.         Except as specified in paragraph 1 above, each
                                 party will bear its own expenses and costs in
                                 connection with the transfer of the
                                 administration of the Assumed Policies under
                                 this Agreement.

           G.         Ceding Company shall provide designated employees of
Assuming Company in Madison, Wisconsin, with read only access to certain
membership and claims systems known as RTMS and NRBS maintained by Ceding
Company in connection with the Assumed Policies for a period of no longer
than eight (8) months following the Administration Transfer Date. Such
employees shall agree to maintain the security and confidentiality of all
information contained in RTMS and NRBS and to abide by Ceding Company's
policies and requirements with regard to access, passwords, and use of such
information.

                      1.         All information to which Assuming Company or
                                 its designated employees have access to shall
                                 be deemed confidential information. Assuming
                                 Company agrees to maintain the confidentiality
                                 of such


                                       8
<PAGE>

                                 information in accordance with Federal and
                                 state laws. In the absence of any such
                                 provisions, Assuming Company agrees to use the
                                 same means to protect the confidential
                                 information as it uses to protect confidential
                                 information in its own trade or business, but
                                 in any event shall at least use reasonable
                                 means to protect the confidential information.
                                 Assuming Company agrees that it shall only
                                 access that information which it has a
                                 legitimate business need to know. Assuming
                                 Company understands and shall make any
                                 individuals who are also provided confidential
                                 information obtained through such access aware
                                 that this information may be subject to the
                                 confidentiality standards set forth under state
                                 or Federal law and that improper disclosure of
                                 such information to anyone who does not have a
                                 legitimate business need to know the
                                 information, may subject Assuming Company or
                                 other individuals with access to the
                                 confidential information to criminal penalties.

                      2.         During the first five (5) months of access,
                                 Ceding Company will not charge Assuming Company
                                 for access. For every month thereafter during
                                 which access is continued, Assuming Company
                                 will pay Ceding Company $1,000 per month for
                                 access as herein specified. At the conclusion
                                 of the eight-month period all access shall be
                                 discontinued and Assuming Company shall return
                                 all property of Ceding Company and delete all
                                 access from its computers.

                       VII. EXTRA CONTRACTUAL OBLIGATIONS

           A.         The Assuming Company shall reinsure the Ceding Company
for one hundred percent (100%) of the Ceding Company's Extra Contractual
Obligation losses arising out of actions taken by or on behalf of the
Assuming Company with respect to the Assumed Policies. Such losses are
defined as those liabilities not covered under any other provision of this
Agreement and which arise from the handling of any claim on business covered
hereunder after the Effective Date.

           B.         The date on which any Extra Contractual Obligation is
incurred by the Ceding Company shall be deemed, in all circumstances, to be
the date of the act (or, with respect to a series of related acts, the first
such act) giving rise to such Extra Contractual Obligation.

                        VIII. DATA AND ACCESS TO RECORDS

           Ceding Company shall provide and transfer to Assuming Company
electronic data files, paper copy and microfilm records, as reasonably necessary
and required and as requested by Assuming Company in connection with the Assumed
Policies. Upon reasonable notice, both the Assuming Company and the Ceding
Company shall be entitled to reasonable access to the books and records of the
other party at any reasonable time and may make copies of the same, but only to
the extent such materials pertain to the Assumed Policies reinsured under this


                                       9
<PAGE>

Agreement. Each party will pay its own expenses associated with any such review
of the books and records.

                             IX. DISPUTE RESOLUTION

           A.         Any dispute or other matter in question between the
Ceding Company and the Assuming Company arising out of or relating to the
formation, interpretation, performance, or breach of this Agreement, whether
such dispute arises before or after termination of this Agreement, shall
first be submitted to the Chief Executive Officers or his designee of each
party, who shall undertake good faith efforts with the other party to resolve
such dispute. If such dispute cannot be resolved through such efforts and
negotiation, either party may request the other party to participate in
non-binding mediation. If the other party refuses to participate in mediation
or if the dispute is not settled by mediation, the dispute shall be settled
by arbitration. Arbitration shall be initiated by the delivery of a written
notice of demand for arbitration by one party to the other.

           B.         Each party shall appoint an individual as arbitrator
and the two so appointed shall then appoint a third arbitrator. If either
party refuses or neglects to appoint an arbitrator within sixty (60) days of
receipt of a written notice of demand for arbitration, the other party may
appoint the second arbitrator. If the two arbitrators do not agree on a third
arbitrator within sixty (60) days of their appointment, each of the
arbitrators shall nominate three individuals. Each arbitrator shall then
decline two of the nominations presented by the other arbitrator. The third
arbitrator shall then be chosen from the remaining two nominations by drawing
lots. The arbitrators shall not have a personal or financial interest in the
result of the arbitration.

           C.         The arbitration hearings shall be held at such place as
may be mutually agreed. Each party shall submit its case to the arbitrators
within sixty (60) days of the selection of the third arbitrator or within
such longer period as may be agreed by the arbitrators. The arbitrators shall
not be obliged to follow judicial formalities or the rules of evidence except
to the extent required by the state law of the situs of the arbitration as
herein agreed; they shall make their decisions according to the practice of
the insurance business. The decision rendered by a majority of the
arbitrators shall be final and binding on both parties. Such decision shall
be a condition precedent to any right of legal action arising out of the
arbitrated dispute that either party may have against the other. Judgment
upon the award rendered may be entered in any court having jurisdiction
thereof.

           D.         Each side shall pay (1) the fee and expenses of its own
arbitrator, (2) one-half of the fee and expenses of the third arbitrator and
(3) one-half of the other expenses that the parties jointly incur directly
related to the arbitration proceeding. Other than as set forth above, each
Party shall bear its own costs in connection with any such arbitration
including, without limitation, (4) all legal, accounting, and other
professional fees and expenses and (5) all other costs and expenses each
party incurs to prepare for such arbitration.


                                      10
<PAGE>

           E.         Except as provided above, arbitration shall be based,
insofar as applicable, upon the Commercial Arbitration Rules of the American
Arbitration Association.

                                 X. SUBROGATION

           In the event of the payment of any loss by the Assuming Company under
this Agreement, the Assuming Company shall be subrogated, to the extent of such
payment, to all of the rights of the Ceding Company against any person or entity
legally responsible for the loss. The Assuming Company is hereby authorized and
empowered to bring any appropriate action in its own name, or in the name of the
Ceding Company with prior written notice to the Ceding Company, to enforce such
rights.

                             XI. ERRORS OR OMISSIONS

           Inadvertent delays, errors or omissions made in connection with this
Agreement or any transaction hereunder will not relieve either party from any
liability that would otherwise have attached had such delay, error or omission
not occurred. Regardless, the responsible party will rectify each such delay,
error or omission as promptly as practicable after discovery.

                           XII. HONORABLE UNDERTAKING

           This Agreement shall be construed as an honorable undertaking between
the parties hereto not to be defeated by technical legal constructions, it being
the intention of this Agreement that the fortunes of the Assuming Company shall
in all cases follow the fortunes of the Ceding Company.

                            XIII. REGULATORY APPROVAL

           The consummation of this Agreement and the transactions contemplated
hereby are contingent upon the receipt of any necessary approvals of insurance
regulatory authorities pursuant to all applicable insurance laws and upon the
receipt of all necessary approvals by any other governmental or regulatory
authority whose approval is required by law. The Ceding Company and the Assuming
Company shall take all steps necessary to obtain any requisite regulatory
approval of this Agreement and the transaction described herein.

                                 XIV. INSOLVENCY

           A.         In the event of the insolvency of the Ceding Company
and the appointment of a liquidator, receiver, conservator or statutory
successor, amounts due from Assuming Company shall be payable by the Assuming
Company immediately upon demand, with reasonable provision for verification,
on the basis of the liability of the Ceding Company as a result of claims
allowed against the Ceding Company by any court of competent jurisdiction or
any liquidator, receiver, conservator or statutory successor having authority
to allow such claims, without diminution because of such insolvency or
because such liquidator, receiver, conservator or statutory successor has
failed to pay all or a portion of any claims.


                                      11
<PAGE>

           B. Payments by the Assuming Company as above set forth shall be
made directly to the Ceding Company or to its liquidator, receiver,
conservator or statutory successor, except (1) where this Agreement specifies
another payee in the event of the insolvency of the Ceding Company, or (2)
the Assuming Company with the consent of the direct insureds has assumed such
policy obligations of the Ceding Company as its direct obligations to the
payees under such Assumed Policies, in substitution for the obligations of
the Ceding Company to such payees.

           C. In the event of the insolvency of the Ceding Company, the
liquidator, receiver, conservator or statutory successor of the Ceding
Company shall give written notice to the Assuming Company of the pendency of
a claim against the insolvent Ceding Company on the Assumed Policies within a
reasonable time after such claim is filed in the insolvency proceeding and
during the pendency of such claim the Assuming Company may investigate such
claim and interpose, at its own expense, in the proceeding where such claim
is to be adjudicated any defense or defenses which it may deem available to
the Ceding Company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Assuming Company shall be
chargeable subject to court approval against the insolvent Ceding Company as
part of the expense of liquidation to the extent of a proportionate share of
the benefit which may accrue to the Ceding Company solely as a result of the
defense undertaken by the Assuming Company.

           D. Where two or more assuming companies are involved in the same
claim and a majority in interest elect to interpose defense to such claim,
the expense shall be apportioned in accordance with the terms of this
Agreement as though such expense had been incurred by the Ceding Company.

           E. It is understood and agreed that any debts or credits,
liquidated or unliquidated, in favor of or against either party on the date
of the entry of the receivership or liquidation order, are deemed mutual
debts or credits, as the case may be, and shall be set off and the balance
only shall be allowed or paid. Although such claim, if any, on the part of
either party against the other may be unliquidated or undetermined in amount
on the date of the entry of the receivership or liquidation order, such
claim, if any, is hereby deemed to be in existence as of such date. Any
credits or claims then in existence and held by the other party may be offset
against it.

                                      12
<PAGE>

                               XV. INDEMNIFICATION

           A. The Assuming Company will indemnify the Ceding Company and hold
the Ceding Company harmless from and against any and all losses, liabilities,
fees, costs, expenses, or damages, including without limitation reasonable
attorneys' fees, arising under or relating to (1) any breach by the Assuming
Company of its obligations hereunder, or (2) any act, delay, error, or
omission of the Assuming Company or its agents in administering or servicing
any of the Assumed Policies. The Assuming Company will also indemnify the
Ceding Company and hold the Ceding Company harmless from and against any and
all losses, fees, costs, expenses, or damages, including without limitation
reasonable attorneys' fees, arising with respect to Losses Incurred, events
occurring or actions taken after the Effective Date with respect to the
Assumed Policies, other than losses, liabilities, fees, costs, expenses, or
damages, including without limitation reasonable attorneys' fees incurred by
reason of Ceding Company's breach of its obligations to administer the
Assumed Policies under Article VI prior to the Administration Transfer Date.

           B. The Ceding Company will indemnify the Assuming Company and hold
the Assuming Company harmless from and against any and all losses,
liabilities, fees, costs, expenses, or damages, including without limitation
reasonable attorneys' fees, arising under or relating to (1) any breach by
the Ceding Company of its obligations hereunder, or (2) any act, delay,
error, or omission of the Ceding Company or its agents in administering or
servicing any of the Assumed Policies. The Ceding Company will also indemnify
the Assuming Company and hold the Assuming Company harmless from and against
any and all losses, fees, costs, expenses, or damages, including without
limitation reasonable attorneys' fees, arising with respect to Losses
Incurred, events occurring or actions taken prior to the Effective Date with
respect to the Assumed Policies.

                             XVI. SPECIAL CONDITIONS

           A. RATE CHANGES. Assuming Company shall establish with Ceding
Company mutually agreed upon target loss ratios by market segment with
respect to any rate increases which occur after the Effective Date until the
earlier of (i) receipt by Ceding Company of the Contingent Payment; or (ii)
two years from the Effective Date.

           B. EMPLOYEES. On the Administration Transfer Date Wellmark, Inc.
("Wellmark") will terminate the employment of the six Wisconsin resident
employees listed on Schedule XVI.B. who administer the Assumed Policies, and
Assuming Company will offer similar employment to all such persons at wages
not less than the wages or applicable salary paid by Wellmark to each such
person on the Effective Date. Wellmark will pay such persons accrued but
unused vacation or alternatively, will pay Assuming Company an amount equal
to vacation benefits accrued but unused and Assuming Company will carry over
the accrued vacation. Assuming Company has provided such persons with a
summary of the employee benefits to be made available to them as employees of
Assuming Company. This provision shall not in any manner be construed as
granting any Wellmark employee hired by Assuming

                                     13
<PAGE>

Company a contract or assurance of continued employment with Assuming
Company. All Wellmark employees hired by Assuming Company will, unless
otherwise expressly agreed by Assuming Company in writing, be employed at
will, which means either the employee or Assuming Company may terminate the
employment relationship with or without cause and without advance notice.

           C. OFFICE SPACE/EQUIPMENT. On the Administration Transfer Date,
Wellmark will assign or transfer to Assuming Company the lease for the office
space located at 1212 Deming Way, Madison, Wisconsin, and Assuming Company
will assume the obligations under the lease. On the Effective Date, Wellmark
will sell to Assuming Company for $500.00 the office equipment, computers,
and furniture in the Madison office as more fully described in Schedule XVI.C.

           D. PENDING LITIGATION. Upon the satisfaction of all terms and
conditions of this Agreement, at the Closing Date, Assuming Company shall
dismiss with prejudice as to all parties Case No. 98-CV-1628 ("Pending
Litigation") pending in the Circuit Court of Dane County Wisconsin with each
party to bear its own costs.

           E. COMPETITION. Ceding Company shall not for a period of three (3)
years from the Effective Date, sell or offer to sell in Wisconsin health
insurance or dental insurance to the policyholders or members associated with
the Assumed Policies.

                              XVII. REPRESENTATIONS

           A. Ceding Company is an Iowa insurance company duly organized,
validly existing, and authorized to conduct its business in the state of
Wisconsin as now conducted, and to enter into and carry out the terms and
conditions of this Agreement. The forms of Assumed Policies including
certificates and master policies have been reviewed by regulatory counsel
familiar with Wisconsin insurance law, certified by counsel or an officer of
the Ceding Company to be in compliance with Wisconsin insurance law, and
submitted to and approved by, to the extent applicable, the Wisconsin Office
of the Commissioner of Insurance. Ceding Company will assist Assuming Company
with the preparation and issuance of amendments necessary to reflect recent
benefit changes required by law, including identifying which amendments are
appropriate for each class of business, and if requested will assist with the
filing of such amendments.

           B. Assuming Company is a Wisconsin insurance company duly organized,
validly existing, and authorized to conduct its business in the state of
Wisconsin as now conducted, and to enter into and carry out the terms and
conditions of this Agreement.

                                     14
<PAGE>



                         XVIII. MISCELLANEOUS PROVISIONS

           A. AMENDMENTS. This Agreement may only be amended by mutual
consent of the parties expressed in a written addendum; and such addendum,
when executed by both parties, shall be deemed to be an integral part of this
Agreement and binding on the parties hereto.

           B. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and bind the Ceding Company and its successors and assigns and the
Assuming Company and its successors and assigns. Neither this Agreement nor
any right hereunder nor any part hereof may be assigned by any party hereto
without the prior written consent of the other party hereto, except with
respect to the administration of the Assumed Policies. Prior to any such
assignment, the consent of all necessary regulatory authorities must be
obtained if required by law.

           C. NO THIRD PARTY BENEFICIARIES. This Agreement is only for the
benefit of the Ceding Company and the Assuming Company and does not confer
any right, benefit, or privilege upon any person or entity not a party to
this Agreement.

           D. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of Wisconsin (without giving effect
to principles of conflicts of laws) applicable to a contract executed and to
be performed in such state.

           E. ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between, and contains the sole and entire
agreement between the Ceding Company and the Assuming Company with respect to
the subject matter hereof.

           F. HEADINGS, ETC. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (1) words of any gender will be deemed to
include each other gender, (2) words using the singular or plural number will
also include the plural or singular number, respectively, (3) the terms
hereof, herein, hereby, and derivative or similar words will refer to this
entire Agreement, and (4) the conjunction "or" will denote any one or more,
or any combination or all, of the specified items or matters involved in the
respective list.

           G. WAIVER. The failure of either party hereto at any time to
enforce any provision of this Agreement shall not be construed as a waiver of
that provision and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.

           H. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of any party under this Agreement will not be
materially and adversely affected thereby, (1) such provision

                                     15
<PAGE>

will be fully severable, (2) this Agreement will be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a
part hereof, (3) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom, and (4) in lieu of such
illegal, invalid, or unenforceable provision, there will be added
automatically as a part of this Agreement, a legal, valid, and enforceable
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible.

           I. NOTICES. Any notice or communication given pursuant to this
Agreement must be in writing and will be deemed to have been duly given if
mailed (by registered or certified mail, postage prepaid, return receipt
requested), or if transmitted by facsimile, or if delivered by courier, as
follows:

To the Assuming Company:    Blue Cross Blue & Shield United of Wisconsin
                            401 West Michigan St., #C10 Legal
                            Milwaukee, WI 53203
                            Attn: Stephen E. Bablitch, Vice President and
                            General Counsel

If to Ceding Company        Wellmark Community Insurance, Inc.
or to Wellmark:             636 Grand Avenue
                            Des Moines, Iowa 50309-2565
                            Attn: F. Joseph Du Bray, Secretary and General
                            Counsel
                            Fax (515) 245-5090

                     All notices and other communications required or
permitted under this Agreement that are addressed as provided in this
paragraph will, whether sent by mail, facsimile, or courier, be deemed given
upon the first business day after actual delivery to the party to whom such
notice or other communication is sent (as evidenced by the return receipt or
shipping invoice signed by a representative of such party or by the facsimile
confirmation). Any party from time to time may change its address for the
purpose of notices to that party by giving a similar notice specifying a new
address, but no such notice will be deemed to have been given until it is
actually received by the party sought to be charged with the contents thereof.

           J. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which will be deemed an original, but all
of which will constitute one and the same instrument.

           K. EXPENSES. Each party is responsible for their own expenses,
including attorneys' fees incurred in connection with the transaction
contemplated by this Agreement, except as specified in Article VI,
Administration and Loss Settlement.

           L. ASSUMING COMPANY. Reference in this Agreement to the Assuming
Company shall mean United Wisconsin Insurance Company as to the Medicare
Supplement Insurance Policies assumed hereunder and Blue Cross & Blue Shield
United of Wisconsin as to all of the

                                     16
<PAGE>

other Assumed Policies such that United Wisconsin Insurance Company shall
have no liability with respect to any of the Assumed Policies other than
Medicare Supplement Insurance Policies and Blue Cross & Blue Shield United of
Wisconsin shall have no liability under this Agreement with respect to
Medicare Supplement Insurance Policies assumed hereunder.

           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first set
forth above.

WELLMARK COMMUNITY INSURANCE, INC.

By:     /s/ David N. Southwell
   ------------------------------------
        David N. Southwell
Title:  Treasurer and Director

WELLMARK, INC.

By:     /s/ David N. Southwell
   ------------------------------------
        David N. Southwell
Title:  Group Vice President and Financial Officer

BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN

By:     /s/ Joseph P. Decker
   ------------------------------------
        Joseph P. Decker
Title:  Regional Vice President

UNITED WISCONSIN INSURANCE COMPANY

By:     /s/ Thomas E. Liechty
   ------------------------------------
        Thomas E. Liechty
Title:  President

                                     17
<PAGE>


                                  SCHEDULE I.B.
                                ASSUMED POLICIES

            1.   Group health and dental insurance policies issued
                 to the Wisconsin Farm Bureau Federation;
                 including the Master Policy/Agreement effective
                 February 1, 1995.

            2.   Group health insurance policies covering members
                 of the Rural Mutual home office, agents, and
                 board of directors groups.

            3.   Small employer group health and dental insurance policies.

            4.   Conversion policies issued under the above.

            5.   Individual plans reported under the Wisconsin Farm Bureau
                 Member Health Plan.

            6.   Medicare Supplement insurance policies.

                                      18
<PAGE>


                                 SCHEDULE XVI.B.
                                    EMPLOYEES

           Employee Name

           Betty Albertson
           Julie Anderson
           Carol Paulson
           Clovious Morgan
           Janice Shehan
           Allyson Waite

                                       19
<PAGE>


                                 SCHEDULE XVI.C.
                                OFFICE EQUIPMENT

7 Compaq Deskpro 2000 Computers with monitors and printers

Office Furniture for six people

Fax machine

Telephones

Copier

File cabinets

Refrigerator

                                       20