<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       FOR THE PERIOD ENDED MARCH 31, 2003
                            COMMISSION FILE #0-11321

                       UNIVERSAL AMERICAN FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)

        NEW YORK                                              11-2580136
(State of Incorporation)                             (I.R.S. Employer I.E. No.)

             Six International Drive, Suite 190, Rye Brook, NY 10573
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (914) 934-5200

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes |X|  No | |

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in the Securities Exchange Act Rule 12b-2): Yes |X|  No | |

         The number of shares outstanding of the Registrant's Common Stock as of
May 2, 2003 was 53,232,684.
<PAGE>
                       UNIVERSAL AMERICAN FINANCIAL CORP.
                                    FORM 10-Q

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page No.
<S>                                                                                                    <C>
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets                                                                        3
         Consolidated Statements of Operations                                                              4
         Consolidated Statements of Stockholders' Equity and Comprehensive Income                           5
         Consolidated Statements of Cash Flows                                                              6
         Notes to Consolidated Financial Statements                                                      7-16

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations          16-29

Item 3.  Quantitative and Qualitative Disclosure of Market Risk                                         30-31

Item 4.  Controls and Procedures                                                                           31


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                 31

Item 2.  Changes in Securities and Use of Proceeds                                                         31

Item 3.  Defaults Upon Senior Securities                                                                   31

Item 4.  Submission of Matters to a Vote of Security Holders                                               31

Item 5.  Other Information                                                                                 31

Item 6.  Exhibits and Reports on Form 8-K                                                                  32

         Signature                                                                                         32

         Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                       33-36
</TABLE>


                                       2
<PAGE>
                          PART 1. FINANCIAL INFORMATION
                    ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                       UNIVERSAL AMERICAN FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  MARCH 31,       DECEMBER 31,
                                                                                   2003              2002
                                                                                -----------      -----------
  ASSETS                                                                                (unaudited)
  Investments                                                                         (In thousands)
<S>                                                                             <C>              <C>
  Fixed maturities available for sale, at fair value
    (amortized cost: 2003, $967,106; 2002, $884,054)                            $ 1,016,780      $   934,950
  Equity securities, at fair value (cost: 2003, $3,068; 2002, $1,661)                 3,085            1,645
  Policy loans                                                                       25,735           23,745
  Other invested assets                                                               2,234            2,808
                                                                                -----------      -----------
    Total investments                                                             1,047,834          963,148

Cash and cash equivalents                                                            52,956           36,754
Accrued investment income                                                            11,962           11,885
Deferred policy acquisition costs                                                    98,963           92,093
Amounts due from reinsurers                                                         241,116          220,100
Due and unpaid premiums                                                               6,229            6,066
Deferred income tax asset                                                            31,029           35,842
Present value of future profits, goodwill and other intangible assets                49,782           10,960
Other assets                                                                         30,425           24,820
                                                                                -----------      -----------
    Total assets                                                                  1,570,296        1,401,668
                                                                                ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Policyholder account balances                                                       328,728          271,578
Reserves for future policy benefits                                                 695,796          627,174
Policy and contract claims - life                                                     6,819            6,718
Policy and contract claims - health                                                  99,625           88,216
Loan payable                                                                         65,000           50,775
Company obligated mandatorily redeemable preferred securities of subsidiary
   trust holding solely junior subordinated debentures                               25,000           15,000
Amounts due to reinsurers                                                             5,215            7,285
Other liabilities                                                                    49,334           48,153
                                                                                -----------      -----------
    Total liabilities                                                             1,275,517        1,114,899
                                                                                -----------      -----------

STOCKHOLDERS' EQUITY
Common stock (Authorized: 80 million shares, issued
   and outstanding:  2003, 53.3 million shares;
   2002, 53.2 million shares)                                                           533              532
Additional paid-in capital                                                          159,017          158,264
Accumulated other comprehensive income                                               29,741           29,887
Retained earnings                                                                   106,954           99,406
Less:  Treasury stock (2003, 0.3 million shares;
          2002, 0.2 million shares)                                                  (1,466)          (1,320)
                                                                                -----------      -----------
    Total stockholders' equity                                                      294,779          286,769
                                                                                -----------      -----------
    Total liabilities and stockholders' equity                                  $ 1,570,296      $ 1,401,668
                                                                                ===========      ===========
</TABLE>

            See notes to unaudited consolidated financial statements.

                                       3
<PAGE>
               UNIVERSAL AMERICAN FINANCIAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

  THREE MONTHS ENDED MARCH 31,                                   2003           2002
                                                              ---------      ---------
  Revenues:                                          (IN THOUSANDS, PER SHARE AMOUNTS IN DOLLARS)
<S>                                                           <C>            <C>
   Direct premiums and policyholder fees earned               $ 154,646      $ 147,436
   Reinsurance premiums assumed                                   6,449            938
   Reinsurance premiums ceded                                   (81,909)       (83,462)
                                                              ---------      ---------
         Net premiums and policyholder fees earned               79,186         64,912

   Net investment income                                         14,378         14,327
   Realized gains on investments                                    110            143
   Fee and other income                                           4,239          2,784
                                                              ---------      ---------
          Total revenues                                         97,913         82,166
                                                              ---------      ---------

Benefits, claims and expenses:
   Net increase in future policy benefits                         5,066          2,570
   Net claims and other benefits                                 50,740         42,646
   Interest credited to policyholders                             3,133          2,607
   Net increase in deferred acquisition costs                    (8,251)        (5,932)
   Amortization of present value of future profits                  121            422
   Commissions                                                   30,364         29,316
   Commission and expense allowances on reinsurance ceded       (22,356)       (24,737)
   Interest expense                                                 816            806
   Early extinguishment of debt (Note 8)                          1,766             --
   Other operating costs and expenses                            24,863         22,843
                                                              ---------      ---------
          Total benefits, claims and  expenses                   86,262         70,541
                                                              ---------      ---------

Income before taxes                                              11,651         11,625
Income tax expense                                                4,103          4,127
                                                              ---------      ---------
Net income                                                    $   7,548      $   7,498
                                                              =========      =========

Earnings per common share:
  Basic                                                       $    0.14      $    0.14
                                                              =========      =========
  Diluted                                                     $    0.14      $    0.14
                                                              =========      =========
</TABLE>

            See notes to unaudited consolidated financial statements.

                                       4
<PAGE>
                       UNIVERSAL AMERICAN FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                  ACCUMULATED
                                                    ADDITIONAL       OTHER
                                       COMMON         PAID-IN    COMPREHENSIVE    RETAINED       TREASURY
THREE MONTHS ENDED MARCH 31,            STOCK         CAPITAL    INCOME / (LOSS)  EARNINGS         STOCK          TOTAL
                                      ---------      ---------   ---------------  ---------      ---------      ---------
<S>                                   <C>           <C>          <C>              <C>            <C>            <C>
            2002

Balance, January 1, 2002              $     528      $ 155,746     $   5,603      $  69,279      $    (386)     $ 230,770

Net income                                   --             --            --          7,498             --          7,498
Other comprehensive income
   (Note 6)                                  --             --        (8,804)            --             --         (8,804)
                                                                                                                ---------

Comprehensive income                                                                                               (1,306)
                                                                                                                ---------

Issuance of common stock (Note 7)             2            619            --             --                           621
Stock-based compensation                     --            160            --             --                           160
Loans to officers                            --             --            --             --                            --
Treasury shares purchased, at
  cost (Note 7)                              --                           --             --           (544)          (544)
Treasury shares reissued (Note 7)            --             80            --             --            586            666
                                      ---------      ---------     ---------      ---------      ---------      ---------

Balance, March 31, 2002               $     530      $ 156,605     $  (3,201)     $  76,777      $    (344)     $ 230,367
                                      =========      =========     =========      =========      =========      =========

            2003

Balance, January 1, 2003              $     532      $ 158,264     $  29,887      $  99,406      $  (1,320)     $ 286,769
Net income                                   --             --            --          7,548             --          7,548
Other comprehensive income
   (Note 6)                                  --             --          (146)            --             --           (146)
                                                                                                                ---------

Comprehensive income                                                                                                7,402
                                                                                                                ---------

Issuance of common stock (Note 7)             1            490            --             --             --            491
Stock-based compensation                     --            228            --             --             --            228
Loans to officers                                           32            --             --             --             32
Treasury shares purchased, at
  cost (Note 7)                              --             --            --             --           (188)          (188)
Treasury shares reissued (Note 7)            --              3            --             --             42             45
                                      ---------      ---------     ---------      ---------      ---------      ---------

Balance, March 31, 2003               $     533      $ 159,017     $  29,741      $ 106,954      $  (1,466)     $ 294,779
                                      =========      =========     =========      =========      =========      =========

</TABLE>

            See notes to unaudited consolidated financial statements.

                                       5
<PAGE>
               UNIVERSAL AMERICAN FINANCIAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

THREE MONTHS ENDED MARCH 31,                                                            2003           2002
                                                                                      ---------      ---------
                                                                                           (In thousands)
<S>                                                                                   <C>            <C>
Cash flows from operating activities:
Net income                                                                            $   7,548      $   7,498
Adjustments to reconcile net income to net cash provided by operating activities,
  net of balances acquired (see Note 3 - Business Combination):
  Deferred income taxes                                                                   3,724          3,565
  Change in reserves for future policy benefits                                           6,880          5,954
  Change in policy and contract claims                                                   (2,046)         5,515
  Change in deferred policy acquisition costs                                            (8,251)        (5,932)
  Amortization of present value of future profits                                           121            422
  Amortization of bond premium                                                           (1,271)          (629)
  Amortization of capitalized loan origination fees                                       1,895            132
  Change in policy loans                                                                     53             32
  Change in accrued investment income                                                     1,143            417
  Change in reinsurance balances                                                         (3,755)       (10,543)
  Realized gains on investments                                                            (110)          (143)
  Change in income taxes payable                                                         (1,381)        (2,401)
  Other, net                                                                             (1,668)        (6,078)
                                                                                      ---------      ---------
Net cash provided (used) by operating activities                                          2,882         (2,191)
                                                                                      ---------      ---------

Cash flows from investing activities:
  Proceeds from sale or redemption of fixed maturities                                   97,327        138,228
  Cost of fixed maturities purchased                                                    (70,186)      (152,361)
  Proceeds from sale of equity securities                                                    --          2,658
  Cost of equity securities purchased                                                      (180)        (3,277)
  Change in other invested assets                                                           574            143
  Change in due from / to broker                                                         (2,379)           132
  Purchase of business, net of cash acquired (Note 3)                                   (56,906)            --
  Other investing activities                                                               (749)        (1,469)
                                                                                      ---------      ---------
Net cash used by investing activities                                                   (32,499)       (15,946)
                                                                                      ---------      ---------

Cash flows from financing activities:
  Net proceeds from issuance of common stock                                                492            620
  Cost of treasury stock purchases                                                         (189)          (544)
  Change in policyholder account balances                                                21,229          2,547
  Change in reinsurance on policyholder account balances                                     62            708
  Principal repayment on loan payable                                                    (2,825)        (2,625)
  Early extinquishment of debt (Note 8)                                                 (47,950)            --
  Issuance of new debt (Note 8)                                                          65,000             --
  Issuance of trust preferred securities (Note 9)                                        10,000             --
                                                                                      ---------      ---------
Net cash provided by financing activities                                                45,819            706
                                                                                      ---------      ---------

Net increase (decrease) in cash and cash equivalents                                     16,202        (17,431)

Cash and cash equivalents at beginning of period                                         36,754         47,990
                                                                                      ---------      ---------
Cash and cash equivalents at end of period                                            $  52,956      $  30,559
                                                                                      =========      =========

Supplemental cash flow information:
  Cash paid during the period for interest                                            $   1,247      $     273
                                                                                      =========      =========
  Cash paid during the period for income taxes                                        $   2,017      $   2,963
                                                                                      =========      =========
</TABLE>

            See notes to unaudited consolidated financial statements.

                                       6
<PAGE>
                    UNIVERSAL AMERICAN FINANCIAL CORP. AND SUBSIDIARIES
                   NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.         BASIS OF PRESENTATION

           The interim financial information herein is unaudited, but in the
opinion of management, includes all adjustments (consisting of normal, recurring
adjustments) necessary to present fairly the financial position and results of
operations for such periods. The results of operations for the three months
ended March 31, 2003 and 2002 are not necessarily indicative of the results to
be expected for the full year. The accompanying consolidated financial
statements and notes should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 2002. Certain
reclassifications have been made to prior year's financial statements to conform
to current period classifications.

           The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
("GAAP") and consolidate the accounts of Universal American Financial Corp.
("Universal American" or the "Parent Company") and its subsidiaries
(collectively the "Company"), American Progressive Life & Health Insurance
Company of New York ("American Progressive"), American Pioneer Life Insurance
Company ("American Pioneer"), American Exchange Life Insurance Company
("American Exchange"), Pennsylvania Life Insurance Company ("Pennsylvania
Life"), Peninsular Life Insurance Company ("Peninsular"), Union Bankers
Insurance Company ("Union Bankers"), Constitution Life Insurance Company
("Constitution"), Marquette National Life Insurance Company ("Marquette"),
Penncorp Life Insurance Company, a Canadian company ("Penncorp Life (Canada)"),
Pyramid Life Insurance Company ("Pyramid Life") and CHCS Services, Inc.

           Pyramid Life was acquired on March 31, 2003 and its operating results
prior to the date of acquisition are not included in Universal American's
consolidated results of operations. However, its assets and liabilities are
included in the consolidated balance sheet as of March 31, 2003.

           Collectively, the insurance company subsidiaries are licensed to sell
life and accident & health insurance and annuities in all fifty states, the
District of Columbia and all the provinces of Canada. The principal insurance
products are Medicare supplement, fixed benefit accident and sickness disability
insurance, long term care, senior life insurance and fixed annuities. The
Company distributes these products through an independent general agency system
and a career agency system. The career agents focus on sales for Pennsylvania
Life, Pyramid Life and Penncorp Life (Canada) while the independent general
agents sell for American Pioneer, American Progressive and Constitution. CHCS
Services, Inc., the Company's administrative services company, acts as a service
provider for both affiliated and unaffiliated insurance companies for senior
market insurance and non-insurance programs.

2.         RECENT ACCOUNTING PRONOUNCEMENTS

           In April 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS" No. 145, "Rescission
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145"). SFAS 145 requires any gain or loss on
extinguishments of debt to be presented as a component of continuing operations
(unless specific criteria are met) whereas SFAS No. 4 required that such gains
and losses be classified as an extraordinary item in determining net income. The
Company adopted these provisions on January 1, 2003, as required. The other
provisions of SFAS No. 145 were not relevant to the Company.

           In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires
costs associated with exit or disposal activities (including restructurings) to
be recognized when the costs are incurred, rather than at a date of commitment
to an exit or disposal plan. This standard nullifies EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)."
Under SFAS 146, a liability related to an exit or disposal activity is not
recognized until such liability has actually been incurred whereas under EITF
Issue No. 94-3 a liability was recognized at the time of a commitment to an exit
or disposal plan. The provisions of this standard are effective for exit or
disposal activities initiated after December 31, 2002. The Company adopted this
standard on January 1, 2003.

                                       7
<PAGE>
           The Company has various stock-based compensation plans for its
employees, directors and agents, which are more fully described in Notes 2q and
8 to the Consolidated Financial Statements included in the Company's 2002 Annual
Report on Form 10-K. In December 31, 2002, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure" ("SFAS
148"). The Company uses the fair value method of accounting for stock-based
awards granted to agents, however, the intrinsic value method of accounting is
used for stock-based awards granted to employees and directors. Accordingly,
compensation cost is not recognized when the exercise price of an employee's
stock option is equal to or exceeds the fair market value of the stock on the
date the option is granted. SFAS 148 requires companies using the intrinsic
value method of accounting to disclose, on a quarterly basis, the effect on
reported net income and earnings per share if compensation expense was based on
the fair value method of accounting for all stock-based awards. The following
table illustrates the pro forma net income and pro forma earnings per share as
if the Company had applied the fair value based method of accounting to all
stock-based awards during each period presented (using the Black-Scholes
option-pricing model for stock options).


<TABLE>
<CAPTION>
   THREE MONTHS ENDED MARCH 31,                                                 2003           2002
                                                                              ---------      ---------
                                                                    (In thousands, except per share amounts)
<S>                                                                           <C>            <C>
     Reported net income                                                      $   7,548      $   7,498
     Add back:  Stock-based compensation expense included in reported net
        income, net of tax                                                          320            276
     Less:  Stock based compensation expense determined under fair value
        based method for all awards, net of tax                                    (587)          (560)
                                                                              ---------      ---------
     Pro forma net income                                                     $   7,281      $   7,214
                                                                              =========      =========

     Net income per share:
       Basic, as reported                                                     $    0.14      $    0.14
       Basic, pro forma                                                       $    0.14      $    0.14

       Diluted, as reported                                                   $    0.14      $    0.14
       Diluted, pro forma                                                     $    0.13      $    0.13
</TABLE>


           Pro forma compensation expense reflected for prior periods is not
indicative of future compensation expense that would be recorded by the Company
upon its adoption of the fair value based recognition provisions of SFAS 123 on
January 1, 2004. Future expense may vary based upon factors such as the number
of awards granted by the Company, the then-current fair market value of such
awards and the transition provisions adopted.

3.         BUSINESS COMBINATION

           On March 31, 2003, Universal American completed the acquisition of
all of the outstanding common stock of Pyramid Life. In this transaction, the
Company acquired a block of in-force business that the Company believes will be
profitable, as well as a career sales force that is skilled in selling the same
type of senior market insurance products that are currently sold by Universal
American. The purchase price of $57.5 million and transaction costs of $2.4
million were financed with $20.1 million of net proceeds generated from the
refinancing of the Company's credit facility and $39.8 million of cash on hand,
including a portion of the proceeds from the trust preferred offerings completed
by Universal American in December 2002 and March 2003. (See Note 8 - Debt
Refinancing and Note 9 - Trust Preferred Securities).

           Operating results generated by Pyramid Life prior to March 31, 2003,
the date of acquisition, are not included in Universal American's consolidated
financial statements. At the time of closing, the fair value of net tangible
assets of the acquired company amounted to $28.3 million. The excess of the
purchase price over the fair value of net tangible assets acquired was $31.6
million. At March 31, 2003, the Company performed the initial allocation of the
excess to identifiable intangible assets. Based on this allocation,
approximately $13.5 million, net of deferred taxes of $7.3 million, was assigned
to the present value of future profits acquired, which has a weighted average
life of 7 years. The remaining $18.1 million was assigned to the value of the
trademarks, licenses and the distribution channel acquired, which are deemed to
have an indefinite life.

                                       8
<PAGE>
           The consolidated pro forma results of operations, assuming that
Pyramid Life was purchased on January 1, 2003 and 2002 is as follows:

<TABLE>
<CAPTION>
     THREE MONTHS ENDED MARCH 31,     2003         2002
                                    --------     --------
                                        (In thousands)
<S>                                 <C>          <C>
     Total revenue                  $126,804     $105,813
     Income before taxes (1)        $ 12,494     $  9,551
     Net income (1)                 $  8,086     $  6,103

     Earnings per common share:
         Basic                      $   0.15     $   0.12
         Diluted (1)                $   0.15     $   0.11
</TABLE>

     (1)  The above pro forma results of operations includes excess amortization
          of capitalized loan fees of $1.9 million in 2003 and $2.4 million in
          2002 as a result of the assumed refinancing of the existing debt at
          January 1, 2003 and 2002, respectively. This additional expense
          reduced net income by $1.2 million or $0.02 per diluted share in 2003
          and $1.6 million or $0.03 per diluted share in 2002. The actual amount
          of excess amortization reported in 2003 was $1.8 million. No excess
          amortization was reported in 2002.

           The pro forma results of operations reflect management's best
estimate based upon currently available information. The pro forma adjustments
are applied to the historical financial statements of Universal American and
Pyramid Life to account for Pyramid Life under the purchase method of
accounting. In accordance with SFAS No. 141, "Business Combinations", the total
purchase cost was allocated to Pyramid Life's assets and liabilities based on
their relative fair values. These allocations are subject to valuations as of
the date of the acquisition based upon appraisals and other information at that
time. Although the time required to identify and measure the fair value of the
assets acquired and liabilities assumed in a business combination will vary with
circumstances, the allocation period should not exceed one year from the
consummation of a business combination. Management has provided its best
estimate of what the likely fair values of assets and liabilities for the
purpose of this pro forma information. However, management cannot predict the
potential adjustments resulting from the actual final purchase assumptions,
which could result in differences from these pro forma estimates.

           The pro forma information presented above is for disclosure purposes
only and is not necessarily indicative of the results of operations that would
have occurred had the acquisition been consummated on the dates assumed, nor is
the pro forma information intended to be indicative of Universal American's
future results of operations.

4.         EARNINGS PER SHARE

           The reconciliation of the numerators and the denominators of the
basic and diluted EPS is as follows:

<TABLE>
<CAPTION>

                                                 INCOME         SHARES      PER SHARE
THREE MONTHS ENDED MARCH 31,                   (NUMERATOR)   (DENOMINATOR)    AMOUNT
                                               -----------   -------------  ---------
                                           (In thousands, per share amounts in dollars)

              2003
<S>                                           <C>            <C>            <C>
Weighted average common stock outstanding                        53,254
Less: Weighted average treasury shares                             (261)
                                                               --------

Basic EPS:

Net income applicable to common shareholders     $  7,548        52,993      $0.14
                                                 ========                    =====

Effect of Dilutive Securities                                     1,131
                                                               --------

Diluted EPS:
Net income applicable to common
  shareholders plus assumed conversions          $  7,548        54,124      $0.14
                                                 ========      ========      =====
</TABLE>
                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                 INCOME         SHARES      PER SHARE
THREE MONTHS ENDED MARCH 31,                   (NUMERATOR)   (DENOMINATOR)    AMOUNT
                                               -----------   -------------  ---------
                                           (In thousands, per share amounts in dollars)

            2002
<S>                                            <C>           <C>            <C>
Weighted average common stock outstanding                        52,892
Less:  weighted average treasury shares                            (122)
                                                               --------

Basic EPS:
Net income applicable to common shareholders     $  7,498        52,770      $0.14
                                                 ========                    =====

Effect of Dilutive Securities                                     1,335
                                                               --------

Diluted EPS:
Net income applicable to common
  shareholders plus assumed conversions          $  7,498        54,105      $0.14
                                                 ========      ========      =====
</TABLE>

5.         INVESTMENTS

           Fixed maturity securities are classified as investments available for
sale and are carried at fair value, with the unrealized gain or loss, net of tax
and other adjustments (deferred policy acquisition costs), included in
accumulated other comprehensive income.

<TABLE>
<CAPTION>
                                                             GROSS            GROSS
                                           AMORTIZED      UNREALIZED        UNREALIZED         FAIR
       CLASSIFICATION                        COST            GAINS            LOSSES           VALUE
                                          -----------     -----------      -----------      -----------
MARCH 31, 2003                                                  (In thousands)

<S>                                       <C>             <C>              <C>              <C>
US Treasury securities
  and obligations of US government        $    60,574     $     1,460      $        (4)     $    62,030
Corporate debt securities                     442,577          33,834           (1,443)         474,968
Foreign debt securities (1)                   175,835           7,423           (1,137)         182,121
Mortgage- and asset-backed securities         288,120          11,882           (2,341)         297,661
                                          -----------     -----------      -----------      -----------
                                          $   967,106     $    54,599      $    (4,925)     $ 1,016,780
                                          ===========     ===========      ===========      ===========

DECEMBER 31, 2002

US Treasury securities
 and obligations of US government         $    90,189     $     1,670      $        (9)     $    91,850
Corporate debt securities                     374,087          30,323           (1,667)         402,743
Foreign debt securities (1)                   166,689          10,072             (216)         176,545
Mortgage- and asset-backed securities         253,089          12,621           (1,898)         263,812
                                          -----------     -----------      -----------      -----------
                                          $   884,054     $    54,686      $    (3,790)     $   934,950
                                          ===========     ===========      ===========      ===========
</TABLE>

(1)  Primarily Canadian dollar denominated bonds owned by our Canadian insurance
     subsidiary.

           The amortized cost and fair value of fixed maturities by contractual
maturity are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                          MARCH 31, 2003
                                                   -------------------------
                                                    AMORTIZED         FAIR
                                                      COST           VALUE
                                                   ----------     ----------
                                                         (In thousands)
<S>                                                <C>            <C>
         Due in 1 year or less                     $   35,603     $   36,077
         Due after 1 year through 5 years             133,176        139,165
         Due after 5 years through 10 years           344,876        372,729
         Due after 10 years                           164,339        170,155
         Mortgage- and asset-backed securities        289,112        298,654
                                                   ----------     ----------
                                                   $  967,106     $1,016,780
                                                   ==========     ==========
</TABLE>


                                       10
<PAGE>
           During the three months ended March 31, 2003, the Company wrote down
the value of certain fixed maturity securities by $0.2 million. During the three
months ended March 31, 2002, the Company wrote down the value of certain fixed
maturity securities by $1.6 million (0.2% of investments). These write downs
represent management's estimate of other than temporary declines in value and
were included in net realized gains on investments in our consolidated statement
of operations.

6.         COMPREHENSIVE INCOME

           The components of other comprehensive income and the related tax
effects for each component are as follows:

<TABLE>
<CAPTION>

THREE MONTHS ENDED MARCH 31,                           2003                                      2002
                                       ------------------------------------      ------------------------------------
                                         BEFORE         TAX         NET OF        BEFORE          TAX         NET OF
                                          TAX         EXPENSE        TAX           TAX          EXPENSE        TAX
                                         AMOUNT      (BENEFIT)      AMOUNT        AMOUNT       (BENEFIT)      AMOUNT
                                       --------      --------      --------      --------      --------      --------
                                                                       (In thousands)
<S>                                    <C>           <C>           <C>           <C>           <C>           <C>
Net unrealized (loss) gain arising
 during the year (net  of deferred
 acquisition cost adjustment)          $ (3,302)     $ (1,160)     $ (2,142)     $(13,729)     $ (4,805)     $ (8,924)

Less:
Reclassification adjustment
 for gains included in net income          (110)          (39)          (71)         (143)          (50)          (93)
                                       --------      --------      --------      --------      --------      --------
Net unrealized (losses) gains            (3,192)       (1,121)       (2,071)      (13,586)       (4,755)       (8,831)

Currency translation adjustments          2,962         1,037         1,925            52            25            27
                                       --------      --------      --------      --------      --------      --------
Other comprehensive (loss) income      $   (230)     $    (84)     $   (146)     $(13,534)     $ (4,730)     $ (8,804)
                                       ========      ========      ========      ========      ========      ========
</TABLE>

7.         STOCKHOLDERS' EQUITY

           Common Stock

           The par value of common stock is $.01 per share with 80,000,000
shares authorized for issuance. Changes in the number of shares of common stock
issued were as follows:

<TABLE>
<S>                                                                  <C>
         Common stock issued, beginning of year                      53,184,381
         Stock options exercised                                        125,620
         Stock purchases pursuant to Agents' Stock Purchase Plan          5,000
                                                                     ----------
         Common stock issued, end of period                          53,315,001
                                                                     ==========
</TABLE>

           Treasury Stock

           The Board of Directors approved a plan to repurchase up to 1.0
million shares of Company stock in the open market. The purpose of the plan is
to fund employee stock bonuses. During the three months ended March 31, 2003,
the Company acquired 33,690 shares on the open market for a cost of $0.2 million
at a weighted average market price of $5.60 per share. The Company distributed
7,721 shares in the form of employee bonuses at a weighted average market price
of $5.92 per share, at the date of distribution.

           Accumulated Other Comprehensive Income

           The components of accumulated other comprehensive income are as
follows:


<TABLE>
<CAPTION>
                                                         MARCH 31,    DECEMBER 31,
                                                           2003          2002
                                                         --------      --------
                                                              (in thousands)
<S>                                                      <C>          <C>
         Net unrealized appreciation on investments      $ 49,691      $ 50,880
         Deferred acquisition cost adjustment              (4,323)       (2,320)
         Foreign currency translation gains (losses)          388        (2,574)
         Deferred tax on the above                        (16,015)      (16,099)
                                                         --------      --------
              Accumulated other comprehensive income     $ 29,741      $ 29,887
                                                         ========      ========
</TABLE>


                                       11
<PAGE>
8.         DEBT REFINANCING

           Existing Credit Facility

           As of January 1, 2003, the outstanding balance of our existing loan
was $50.8 million. In January 2003, the Company made a scheduled principal
payment on its existing loan of $2.8 million, and in March, 2003 made a
principal payment of $5.0 million from a portion of the proceeds from the
issuance of Trust Preferred securities (see Note 9 - Trust Preferred
Securities). These payments reduced the outstanding balance to $42.9 million,
which was repaid from the proceeds of the new loan obtained in connection with
the acquisition of Pyramid Life. The early extinguishment of the existing debt
resulted in the immediate amortization of the capitalized loan origination fees
relating to that debt, causing a pre-tax expense of approximately $1.8 million.
During the three months ended March 31, 2003 and 2002, the Company paid $1.0
million and $0.8 million, respectively, in interest and fees in connection with
this credit facility.

           New Credit Facility

           In connection with the acquisition of Pyramid Life (see Note 3 -
Business Combination), the Company obtained a new credit facility on March 31,
2003 to repay the existing loan and provide funds for the acquisition of Pyramid
Life. This $80 million credit facility consists of a $65 million term loan,
which was funded and remains outstanding, and a $15 million revolving loan
facility none of which has been drawn as of March 31, 2003. The facility calls
for interest at the London Interbank Offering Rate for one, two or three months
("LIBOR"), at the option of the Company, plus 300 basis points (currently 4.3%).
Due to the variable interest rate for this loan, the Company would be subject to
higher interest costs if short-term interest rates rise. Principal repayments
are scheduled over a five-year period with a final maturity date of March 31,
2008. The Company incurred loan origination fees of approximately $2.1 million,
which were capitalized and will be amortized on a straight-line basis over the
life of the loan. The Company pays an annual commitment fee of 50 basis points
on the unutilized facility. The obligations of the Company under the new credit
facility are secured by 100% of the common stock of the Company's U.S. insurance
subsidiaries and 65% of the Company's Canadian subsidiary. In addition, the
obligations are guaranteed by CHCS Services Inc. and other direct and indirect
subsidiaries of the Company (collectively the "Guarantors") and secured by all
of the assets of each of the Guarantors.

           The following table shows the schedule of remaining principal
payments (in thousands) on the Company's new term loan, with the final payment
in March 2008:

<TABLE>
<S>                                     <C>
                     2003               $   6,094
                     2004                  10,562
                     2005                  12,594
                     2006                  15,438
                     2007                  16,250
                     2008                   4,062
                                        ---------
                  Total                 $  65,000
                                        =========
</TABLE>

           In the event that the Company issues additional Trust Preferred
securities (see Note 9 - Trust Preferred Securities), 50% of the net proceeds of
up to $30.0 million, and then 100% of the net proceeds thereafter, are required
to be used to pay down the new term loan, reducing future principal payments on
a pro-rata basis.


                                       12
<PAGE>
9.         TRUST PREFERRED SECURITIES

           In March 2003, the Company formed Universal American Statutory Trust
V, a Delaware statutory business trust (the "Trust"), and, through a private
placement, $10.0 million, issued thirty year floating rate trust preferred
securities (the "Capital Securities"). The Trust will have the right to call the
Capital Securities at par after five years from the date of issuance. The
proceeds from the sale of the Capital Securities, together with proceeds from
the sale by the Trust of its common securities to the Company, were invested in
floating rate junior subordinated deferrable interest debentures of the Company
due 2033 (the "Junior Subordinated Debt"). A portion of the proceeds were used
to pay down existing debt in connection with the acquisition of Pyramid Life
(see Note 3 - Business Combination), with the balance to be held for general
corporate purposes.

           The Capital Securities represent an undivided beneficial interest in
the Trust's assets, which consist solely of the Junior Subordinated Debt.
Holders of Capital Securities have no voting rights. The Company owns all of the
common securities of the Trust. Holders of both the Capital Securities and the
Junior Subordinated Debt are entitled to receive cumulative cash distributions
accruing from March 27, 2003, the date of issuance, and payable quarterly in
arrears commencing June 27, 2003 at a floating rate equal to the three-month
LIBOR plus 400 basis points (currently 5.3%). The floating rate resets quarterly
and is limited to a maximum of 12.5% through March 28, 2008. Due to the variable
interest rate for this security the Company would be subject to higher interest
costs if short-term interest rates rise. The Capital Securities are subject to
mandatory redemption upon repayment of the Junior Subordinated Debt at maturity
or upon earlier redemption. The Junior Subordinated Debt is unsecured and ranks
junior and subordinate in right of payment to all present and future senior debt
of the Company and is effectively subordinated to all existing and future
obligations of the Company's subsidiaries. The Company has the right to redeem
the Junior Subordinated Debt on or after March 27, 2008.

           The Company has the right at any time, and from time to time, to
defer payments of interest on the Junior Subordinated Debt for a period not
exceeding 20 consecutive quarters up to the debentures' maturity date. During
any such period, interest will continue to accrue and the Company may not
declare or pay any cash dividends or distributions on, or purchase, the
Company's capital stock nor make any principal, interest or premium payments on
or repurchase any debt securities that rank equally with or junior to the Junior
Subordinated Debt. The Company will have the right at any time to dissolve the
Trust and cause the Junior Subordinated Debt to be distributed to the holders of
the Capital Securities. The Company has guaranteed, on a subordinated basis, all
of the Trust's obligations under the Capital Securities including payment of the
redemption price and any accumulated and unpaid distributions to the extent of
available funds and upon dissolution, winding up or liquidation but only to the
extent the Trust has funds available to make such payments. The Capital
Securities have not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and will only be offered and sold under
an applicable exemption from registration requirements under the Securities Act.

           In December 2002, a separate subsidiary trust of the Company issued
$15.0 million of floating rate (currently 5.3%) trust preferred securities under
terms similar to the above securities. As of March 31, 2003, a total of $25.0
million of trust preferred securities were outstanding. During the three months
ended March 31, 2003, the Company paid $0.2 million in interest in connection
with the trust preferred securities.

           In May 2003, the Company committed to the placement of two additional
trust preferred securities of $15 million each to be issued from separate
subsidiary trusts on similar terms as the above, except that the rate will be
fixed at 7.4% for the first five years on one and variable at 420 basis points
over LIBOR on the other. There is no assurance that either of these issuances
will close. Pursuant to the terms of our credit facility, half of the net
proceeds of these issuances will be used to repay our existing term loan.


                                       13
<PAGE>
10.        STATUTORY CAPITAL AND SURPLUS REQUIREMENTS

           The insurance subsidiaries are required to maintain minimum amounts
of capital and surplus as required by regulatory authorities. Each of the
insurance subsidiaries' statutory capital and surplus exceeds its respective
minimum requirement. However, substantially more than such minimum amounts are
needed to meet statutory and administrative requirements of adequate capital and
surplus to support the current level of the Insurance Subsidiaries' operations.
At March 31, 2003, the statutory capital and surplus, including asset valuation
reserve, of the U.S. insurance subsidiaries totaled $105.2 million. Statutory
net income for the three months ended March 31, 2003 was $2.3 million, which
included net realized losses of $0.1 million.

           The National Association of Insurance Commissioners ("NAIC") imposes
regulatory risk-based capital ("RBC") requirements on life insurance
enterprises. At March 31, 2003 all of the Insurance Subsidiaries maintained
ratios of total adjusted capital to RBC in excess of the Authorized Control
Level.

           Penncorp Life (Canada) reports to Canadian regulatory authorities
based upon Canadian statutory accounting principles that vary in some respects
from U.S. statutory accounting principles. Canadian net assets based upon
Canadian statutory accounting principles were C$57.4 million (US$39.0 million)
as of March 31, 2003. Penncorp Life (Canada) maintained a Minimum Continuing
Capital and Surplus Requirement Ratio ("MCCSR") in excess of the minimum
requirement at March 31, 2003.

11.        BUSINESS SEGMENT INFORMATION

           The Company's principal business segments are: Career Agency, Senior
Market Brokerage and Administrative Services. The Company also reports the
corporate activities of our holding company in a separate segment. A description
of these segments follows:

CAREER AGENCY -- The Career Agency segment is comprised of the operations of
Pennsylvania Life, Penncorp Life (Canada), and Pyramid Life, beginning March 31,
2003. Pennsylvania Life and Pyramid Life operate in the United States, while
Penncorp Life (Canada) operates exclusively in Canada. This segment's products
include supplemental senior health insurance, fixed benefit accident and
sickness disability insurance, life insurance and annuities and are distributed
by career agents that are under exclusive contract with either Pennsylvania
Life, Pyramid Life or Penncorp Life (Canada).

SENIOR MARKET BROKERAGE -- This segment includes the operations of our other
insurance subsidiaries, primarily American Pioneer, American Progressive and
Constitution, which distribute senior market products through non-exclusive
general agency and brokerage distribution systems. The products include Medicare
supplement/select, long term care, senior life insurance and annuities.

ADMINISTRATIVE SERVICES -- CHCS Services, Inc. acts as a third party
administrator and service provider for both affiliated and unaffiliated
insurance companies, primarily with respect to senior market insurance and
non-insurance products. The services provided include policy underwriting and
issuance, telephone and face-to-face verification, policyholder services, claims
adjudication, case management, care assessment and referral to health care
facilities.

CORPORATE -- This segment reflects the activities of our holding company,
including the payment of interest on our debt, certain senior executive
compensation, and the expense of being a public company.

Intersegment revenues and expenses are reported on a gross basis in each of the
operating segments but eliminated in the consolidated results. These
intersegment revenues and expenses affect the amounts reported on the individual
financial statement line items, but are eliminated in consolidation and 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 and Senior Market
Brokerage segments and interest on notes issued by the Corporate segment to the
other operating segments.


                                       14
<PAGE>
Financial results by segment are as follows:

<TABLE>
<CAPTION>

        THREE MONTHS ENDED MARCH 31,                  2003                          2002
                                            ------------------------      ------------------------
                                                       Segment Income                 Segment Income
                                            Segment     (Loss) Before     Segment     (Loss) Before
                                            Revenue     Income Taxes      Revenue     Income Taxes
                                            -------     ------------      -------     ------------
                                                              (In thousands)
<S>                                        <C>         <C>               <C>          <C>
         Career Agency                     $  41,339      $   9,470      $  39,764      $   7,207
         Senior Market Brokerage              52,464          3,056         39,676          4,155
         Administrative Services              12,809          2,564          9,696          1,876
                                           ---------      ---------      ---------      ---------
           Subtotal                          106,612         15,090         89,136         13,238
         Corporate                                40         (3,549)           219         (1,756)
         Intersegment revenues                (8,849)            --         (7,332)            --
                                           ---------      ---------      ---------      ---------
           Segment operating total (1)        97,803         11,541         82,023         11,482
         Adjustments to segment total
           Net realized  gains (1)               110            110            143            143
                                           ---------      ---------      ---------      ---------

         Total                             $  97,913      $  11,651      $  82,166      $  11,625
                                           =========      =========      =========      =========
</TABLE>

          (1)  We evaluate the results of operations of our segments based on
               operating income by segment. Operating revenue and income
               excludes realized gains and losses. This differs from generally
               accepted accounting principles, which includes the effect of
               realized gains and losses in the determination of total revenue
               and net income. Management believes that realized gains and
               losses are not indicative of overall operating trends. The
               schedule above reconciles our segment revenue to total revenue
               and operating income to net income in accordance with generally
               accepted accounting principles.

Identifiable assets by segment are as follows:

<TABLE>
<CAPTION>
                                           MARCH 31,       DECEMBER 31,
                                             2003              2002
                                          -----------      -----------
                                                   (In thousands)
<S>                                       <C>              <C>
         Career Agency                    $   851,548      $   683,720
         Senior Market Brokerage              714,901          707,967
         Administrative Services               19,448           19,332
                                          -----------      -----------
            Subtotal                        1,585,897        1,411,019
         Corporate                            414,799          375,219
         Intersegment assets (1)             (430,400)        (384,570)
                                          -----------      -----------

         Total Assets                     $ 1,570,296      $ 1,401,668
                                          ===========      ===========
</TABLE>

          (1)  Intersegment assets include the elimination of the parent holding
               company's investment in its subsidiaries as well as the
               elimination of other intercompany balances.


                                       15

<PAGE>
12.        FOREIGN OPERATIONS

           A portion of the operations of the Company's Career Agency segment is
conducted in Canada through Penncorp Life (Canada). These assets and liabilities
are located in Canada where the insurance risks are written. Revenues, excluding
capital gains, of the Career Agency segment by geographic area are as follows:

<TABLE>
<CAPTION>
         THREE MONTHS ENDED MARCH 31,             2003            2002
                                                -------         -------
                                               (In thousands, in US$'s)
<S>                                             <C>             <C>
         Revenues
           United States                        $26,241         $26,022
           Canada                                15,098          13,742
                                                -------         -------
              Total                             $41,339         $39,764
                                                =======         =======
</TABLE>

           Total assets and liabilities of Penncorp Life (Canada), which are
located entirely in Canada, are as follows:

<TABLE>
<CAPTION>
                                              MARCH 31,       DECEMBER 31,
                                                2003             2002
                                              --------         --------
                                             (In thousands, in US$'s)
<S>                                           <C>              <C>
         Assets                               $185,146         $175,365
                                              ========         ========
         Liabilities                          $135,066         $124,843
                                              ========         ========
</TABLE>


ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

           Certain statements in this report or incorporated by reference into
this report and oral statements made from time to time by our representatives
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
statements not based on historical information. They relate to future
operations, strategies, financial results or other developments. In particular,
statements using verbs such as "expect," "anticipate," "believe" or similar
words generally involve forward-looking statements. Forward-looking statements
include statements about development and distribution of our products,
investment spreads or yields, the impact of proposed or completed acquisitions,
the adequacy of reserves or the earnings or profitability of our activities.
Forward-looking statements are based upon estimates and assumptions that are
subject to significant business, economic and competitive uncertainties, many of
which are beyond our control and are subject to change. These uncertainties can
affect actual results and could cause actual results to differ materially from
those expressed in any forward-looking statements. Whether or not actual results
differ materially from forward-looking statements may depend on numerous
foreseeable and unforeseeable risks and uncertainties, some of which relate
particularly to our business, such as our ability to set adequate premium rates
and maintain adequate reserves, our ability to compete effectively and our
ability to grow our business through internal growth as well as through
acquisitions. Other risks and uncertainties may be related to the insurance
industry generally or the overall economy, such as regulatory developments,
industry consolidation and general economic conditions and interest rates. We
disclaim any obligation to update forward-looking statements.


                                       16
<PAGE>
INTRODUCTION

           The following discussion and analysis presents a review of Universal
American and its subsidiaries as of March 31, 2003 and December 31, 2002 and its
results of operations for the three months ended March 31, 2003. This
Management's Discussion and Analysis of Financial Condition and Results of
Operation should be read in conjunction with the consolidated financial
statements as well as the MD&A included in the Company's 2002 Annual Report on
Form 10-K.

           We own ten insurance companies (collectively, the "Insurance
Subsidiaries"): American Progressive Life & Health Insurance Company of New York
("American Progressive"), American Pioneer Life Insurance Company ("American
Pioneer"), American Exchange Life Insurance Company ("American Exchange"),
Constitution Life Insurance Company ("Constitution"), Marquette National Life
Insurance Company ("Marquette"), Peninsular Life Insurance Company
("Peninsular"), Pennsylvania Life Insurance Company ("Pennsylvania Life"),
Penncorp Life Insurance Company ("Penncorp Life (Canada)"), Pyramid Life
Insurance Company ("Pyramid Life") and Union Bankers Insurance Company ("Union
Bankers"). Collectively, the insurance company subsidiaries are licensed to sell
life and accident and health insurance in all fifty states, the District of
Columbia and all the provinces of Canada. In addition to the Insurance
Subsidiaries, we own a third party administrator, CHCS Services, Inc., that
administers senior market business for more than 40 unaffiliated insurance
companies, as well as our own companies. Pyramid Life was acquired on March 31,
2003 and its operating results prior to the date of acquisition are not included
in Universal American's consolidated results of operations.

OVERVIEW

           Our principal business segments are: Career Agency, Senior Market
Brokerage and Administrative Services. We also report the corporate activities
of our holding company in a separate segment. A description of these segments
follows:

CAREER AGENCY -- The Career Agency segment is comprised of the operations of
Pennsylvania Life, Penncorp Life (Canada), and Pyramid Life, beginning March 31,
2003. Pennsylvania Life and Pyramid Life operate in the United States, while
Penncorp Life (Canada) operates exclusively in Canada. This segment's products
include supplemental senior health insurance, fixed benefit accident and
sickness disability insurance, life insurance, and annuities and are distributed
by career agents that are under exclusive contract with Pennsylvania Life,
Pyramid Life or Penncorp Life (Canada).

SENIOR MARKET BROKERAGE -- This segment includes the operations of our other
insurance subsidiaries, primarily American Pioneer, American Progressive and
Constitution that distribute senior market products through non-exclusive
general agency and brokerage distribution systems. The products include Medicare
supplement/select, long term care, senior life insurance and annuities.

ADMINISTRATIVE SERVICES -- CHCS Services, Inc. acts as a third party
administrator and service provider for both affiliated and unaffiliated
insurance companies, primarily with respect to senior market insurance and
non-insurance products. The services provided include policy underwriting and
issuance, telephone and face-to-face verification, policyholder services, claims
adjudication, case management, care assessment and referral to health care
facilities.

CORPORATE -- This segment reflects the activities of our holding company,
including the payment of interest on our debt, certain senior executive
compensation, and the expense of being a public company.

Intersegment revenues and expenses are reported on a gross basis in each of the
operating segments. These intersegment revenue and expenses affect the amounts
reported on the individual financial statement line items, but are eliminated in
consolidation and 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 and
Senior Market Brokerage segments and interest on notes issued by the Corporate
segment to the other operating segments.


                                       17
<PAGE>
CRITICAL ACCOUNTING POLICIES

          Our consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States ("GAAP"). The
preparation of our financial statements in conformity with GAAP requires us to
make estimates and assumptions that affect the amounts of assets and liabilities
and disclosures of assets and liabilities reported by us at the date of the
financial statements and the revenues and expenses reported during the reporting
period. As additional information becomes available or actual amounts become
determinable, the recorded estimates may be revised and reflected in operating
results. Actual results could differ from those estimates. Accounts that, in our
judgment, are most critical to the preparation of our financial statements
include policy liabilities and accruals, deferred policy acquisition costs,
valuation of certain investments and deferred taxes. There have been no changes
in our critical accounting policies during the current quarter. Refer to
"Critical Accounting Policies" in the Company's 2002 Annual Report on Form 10-K
for information on accounting policies that the Company considers critical in
preparing its consolidated financial statements.

ACQUISITIONS AND FINANCING ACTIVITY

           Pyramid Life Acquisition

           On March 31, 2003, Universal American acquired all of the outstanding
common stock of Pyramid Life. Pyramid Life specializes in selling health and
life insurance products to the senior market, including Medicare supplement,
long term care, life insurance, and annuities. Pyramid Life markets its products
in 26 states through a career agency sales force of over 1,100 agents operating
out of 33 Senior Solutions Sales Centers. As of the closing of the acquisition
Pyramid Life had approximately $120 million of premium in force. In the Pyramid
Life acquisition the Company acquired a block of in-force business that the
Company believes will be profitable, as well as a career sales force that is
skilled in selling the same type of senior market insurance products that are
currently sold by Universal American. During 2002, Pyramid Life agents produced
more than $25 million of annualized new sales. We believe this acquisition will
add further scale and efficiencies to our operations in the rapidly expanding
senior market. Following a transition period that we estimate will take one
year, we plan to take advantage of our cost-effective and efficient service
center to administer the business Operating results generated by Pyramid Life
prior to the date of acquisition are not included in Universal American's
consolidated financial statements. Refer to Consolidated Financial Statement
Note 3 - Business Combinations for additional information on the acquisition.

           Debt Refinancing

           In connection with the acquisition of Pyramid Life (see Consolidated
Financial Statement Note 3 - Business Combination), the Company refinanced its
existing credit facility. On March 31, 2003, the Company entered into an $80
million credit facility consisting of a $65 million term loan and a $15 million
revolving loan facility. None of the revolving loan facility was drawn as of
March 31, 2003. Refer to Consolidated Financial Statement Note 8 - Debt
Refinancing. The Company used the proceeds from the new term loan to repay the
balance outstanding on its existing term loan. The early extinguishment of the
existing debt resulted in the immediate amortization of the capitalized loan
origination fees relating to that debt, resulting in a pre-tax expense of
approximately $1.8 million.

        Trust Preferred Issuances

        In March 2003, the Company issued an additional $10.0 million of
floating rate trust preferred securities through a subsidiary trust, bringing
the total outstanding to $25.0 million. These securities have terms similar to
those issued in December 2002. A portion of the proceeds was used to repay our
existing debt and the balance was retained at the parent company for general
corporate purposes (for more detailed information, see Consolidated Financial
Statement Note 9 - Trust Preferred Securities).


                                       18
<PAGE>
          In May 2003, the Company committed to the placement of two additional
trust preferred securities of $15 million each to be issued from separate
subsidiary trusts on similar terms as the prior issuances, except that the rate
will be fixed at 7.4% for the first five years on one and variable at 420 basis
points over LIBOR on the other. There is no assurance that either of these
issuances will close. Pursuant to the terms of our credit facility, half of the
net proceeds of these issuances will be used to repay our existing term loan.

RESULTS OF OPERATIONS - CONSOLIDATED OVERVIEW

           The following table reflects each of our segments' operating
income(1) and contains a reconciliation to reported net income:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                                      2003          2002
                                                                --------      --------
                                                                    (In thousands)
<S>                                                             <C>           <C>
Operating Income (1):
  Career Agency                                                 $  9,470      $  7,207
  Senior Market Brokerage                                          3,056         4,155
  Administrative Services                                          2,564         1,876
                                                                --------      --------
    Segment operating income                                      15,090        13,238

Corporate & Eliminations                                          (3,549)       (1,756)
                                                                --------      --------

Operating income before realized gains and income taxes (1)       11,541        11,482

Income taxes on operating income (2)                              (4,064)       (4,077)
                                                                --------      --------

  Net operating income (1)                                         7,477         7,405
  Realized gains, net of tax (3)                                      71            93
                                                                --------      --------

Net income                                                      $  7,548      $  7,498
                                                                ========      ========

Per share data (diluted):
  Net operating income (1)                                      $   0.14      $   0.14
  Realized gains, net of tax (3)                                      --            --
                                                                --------      --------

Net income                                                      $   0.14      $   0.14
                                                                ========      ========
</TABLE>

     (1)  We evaluate the results of operations of our segments based on
          operating income by segment. Operating income excludes realized gains
          and losses. Management believes that realized gains and losses are not
          indicative of overall operating trends. This differs from generally
          accepted accounting principles, which includes the effect of realized
          gains in the determination of net income. The schedule above
          reconciles our operating income to net income in accordance with
          generally accepted accounting principles.

     (2)  The effective tax rates on operating income before realized gains were
          35.2% for the three months ended March 31, 2003 and 35.5% for 2002.

     (3)  Tax on realized capital gains is based on a 35.0% effective tax rate
          for all periods.

Three months ended March 31, 2003 and 2002

           Net income for the first quarter of 2003 was substantially the same
as the amount reported in the first quarter of 2002. In connection with the
acquisition of Pyramid Life, we refinanced our credit facility. As a result of
the repayment of our existing debt, we were required to write off the
unamortized portion of the fees we incurred for that debt. This resulted in a
non-cash charge of $1.8 million, or $.02 net of tax (the "financing charge").

           Net operating income, excluding realized gains and excluding the
financing charge, was $8.6 million, or $0.16 per share, representing increases
of 16% and 14%, respectively, over the 2002 first quarter results of $7.4
million, or $0.14 per share.


                                       19
<PAGE>
           Pre-tax operating results for the Career Agency segment improved by
$2.3 million, or 31%, to $9.5 million in the first quarter of 2003 compared to
the first quarter of 2002. This reflects a continued increase in new sales and
improved loss ratios.

           Operating results for the Senior Market Brokerage segment fell $1.1
million, or 27%, compared to the first quarter of 2002. There were three primary
factors contributing to the reduced profitability: losses on the discontinued
Florida home healthcare block of business, excess lapsation in a block of
Connecticut Medicare supplement business in the first quarter of 2003 and
favorable experience and reserve development on certain runoff blocks of
business in the first quarter of 2002 that did not repeat in the first quarter
of 2003.

           Operating income for the Administrative Services segment improved by
$0.7 million, or 37%, compared to the first quarter of 2002. This improvement is
primarily a result of the increase in fees for underwriting of long term care
policies for third party clients and the scheduled reduction in the amortization
of the present value of future profits.

           The operating loss from the Corporate segment increased by $1.8
million, or 102%, compared to the first quarter of 2002, due to the financing
charge.


SEGMENT RESULTS - CAREER AGENCY

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                              2003          2002
                                                        --------      --------
                                                            (In thousands)
<S>                                                     <C>           <C>
Net premiums and policyholder fees:
  Life and annuity                                      $  3,869      $  3,745
  Accident & health                                       28,829        27,795
                                                        --------      --------
  Net premiums                                            32,698        31,540
Net investment income                                      8,527         8,144
Other income                                                 114            80
                                                        --------      --------
  Total revenue                                           41,339        39,764
                                                        --------      --------

Policyholder benefits                                     19,510        20,183
Interest credited to policyholders                         1,063           636
Change in deferred acquisition costs                      (4,620)       (3,227)
Amortization of present value of future profits               --            --
Commissions and general expenses, net of allowances       15,916        14,965
                                                        --------      --------
  Total benefits, claims and other deductions             31,869        32,557
                                                        --------      --------

  Segment operating income                              $  9,470      $  7,207
                                                        ========      ========
</TABLE>

Three Months ended March 31, 2003 and 2002

           Pre-tax operating results for the Career Agency segment improved by
$2.3 million, or 31%, to $9.5 million in the first quarter of 2003 compared to
the first quarter of 2002. This reflects a continued increase in new sales and
improved loss ratios.

           REVENUES. Net premiums for the quarter increased by approximately 4%
for the segment compared to the first quarter of 2002. The increase is due to
continued strong sales, particularly in senior market products. Canadian
premiums accounted for approximately 40% of the net premiums of this segment for
the first quarter of 2003 and 38% of the net premiums for the first quarter of
2002. The Career agents also sold $16.6 million of fixed annuities during the
first quarter of 2003, compared to $4.5 million in 2002. Annuity deposits are
not reported as premiums for GAAP.

           Net investment income increased by approximately $0.4 million, or 5%,
compared to the first quarter of 2002. The increase is due to an increase in the
segment's invested assets due to the increase in the sale of annuities, as noted
above, offset by a decrease in overall investment yields.


                                       20
<PAGE>
           BENEFITS, CLAIMS AND OTHER DEDUCTIONS. Policyholder benefits,
including the change in reserves, decreased by approximately 3% compared to the
first quarter of 2002. The decrease was due primarily to a reduction in the
overall loss ratios for the segment from 64% in the first quarter of 2002 to 60%
in the first quarter of 2003, primarily in the disability line. Interest
credited increased by $0.4 million, due to the increase in annuity balances as a
result of the continued strong sales.

           The increase in deferred acquisition costs was approximately $1.4
million more in the first quarter of 2003, compared to the increase in the first
quarter of 2002. This is directly related to the increase in the new business,
including annuities, generated by the segment during 2003.

           Commissions and general expenses increased by approximately $1.0
million, or 6%, in the first quarter of 2003 compared to 2002. This relates
primarily to the increase in new business.


SEGMENT RESULTS - SENIOR MARKET BROKERAGE

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                              2003          2002
                                                        --------      --------
Net premiums and policyholder fees:                         (In thousands)
<S>                                                     <C>           <C>
  Life and annuity                                      $  4,245      $  4,602
  Accident & health                                       42,243        28,770
                                                        --------      --------
  Net premiums                                            46,488        33,372
Net investment income                                      5,907         6,127
Other income                                                  69           177
                                                        --------      --------
  Total revenue                                           52,464        39,676
                                                        --------      --------

Policyholder benefits                                     36,296        25,034
Interest credited to policyholders                         2,069         1,971
Change in deferred acquisition costs                      (3,631)       (2,705)
Amortization of present value of future profits               33            43
Commissions and general expenses, net of allowances       14,641        11,178
                                                        --------      --------
  Total benefits, claims and other deductions             49,408        35,521
                                                        --------      --------

  Segment operating income                              $  3,056      $  4,155
                                                        ========      ========
</TABLE>

           The table below details the gross premiums and policyholder fees
before reinsurance for the major product lines in the Senior Market Brokerage
segment and the corresponding average amount of premium retained. We reinsure a
substantial portion of all of our Senior Market Brokerage products to
unaffiliated third party reinsurers under various quota share agreements.
Medicare supplement/select written premium is reinsured under quota share
reinsurance agreements ranging between 25% and 75% based upon the geographic
distribution. We have also acquired various blocks of Medicare supplement
premium, which we reinsure under quota share reinsurance agreements ranging from
50% to 100%. Under our reinsurance agreements, we reinsure the claims incurred
and commissions on a pro rata basis and receive additional expense allowances
for policy issue, administration and premium taxes. In 2002 and 2003, we
increased our retention on Medicare supplement new business, causing the
percentage of net retained premium to increase as seen below.

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                      2003                        2002
                                       -------------------------   -------------------------
                                         GROSS            NET       GROSS             NET
                                       PREMIUMS         RETAINED   PREMIUMS         RETAINED
                                       --------         --------   --------         --------
                                                            (In thousands)
<S>                                    <C>              <C>       <C>               <C>
Medicare supplement acquired           $ 45,021           25%     $ 39,440            7%
Medicare supplement/select written       66,585           39%       59,027           34%
Other senior supplemental health          6,494           60%        6,087           60%
Other health                              2,704           45%        4,549           39%
Senior life insurance                     2,592           59%        2,277           67%
Other life                                3,501           78%        4,026           74%
                                       --------                   --------

Total gross premiums                   $126,897           37%     $115,406           29%
                                       ========                   ========
</TABLE>


                                       21
<PAGE>
Three Months ended March 31, 2003 and 2002

           Operating results for the Senior Market Brokerage segment fell $1.1
million, or 27%, compared to the first quarter of 2002. There were three factors
contributing to the reduced profitability: losses on the discontinued Florida
home healthcare block of business, excess lapsation in a block of Connecticut
Medicare supplement business in the first quarter of 2003 and favorable
experience and reserve development on certain runoff blocks of business in the
first quarter of 2002 that did not repeat in the first quarter of 2003.

           REVENUES. Gross premium written for the Senior Market portfolio
products have increased $11.5 million, or 10%, over the first quarter of 2002.
The increase in gross premium includes a $7.6 million, or 13%, increase in
Medicare supplement/select written, as a result of continued new sales, rate
increases and better than assumed persistency. Medicare supplement acquired
increased by $5.6 million, or 14%, due to the premiums from the Nationwide block
of business acquired in November 2002. Other senior supplemental health, which
includes long term care, nursing home and home health care increased by $0.4
million, or 7%, and Senior life increased by $0.3 million, or 14%. These
increases were partially offset by a decrease of $1.8 million, or 41%, in other
health, primarily as a result of our decision to exit the major medical line of
business and $0.5 million, or 13%, in other life.

           Net premiums for the first quarter of 2003 increased by approximately
$13.1 million, or 39%, compared to 2002. Net premiums grew faster than gross
premiums as a result of our decision to reinsure less premium and retain more
risk. Also, the premiums from the Nationwide business are retained 100%. As a
result, the net amount of premium retained increased from 29% in 2002 to 37% in
2003.

           Net investment income decreased by $0.2 million compared to the first
quarter of 2002. Although we increased the segment's invested assets, net
investment income decreased due to an overall decline in reinvestment yields.

           BENEFITS, CLAIMS AND OTHER DEDUCTIONS. Policyholder benefits,
including the change in reserves, increased by approximately $11.3 million, or
45%, compared to the first quarter of 2002. The increase is due to an increase
in losses on the discontinued Florida home healthcare block of business over the
first quarter of 2003, favorable experience and reserve development on certain
runoff blocks of business in the first quarter of 2002 that did not repeat in
the first quarter of 2003 and higher annualized premium in force and increased
retention in the Medicare supplement lines. The Florida home healthcare block of
business improved over the fourth quarter of 2002 due to the effect of rate
increases and more efficient claims management. We will continue to seek rate
increases on this block, as appropriate, to reduce its strain on the segment's
operating results.

           The increase in deferred acquisition costs in the first quarter of
2003 was approximately $0.9 million more than in the first quarter of 2002. The
increase relates primarily to our higher retention on new business and was
offset by the accelerated amortization of the deferred costs relating to the
excess lapsation on the block of Connecticut Medicare supplement policies.

           Commissions and other operating expenses increased by approximately
$3.5 million, or 31%, in the first quarter of 2003 compared to 2002. The
following table details the components of commission and other operating
expenses:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                                2003            2002
                                                          --------        --------
                                                               (In thousands)
<S>                                                       <C>             <C>
Commissions                                               $ 20,905        $ 20,225
Other operating costs                                       15,474          15,052
Reinsurance allowances                                     (21,738)        (24,099)
                                                          --------        --------

Commissions and general expenses, net of allowances       $ 14,641        $ 11,178
                                                          ========        ========
</TABLE>

                                       22
<PAGE>
           The ratio of commissions to gross premiums decreased to 16.5% during
the first quarter of 2003, from 17.5% in 2002, as a result of the lower level of
new business written. Other operating costs as a percentage of gross premiums
decreased to 12.2% during the first quarter of 2003 compared to 13.0% in 2002.
Commission and expense allowances received from reinsurers as a percentage of
the premiums ceded also decreased to 27.0% during the first quarter of 2003
compared to 29.4% in 2002, primarily due to the reduction in new business ceded
as a result of our decision to increase our retention on new business.


SEGMENT RESULTS - ADMINISTRATIVE SERVICES

<TABLE>
<CAPTION>

THREE MONTHS ENDED MARCH 31,                                               2003          2002
                                                                         -------       -------
                                                                             (In thousands)
<S>                                                                      <C>           <C>
Service fee and other income                                             $12,806       $ 9,567
Net investment income                                                          3           129
                                                                         -------       -------
  Total revenue                                                           12,809         9,696
                                                                         -------       -------

Amortization of present value of future profits                               88           379
General expenses                                                          10,157         7,441
                                                                         -------       -------
  Total expenses                                                          10,245         7,820
                                                                         -------       -------

  Segment operating income                                                 2,564         1,876

Depreciation, amortization and interest                                      481           689
                                                                         -------       -------
Earnings before interest, taxes, depreciation and amortization (1)       $ 3,045       $ 2,565
                                                                         =======       =======
</TABLE>


(1) In addition to segment operating income, we also evaluate the results of our
    Administrative Services segment based on earnings before interest, taxes,
    depreciation and amortization ("EBITDA"), which is not in accordance with
    generally accepted accounting principles.

Three months ended March 31, 2002 and 2001

           Operating income for the Administrative Services segment improved by
$0.7 million, or 37%, compared to the first quarter of 2002. This improvement is
primarily a result of the in fees for underwriting of long term care policies
for third party clients and the scheduled reduction in the amortization of the
present value of future profits ("PVFP"). Earnings before interest, taxes,
depreciation and amortization ("EBITDA") for this segment increased $0.5
million, or 18%, compared to the first quarter of 2002.

           The following table details the service fee revenue earned by our
Administrative Services segment:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                 2003          2002
                                           -------       -------
                                               (In thousands)
<S>                                        <C>           <C>
Affiliated Fee Revenue
        Medicare supplement                $ 5,914       $ 4,133
        Long term care                         672           521
        Other health insurance                  81            22
        Life insurance                         192            95
                                           -------       -------

        Total Affiliated Revenue             6,859         4,771
                                           -------       -------

Unaffiliated Fee Revenue
        Medicare supplement                  2,186         2,342
        Long term care                       2,740         1,613
        Other health insurance                  38           128
        Non-insurance products                 276           375
        Non-insurance assistance               707           338
                                           -------       -------

        Total Unaffiliated Revenue           5,947         4,796
                                           -------       -------

Total Administrative Service Revenue       $12,806       $ 9,567
                                           =======       =======
</TABLE>


                                       23
<PAGE>
           Administrative Service fee revenue increased by $3.2 million, or 34%,
as compared to the first quarter of 2002. Affiliated service fee revenue
increased by $2.1 million compared to the first quarter of 2003 as a result of
the increase in Medicare supplement business in force at our insurance
subsidiaries. Unaffiliated service fee revenue increased by approximately $1.1
million primarily due to an increase in the fees for underwriting of long term
care policies for our third party clients, including the underwriting work we
performed for the consortium that is offering long term care to employees of the
federal government and their families. However, as the open enrollment period of
this program winds down, we will seek to replace this business with additional
services for our existing and new clients

           General expenses for the segment increased by $2.7 million, or 37%,
due primarily to the increase in business and the cost to bring new clients on
line.

           The amortization of PVFP relates primarily to the acquisition of
American Insurance Administration Group, Inc. ("AIAG"). Approximately $7.7
million of PVFP was established when AIAG was acquired in January 2000 and is
being amortized in proportion to the expected profits from the contracts in
force on the date of acquisition. A large portion of the contracts had a
remaining term of three years at the date of acquisition; accordingly, the
amortization is heavily weighted to those periods. During the first quarter of
2003, approximately $0.1 million was amortized compared to $0.4 million in 2002.
As of March 31, 2003, $1.2 million, or 16%, of the original amount of PVFP
remains unamortized.

SEGMENT RESULTS - CORPORATE

The following table presents the primary components comprising the segment's
operating loss:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                             2003         2002
                                                        ------       ------
                                                          (In thousands)
<S>                                                     <C>          <C>
Interest cost on outstanding debt                       $  816       $  806
Early extinquishment of debt                             1,766           --
Amortization of capitalized loan origination fees          129          132
Stock-based compensation expense                            91          160
Other parent company expenses, net                         747          658
                                                        ------       ------

  Segment operating loss                                $3,549       $1,756
                                                        ======       ======
</TABLE>

Three Months ended March 31, 2003 and 2002

           The operating loss from the Corporate segment increased by $1.8
million, or 102%, compared to the first quarter of 2002, due to the financing
charge associated with the refinancing of our debt. The interest on our term
loan decreased by $0.2 million compared to the first quarter of 2002 as a result
of principal repayments and a lower rate, however, this was almost entirely
offset by the additional interest on the trust preferred securities.

LIQUIDITY AND CAPITAL RESOURCES

           Our capital is used primarily to support the retained risks and
growth of our insurance company subsidiaries and to support our parent company
as an insurance holding company. In addition, we use capital to fund our growth
through acquisitions of other companies, blocks of insurance or administrative
service business.

           We require cash at our parent company to meet our obligations under
our credit facility and our outstanding debentures held by our subsidiaries,
American Progressive and Pennsylvania Life. In January 2002, our parent company
issued a debenture to Pennsylvania Life in conjunction with the transfer of the
business of Pennsylvania Life's Canadian Branch to Penncorp Life (Canada). We
anticipate funding the repayment of the debenture from dividends of Penncorp
Life (Canada). We also require cash to pay the operating expenses necessary to
function as a holding company (applicable insurance department regulations
require us to bear our own expenses), and to meet the costs of being a public
company.


                                       24
<PAGE>
           We believe that our current cash position, the availability of the
new $15.0 million revolving credit facility, the expected cash flows of our
administrative service company and the surplus note interest payments from
American Exchange (as explained below) can support our parent company
obligations for the foreseeable future. However, there can be no assurance as to
our actual future cash flows or to the continued availability of dividends from
our insurance company subsidiaries.

           Contractual Obligations and Commercial Commitments

           Existing Credit Facility

           As of January 1, 2003, the outstanding balance of our existing loan
was $50.8 million. In January 2003, the Company made a scheduled principal
payment on its existing loan of $2.8 million, and in March, 2003 made a
principal payment of $5.0 million from a portion of the proceeds from the
issuance of Trust Preferred securities (see Note 9 - Trust Preferred
Securities). These payments reduced the outstanding balance to $42.9 million,
which was repaid from the proceeds of the new loan obtained in connection with
the acquisition of Pyramid Life. The early extinguishment of the existing debt
resulted in the immediate amortization of the capitalized loan origination fees
relating to that debt, causing a pre-tax expense of approximately $1.8 million.

           During the three months ended March 31, 2003 and 2002, the Company
paid $1.0 million and $0.8 million, respectively, in interest and fees in
connection with this credit facility.

           New Credit Facility

           In connection with the acquisition of Pyramid Life (see Note 3 -
Business Combination), the Company obtained a new credit facility on March 31,
2003 to repay the existing loan and provide funds for the acquisition of Pyramid
Life. This $80 million credit facility consists of a $65 million term loan,
which was funded and remains outstanding, and a $15 million revolving loan
facility none of which has been drawn as of March 31, 2003. The facility calls
for interest at the London Interbank Offering Rate for one, two or three months
("LIBOR"), at the option of the Company, plus 300 basis points (currently 4.3%).
Due to the variable interest rate for this loan, the Company would be subject to
higher interest costs if short-term interest rates rise. Principal repayments
are scheduled over a five-year period with a final maturity date of March 31,
2008. The Company incurred loan origination fees of approximately $2.1 million,
which were capitalized and will be amortized on a straight-line basis over the
life of the loan. The Company pays an annual commitment fee of 50 basis points
on the unutilized facility. The obligations of the Company under the new credit
facility are secured by 100% of the common stock of the Company's U.S. insurance
subsidiaries and 65% of the Company's Canadian subsidiary. In addition, the
obligations are guaranteed by CHCS Services Inc. and other direct and indirect
subsidiaries of the Company (collectively the "Guarantors") and secured by all
of the assets of each of the Guarantors.

           The following table shows the schedule of remaining principal
payments (in thousands) on the Company's new term loan, with the final payment
in March 2008:

<TABLE>
<S>                                     <C>
                     2003               $   6,094
                     2004                  10,562
                     2005                  12,594
                     2006                  15,438
                     2007                  16,250
                     2008                   4,062
                                        ---------
                      Total             $  65,000
                                        =========
</TABLE>

           In the event that the Company issues additional Trust Preferred
securities (see Note 9 - Trust Preferred Securities), 50% of the net proceeds of
up to $30.0 million, and then 100% of the net proceeds thereafter, are required
to be used to pay down the new term loan, reducing future principal payments on
a pro-rata basis.


                                       25
<PAGE>
           Lease Obligations

           We are obligated under certain lease arrangements for its executive
and administrative offices in New York, Florida, Texas, and Ontario, Canada.
Annual minimum rental commitments, subject to escalation clauses, under
non-cancelable operating leases (in thousands) are as follows:

<TABLE>
<S>                                                           <C>
           2003 - Remainder of year                           $  1,503
           2004                                                  1,807
           2005                                                  1,279
           2006                                                  1,145
           2007 and thereafter                                   3,764
                                                              --------
                        Totals                                $  9,498
                                                              ========
</TABLE>

           In addition to the above, Pennsylvania Life is the named lessee on
approximately 40 properties occupied by Career Agents for uses as field offices.
The agents reimburse rent for these field offices. The total annual rent
obligation for these field offices is approximately $633,000.

           Trust Preferred Securities

           In March 2003, the Company formed Universal American Statutory Trust
V, a Delaware statutory business trust (the "Trust"), and, through a private
placement, issued $10.0 million, thirty year floating rate trust preferred
securities (the "Capital Securities"). The Trust will have the right to call the
Capital Securities at par after five years from the date of issuance. The
proceeds from the sale of the Capital Securities, together with proceeds from
the sale by the Trust of its common securities to the Company, were invested in
floating rate junior subordinated deferrable interest debentures of the Company
due 2033 (the "Junior Subordinated Debt"). A portion of the proceeds were used
to pay down existing debt in connection with the acquisition of Pyramid Life
(see Consolidated Financial Statement Note 3 - Business Combination), with the
balance to be held for general corporate purposes.

           The Capital Securities represent an undivided beneficial interest in
the Trust's assets, which consist solely of the Junior Subordinated Debt.
Holders of Capital Securities generally have no voting rights. The Company owns
all of the common securities of the Trust. Holders of both the Capital
Securities and the Junior Subordinated Debt are entitled to receive cumulative
cash distributions accruing from March 27, 2003, the date of issuance, and
payable quarterly in arrears commencing June 27, 2003 at a floating rate equal
to the three-month LIBOR plus 400 basis points(currently 5.3%) of the stated
liquidation amount of $1,000 per Capital Security. The floating rate resets
quarterly and is limited to a maximum of 12.5% through March 28, 2008. The rate
is subject to fluctuations in LIBOR at three month increments. Due to the
variable nature of the interest rate for this credit facility, the Company would
be subject to higher interest cost in a rising interest rate environment. The
Capital Securities are subject to mandatory redemption upon repayment of the
Junior Subordinated Debt at maturity or upon earlier redemption. The Junior
Subordinated Debt is unsecured and ranks junior and subordinate in right of
payment to all present and future senior debt of the Company and is effectively
subordinated to all existing and future obligations of the Company's
subsidiaries. The Company has the right to redeem the Junior Subordinated Debt
on or after March 27, 2008.

           The Company has the right at any time, and from time to time, to
defer payments of interest on the Junior Subordinated Debt for a period not
exceeding 20 consecutive quarters up to the debentures' maturity date. During
any such period, interest will continue to accrue and the Company may not
declare or pay any cash dividends or distributions on, or purchase, the
Company's capital stock nor make any principal, interest or premium payments on
or repurchase any debt securities that rank equally with or junior to the Junior
Subordinated Debt. The Company will have the right at any time to dissolve the
Trust and cause the Junior Subordinated Debt to be distributed to the holders of
the Capital Securities. The Company has guaranteed, on a subordinated basis, all
of the Trust's obligations under the Capital Securities including payment of the
redemption price and any accumulated and unpaid distributions to the extent of
available funds and upon dissolution, winding up or liquidation but only to the
extent the Trust has funds available to make such payments. The Capital
Securities have not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and will only be offered and sold under
an applicable exemption from registration requirements under the Securities Act.


                                       26
<PAGE>
          In December 2002, a separate subsidiary trust of the Company issued
$15.0 million of floating rate (currently 5.3%) trust preferred securities under
terms similar to the above securities. As of March 31, 2003, a total of $25.0
million of trust preferred securities were outstanding. During the three months
ended March 31, 2003, the Company paid $0.2 million in interest in connection
with the trust preferred securities.

          In May 2003, the Company committed to the placement of two additional
trust preferred securities of $15 million each to be issued from separate
subsidiary trusts on similar terms as the above, except that the rate will be
fixed at 7.4% for the first five years on one and variable at 420 basis points
over LIBOR on the other. There is no assurance that either of these issuances
will close.

           Affiliated Obligations of the Parent Company

           In connection with an agreement entered into in 1996 under which
American Pioneer became a direct subsidiary of our holding company rather than
an indirect subsidiary owned through American Progressive, our holding company
issued $7.9 million in debentures to American Progressive. Our holding company
pays interest on the outstanding debentures quarterly at a rate of 8.50%. The
balance outstanding at March 31, 2003 was $2.0 million, which is due in May
2003. The Parent company currently has the cash on hand to satisfy this
obligation. During the three months ended March 31, 2003, our parent holding
company paid $0.1 million in interest on these debentures to American
Progressive. The interest on these debentures is eliminated in consolidation.

           In January 2002, our parent company issued a debenture to
Pennsylvania Life in connection with the transfer of the business of
Pennsylvania Life's Canadian Branch to Penncorp Life (Canada). Our parent
company paid $2.0 million in principal during 2003, reducing the outstanding
balance to $12.0 million as of March 31, 2003. Principal and interest payments
are made quarterly. The debenture is scheduled to be repaid in full by the third
quarter of 2005. During 2003, our parent holding company paid $0.3 million in
interest on these debentures. The interest on these debentures is eliminated in
consolidation. Dividends from Penncorp Life (Canada) funded the interest and
principal paid on the debenture in 2003 and it is anticipated that they will
fund all future payments made on this debenture.

           Administrative Service Company

           Liquidity for our administrative service company is measured by its
ability to pay operating expenses. The primary source of liquidity is fees
collected from clients. We believe that the sources of cash for our
administrative service company exceed scheduled uses of cash and results in
amounts available to dividend to our parent holding company. We measure the
ability of the administrative service company to pay dividends based on its
earnings before interest, taxes, depreciation and amortization ("EBITDA").
EBITDA for our administrative services segment was $3.0 million for the three
months ended March 31, 2003.

           Insurance Subsidiary - Surplus Note

           Cash generated by our insurance company subsidiaries will be made
available to our holding company, principally through periodic payments of
principal and interest on surplus notes. As of March 31, 2002, the principal
amount of surplus notes owed to our holding company from our American Exchange
subsidiary was $60.0 million. The notes pay interest to our parent holding
company at LIBOR plus 325 basis points. We anticipate that the surplus notes
will be primarily serviced by dividends from Pennsylvania Life, a wholly owned
subsidiary of American Exchange, and by tax-sharing payments among the insurance
companies that are wholly owned by American Exchange and file a consolidated
Federal income tax return. No dividends have been paid to American Exchange
during the three months ended March 31, 2003. No principal payments were made
during 2003. During the first three months of 2003, American Exchange paid $0.8
million in interest on the surplus notes to our parent holding company.


                                       27
<PAGE>
           Insurance Subsidiaries

           Our insurance subsidiaries are required to maintain minimum amounts
of capital and surplus as determined by statutory accounting practices. As of
March 31, 2003, each insurance company subsidiary's statutory capital and
surplus exceeded its respective minimum requirement. However, substantially more
than these minimum amounts are needed to meet statutory and administrative
requirements of adequate capital and surplus to support the current level of our
insurance subsidiaries' operations. As of March 31, 2003 the statutory capital
and surplus, including asset valuation reserves, of our U.S. domiciled insurance
subsidiaries totaled $105.2 million.

           The National Association of Insurance Commissioners has developed,
and state insurance regulators have adopted, risk-based capital requirements on
life insurance enterprises. As of March 31, 2003 all of our insurance company
subsidiaries maintained ratios of total adjusted capital to risk-based capital
in excess of the minimum trigger point for regulatory action.

           Penncorp Life (Canada) is subject to Canadian capital requirements
and reports its results to Canadian regulatory authorities based upon Canadian
statutory accounting principles that vary in some respects from U.S. statutory
accounting principles. Canadian net assets based upon Canadian statutory
accounting principles were C$57.4 million (US$39.0 million) as of March 31,
2003. Penncorp Life (Canada) maintained a minimum continuing capital and surplus
requirement ratio in excess of the minimum requirement as of March 31, 2003.

           Dividend payments by our insurance companies to our parent holding
company or to intermediate subsidiaries are limited by, or subject to the
approval of the insurance regulatory authorities of each insurance company's
state of domicile. Such dividend requirements and approval processes vary
significantly from state to state. The maximum amount of dividends which can be
paid to American Exchange from Pennsylvania Life (to assist in servicing the
surplus note held by American Exchange) without the prior approval of the
Pennsylvania Department of Insurance is restricted to the greater of 10% of
Pennsylvania Life's surplus as regards policyholders as of the preceding
December 31 or the net gain from operations during the preceding year.
Currently, Pennsylvania Life is able to pay ordinary dividends of up to $10.6
million to American Exchange (its direct parent) without the prior approval from
Pennsylvania Department of Insurance in 2003. Additionally, it is anticipated
that Penncorp Life (Canada) will be able to pay ordinary dividends of up to $6.6
million to Universal American in 2003. We do not expect that our remaining
regulated insurance subsidiaries will be able to pay ordinary dividends in 2003.

           Liquidity for our insurance company subsidiaries is measured by their
ability to pay scheduled contractual benefits, pay operating expenses, and fund
investment commitments. Sources of liquidity include scheduled and unscheduled
principal and interest payments on investments, premium payments and deposits
and the sale of liquid investments. We believe that these sources of cash for
our insurance company subsidiaries exceed scheduled uses of cash.

           Liquidity is also affected by unscheduled benefit payments including
death benefits, benefits under accident and health insurance policies and
interest-sensitive policy surrenders and withdrawals. The amount of surrenders
and withdrawals is affected by a variety of factors such as credited interest
rates for similar products, general economic conditions and events in the
industry that affect policyholders' confidence. Although the contractual terms
of substantially all of our in force life insurance policies and annuities give
the holders the right to surrender the policies and annuities, we impose
penalties for early surrenders. As of March 31, 2003 we held reserves that
exceeded the underlying cash surrender values of our net retained in force life
insurance and annuities by $22.3 million. Our insurance subsidiaries, in our
view, have not experienced any material changes in surrender and withdrawal
activity in recent years.


                                       28
<PAGE>
           Changes in interest rates may affect the incidence of policy
surrenders and withdrawals. In addition to the potential impact on liquidity,
unanticipated surrenders and withdrawals in a changed interest rate environment
could adversely affect earnings if we were required to sell investments at
reduced values in order to meet liquidity demands. We manage our asset and
liability portfolios in order to minimize the adverse earnings impact of
changing market rates. We seek to invest in assets that have duration and
interest rate characteristics similar to the liabilities that they support.

           The net yields on our cash and invested assets decreased from 6.56%
in 2002 to 5.76% in 2003. A portion of these securities are held to support the
liabilities for policyholder account balances, which liabilities are subject to
periodic adjustments to their credited interest rates. The credited interest
rates of the interest-sensitive policyholder account balances are determined by
us based upon factors such as portfolio rates of return and prevailing market
rates and typically follow the pattern of yields on the assets supporting these
liabilities.

           As of March 31, 2003, our insurance company subsidiaries held cash
and cash equivalents totaling $43.2 million, as well as fixed maturity
securities that could readily be converted to cash with carrying values (and
fair values) of $1,016.8 million. The fair values of these holdings totaled more
than $1,060.0 million as of March 31, 2003.

           Investments

           Our investment policy is to balance the portfolio duration to achieve
investment returns consistent with the preservation of capital and maintenance
of liquidity adequate to meet payment of policy benefits and claims. We invest
in assets permitted under the insurance laws of the various states in which we
operate. However, we do not invest in partnerships, special purpose entities,
real estate, commodity contracts, or other derivative securities. Such laws
generally prescribe the nature, quality of and limitations on various types of
investments that may be made. We currently engage the services of three
investment advisors under the direction of the management of our insurance
company subsidiaries and in accordance with guidelines adopted by the Investment
Committees of their respective boards of directors. Conning Asset Management
Company manages our fixed maturity portfolio in the United States, Hyperion
Capital manages the Pyramid Life portfolio and MFC Global Investment Management
manages our Canadian fixed maturity portfolio. Our current policy is not to
invest in derivative programs or other hybrid securities, except for GNMA's,
FNMA's and investment grade corporate collateralized mortgage obligations. We
invest primarily in fixed maturity securities of the U.S. Government and its
agencies and in corporate fixed maturity securities with investment grade
ratings of "Baa3" (Moody's Investor Service), "BBB-" (Standard & Poor's
Corporation) or higher. As of March 31, 2003, 99.0% of our fixed maturity
investments had investment grade ratings from Moody's Investors Service or
Standard & Poor's Corporation. However, we do own some investments that are
rated "BB+" or below by Standard & Poor's (together 1.0% of total fixed
maturities as of March 31, 2003). There were no non-income producing fixed
maturities as of March 31, 2003. We wrote down the value of certain fixed
maturity securities by $0.2 million during the three months ended March 31,
2003, and by $1.3 million during the three months ended March 31, 2002. In each
case, these write-downs represent our estimate of other than temporary declines
in value and were included in net realized gains (losses) on investments in our
consolidated statements of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

         Refer to Consolidated Financial Statements Note 2 - Recent Accounting
Pronouncements.


                                       29
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           In general, market risk relates to changes in the value of financial
instruments that arise from adverse movements in interest rates, equity prices
and foreign exchange rates. We are exposed principally to changes in interest
rates that affect the market prices of our fixed income securities.

           Interest Rate Sensitivity

           Our profitability could be affected if we were required to liquidate
fixed income securities during periods of rising and/or volatile interest rates.
However, we attempt to mitigate our exposure to adverse interest rate movements
through a combination of active portfolio management and by staggering the
maturities of our fixed income investments to assure sufficient liquidity to
meet our obligations and to address reinvestment risk considerations. Our
insurance liabilities generally arise over relatively long periods of time,
which typically permits ample time to prepare for their settlement. To date, we
have not used various financial risk management tools on our investment
securities, such as interest rate swaps, forwards, futures and options to modify
our exposure to changes in interest rates. However, we may consider using risk
management tools in the future.

           Certain classes of mortgage-backed securities are subject to
significant prepayment risk due to the fact that in periods of declining
interest rates, individuals may refinance higher rate mortgages to take
advantage of the lower rates then available. We monitor and adjust our
investment portfolio mix to mitigate this risk.

           We regularly conduct various analyses to gauge the financial impact
of changes in interest rate on our financial condition. The ranges selected in
these analyses reflect our assessment as being reasonably possible over the
succeeding twelve-month period. The magnitude of changes modeled in the
accompanying analyses should not be construed as a prediction of future economic
events, but rather, be treated as a simple illustration of the potential impact
of such events on our financial results.

           The sensitivity analysis of interest rate risk assumes an
instantaneous shift in a parallel fashion across the yield curve, with scenarios
of interest rates increasing and decreasing 100 and 200 basis points from their
levels as of March 31, 2003, and with all other variables held constant. A 100
basis point increase in market interest rates would result in a pre-tax decrease
in the market value of our fixed income investments of $57.5 million and a 200
basis point increase in market interest rates would result in $113.1 million
decrease. Similarly, a 100 basis point decrease in market interest rates would
result in a pre-tax increase in the market value of our fixed income investments
of $60.5 million and a 200 basis point decrease in market interest rates would
result in a $121.2 million increase.

           Currency Exchange Rate Sensitivity

           Portions of our operations are transacted using the Canadian dollar
as the functional currency. As of and for the three months ended March 31, 2003,
approximately 12% of our assets, 15% of our revenues, excluding realized gains,
and 25% of our operating income before taxes were derived from our Canadian
operations. As of and for the three months ended March 31, 2002, approximately
11% of our assets, 17% of our revenues, excluding realized gains, and 18% of our
operating income before taxes were derived from our Canadian operations.
Accordingly, our earnings and shareholder's equity are affected by fluctuations
in the value of the U.S. dollar as compared to the Canadian dollar. Although
this risk is somewhat mitigated by the fact that both the assets and liabilities
for our foreign operations are denominated in Canadian dollars, we are still
subject to translation losses.

           We periodically conduct various analyses to gauge the financial
impact of changes in the foreign currency exchange rate on our financial
condition. The ranges selected in these analyses reflect our assessment of what
is reasonably possible over the succeeding twelve-month period.


                                       30
<PAGE>
           As of March 31, 2003, a 10% strengthening of the U.S. dollar relative
to the Canadian dollar would result in a decrease in our operating income before
taxes of approximately $0.3 million and a decrease in shareholders' equity of
approximately $3.5 million. A 10% weakening of the U.S. dollar relative to the
Canadian dollar would result in an increase in our operating income before taxes
of approximately $0.3 million and an increase in shareholders' equity of
approximately $4.2 million. Our sensitivity analysis of the effects of changes
in foreign currency exchange rates does not factor in any potential change in
sales levels, local prices or any other variables.

           The magnitude of changes reflected in the above analysis regarding
interest rates and foreign currency exchange rates should, in no manner, be
construed as a prediction of future economic events, but rather as a simple
illustration of the potential impact of such events on our financial results

ITEM 4.  CONTROLS AND PROCEDURES

           Evaluation of Disclosure

           The Company's principal executive officer and its principal financial
officer, based on their evaluation of the Company's disclosure controls and
procedures (as defined in Exchange Act Rule 13a-14(c)) as of a date within 90
days prior to the filing of this Quarterly Report on Form 10-Q, have concluded
that the Company's disclosure controls and procedures are adequate and effective
for the purposes set forth in the definition thereof in Exchange Act Rule
13a-14(c).

           Changes in Internal Controls

           There were no significant changes in the Company's internal controls
or in other factors that could significantly affect the Company's internal
controls subsequent to the date of their evaluation.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

                     The Company has litigation in the ordinary course of
           business, including claims for medical, disability and life insurance
           benefits, and in some cases, seeking punitive damages. Management and
           counsel believe that after reserves and liability insurance
           recoveries, none of these will have a material adverse effect on the
           Company

                     A lawsuit has been commenced against Universal American,
           its subsidiary American Progressive Life & Health Insurance Company,
           and Richard Barasch, by Marvin Barasch, the former Chairman of
           American Progressive. The suit primarily arises out of Marvin
           Barasch's employment with American Progressive and includes other
           personal claims against Richard Barasch. The Company and Richard
           Barasch believe that the allegations are totally without merit and
           that the likelihood of material recovery by the plaintiff is remote.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

                     None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                     None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                     None

ITEM 5.  OTHER INFORMATION

                     None


                                       31
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

               a. Exhibits

               Exhibit 11.  Computation of Per Share Earnings Data required
                            by Statement of Financial Accounting Standards
                            No. 128, Earnings Per Share, is provided  in
                            Note 4 to the Consolidated Financial Statements
                            in this report

               Exhibit 99.1 Certification pursuant to 18 U.S.C. Section
                            1350, as adopted pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002.

               Exhibit 99.2 Certification pursuant to 18 U.S.C. Section 1350,
                            as adopted pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002.

               b. Reports on Form 8-K during the quarter ended March 31, 2003

                  None

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

SIGNATURE

           Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                         UNIVERSAL AMERICAN FINANCIAL CORP.

                                         By:  /S/ Robert A. Waegelein
                                              ----------------------------------
                                              Robert A. Waegelein
                                              Executive Vice President
                                              Chief Financial Officer

Date:  May 15, 2003


                                       32
<PAGE>
                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Richard A. Barasch, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Universal
            American Financial Corp.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation to the registrant's auditors and
            the audit committee of registrant's board of directors (or persons
            performing the equivalent functions):

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether there were significant changes in
            internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.



Date:  May 15, 2003

                                              /s/ Richard A. Barasch
                                              ----------------------------------
                                              Richard A. Barasch
                                              Chief Executive Officer


                                       33
<PAGE>
                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Robert A. Waegelein, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Universal
            American Financial Corp.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation to the registrant's auditors and
            the audit committee of registrant's board of directors (or persons
            performing the equivalent functions):

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether there were significant changes in
            internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.


Date:  May 15, 2003

                                              /s/ Robert A. Waegelein
                                              ----------------------------------
                                              Robert A. Waegelein
                                              Chief Financial Officer


                                       34