The following selected consolidated financial data as of and for each of the five years in the period ended December 31, 1999 have been derived from the audited Consolidated Financial Statements of the Company. The following data should be read in conjunction with the Consolidated Financial Statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein. The following income statement data has been restated to reflect the Company's United CreditServ segment as a discontinued operation. See Note B to Notes to the Consolidated Financial Statements.
(2) The health expense ratio represents underwriting, acquisition and insurance expenses related to health insurance policies stated as a percentage of health premiums. Expenses relating to providing administrative services are not included.
The Company's operating segments are: (i) Insurance, which includes the businesses of the Self-Employed Agency Division; the Student Insurance Division; the OKC Division; the Special Risk Division; and the National Motor Club Division; (ii) Financial Services, which includes the businesses of Educational Finance Group, Inc., the Company's investment in HealthAxis.com, Inc., and Other Business Units and (iii) Other Key Factors, which includes investment income not allocated to the other segments, interest expense, general expenses relating to corporate operations, goodwill amortization, realized gains or losses on sale of investments and the AMLI operations. Net investment income is allocated to the Insurance segment based on policy liabilities. The interest rate for the allocation is based on a high credit quality investment portfolio with a duration consistent with the duration of the segment's policy liabilities.
In light of UICI's continuing difficulties with its United CreditServ unit, on March 17, 2000 the Board of Directors of UICI determined, after a thorough assessment of the unit's prospects, that it will exit from its United CreditServ sub-prime credit card business. Accordingly, the United CreditServ unit has been reflected as a discontinued operation for financial reporting purposes. The Company currently expects to complete the sale of the United CreditServ unit during the year 2000. UICI has recorded in 1999 its current estimate of all additional loss that it believes it will incur as part of any sale of the United CreditServ unit. The Company currently estimates that such pre-tax loss will be $130.0 million. The estimate includes asset write-downs, the estimated loss on the sale of the business and/or the assets and continuing losses through date of sale. The loss the Company will ultimately realize upon disposal of the discontinued operation could differ materially from the current estimate.
Other expenses. Other expenses increased to $119.3 million in 1999 from $114.4 million in 1998, an increase of $4.9 million. The increase is primarily due to the increased costs of Educational Finance Group's student loan originations which were offset by the disposition of IPN, LLC and HealthCare Automation, Inc. units that were sold in July 1998. In 1998, the Company recognized aggregate operating losses from IPN, LLC and HealthCare Automation, Inc. in the amount of $10.5 million.
Revenues. Revenues increased to $1,056.8 million in 1998 from $905.6 million in 1997, an increase of $151.2 million, or 17%. The increase resulted primarily from increases in health premiums in the self-employed market.
In December 1998, EFG completed a $550 million Variable Rate Note ("VRN") facility, which replaced $550 million of the $750 million repurchase facility. Approximately 97.0% of the notes issued under the VRN are rated AAA, with the remainder rated BBB, by both Standard and Poor's and Moody's. These high quality credit ratings greatly enhance the marketability of the notes. The balance of the $750 million repurchase facility, or $200 million remains in place. EFG continues to explore additional funding facilities that will provide the short term, intermediate, and long term funding for the student loans which will be originated.
UCNB's failure to comply with the terms of the Consent Order could also result in sanctions brought against UCNB, its officers and directors and UCNB's "institution-related parties," including the assessment of civil money penalties and enforcement of the Consent Order in Federal District Court.
The Company is unable to predict when or whether any additional federal or state proposals, or some combination thereof, will be enacted or, if enacted, the likely impact on the Company. It is possible, however, that the enactment of such additional health care reform legislation could adversely affect the Company's results of operations. The Company has been proactively involved in an advocacy role concerning such regulatory initiatives and is in a position to evaluate and recommend the Company's position with respect to such initiatives.
Plan, it is currently expected that UICI will be required to contribute an additional $25.0 million to the capital of UCNB during the Plan Period.
The Proposed Capital Plan is expressly subject to the review and approval of the OCC and the FDIC. There can be no assurance that the OCC or the FDIC will approve the Proposed Capital Plan in its current form. If the OCC and/or FDIC fails to approve the Proposed Capital Plan or some mutually acceptable alternative plan, UCNB could be required to liquidate its assets on a short term basis and the Company could be required to fund the resulting losses immediately. Such a requirement would have a material adverse effect upon the Company's liquidity, results of operations and financial condition.
credit note with AEGON USA at December 31, 1998. On May 17, 1999, the Company terminated this line of credit. The Company did not borrow on this revolving note during 1999.