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HEALTHMARKETS' SUBSIDIARIES REACH SETTLEMENT WITH STATE REGULATORS

HealthMarkets Committed to Continuing to Improve Operations

North Richland Hills, Texas – July 21, 2008 – HealthMarkets, Inc. (http://www.healthmarkets.com) announced today that its insurance subsidiaries have reached a comprehensive settlement with state insurance regulators leading a multi-state examination of HealthMarkets' insurance subsidiaries

“We have worked closely with insurance regulators during the multi-state examination and settlement process, and we understand our obligations to regulators, as well as our customers," said HealthMarkets chief executive officer Phillip J. Hildebrand. “In order to meet those commitments, we are improving Company operations across the board. We are committed to serving the health insurance needs of individuals, families, the self-employed, and small businesses in a fully compliant manner.”

The settlement includes a $20 million penalty and the possibility for payment of an additional $10 million if the subsidiaries fail to meet the terms of the agreement. The settlement includes an outreach program to those insured by the Companies prior to August 1, 2005 regarding their coverage, implementation of changes in the way the Company interacts with its insureds, enhanced support and management of agents, periodic self reporting for the next 18 months, and a follow up examination to begin no later than July 2010.

The settlement brings a close to a process begun in 2005 in which insurance regulators jointly examined the practices and processes of HealthMarkets' insurance subsidiaries. The examination report acknowledges that the companies have already implemented extensive changes that have addressed many of the concerns raised by regulators. Many of those changes were underway prior to initiation of the multi-state exam and a number of others were implemented soon after the examination began three years ago.

To date, 29 states have signed on to participate in the settlement agreement.

Additional information regarding the Companies changes and the multi-state examination settlement:

Ensuring customer understanding

The Companies have taken industry-leading steps to ensure customers fully understand the products they purchase. These steps include complete and clearly stated product disclosures at the point of sale and telephone calls placed to each new customer to verify their understanding of the product’s benefits, costs and limitations. Following these calls, 99 percent of customers choose to retain their coverage with the Company – an indicator that agents are explaining the products correctly. Agent training and oversight

The companies have put in place a thorough and comprehensive program of agent training and oversight. Begun in 2005, this training program is mandatory for all agents who sell our products. The Companies will not tolerate agent behavior that misleads customers or misrepresents our products.

Relationship between the Companies and the Associations

Since 2004, the Companies have provided written disclosures at the point of sale that clearly delineate the relationship between its subsidiaries and the associations that offer access to our products. The Association Disclosure form goes beyond any regulatory requirement or industry practice.

Compliance Efforts

The Companies have improved and expanded compliance efforts across the entire organization. Compliance within the Companies is under the direction of the Chief Compliance Officer who meets with senior management to identify and resolve compliance issues throughout the Company.

The Companies established a Compliance Audit Group that tests procedures that have been put into place. The Companies also established an independent Regulatory Advisory Panel that reports directly to the Company’s Board of Directors.

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About HealthMarkets

HealthMarkets, headquartered in North Richland Hills, Texas, is a provider of health and life insurance products to individuals, families, the self-employed, Medicare beneficiaries and small businesses. HealthMarkets offers products and services through its licensed insurance subsidiaries The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and The Chesapeake Life Insurance Company. The Company’s offerings include individual and self-employed health insurance, small employer group health insurance, life insurance and reinsurance. Through its Consumer Guided Health Insurance plans, HealthMarkets seeks to provide affordable and accessible health coverage to individuals and small businesses. The Company is owned by a group of private equity investors, including affiliates of The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners, members of management and the Company’s independent, licensed agents through the Company’s agent stock accumulation plans. For more information, visit http://www.healthmarkets.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

Some of the matters discussed in this news release may contain forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "objective," "plan," "possible," "potential" and similar expressions. Actual results may vary materially from those included in the forward-looking statements. Factors that could cause actual results to differ materially from those included in the forward-looking statements include, but are not limited to, general economic conditions; the continued ability of the Company to compete for customers and insureds in an industry where many of its competitors may have greater market share and/or greater financial resources; the Company’s ability to accurately estimate medical claims and control costs; changes in government regulation that could increase the costs of compliance or cause the Company to discontinue marketing its products in certain states; the Company’s failure to comply with new or existing government regulations that could subject it to significant fines and penalties and/or result in restrictions on its operations; changes in the relationship between the Company and the membership associations that make available to their members the health insurance and other insurance products issued by the Company’s insurance subsidiaries; changes in the laws and regulations governing so-called “association group” insurance (particularly changes that would subject the issuance of policies to prior premium rate approval and/or require the issuance of policies on a “guaranteed issue” basis); significant liabilities and costs associated with litigation; failure of the Company’s information systems to provide timely and accurate information; negative publicity regarding the Company’s business practices and/or regarding the health insurance industry in general; the Company’s inability to enter into or maintain satisfactory relationships with networks of hospitals, physicians, dentists, pharmacies and other health care providers; failure of the Company’s regulated insurance company subsidiaries to maintain their current ratings by A.M. Best Company, Fitch and/or Standard & Poor’s; and the other risk factors set forth in the reports filed by the Company from time to time with the Securities and Exchange Commission.

Media Contacts:

Donna Ledbetter
HealthMarkets Corporate Communications
(817) 255-5405
Donna.Ledbetter@healthmarkets.com
www.HealthMarkets.com

Karen Mellen
For HealthMarkets
(312) 596-3487
Karen.Mellen@bm.com