Common use of BACKGROUND AND RECITALS Clause in Contracts

BACKGROUND AND RECITALS. 1. The MEGA Life and Health Insurance Company (“MEGA”) is and has been a licensed insurance company domiciled in the State of Oklahoma. 2. Mid-West National Life Insurance Company of Tennessee (“Mid-West”) is and has been a licensed insurance company domiciled in the State of Texas. 3. The Chesapeake Life Insurance Company (“Chesapeake”) is and has been a licensed insurance company domiciled in the State of Oklahoma. 4. All three (3) Companies are subsidiaries of HealthMarkets, Inc. (“HealthMarkets”), a Delaware corporation, with its principal place of business in North Richland Hills, Texas. Any other current, after acquired or formed insurance company subsidiaries, affiliates or agencies of HealthMarkets licensed by the Massachusetts Division of Insurance (“Division”) are likewise bound by any continuing conditions imposed on the Company pursuant to this Agreement. 5. On November 6, 2003, the Division called a limited scope market conduct examination of MEGA. This examination was confined to review the following standards in small group health insurance: company operations/management, complaint handling, marketing and sales, certificate holder service and underwriting and rating. 6. On January 12, 2005, as a result of the preliminary findings from the examination referenced in the previous paragraph, the Division called a limited scope market conduct examination of MEGA, Mid-West and Chesapeake. This examination was confined to a review of the claims handling practices in small group health insurance. 7. As a result of the findings from these examinations, the Division engaged in extensive discussions with the Company with respect to the findings, a plan of corrective action by the Company to address those findings for the benefit of the Company’s current and former certificate holders, and a means of providing for the enforcement of such a plan. An examination report concerning the limited scope market conduct examination of MEGA’s, Mid-West’s and Chesapeake’s claims handling practices examination was released concurrently with a Regulatory Settlement Agreement (RSA) in December 2006. 8. During the two-year period following the RSA, the Division continued monitoring of the Company’s activities and implementation of the RSA requirements. Such monitoring included members of the examination team conducting periodic reviews of randomly selected files. Monitoring also included meetings with Company senior management to discuss compliance with the RSA. 9. On January 12, 2009, the Division commenced re-examination of certain key provisions of the RSA. An examination report concerning this re-examination is being released concurrently with this Agreement.

BACKGROUND AND RECITALS. 1. The MEGA Life and Health Insurance Company (“MEGA”) is and has been a licensed insurance company domiciled in the State of Oklahoma. 2. Mid-West National Life Insurance Company of Tennessee (“Mid-West”) is and has been a licensed insurance company domiciled in the State of Texas. 3. The Chesapeake Life Insurance Company (“Chesapeake”) is and has been a licensed insurance company domiciled in the State of Oklahoma. 4. All three (3) Companies are subsidiaries of HealthMarketsHealth Markets, Inc. (“HealthMarkets”) (formerly known as UICI), a Delaware corporation, with its principal place of business in North Richland Hills, Texas. Any other current, current or after acquired or formed insurance company subsidiaries, subsidiaries or affiliates or agencies of HealthMarkets Health Markets licensed by the Massachusetts Division of Insurance (“Division”) are likewise bound by any continuing conditions imposed on the Company pursuant to this AgreementCompany. 5. On November 6, 2003, the Division called a limited scope market conduct examination of MEGA. This examination was confined to review the following standards in small group health insurance: company operations/management, complaint handling, marketing and sales, certificate holder service and underwriting and rating. 6. On January 12, 2005, as a result of the preliminary findings from the examination referenced in the previous paragraph, the Division called a limited scope market conduct examination of MEGA, Mid-West and Chesapeake. This examination was confined to a review of the claims handling practices in small group health insurance. 7. As a result of the findings from these examinations, the Division engaged in extensive discussions with the Company with respect to the findings, a plan of corrective action by the Company to address those findings for the benefit of the Company’s current and former certificate holders, and a means of providing for the enforcement of such a plan. An examination report concerning the limited scope market conduct examination of MEGA’s, Mid-West’s and Chesapeake’s claims handling practices examination was released concurrently with a Regulatory Settlement Agreement (RSA) in December 2006. 8. During the two-year period following the RSA, the Division continued monitoring of the Company’s activities and implementation of the RSA requirements. Such monitoring included members of the examination team conducting periodic reviews of randomly selected files. Monitoring also included meetings with Company senior management to discuss compliance with the RSA. 9. On January 12, 2009, the Division commenced re-examination of certain key provisions of the RSA. An examination report concerning this re-examination is being released concurrently with this Agreement that contemplates the execution of this Agreement. 8. The Company responded in detail to the items identified in the reports as required actions. The Division has reviewed the Company’s responses. The Division has not tested the sufficiency or effectiveness of the Company’s responses but will do so after the execution of this Agreement. 9. The Company and the Division agree that the Company shall enter into a Plan of Corrective Action to assure compliance with applicable Massachusetts statutes and/or regulations in accordance with Section B below.