Bear Stearns 2005 London Health Care Conference May 10, 2005 The Four Seasons, London

1. Bear Stearns 2005 London Health Care Conference May 10, 2005 The Four Seasons, London PacifiCare Health Systems Gregory W. Scott Executive Vice President and CFO

2. Cautionary Statement The statements made during this presentation that are not historical facts are forward-looking statements within the meaning of the Federal securities laws, and may involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the risks discussed in the company's most recent filings with the SEC, including the Form10K filed as of December 31, 2004.

3. 2004 Markets – Pre-AMS Acquisition PHS Only Markets Strategy of a growth company PHS 8 health plan markets before acquisitions • A Fortune 200 company with: • $12 billion in revenue • 2.6 million commercial lives • 715K Medicare Advantage • lives • 10 million specialty lives

4. 2005 Markets – Post-AMS Acquisition PHS Only Markets AMS Only Markets PHS & AMS Overlaps Expansion through recent acquisitions 28 Additional medical states after American Medical Security Group acquisition • A Fortune 200 company with 2005 goals of: • $14.1 billion in revenue • 2.7 million commercial lives • 743K Medicare Advantage • lives • 11.8 million specialty lives

5. 1Q ‘05 Close Target 2005 Markets - Post Acquisitions PHS Only Markets AMS Only Markets PHS/AMS/Pac Life Overlaps Expansion through recent acquisitions Significant additional overlap with Pacific Life acquisition

6. Benefits of AMS and Pacific Life acquisitions • Adds a total of more than 370K ISG PPO lives = 15% commercial member increase • Focus on important ISG market segment • Expanded network of independent agents increases distribution for PHS products/services • Commercial growth/diversification balances Medicare Advantage business • Geographic expansion diversifies outside of CA

7. Earnings growth $370-$385 $303 * Excluding effect of the adoption of FAS 142 relating to the amortization of goodwill ^ Includes acquisition of American Medical Security Group & proposed acquisition of Pacific Life’s group health insurance business

8. = 20%-25% Net Income Growth 2005 Guidance Includes effect of FAS 123R on equity based compensation

9. DIVERSIFIED INSURANCE COMPANY CONSUMER HEALTH ORGANIZATION HMO PacifiCare Vision

10. SignatureValue Traditional Plan SignatureValue Select Hospital Plan SignatureOptions Advantage SignatureOptions Traditional Plan HMO/EPO SignatureValue Advantage PPO Signature Freedom Signature Independence HSA/SDHP Indemnity Low Cost High Cost • Front End • Decision Support • Quality Index Profiles • Benefit Selection Pricer • Health Risk Assessment • Worksite/Web Based Tools • On-Line Enrollment • On-Going Support - • Care Management • Disease Mgmt/ Web Admin • Health Credits • Women’s Health • Flexible Spending Account • Ethnic Diversity Programs • Specialty Offerings • Pharmacy • Dental & Vision • Behavioral • Life/STD/LTD • Caregiver • PAN PacifiCare offers a total solution

11. Specialty company growth- Pharmacy Benefit Management Company (PBM) Prescription Solutions’ Unaffiliated Membership

12. Specialty company growth $1,647 * Breakout of internal vs. external revenue is not available prior to CY 2002. ^ Revenue increases related to a change in contracting methodology from the gross method to the net method for retail prescription drug transactions ~$50M in 2004, ~ $890M in 2005 mainly for PHS contract.

13. Specialty company growth 25.3% 26.0% 20.6% 20.3% 18.4% 18.7%

14. Specialty company growth- Recent PBM recognition • Among MCOs: Top rated PBM on 5 of 8 evaluation factors- Recent Flashpohler Research survey • Of 2nd tier PBMs, mentioned more than any other PBM - CSFB report, 10/04 • Outperforms the industry in pharmacy management; and doing an excellent job regarding its primary functions: rebates, network management, mail service and generic fill rates - CapGemini Benchmarking study, 2004 • #2 among all PBMs in mail order satisfaction – PCMA 2004 • Rx Benefit Innovation Award-The Pharmacy Benefit Management Institute

15. Medicare opportunities • Medicare Advantage HMO/ Private Fee for Service • Part D Administration- Prescription Drug Plan (PDP) • Medicare Supplement • Medicare Advantage Regional PPO

16. Medicare opportunities • Medicare Advantage HMO • Goals of Medicare Modernization Act • Stabilize membership through increased benefits and provider payments • Nationwide ’04 MA Risk member increase = 98,500 • PHS had 3 of 4 fastest growing plans in U.S. • PHS had 22K net adds in ’04; target growth in ’05 = 39K • Position MA for growth in 2006 • Broker distribution • Geographic expansion • Preferred provider relationships = Value Plans • Community & faith-based organization marketing • Small acquisitions • CMS demonstration project

17. Group Retiree = ??M + Medicare opportunities • Part D Administration- Potential market 35.7 million 17 million

18. Pro Rata Annualized 1st Year Market ShareRevenue Opportunity 6-8%$1.3-$2.2 billion with PBM mail order revenue Medicare opportunities • Part D Administration- Model of potential market share • PHS to offer benefits nationally, in all 34 PDP regions • Assume 10 national/large PDPs + 3 regional PDPs in each region • Assume equal distribution of 17 million assumed ’06 membership • Example: • Potential revenue excludes additional subsidies for low income, institutionalization, etc. • PHS will issue specific guidance late 2005

19. Medicare opportunities • Part D Administration- PHS capabilities • Captive PBM w/ external focus (new mail order facility in planning) • Broad distribution capabilities • State-of-the-art mail facility • National pharmacy network • Risk-based business model • 10 years of senior prescription drug data • Managed care tools to control costs, improve outcomes • Additional marketing channels • Direct TV/radio advertising • Direct mail • Recent acquisitions • Broker distribution