United HealthCare and Humana to Merge

Merger Creates a Strategic Business Combination Dedicated to

Improving the Health and Well-Being of People Through all Stages of Life

May 28, 1998, 01:00 ET from Humana Incorporated

    MINNEAPOLIS and LOUISVILLE, Ky., May 28 /PRNewswire/ -- United HealthCare
 Corporation (NYSE:   UNH) and Humana Inc. (NYSE:   HUM) today announced they have
 reached a definitive agreement to merge in a transaction approved by the
 boards of directors of both companies.  The combination will bring together
 two organizations who have long been devoted to serving customers with high
 quality, accessible and affordable health care services.  The combined
 enterprise will operate under the United HealthCare name and will be based in
 Minneapolis, with a significant workforce and business presence continuing in
     The proposed merger will be accounted for as a pooling of interests in
 which one United HealthCare share will be exchanged for every two Humana
 shares in a tax-free transaction.  The total consideration of the proposed
 transaction is approximately $5.5 billion.  The transaction will require
 shareholder and regulatory approvals and is expected to close in the third
 quarter of 1998.
     William W. McGuire, M.D., United HealthCare's chairman, president and
 chief executive officer, said, "The most successful health care companies in
 the next decade will be those whose products and services align with the needs
 and desires of consumers -- in other words, companies that offer people what
 they want.  United HealthCare has led the industry in meeting consumer demands
 for greater access and flexibility.  By year-end, our open access plans will
 enable nearly 4 million health plan members in 38 markets to see network
 doctors and specialists without a referral."
     Dr. McGuire continued, "Consumers want flexibility in choice of doctors
 and hospitals, broader access to services, a wide spectrum of products and
 services tailored to specific consumer market segments and needs, and greater
 affordability.  To achieve these objectives and create a powerful platform for
 growth, it is critical to create an enterprise that, in an increasingly
 competitive marketplace, possesses the size, scale and operating efficiencies
 needed to accelerate investments in high quality health and well-being
 services.  The combination of United HealthCare and Humana is driven by this
     Greg Wolf, Humana's chief executive officer, said, "The merged company
 will be able to respond, better than any other, to what people want from a
 health care company today.  With millions of members in all 50 states and
 Puerto Rico, the new enterprise will realize tremendous economies of scale,
 unmatched administrative efficiency and an industry-leading service platform.
 The result will be more affordable products, for more people, delivered more
     "In addition, the merged company will offer greater choice of doctors and
 hospitals, consumer-focused, high quality products and the ability to
 measurably improve our members' health.  A proprietary information system with
 the capacity to collect and analyze enormous reservoirs of the most current
 data will be of tremendous value to doctors as they seek the best clinical
 pathways for patient care.
     "Finally, the merged entity offers consumers and investors a company with
 financial strength, earning power and favorable prospects for substantial
 growth," Mr. Wolf added.
     David A. Jones, Humana's chairman and co-founder, said, "As the health
 care industry grapples with issues of access, affordability, quality and
 choice, the size, scope and proven operational competence of the new company
 will enable us to address these concerns.  We are creating a company whose
 leadership and innovation can help people of all ages realize the best of our
 health care assets.  And through these efforts, this merger holds great
 promise for outstanding shareholder return."
     The companies expect the merger to be neutral to earnings in 1998 and
 accretive to earnings in 1999 (exclusive of transaction costs) and have
 identified significant annual operating synergies that will be realized
 following the completion of the transaction.  These synergies come from
 consolidation of corporate overhead and administration, merging overlapping
 operations, integrating and improving medical care programs and cross-selling
 products and services.
     "We are targeting improvements in operating costs of 3 percent to 5
 percent, and medical costs of 0.75 percent to 1 percent while maintaining our
 commitment to providing our customers with high quality health and well-being
 services they need, when they need them," said Dr.McGuire.  "We will move
 quickly to eliminate basic functional redundancies and, as a result, improve
 how we work for our customers.  The integration of each company's best network
 and medical management systems will help us to optimize our medical care
 effectiveness.  Longer term, we will integrate the underlying systems and
 service processes of both companies to evolve into the industry-leading
 service and support platform that will provide customers and care providers
 with leading edge service.  We also expect to achieve a sustainable unit cost
 advantage in the key operational areas."
     Mr. Wolf added, "Most importantly, we believe the merger increases our
 ability to introduce new product and service offerings in our local markets,
 giving consumers more value and greater choice while enhancing their health
 and well-being.  As consumers embrace these new offerings, we expect the
 already remarkable growth rate of these companies to continue."
     Dr. McGuire stated that the merger with Humana fits exceptionally well
 within the framework of United HealthCare's six strategic business segments,
 which will facilitate a rapid and efficient integration of the combined
 operations.  Humana's health plans, small group insurance services and
 specialized businesses that include dental, life, workers' compensation and
 disability, are strong units that complement or add new services to those
 currently offered by United HealthCare.
     On a pro forma combined basis, United HealthCare would be among the most
 prominent health care concerns, with annual revenues approximating $27
 billion.  The company will operate in 50 states, Puerto Rico and
 internationally, including Hong Kong, Singapore and South Africa.  United
 HealthCare will be supported by a dedicated 50,000-member workforce, as well
 as an exceptionally strong financial position with more than $13 billion in
 total assets, and more than $6 billion in shareholder equity.
     The combined company will be led by Dr. McGuire, who will remain as
 chairman, president and chief executive officer.  Greg Wolf will have a
 prominent leadership role and will serve on United HealthCare's executive
 council.  David Jones will join the United HealthCare Board of Directors.
     Dr. McGuire said, "I am delighted that David Jones will be joining our
 board of directors.  He has been a key figure in advancing the quality of
 health care services in a career that has spanned a period of unprecedented
 industry transformation.  He has played a central role not only in the
 creation and enduring success of Humana, but also in the direction of the
 entire industry.  We are extremely pleased that David will continue as a
 member of our board, and that Greg Wolf and his outstanding management team
 will be joining us to help lead the company in the future."
     United HealthCare (http://www.unitedhealthcare.com) is a diversified
 health service company that provides a broad spectrum of resources of
 resources and services to help people achieve improved health and well-being
 through all stages of life.  United HealthCare is organized into six business
 segments: Health Plans, Retiree and Senior Services, Strategic Business
 Services, Insurance Services, Specialized Care Services, and Knowledge and
 Information Services.
     Humana Inc. (http://www.humana.com), with headquarters in Louisville, Ky.,
 is one of the nation's largest publicly traded managed health care companies
 with approximately 6.2 million customers in its health care programs located
 primarily in 16 states and Puerto Rico.  Humana offers coordinated health care
 through a variety of health plans -- health maintenance organizations,
 preferred provider organizations, point-of-service plans, and administrative
 services products -- to employers groups, government-sponsored plans and
     Forward-Looking Statements
     Statements that United HealthCare or Humana may publish, including those
 in this announcement, that are not strictly historical are "forward-looking"
 statements under the safe harbor provisions of the Private Securities
 Litigation Reform Act of 1995.  Forward-looking statements involve known and
 unknown risks which may cause actual results and corporate developments to
 differ materially from those expected.  Factors that could cause results and
 developments to different materially from expectations include, without
 limitation, the ability of the combined company to execute the anticipated
 integration and realize the expected synergies, the effects of the state and
 federal regulations, including those that impact the formation of the combined
 companies, the effects of related or other acquisitions and divestitures, and
 other risks described from time to time in each of United HealthCare's and
 Humana's SEC reports including quarterly reports on Form 10-Q, annual reports
 on Form 10-K and reports on Form 8-K.

SOURCE Humana Incorporated