CIBC World Markets 13 th Annual Healthcare Conference The Plaza Hotel, New York City

1. CIBC World Markets 13th Annual Healthcare Conference The Plaza Hotel, New York City November 6, 2002 Gregory W. Scott Executive Vice President, Chief Financial Officer Pacificare Health Systems

2. Safe Harbor 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 Form 10Q as of June 30, 2002, and Form 10K as of December 31, 2001.

3. Top-Level Strategy Fix the Core • Operational Control • Profit Margin MCO Product/Segment Extensions • PPO • Med Supp • ASO • Defined Contribution • 3rd Party Specialty Business HMO Consumer-Aligned Organization • Drug Discount Program • Debit Card • Women’s Health Initiative • Stand Alone Rx Plan • Tight Network Operations • Quality Measurement • Extended Service Hours • Customer Welcome Calls Full Service MCO Consumer Health Organization (CHO)

4. PacifiCare- largest purchaser of health care services in the western U.S. 2002 Markets A Fortune 200 company with • $11 billion in revenue • 2.4 million commercial lives • 800 thousand Medicare+Choice lives • 9 million specialty lives

5. 2003 Market Expansion Medicare Supplement Pharmacy Benefit Management Behavioral Health

6. 3rd 2002 Quarter Results • Reported EPS = $1.20 vs. consensus of $0.84 • EPS up 29% year-over-year on FAS 142 adjusted basis • Operating income, excluding net investment income, up 66% y-o-y • Cash flow from operations = $189 million, up 136% y-o-y

7. 3rd 2002 Quarter Results • Consolidated medical loss ratio = 85.8%, down 340 basis points y-o-y • EBITDA = $109.3 million, up 22% y-o-y • EBITDA up 23% vs. prior quarter • SG&A ratio = 13%, up 250 basis points y-o-y • Full year 2002 EPS guidance raised from $3.37-$3.47 to $3.90

8. Earnings Improvement *Reported EPS NOTE: 2001 EPS figure adjusted to FAS 142 comparable basis; Q202 adjustment relates to investment impairments

9. Operating Profit Improvement Investment Income: (52)% Operating Profit: 74% Investment Income: (19)% Operating Profit: 66% *Adjusted for SFAS 142 change in accounting for goodwill as if adopted January 1, 2001 and excludes impairment, disposition, restructuring, OPM and other charges/credits

10. Drivers of 2002 Operating Profit Improvement

11. Growth in Specialty Company Unaffiliated Membership Up 9% Up 30%

12. Improved Free Cash Flow Free cash flow is defined as net income plus depreciation & amortization less capital expenditures * Excluding non-recurring items

13. Increase in Excess Statutory Capital

14. Lower Debt to EBITDA Ratio 2.4x 1.66x NOTE: Debt to EBITDAratios based on annualized current quarter EBITDA; Q202 & Q302 debt total excludes FHP bonds due to cash collateral account

15. SG&A • 3rd quarter SG&A ratio = 13%, up 250 basis points y-o-y • ~ $40 million in 3rd quarter costs are non-recurring • litigation-related accruals • incentive compensation accrual • 4th quarter SG&A will include: • Seasonal open enrollment costs • Marketing costs • 2003 • Continued investment in future state & new products

16. Debt Restructured • Bank Credit Facility • January ‘03 maturity date extended 2 years • $461 million reduction of outstanding balance YTD ‘02 • High Yield Notes • $200 million offer increased to $500 million • 10 ¾% coupons, priced to yield 10 7/8%; mature June ’09 • FHP bonds • $43 millionremaining balance covered by cash collateral account

17. Recent Events • Keystone Health Plan partners with PacifiCare Behavioral Health • Effective 11/1/02 • Covers > 200,000 Keystone enrollees in PA • Reader’s Digest agreement with Senior Solutions • Exclusive endorsement of Secure Horizons’ Medicare Supplement products • Access to customer database with > 100 million households • Working with Reader’s Digest to offer additional products

18. Recent Events • WebMD agreement with Prescription Solutions • Agreement is with WebMD sub, MedE America, which has 4 million lives • Prescription Solutions to provide mail order prescriptions & OTC medications • 300K members initially; additional mbrs. over next year • International Brotherhood of Teamsters agreement • Prescription Solutions endorsed as preferred PBM • Covers >250 Taft-Hartley trusts with > 1.4 million lives

19. Recent Events • Significant new commercial case wins • 65,000 new Large Group & National Accounts members effective January 1, 2003 • Includes Wells Fargo, IBM, Verizon Communications, LAUSD, County of Riverside and Fidelity National • 17,000 new members from County of San Diego effective October 2002 • Commercial HMO membership YTD is 85,000 > plan

20. New Products • Value Network • Designed to lower premiums 6-16% • Smaller network than standard HMO, but up to 4 times larger than Kaiser in CA • Self Directed Health Plan • Access to PPO • Combines employer funded medical spending account + catastrophic coverage • Stand Alone Rx Plan • No deductible; no annual max • Covers ~400 medications, mostly generic • Discounts of 15-30% on other drugs • M+C PPO Demonstration Project • Active in 2 counties in AZ and NV • Only participating plan in CA • Medicare Disease Management Demonstration Project • Targets up to 15,000 CHF patients

21. Changes to Medicare+Choice Goal is to maximize cash flow

22. 2003 Guidance • Higher commercial membership, excluding loss of CalPERS • Lower Commercial MLR • Commercial premium PMPM increase equal to or slightly higher than 2002 • Medicare+Choice MLR higher • Continued investments in IT, new products • Continued rapid growth in unaffiliatedspecialty company membership

23. Thank You