Universal American Financial Corporation ("Universal American" or the Company) is a specialty health and life insurance holding company that provides a broad array of health insurance and managed care products and services to the growing senior population. The Company’s principal health insurance products for the senior market are Medicare Supplement and Medicare Advantage.

The Complaint alleges that Defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Universal American securities.

Specifically, the Complaint alleges that Defendants made materially false and misleading statements regarding the Company’s medical loss ratio. The medical loss ratio is a very closely watched metric that is an expression of the relation of the cost of health care provided to premium income. An increase in the medical loss ratio means higher expenses relative to premium income, which in turn indicates that the Company is growing less profitable. The Company stated that the profitability of its Medicare Advantage business depended, to a significant degree, on the Company’s ability to predict and effectively manage costs related to the provision of healthcare services. State regulations required that the Company monitor its medical loss ratio and the Company claimed to have systems in place that enabled it to do so. Defendants further stated that they were reversing a negative trend in the medical loss ratio.

The Complaint further alleges that the truth was revealed on or around October 28, 2005, when Defendants issue a release that announced a 22% year-over-year decline in net income resulting from higher medical care costs and expenses. On this news, the Company’s share price dropped precipitously, by $7.50 per share, or 33%, in regular trading on the Nasdaq National Market (“NASDAQ”) exchange, to close at below $15.00 per share. During the Class Period, the Company and Company insiders sold Universal American shares for proceeds in excess of $200 million.

In a press release dated May 12, 2006, the court ordered the consolidation of the two actions because both related to the same series of allegedly false and misleading statements and arose from the act. It granted Western Washington Laborers-Employers Pension Trust's motion for appointment as lead Plaintiff, determining that it had the largest financial interest in the litigation and otherwise met the requirements of Federal Rule of Civil Procedure 23. It also approved Western Washington's selection of lead Counsel.

As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2007, on June 26, 2006, a consolidated amended class action Complaint was filed in the Kemp Action (the “Amended Complaint”), which now subsumes the Western Trust Action. The Amended Complaint asserts the same legal claims as in the original Kemp and Western Trust Actions, but also names an additional Defendant and includes additional allegations. The additional Defendant is a former director and former president of Pennsylvania Life Insurance Company, a subsidiary of the Company. The Amended Complaint alleges that Mr. Wehner is liable for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on grounds similar to those asserted against the Officer Defendants. The additional assertions are supposedly based in part upon information from six former employees and agents of the Company and its subsidiaries concerning, among other things, the Company’s medical loss ratio. Like the original Complaints in the Kemp and Western Trust Actions, the Amended Complaint seeks damages in an unspecified amount. On August 14, 2006, Defendants served a motion to dismiss the Amended Complaint in the Kemp Action. The lead Plaintiff served opposition papers to the motion on October 17, 2006. The motion was argued before the Court on December 13, 2006, and, on January 10, 2007, the Complaint was dismissed without prejudice. On March 29, 2007, lead Plaintiff in the Kemp Action served a second amended Complaint, which carried forward most of the factual and legal assertions in the prior pleading and added certain new allegations from the alleged confidential witnesses referred to in the Amended Complaint. The second amended Complaint dropped the claim that an individual Defendant directly violated Section 10(b) of the Securities Exchange Ace of 1934, as amended. Defendants served a motion to dismiss the second amended Complaint on May 10, 2007.

According to a press release dated July 18, 2007, Universal American Financial Corp. (NASDAQ: UHCO) announced that the securities class action entitled Robert Kemp vs. Universal American Financial Corp., Richard A. Barasch, Robert A. Waegelein and Gary W. Bryant that was filed in the United States District Court for the Southern District of New York (Case No. 05 CV 9883) in November 2005 has been dismissed with prejudice following a ruling by the Court in favor of the Company Defendants. This lawsuit was the consolidation of the two Complaints that had alleged violations of federal securities laws in connection with, among other things, Universal American’s Medicare Supplement business.