Caremark Ulysses Holding Corp. – ‘PRE 14A’ for 5/26/04

On:  Wednesday, 4/28/04, at 4:59pm ET   ·   For:  5/26/04   ·   Accession #:  950123-4-5334   ·   File #:  1-08506

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Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Notice of Annual Meeting: Universal American          39    194K 

Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities 
Exchange Act of 1934 (Amendment No. [_])
 Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
 [X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
 RULE 14A-6(e)(2))
[_] Definitive Proxy Statement
 [_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-12
UNIVERSAL AMERICAN FINANCIAL CORP.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 Payment of Filing Fee
(Check the appropriate box):                                                    

[X]   No fee required.                                                          

[_]   Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.  

 (1)   Title of each class of securities to which transaction applies:

(2)   Aggregate number of securities to which transaction applies:  

  (3)   Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which
      the filing fee is calculated and state how it was determined):

(4)   Proposed maximum aggregate value of transaction:              

            --------------------------------------------------------------------
(5)   Total fee paid:                                               

            --------------------------------------------------------------------

[_]   Fee paid previously with preliminary materials.                           

[_]   Check box if any part of the fee is offset as provided by Exchange Act    
    Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
   paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.         

(1)   Amount Previously Paid:                                       

            --------------------------------------------------------------------
(2)   Form, Schedule or Registration Statement No.:                 

            --------------------------------------------------------------------
(3)   Filing Party:                                                 

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(4)   Date Filed:                                                   

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UNIVERSAL AMERICAN FINANCIAL CORP.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 TO BE HELD MAY 26, 2004

TO THE SHAREHOLDERS OF                                                          
UNIVERSAL AMERICAN FINANCIAL CORP.:                                             

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of   
UNIVERSAL AMERICAN FINANCIAL CORP. will be held at the Penn Club, 30 West 44th  
Street, New York, New York 10036, at 9:30 a.m. (local time) on Wednesday, May   
26, 2004, or at any adjournment thereof (the "Annual Meeting"), for the         
following purposes:                                                             

    1.    To approve a proposal to amend our certificate of incorporation to
increase the authorized shares of common stock.         

 2.    To approve a proposal to increase the number of shares issuable
   under our Universal American Financial Corp. 1998 Incentive
Compensation Plan.                                      

3.    To elect nine directors to hold office until the next annual  
       election of directors or until their successors are elected and
qualified.                                              

   4.    To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.          

All shareholders are invited to attend the Annual Meeting. Only     
shareholders of record at the close of business on April 5, 2004 will be        
entitled to vote at the Annual Meeting. A list of these shareholders will be    
available at the Company's headquarters, 6 International Drive Rye Brook, New   
York 10573-1068 before the Annual Meeting.                                      

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND   
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS SOON AS    
POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, 
EVEN THOUGH YOU HAVE PREVIOUSLY SIGNED AND RETURNED YOUR PROXY.                 

                                     By order of the Board of Directors,

                        /s/  Joan M. Ferrarone

                   JOAN M. FERRARONE
           Secretary

Dated:   May 10, 2004                                                           
Rye Brook, New York                                           

 -----------------------------------

This proxy statement and the accompanying proxy card are being mailed to
Company shareholders beginning about May 10, 2004.

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UNIVERSAL AMERICAN FINANCIAL CORP.
 6 INTERNATIONAL DRIVE
RYE BROOK, NEW YORK 10573-1068

------------------

 PROXY STATEMENT
 FOR
ANNUAL MEETING OF SHAREHOLDERS

 TO BE HELD MAY 26, 2004

------------------
GENERAL INFORMATION                                                             

This proxy statement is furnished to the shareholders of Universal  
American Financial Corp., a New York corporation (the "Company"), in connection 
with the solicitation of proxies for use at the Company's Annual Meeting of     
Shareholders, or at any and all adjournments of such meeting (the "Annual       
Meeting")                                                                       

     The Annual Meeting of Shareholders will be held at the Penn Club, 30 West
44th Street, New York, New York 10036, at 9:30 a.m. (local time) on Wednesday,  
May 26, 2004.                                                                   

   This proxy statement and the accompanying form of proxy are first being
sent on or about May 10, 2004 to shareholders of record at the close of business
on April 5, 2004.                                                               

VOTING RIGHTS AND SOLICITATION                                                  

      Only shareholders of record at the close of business on April 5, 2004, are
entitled to notice of, and to vote at the 2004 Annual Meeting. On that day,     
there were issued and outstanding 54,207,096 shares of Common Stock (after      
deducting an aggregate of 212,000 shares held in treasury). Each share has one  
vote.                                                                           

Election of Directors.                                              

     Under New York law, the affirmative vote of the holders of a plurality of
the shares of common stock voted at the meeting is required to elect each       
director. Consequently, only shares that are voted in favor of a particular     
nominee will be counted toward the nominee's achievement of a plurality. Shares 
present at the meeting that are not voted for a particular nominee or shares    
present by proxy where the shareholder properly withholds authority to vote for 
the nominee, including broker non-votes, will not be counted toward the         
nominee's achievement of a plurality.                                           

Approval of Amendment to Certificate of Incorporation.              

      Approval of the amendment to our certificate of incorporation requires the
affirmative vote of the holders of a majority of the outstanding common shares. 
Any shares not voted (whether by abstention, broker non-vote or otherwise) have 
no impact on the vote.                                                          

Approval of an Increase of the Number of Shares Issuable Under Our  
    Universal American Financial Corp. 1998 Incentive Compensation Plan (the
"1998 ICP").                                                        

   Approval of an increase of the number of shares issuable under the 1998
ICP requires the affirmative vote of the holders of a majority of the           
outstanding common shares. Any shares not voted (whether by abstention, broker  
non-vote or otherwise) have no impact on the vote.                              

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    The cost of preparing, assembling, and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and        
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by us. We do not  
intend to solicit proxies other than by use of the mail, but certain of our     
officers and regular employees, without additional compensation, may use their  
personal efforts, by telephone or otherwise, to obtain proxies.                 

VOTING BY PROXY                                                                 

   When voting for the election of director nominees, you may (a) vote for
all director nominees as a group, (b) vote for all of the director nominees as a
group, except those nominees whose names you specify, or (c) withhold your vote 
for all director nominees as a group. When voting for any other item to be voted
on at the Annual Meeting, you may vote FOR or AGAINST the item or you may       
ABSTAIN from voting. All shares represented by valid proxies received and not   
revoked before they are exercised will be voted in the manner specified in the  
proxies. If nothing is specified, the proxies will be voted FOR each of the     
proposals.                                                                      

You may revoke your proxy at any time before it is exercised:       

-     by giving written notice of revocation to the Secretary of the
Company,                                                

     -     by submitting a subsequently dated and properly completed proxy, or

-     by attending the Annual Meeting and revoking your proxy. Your 
      attendance at the Annual Meeting will not by itself revoke you
proxy.                                                  

VOTING SHARES HELD IN COMPANY STOCK PLANS                                       

   Shares of our common stock held by Company employees who participate in
the Universal American Financial Corp. 401(k) Savings Plan (the "401(k) Savings 
Plan") are held of record and are voted by the trustees of the 401(k) Savings   
Plan. Participants in the 401(k) Savings Plan may instruct plan trustees as how 
to vote shares allocated to their accounts by voting by proxy. The trustees of  
the 401(k) Savings Plan will vote shares as to which they have not received     
direction in accordance with the terms of the 401(k) Savings Plan.              

SHAREHOLDERS' PROPOSALS FOR 2005 ANNUAL MEETING                                 

Any shareholder proposals, including director nominations that are  
intended to be considered for inclusion in the proxy statement for the 2005     
annual meeting of shareholders, must be received by the Company no later than   
the close of business on December 15, 2004. Any proposal received after that    
date will not be included in the Company's proxy materials for 2005. In         
addition, all proposals for inclusion in the 2005 proxy statement must comply   
with all of the requirements of Rule 14a-8 under the Securities Exchange Act of 
1934, as amended.                                                               

   In accordance with our bylaws, no proposal may be presented at the 2005
annual meeting of shareholders unless the Company receives advance notice of the
proposal by February 15, 2005. Proposals should be sent to the Secretary of the 
Company, Six International Drive, Rye Brook, New York, 10573. Nominations for   
director must be accompanied by written consent to being named in the proxy     
statement as a nominee and to serving as a director if elected. All proposals   
must comply with certain requirements set forth in the Company's bylaws, a copy 
of which may be obtained from the Secretary of the Company.                     

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ITEMS TO BE ACTED UPON BY SHAREHOLDERS

PROPOSAL 1

PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION
 TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK

The Board of Directors of the Company (the "Board") has approved and
recommends that the shareholders approve at the Annual Meeting a proposal to    
amend paragraph (a) of Article Fourth of the Company's Restated Certificate of  
Incorporation (the "Certificate of Incorporation") to increase the number of    
authorized shares of common stock, par value $0.01 per share, from 80,000,000   
shares to 100,000,000 shares. The Board believes that the proposed amendment to 
the Certificate of Incorporation shown below is in the best interests of the    
Company and its shareholders:                                                   

     "(a) The total number of shares which the Corporation is to be authorized
to issue is 102,000,000, consisting of 100,000,000 shares of common stock of the
par value of $.01 each, and 2,000,000 shares of Preferred Stock of the par value
of $1.00 each."                                                                 

     The Company is currently authorized to issue 82,000,000 shares of capital
stock, divided into 80,000,000 shares of common stock, $.01 par value per share,
and 2,000,000 shares of preferred stock, $1.00 par value per share. As of April 
5, 2004, 54,207,096 shares of Common Stock were outstanding, after deducting an 
aggregate of 212,000 shares held by the Company in treasury. Approximately 5.5  
million shares of our common stock were reserved for issuance upon exercise of  
outstanding options under the Company's stock options plans. As of April 5,     
2004, there were no shares of our preferred stock issued or outstanding.        

REASONS FOR THE PROPOSAL                                                        

      The Board has concluded that increasing the number of authorized shares of
common stock will give the Company the ability to react quickly to future growth
opportunities for the Company. Although the Board has no specific plans or      
commitments for the issuance of any of the additional shares that would be      
authorized by the amendment, the Board believes that the increase in the number 
of authorized shares will provide flexibility for actions the Company might wish
to take, such as paying for acquisitions with stock of the Company, equity      
offerings to raise capital, distributing stock splits or stock dividends and    
granting new awards under employee benefit plans.                               

CERTAIN EFFECTS OF THE PROPOSAL                                                 

   If our shareholders approve the proposed amendment, the Board may issue
such shares without further shareholder action except as required by law,       
regulation, or applicable NASDAQ Stock Market requirements. The additional      
shares, when issued, will have the same voting and other rights as the Company's
presently authorized common stock. The holders of common stock do not have      
preemptive rights to subscribe for additional shares of common stock.           

   Furthermore, in certain instances, the issuance of additional shares of
common stock may have a dilutive effect on earnings per share and on the equity 
and voting power of existing security holders of the Company's capital stock. It
may also adversely affect the market price of the Company's common stock.       
However, if additional shares are issued in transactions whereby favorable      
business opportunities are provided and allow the Company to pursue its business
plans, the market price of common stock may increase.                           

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ANTI-TAKEOVER EFFECTS AND OTHER PROVISIONS                                      

 Although the Board has no present intention of issuing any additional
shares of common stock as an anti-takeover step, the issuance of additional     
common shares could be used to create impediments to or otherwise discourage    
persons attempting to gain control of the Company. For example, the issuance of 
additional shares could be used in a manner that would dilute the voting power  
of shares then outstanding. Shares of common stock could also be issued to      
persons or entities that would support the Board in opposing a takeover bid     
which the Board determines to be not in the best interests of the Company, its  
shareholders, and its employees.                                                

EFFECTIVE DATE                                                                  

If approved by our shareholders, the amendment to our Certificate of
Incorporation would become effective upon the filing with the Secretary of State
of New York of a certificate of amendment, which filing is expected to take     
place shortly after the shareholders approve the amendment.                     

VOTE REQUIRED                                                                   

      The affirmative "FOR" vote by the holders of a majority of the outstanding
common stock entitled to vote is required to approve this amendment to the      
Company's Certificate of Incorporation.                                         

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.    

PROPOSAL 2

PROPOSAL TO INCREASE THE NUMBER OF SHARES ISSUABLE UNDER OUR
 UNIVERSAL AMERICAN FINANCIAL CORP. 1998 INCENTIVE COMPENSATION PLAN

      The Board has approved and recommends that the shareholders approve at the
Annual Meeting a proposal to amend the 1998 ICP to increase the number of shares
of common stock authorized for issuance under the 1998 ICP by 2,500,000 shares. 

 The Board believes that attracting and retaining key employees of the
Company and its subsidiaries, as well as directors, agents and other persons who
provide services to the Company and its subsidiaries is essential to the        
Company's growth and success. In addition, the Board believes that the long term
success of the Company is enhanced by a competitive and comprehensive           
compensation program, which may include tailored types of incentives designed to
motivate and reward such persons for outstanding service, including awards that 
link compensation to applicable measures of the Company's performance and the   
creation of shareholder value. Such awards will enable the Company to attract   
and retain key employees as well as directors, agents and other persons who     
provide services to the Company and enable such persons to acquire and/or       
increase their ownership in the Company and thereby align their interests with  
the interests of the Company's shareholders.                                    

REASONS FOR THE PROPOSED AMENDMENT                                              

   The primary reason for the proposed amendment to increase the number of
shares of our common stock authorized for issuance under the 1998 ICP is to     
provide sufficient shares for continued issuance of grants under the 1998 ICP.  
As of March 31, 2004, a total of 7.3 million shares were eligible for grant     
under the 1998 ICP, of which 4.9 million shares were reserved for delivery under
outstanding Awards (as defined below) under the 1998 ICP, 2.1 million shares had
been issued pursuant to previous Awards and 0.3 million shares reserved for     
issuance under future Awards. On April 27, 2004, the closing price of the       
Company's common stock, as reported by NASDAQ, was $11.50 per share.            

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    The Board believes that the availability of an adequate number of shares
under the 1998 ICP has been, and in the future, will continue to be, an         
important factor in attracting and retaining key employees, directors, agents   
and other persons who provide services to the Company.                          

DESCRIPTION OF THE 1998 ICP                                                     

   The following is a brief summary of the 1998 ICP, which is qualified in
its entirety by reference to the full 1998 ICP. You can obtain a copy of the    
1998 ICP by writing to the Secretary of the Company at our address set forth in 
the Notice appearing before this proxy statement. The 1998 ICP is also available
on our website at http://www.uafc.com by reference to Exhibit A of the Proxy    
Statement dated April 28, 1998, which is accessed through SEC Filings under the 
Investor Relations section of our website.                                      

TYPES OF AWARDS                                                                 

 The 1998 ICP provides for grants of stock options, stock appreciation
rights ("SARs"), restricted stock, deferred stock, other stock-related awards,  
and performance or annual incentive awards that may be settled in cash, stock,  
or other property (collectively, "Awards").                                     

      The 1998 ICP superseded the Universal Holding Corp. Incentive Stock Option
Plan, the Universal American Financial Corp. Stock Option Plan For Directors,   
and the Non-Qualified Stock Option Plan for Agents and Others (the "Pre-existing
Plans"), although previously granted awards will remain outstanding in          
accordance with their terms and the terms of the Pre-existing Plans.            

    The following is a summary of the current sub-plans for which Awards are
currently granted under the 1998 ICP:                                           

Awards to Employees:                                                

GRANTS OF RESTRICTED STOCK - This sub-plan provides for a grant of  
restricted stock to employees, which vests over time based upon continued       
service with the Company.                                                       

      ANNUAL BONUS OPTION GRANTS - This sub-plan provides for a grant of options
to management as part of the Company's annual bonus program. These options are  
issued with a strike price equal to the fair market value at the date of grant  
and vest based on the terms of the annual bonus program, as approved by the     
Compensation Committee of the Board each year.                                  

     NEW HIRE OPTION GRANTS - This sub-plan provides for a grant of options to
new employees. These options are issued with strike price equal to fair market  
value at the date of grant. The vesting period for these options is determined  
at the discretion of management, but generally takes place over no less than 3  
years.                                                                          

Awards to Non-Employee Directors:                                   

  ANNUAL OPTION AWARD - This sub-plan provides for a grant of options to
non-employee directors of the Company and its subsidiaries. These options are   
issued with a strike price equal to fair market value at the date of grant and  
vest over three years.                                                          

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Awards to Agents:                                                   

    ANNUAL BROKERAGE AGENT OPTION AWARD - This sub-plan provides for a grant
of options to brokerage agents based on production. These options are issued    
with a strike price equal to 125% of fair market value at the date of grant and 
vest one-third upon issuance, two-thirds after one year and 100% after two      
years.                                                                          

      ANNUAL CAREER MANAGER OPTION AWARD - This sub-plan provides for a grant of
options to regional managers of Pennsylvania Life Insurance Company and PennCorp
Life Insurance Company based on production. These options are issued with a     
strike price equal to 110% or 125% of fair market value at the date of grant and
vest one third upon issuance, two thirds after one year and 100% after two      
years.                                                                          

     ANNUAL CAREER AGENT RESTRICTED STOCK AWARD - This sub-plan provides for a
grant of stock to agents of Pennsylvania Life Insurance Company and PennCorp    
Life Insurance Company based on production. This award vests 100% on the second 
anniversary of the award date and shares are held by the Company until vested.  

    AGENT STOCK PURCHASE PLAN - Pursuant to this sub-plan, qualifying agents
may purchase shares of our common stock, at a price equal to fair market value  
on the date of purchase.                                                        

    AGENT DEFERRED COMPENSATION PLAN - Pursuant to this sub-plan, qualifying
agents may elect to defer receipt of commissions. Under the terms of the        
sub-plan, agent deferrals receive a Company matching contribution of 25% of the 
amount deferred, subject to certain limits. Agent deferrals and Company matching
contributions are then used to purchase shares of our common stock at a price   
equal to fair market value on the date of purchase.                             

REGIONAL GENERAL AGENTS EQUITY PARTICIPATION PLAN - Pursuant to this
sub-plan, qualifying agents can earn bonuses which, at their election, can be   
used to purchase shares of our common stock at a price equal to fair market     
value on the date of purchase. There is no vesting on the shares acquired       
through bonus deferrals until the fifth anniversary of the award, at which point
they become 100% vested.                                                        

 The above summary of sub-plans is not intended to be an all inclusive
listing of the use of equity based compensation for employees, directors, agents
and other persons who provide services to the Company. The above sub-plans may  
be modified or cancelled at the discretion of management and the Board, in      
accordance with their terms. In addition, individual awards and/or new sub-plans
may be added at the discretion of management and the Board, subject to the      
overall limits of the 1998 ICP as amended, to provide appropriate incentives for
those eligible individuals.                                                     

SHARES SUBJECT TO THE 1998 ICP                                                  

      Currently, under the 1998 ICP, the total number of shares of the Company's
common stock reserved and available for delivery in connection with Awards is:  
(i) 1.5 million, plus (ii) the number of shares of common stock subject to      
awards under the Preexisting Plans that become available (generally due to      
cancellation or forfeiture) after the effective date of the 1998 ICP, plus (iii)
13% of the number of shares of common stock issued or delivered by the Company  
during the term of the 1998 ICP (excluding any issuance or delivery in          
connection with Awards, or any other compensation or benefit plan of the        
Company); provided, however, that the total number of shares of our common stock
with respect to which incentive stock options ("ISOs") may be granted shall not 
exceed 1.5 million. All shares of our common stock delivered in connection with 
Awards under the 1998 ICP consist of authorized and unissued shares or treasury 
shares. As of March 31, 2004, a total of 7.3 million shares were eligible for   
grant under the current 1998 ICP. If the proposal is approved, the Company will 
be able to award an additional 2.5 million shares, for a total of 9.8 million   
shares under the 1998 ICP, as amended.                                          

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ADMINISTRATION                                                                  

   Subject to the terms and conditions of the 1998 ICP and the approval of
the Board, the Compensation Committee administers the 1998 ICP and is authorized
to:                                                                             

-     Select Award recipients,                                      

-     Determine the type and number of Awards to be granted,        

    -     Determine the number of shares of our common stock to which Awards
will relate,                                            

 -     Specify times at which Awards will be exercisable or settleable
   (including performance conditions that may be required as a
condition thereof),                                     

-     Set other terms and conditions of such Awards,                

-     Prescribe forms of Award agreements,                          

  -     Interpret and specify rules and regulations relating to the 1998
ICP, and                                                

      -     Make all other determinations that may be necessary or advisable for
the administration of the 1998 ICP.                     

  The 1998 ICP provides that Compensation Committee members shall not be
personally liable, and shall be fully indemnified, in connection with any       
action, determination, or interpretation taken or made in good faith under the  
1998 ICP.                                                                       

ANNUAL PER-PERSON LIMITATIONS                                                   

The 1998 ICP imposes individual limitations on the amount of certain
Awards in order to comply with Section 162(m) of the Internal Revenue Code of   
1986, as amended (the "Code"). Under these limitations, during any fiscal year  
the number of options, SARs, shares of restricted stock, shares of deferred     
stock, shares of common stock issued as a bonus or in lieu of other obligations,
and other stock-based Awards granted to any one participant may not exceed one  
million shares for each type of such Award, subject to adjustment in certain    
circumstances. The maximum cash amount that may be earned as a final annual     
incentive award or other annual cash Award in respect of any fiscal year by any 
one participant is $5 million, and the maximum cash amount that may be earned as
a final performance award or other cash Award in respect of a performance period
other than an annual period by any one participant on an annualized basis is $5 
million.                                                                        

     The Compensation Committee is authorized to adjust the number and kind of
shares available for Awards under the 1998 ICP, subject to the aggregate share  
limitations and annual limitations and subject to outstanding Awards (including 
adjustments to exercise prices, number of shares subject to options and other   
affected terms of Awards) in the event that a dividend or other distribution    
(whether in cash, shares, or other property), recapitalization, forward or      
reverse stock split, reorganization, merger, consolidation, spin-off,           
combination, share repurchase, or share exchange, or other similar corporate    
transaction or event affects the common stock so that an adjustment is          
appropriate. The Compensation Committee is also authorized to adjust performance
conditions and other terms of Awards in response to these kinds of events, for  
compliance with changes in applicable laws or regulations, or accounting        
principles.                                                                     

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ELIGIBILITY                                                                     

  Executive officers, directors, and other officers and employees of the
Company or any of its subsidiaries, as well as other persons who provide        
services to the Company or any of its subsidiaries, are eligible to be granted  
Awards under the 1998 ICP. The number of individuals eligible for participation 
in future Awards is summarized as follows:                                      

                                                                [Download Table]

                                         Eligible                         
                                           for      Estimated   Estimated 
Group                                     Future     Value of     Number  
                                         Awards *    Awards *   Of Units *
                                        ----------  ----------  ----------
                                                                          
Executive Officers:                                                       
  Richard A. Barasch                             1  $  150,000      14,500
  Gary W. Bryant                                 1     150,000      14,500
  Robert A. Waegelein                            1     150,000      14,500
  Jason J. Israel                                1     150,000      14,500
  William E. Wehner                              1     100,000       9,500
                                        ----------  ----------  ----------
Executive Officers as a Group                    5     800,000      67,500
Other Employees                                100   1,000,000     390,000
Directors                                        8     225,000      36,000
Insurance Company Subsidiary Directors           8      75,000      12,000
Agents and other non-employees                 200     550,000     212,000
                                        ----------  ----------  ----------
  Total                                        321  $2,650,000     717,500
                                        ==========  ==========  ==========

* Amounts estimated based upon participation in prior Awards.       

      The Compensation Committee will recommend and the Board will determine the
number and type of Awards pursuant to the terms of the 1998 ICP, subject to the 
limitations therein.                                                            

STOCK OPTIONS AND SARS                                                          

      The Compensation Committee is authorized to grant stock options, including
ISOs, which can result in potentially favorable tax treatment to the            
participant, non-qualified stock options (i.e., stock options not qualifying as 
ISOs), and SARs entitling the participant to receive the excess of the fair     
market value of a share of common stock on the date of exercise over the grant  
price of the SAR. The exercise price per share subject to an option and the     
grant price of an SAR is determined by the Compensation Committee, but must not 
be less than the fair market value of a share of common stock on the date of    
grant (except to the extent of in-the-money Awards or cash obligations          
surrendered by the participant at the time of grant). The maximum term of each  
option or SAR, the times at which each option or SAR will be exercisable, and   
provisions requiring forfeiture of unexercised options or SARs at or following  
termination of employment generally is fixed by the Compensation Committee,     
except no option or SAR may have a term exceeding ten years. Options may be     
exercised by payment of the exercise price in cash, common stock, outstanding   
Awards, or other property (possibly including notes or obligations to make      
payment on a deferred basis) having a fair market value equal to the exercise   
price, as the Compensation Committee may determine from time to time. Methods of
exercise and settlement and other terms of the SARs are determined by the       
Compensation Committee.                                                         

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RESTRICTED AND DEFERRED STOCK                                                   

  The Compensation Committee is authorized to grant restricted stock and
deferred stock. Restricted stock is a grant of common stock which may not be    
sold or disposed of, and which may be forfeited in the event of certain         
terminations of employment and/or failure to meet certain performance           
requirements prior to the end of a restricted period specified by the           
Compensation Committee. A participant granted restricted stock generally has all
of the rights of a shareholder of the Company, including the right to vote the  
shares and to receive dividends thereon, unless otherwise determined by the     
Compensation Committee. An Award of deferred stock confers upon a participant   
the right to receive shares at the end of a specified deferral period, subject  
to possible forfeiture of the Award in the event of certain terminations of     
employment and/or failure to meet certain performance requirements prior to the 
end of a specified restricted period (which restricted period need not extend   
for the entire duration of the deferral period). Prior to settlement, an Award  
of deferred stock carries no voting or dividend rights or other rights          
associated with share ownership, although dividend equivalents may be granted,  
as discussed below.                                                             

DIVIDEND EQUIVALENTS                                                            

  The Compensation Committee is authorized to grant dividend equivalents
conferring on the participant the right to receive, currently or on a deferred  
basis, cash, shares, other Awards, or other property equal in value to dividends
paid on a specific number of shares or other periodic payments. Dividend        
equivalents may be granted on a free-standing basis or in connection with       
another Award, may be paid currently or on a deferred basis, and, if deferred,  
may be deemed to have been reinvested in additional shares, Awards, or other    
investment vehicles specified by the Compensation Committee.                    

BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS                              

    The Compensation Committee is authorized to grant shares as a bonus free
of restrictions, or to grant shares or other Awards in lieu of obligations to   
pay cash under other plans or compensatory arrangements, subject to such terms  
as the Compensation Committee may specify.                                      

OTHER STOCK-BASED AWARDS                                                        

   The 1998 ICP authorizes the Compensation Committee to grant Awards that
are denominated or payable in, valued by reference to, or otherwise based on or 
related to shares of common stock. Such Awards might include convertible or     
exchangeable debt securities, other rights convertible or exchangeable into     
shares of common stock, purchase rights for shares of our common stock, Awards  
with value and payment contingent upon performance of the Company or any other  
factors designated by the Compensation Committee, and Awards valued by reference
to the book value of shares of common stock or the value of securities of or the
performance of specified subsidiaries. The Compensation Committee determines the
terms and conditions of such Awards, including consideration to be paid to      
exercise Awards in the nature of purchase rights, the period during which Awards
will be outstanding, and forfeiture conditions and restrictions on Awards.      

PERFORMANCE AWARDS, INCLUDING ANNUAL INCENTIVE AWARDS                           

      The right of a participant to exercise or receive a grant or settlement of
an Award, and the timing thereof, may be subject to such performance conditions 
as may be specified by the Compensation Committee. In addition, the 1998 ICP    
authorizes specific annual incentive Awards, which represent a conditional right
to receive cash, shares or other Awards upon achievement of pre-established     
performance goals during a specified one-year period. Performance Awards and    
annual incentive Awards granted to persons the Compensation Committee expects   
will, for the year in which a deduction arises, be among the Chief Executive    
Officer and four other most highly compensated executive officers of the        
Company, will, if so intended by the Compensation Committee, be subject to      
provisions intended to qualify such Awards as                                   

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"performance-based compensation" not subject to the limitation on tax           
deductibility by the Company under Code Section 162(m).                         

The performance goals to be achieved as a condition of payment or   
settlement of a performance Award or annual incentive Award will consist of (i) 
one or more business criteria and (ii) a targeted level or levels of performance
with respect to each such business criteria. In the case of performance Awards  
intended to meet the requirements of Code Section 162(m), the business criteria 
used must be one of those specified in the 1998 ICP, although for other         
performance awards the Compensation Committee may specify any other criteria.   
The business criteria specified in the 1998 ICP are: (1) earnings per share; (2)
revenues; increase in revenues; the excess of all or a portion of revenues over 
operating expenses (which may exclude expenses determined by the Compensation   
Committee at the time performance goals are established); (3) cash flow; (4)    
cash flow return on investment; (5) return on net assets, return on assets,     
return on investment, return on capital, return on equity; (6) economic value   
added; (7) operating margin; (8) net income; pretax earnings; pretax earnings   
before interest, depreciation, amortization and/or incentive compensation;      
pretax operating earnings; operating earnings (with or without investment gains 
or losses); (9) total shareholder return; (10) reduction in costs; (11) increase
in the fair market value of common stock; and (12) any of the above goals as    
compared to the performance of a published or special index selected by the     
Compensation Committee, which may, but need not, select the Standard & Poor's   
500 Stock Index or a group of comparator companies.                             

In granting annual incentive or performance Awards, the Compensation
Committee may establish unfunded Award "pools," the amounts of which will be    
based upon the achievement of a performance goal or goals using one or more of  
the business criteria described in the preceding paragraph. During the first 90 
days of a fiscal year or performance period, the Compensation Committee will    
determine who will potentially receive annual incentive or performance Awards   
for that fiscal year or performance period, either out of the pool or otherwise.
After the end of each fiscal year or performance period, the Compensation       
Committee will determine the amount, if any, of the pool, the maximum amount of 
potential annual incentive or performance Awards payable to each participant in 
the pool, and the amount of any potential annual incentive or performance Award 
otherwise payable to a participant. The Compensation Committee may, in its      
discretion, determine that the amount payable as a final annual incentive or    
performance Award will be increased or reduced from the amount of any potential 
Award, but may not exercise discretion to increase any such amount intended to  
qualify under Code Section 162(m).                                              

   Subject to the requirements of the 1998 ICP, the Compensation Committee
will determine other performance Award and annual incentive Award terms,        
including the required levels of performance with respect to the business       
criteria, the corresponding amounts payable upon achievement of such levels of  
performance, termination and forfeiture provisions, and the form of settlement. 

NON-EMPLOYEE DIRECTOR OPTIONS                                                   

     Unless otherwise determined by the Board, each non-employee director will
be granted an option to purchase 4,500 shares of our common stock upon his or   
her initial election to the Board and at each annual meeting of shareholders    
occurring three months or more thereafter at which he or she qualifies as a     
non-employee director. Unless otherwise determined by the Board, such options   
will have an exercise price equal to 100% of the fair market value per share on 
the date of grant and will become exercisable in three equal installments after 
each of the first, second and third anniversaries of the date of grant, based on
continued service as a director. Any such initial or annual options granted to  
non-employee directors expire at the earlier of 10 years after the date of the  
grant or 3 months after the date the participant ceases to serve as a director  
of the Company for any reason.                                                  

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OTHER TERMS OF AWARDS                                                           

     Awards may be settled in the form of cash, common stock, other Awards, or
other property, in the discretion of the Compensation Committee. The            
Compensation Committee may require or permit participants to defer the          
settlement of all or part of an Award in accordance with such terms and         
conditions as the Compensation Committee may establish, including payment or    
crediting of interest or dividend equivalents on deferred amounts, and the      
crediting of earnings, gains, and losses based on deemed investment of deferred 
amounts in specified investment vehicles. The Compensation Committee is         
authorized to place cash, shares, or other property in trusts or make other     
arrangements to provide for payment of the Company's obligations under the 1998 
ICP. The Compensation Committee may condition any payment relating to an Award  
on the withholding of taxes and may provide that a portion of any shares or     
other property to be distributed will be withheld (or previously acquired shares
or other property surrendered by the participant) to satisfy withholding and    
other tax obligations. Awards granted under the 1998 ICP generally may not be   
pledged or otherwise encumbered and are not transferable except by will or by   
the laws of descent and distribution, or to a designated beneficiary upon the   
participant's death, except that the Compensation Committee may, in its         
discretion, permit transfers for estate planning or other purposes.             

      Awards under the 1998 ICP are generally granted without a requirement that
the participant pay consideration in the form of cash or property for the grant 
(as distinguished from the exercise), except to the extent required by law. The 
Compensation Committee may, however, grant Awards in exchange for other Awards  
under the 1998 ICP, awards under other plans of the Company, or other rights to 
payment from the Company, and may grant Awards in addition to and in tandem with
such other Awards, awards, or rights as well.                                   

ACCELERATION OF VESTING                                                         

The Compensation Committee may, in its discretion, accelerate the   
exercisability, the lapsing of restrictions, or the expiration of deferral or   
vesting periods of any Award, and such accelerated exercisability, lapse,       
expiration and vesting shall occur automatically in the case of a "change in    
control" of the Company except to the extent otherwise determined by the        
Compensation Committee at the date of grant or thereafter. In addition, the     
Compensation Committee may provide that the performance goals relating to any   
performance-based Award will be deemed to have been met upon the occurrence of  
any change in control. Upon the occurrence of a change in control, except to the
extent otherwise determined by the Compensation Committee at the date of grant  
or thereafter, the holder of the options may elect to receive cash in lieu of   
shares based on a defined "change in control price," which will be the higher of
(i) the cash and fair market value of property that is the highest price per    
share of common stock paid (including extraordinary dividends) in any change in 
control transaction or in any liquidation of shares of common stock following a 
sale of substantially all of the assets of the Company, or (ii) the highest fair
market value per share of common stock (generally based on market prices) at any
time during the 60 days before and 60 days after a change in control. "Change in
control" is defined in the 1998 ICP to include a variety of events, including   
significant changes in the stock ownership of the Company or a significant      
subsidiary, changes in the Board, certain mergers and consolidations of the     
Company or a significant subsidiary, and the sale or disposition of all or      
substantially all the consolidated assets of the Company.                       

AMENDMENT AND TERMINATION OF THE 1998 ICP                                       

   The Board may amend, alter, suspend, discontinue, or terminate the 1998
ICP or the Compensation Committee's authority to grant Awards without further   
shareholder approval, except shareholder approval must be obtained for any      
amendment or alteration if required by law or regulation or under the rules of  
any stock exchange or automated quotation system on which the shares are then   
listed or quoted. For example, shareholder approval will not be deemed to be    
required under laws or regulations, such as those relating to ISOs, that        
condition favorable treatment of participants on such approval, although        

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the Board may, in its discretion, seek shareholder approval in any circumstance 
in which it deems such approval advisable. Thus, shareholder approval will not  
necessarily be required for amendments that might increase the cost of the 1998 
ICP or broaden eligibility. Unless earlier terminated by the Board, the 1998 ICP
will terminate at such time as no shares remain available for issuance under the
1998 ICP and the Company has no further rights or obligations with respect to   
outstanding Awards under the 1998 ICP.                                          

FEDERAL INCOME TAX IMPLICATIONS OF THE 1998 ICP                                 

Due to the complexity of the applicable provisions of the Code, this
summary sets forth only general tax principles affecting Awards which may be    
granted under the 1998 ICP. The general tax principles discussed below are      
subject to changes that may be brought about by future legislation or by        
regulations and administrative rulings, which may be applied on a retroactive   
basis. Special rules may apply to recipients of Awards stock who are subject to 
Section 16(b) of the Securities Exchange Act of 1934, as amended.               

Stock Appreciation Rights                                           

     The tax consequences of the grant of an SAR are generally as follows: (i)
at the time an SAR is granted, a participant will not recognize any taxable     
income; (ii) at the time of exercise of an SAR, the participant will recognize  
ordinary income equal to the cash or the fair market value of the shares of     
common stock received at that time. Subject to the rules concerning             
deductibility of compensation, the Company will be allowed an income tax        
deduction equal to the amount that the holder of an SAR recognizes as ordinary  
income upon the exercise of an SAR.                                             

Stock Options - Incentive Stock Options                             

     Under currently applicable provisions of the Code, as a general rule: (i)
at the time an ISO is granted, the participant will not recognize any taxable   
income, and (ii) at the time of exercise of the ISO, no taxable income will be  
realized by the participant.                                                    

 If common stock received upon exercise of an ISO is sold or otherwise
disposed of more than two years from the date the ISO was granted and more than 
one year after the shares of common stock were received upon exercise of the    
ISO, then: (i) the difference between the option exercise price paid and the    
sale price paid to the participants for the shares will result in long-term     
capital gain or loss to the participant, and (b) no deduction will be allowed to
the Company for federal income tax purposes in connection with the grant or     
exercise of the ISO. Different rules apply to participants who are subject to   
the alternative minimum tax. For example, the amount by which the fair market   
value of the stock acquired by exercising an ISO exceeds the exercise price is  
considered a "preference" and included in the calculation of alternative minimum
tax.                                                                            

 If common stock received upon exercise of an ISO is sold or otherwise
disposed of before the holding period described above is satisfied (called a    
"disqualifying disposition"), then the participant will recognize ordinary      
income at the time of the sale or other disposition in an amount equal to the   
lesser of: (a) the difference between the option exercise price and the fair    
market value of the shares at the time the option was exercised, and (b) the    
difference between the option exercise price and the amount realized upon the   
sale or other disposition of the shares. In addition, the participant will      
recognize short-term or long-term capital gain, depending upon whether the      
holding period for the shares is more or less than one year, to the extent of   
any excess of the amount realized upon the sale or other disposition of the     
shares over the fair market value of the shares upon exercise of the option. In 
the event of a disqualifying disposition, we will be allowed a tax deduction    
equal to the amount of the ordinary income recognized by the participant,       
subject to satisfying the rules concerning deductibility of compensation.       

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Stock Options - Non-Incentive Stock Options                         

  Some options granted under the 1998 ICP are not intended to qualify as
ISOs. Under currently applicable law, as a general rule: (i) at the time a      
non-ISO is granted, the participant will not recognize any taxable income; and  
(ii) upon the exercise of the option, the participant will recognize ordinary   
income in the amount by which the fair market value of the common stock at the  
time of exercise exceeds the option exercise price. When a participant sells    
shares acquired by the exercise of a non-ISO, the difference between the amount 
received and the adjusted tax basis of the shares will be gain or loss. Such    
gain will be long-term or short-term capital gain, depending upon whether the   
holding period for such shares is more or less than one year.                   

      The Company will generally be allowed an income tax deduction equal to the
amount that the participant recognizes ordinary income upon exercise of a       
non-ISO, subject to satisfying the rules concerning deductibility of            
compensation. The Company is not entitled to a deduction on amounts taxed as    
income to the participant upon a sale or other disposition of shares of common  
stock received upon exercise of a non-ISO.                                      

Other Awards                                                        

With respect to Awards granted under the 1998 ICP that result in the
payment or issuance of cash or shares or other property that is either not      
restricted as to transferability or not subject to a substantial risk of        
forfeiture, the participant must generally recognize ordinary income equal to   
the cash or the fair market value of shares or other property received. Thus,   
deferral of the time of payment or issuance will generally result in the        
deferral of the time the participant will be liable for income taxes with       
respect to such payment or issuance. The Company generally will be entitled to a
deduction in an amount equal to the ordinary income recognized by the           
participant.                                                                    

     With respect to Awards involving the issuance of shares or other property
that is restricted as to transferability and subject to a substantial risk of   
forfeiture, the participant must generally recognize ordinary income equal to   
the fair market value of the shares or other property received at the first time
the shares or other property becomes transferable or is not subject to a        
substantial risk of forfeiture, whichever occurs earlier. A participant may     
elect to be taxed at the time of receipt of restricted shares or other          
restricted property rather than upon lapse of restrictions on transferability or
substantial risk of forfeiture, but if the participant subsequently forfeits    
such shares or property, the participant would not be entitled to any tax       
deduction, including as a capital loss, for the value of the shares or property 
on which he previously paid tax. The participant must file such election with   
the Internal Revenue Service within 30 days of the receipt of the shares or     
other property. The Company generally will be entitled to a deduction in an     
amount equal to the ordinary income recognized by the participant.              

     Awards that are granted, accelerated or enhanced upon the occurrence of a
change in control may give rise, in whole or in part, to "excess parachute      
payments" within the meaning of Code Section 280G and, to such extent, will be  
non-deductible by the Company and subject to a 20% excise tax by the            
participant.                                                                    

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EQUITY COMPENSATION PLAN INFORMATION                                            

The following table sets forth information relating to equity securities        
authorized for issuance under the Company's equity compensation plans as of     
December 31, 2003:                                                              

                                                        [Enlarge/Download Table]

                                    NUMBER OF         WEIGHTED-AVERAGE   NUMBER OF SECURITIES     
                                  SECURITIES TO           EXERCISE        REMAINING AVAILABLE     
                                  BE ISSUED UPON          PRICE OF       FOR FUTURE ISSUANCE      
                                   EXERCISE OF          OUTSTANDING          UNDER EQUITY         
                                   OUTSTANDING            OPTIONS,        COMPENSATION PLANS      
                                OPTIONS, WARRANTS         WARRANTS       (EXCLUDING SECURITIES    
        PLAN CATEGORY               AND RIGHTS           AND RIGHTS     EFLECTED IN COLUMN (A))   
------------------------------  -----------------     ----------------  -----------------------   
                                       (a)                  (b)                  (c)              
                                                                                                  
Equity compensation plans                                                                         
  approved by security holders          5,458,305(1)  $           4.18                  357,586(2)
Equity compensation plans not                                                                     
  approved by security holders            201,124(3)  $           3.98                        0(4)
                                -----------------     ----------------  -----------------------   
Total                                   5,659,429     $           4.17                  357,586   
                                =================     ================  =======================   

(1)   Consists of shares of our common stock to be issued upon the exercise of  
options granted pursuant to the 1998 ICP.                           

(2)   Securities remaining available for issuance under the 1998 ICP. See above 
     for a description of the 1998 ICP. Shares of our common stock may also be
issued in connection with SARs, restricted stock and other Awards.  

(3)   Consists of shares of our common stock to be issued upon the exercise of  
    options granted pursuant to the Career Agent Stock Plan and the Regional
Equity Plan For Career Agency Managers filed on Form S-2.           

(4)   The Career Agent Stock Plan and the Regional Equity Plan For Career Agency
Managers were terminated as of December 31, 2001.                   

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.    

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PROPOSAL 3

 ELECTION OF DIRECTORS

   Our Restated Certificate of Incorporation and our By-Laws provide for a
board of directors of not less than three members, with the number of members to
be as set by the Board. Each director is elected for a term of one year, ending 
at the next annual meeting of our shareholders, and until his or her successor  
is elected and qualifies, subject to earlier removal. The Board has fixed the   
number of directors at nine. All of our present directors are nominees for      
election by the holders of our common stock. The following table sets forth     
certain information concerning our nominees for election as directors:          

                                                        [Enlarge/Download Table]

                                          POSITION WITH THE COMPANY, PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND      
NAME                               AGE    THE PAST FIVE-YEAR EMPLOYMENT HISTORY                                          
---------------------------------  -----  -------------------------------------------------------------------------------
                                                                                                                         
Richard A. Barasch (1)             50     Mr. Barasch has served as a Director since July 1988, as Chairman since        
                                          December 1997, as President since April 1991 and as Chief Executive Officer    
                                          since June 1995.  He is also Chairman of the Board of all of our               
                                          subsidiaries and has held executive positions with our subsidiaries since      
                                          their acquisition or organization.                                             

Bradley E. Cooper (1)(2)(3)        37     Mr. Cooper has served as a Director since July 1999.  Mr. Cooper is a          
                                          Senior Vice President, Director, Partner and co-founder of Capital Z, which    
                                          owns 46.5% of our outstanding common stock.  Prior to joining Capital Z,       
                                          Mr. Cooper served in similar roles at Insurance Partners, L.P. from 1994 to    
                                          1998 and International Insurance Advisors, L.P. from 1990 to 1994.  Mr.        
                                          Cooper currently serves on the board of directors of CERES Group, Inc. and     
                                          PXRE Group, Ltd.                                                               

Mark M. Harmeling (3)(6)           51     Mr. Harmeling has served as a Director since July 1990. He has also served     
                                          as Director of American Progressive from 1992 to 1999.  Mr. Harmeling is       
                                          self employed in the real estate industry.  He was previously a Managing       
                                          Director of TA Associates Realty, a pension fund advisory firm from 2001 to    
                                          2003.  From 1997 to 2001, Mr. Harmeling was employed by AG Spanos              
                                          Companies.  Mr. Harmeling is also a Director of Rochester Shoetree             
                                          Corporation and Applied Extrusion Technologies, Inc.                           

Bertram Harnett (1)(2)             81     Mr. Harnett has served as a Director since 1996.  Mr. Harnett has been a       
                                          practicing lawyer since 1948 and has been President of the law firm of         
                                          Harnett Lesnick & Ripps P.A., Boca Raton, Florida and its predecessors         
                                          since 1988.  He is the author of treatises on insurance law and is a           
                                          retired Justice of the New York State Supreme Court.                           

Linda H. Lamel(3)(4)(5)            60     Ms. Lamel is an attorney and consultant in private practice.  She was CEO      
                                          of Claims online, a technology company specializing in insurance claims        
                                          processing, from 2000 to 2002.  From 1997 to 2000, Ms. Lamel was Executive     
                                          Director of the Risk and Insurance Management Society, and from, 1988 to       
                                          1996, was Vice-President of TIAA-CREF.                                         

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                                                        [Enlarge/Download Table]

                                          POSITION WITH THE COMPANY, PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND      
NAME                               AGE    THE PAST FIVE-YEAR EMPLOYMENT HISTORY                                          
---------------------------------  -----  -------------------------------------------------------------------------------
                                                                                                                         
Eric W. Leathers(a)              30     Mr. Leathers is a Principal of Capital Z, which owns 46.5% of our                
                                        outstanding common stock.  Prior to joining Capital Z in August 1998, Mr.        
                                        Leathers was an investment banker with Donaldson, Lufkin & Jenrette, where       
                                        he specialized in mergers and acquisitions, corporate financings, and            
                                        private equity transactions within the insurance industry.                       

Patrick J. McLaughlin            46     Mr. McLaughlin has served as a Director since January 1995.  Mr. McLaughlin      
(1)(2)(4)(5)                            has been a Managing Director of Emerald Capital Group, Ltd., an asset            
                                        management and consulting firm specializing in the insurance industry, since     
                                        April 1993.                                                                      

Robert A. Spass (1)(6)           48     Mr. Spass has served as a Director since July 1999.  Mr. Spass is the            
                                        Chairman of the Board, a Partner and co-founder of Capital Z, which owns         
                                        46.5% of our outstanding common stock.  Prior to founding Capital Z, Mr.         
                                        Spass was the Managing Partner and co-founder of Insurance Partners, L.P.        
                                        from 1994 to 1998.  Prior to the formation of Insurance Partners, L.P., Mr.      
                                        Spass was President and CEO of International Insurance Advisors L.P. from        
                                        1990 to 1994.  Mr. Spass serves on the board of directors of CERES Group,        
                                        Inc., Endurance Holdings, Inc., Aames Financial Corp. and USI Holdings           
                                        Corporation.                                                                     

Robert F. Wright (4)(5)(6)       78     Mr. Wright has served as a Director since June 1998.  Mr. Wright has been        
                                        President of Robert F. Wright Associates, Inc. since 1988.  Prior to that,       
                                        Mr. Wright was a senior partner of the public accounting firm of Arthur          
                                        Andersen LLP.  Mr. Wright is Director of Reliance Standard Life Insurance        
                                        Company (and its affiliates), GVA Williams, The Navigators Group, Inc. and       
                                        USI Holdings Corporation.                                                        

--------------------                                                            

(1)   Member of the Executive Committee.                                        

(2)   Member of the Investment Committee.                                       

(3)   Member of the Compensation Committee.                                     

(4)   Member of the Audit Committee.                                            

(5)   Member of the Transaction Committee.                                      

(6)   Member of the Nominating and Governance Committee.                        

(a)   Mr. Leathers was appointed to the Board on February 13, 2004, upon the    
     recommendation of the Nominating and Governance Committee and approval by
the remainder of the Board, to fill the seat previously held by Ms. 
   Fleming, who resigned from the Board on the same date. Mr. Leathers was
recommended, pursuant to the Shareholders' Agreement (see below), by
      Capital Z, a shareholder that beneficially owns 46.5% of our common stock.

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SHAREHOLDERS' AGREEMENT                                                         

     The Company, Capital Z, Richard Barasch (the Chairman and Chief Executive
Officer of the Company) and several other shareholders the Company entered into 
a shareholders' agreement on July 30, 1999 (the "Shareholders' Agreement"). The 
Shareholders' Agreement requires that all proposed sales/transfers by the other 
shareholders who are party to the Shareholders' Agreement must first be offered 
to Richard Barasch and Capital Z, including its affiliates. However, pledges and
some other transfers by any party to the Shareholders' Agreement of less than 1%
of Universal American's outstanding common stock at any one time, or 2.5% when  
aggregated with the other transfers by the shareholder and his, her or its      
permitted transferees of Universal American's outstanding common stock, are     
permitted. The Shareholders' Agreement provides for tag-along and drag-along    
rights under some circumstances. "Tag-along rights" allow the holder of stock to
include his, her or its stock in a sale of common stock initiated by another    
party to the Shareholders' Agreement. "Drag-along rights" permit a selling party
to the Shareholders' Agreement to force the other parties to the Shareholders'  
Agreement to sell a proportion of the other holder's shares in a sale arranged  
by the selling shareholder.                                                     

  Under the terms of the Shareholders' Agreement, of the nine members of
Universal American's board of directors, certain shareholders are permitted to  
nominate directors as follows: Capital Z: four, Richard Barasch: two and        
Universal American: two. Capital Z and Richard Barasch are each required to vote
for the director(s) nominated by the other. The right of Richard Barasch to     
nominate directors is conditioned upon his continued employment with Universal  
American. In addition, the right to nominate directors is not transferable,     
except that Capital Z may transfer its right to a third-party buyer who acquires
10% or more of the outstanding common stock of Universal American from Capital  
Z.                                                                              

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ALL NOMINEES FOR  
ELECTION AS DIRECTORS.                                                          

BOARD MEETINGS AND COMMITTEES                                                   

The Board met nine times during 2003. In 2003, each of our directors
attended at least 75% of the meetings of the Board and the committees on which  
he or she served. In addition, our policy is to encourage the members of the    
Board to attend our Annual Meeting. The 2003 annual meeting was attended by of  
eight of our Directors.                                                         

COMMITTEES OF THE BOARD OF DIRECTORS                                            

      The Board has an Audit Committee, a Nominating and Governance Committee, a
Transaction Committee, a Compensation Committee, an Investment Committee and an 
Executive Committee. Unless otherwise indicated, committee membership for each  
of our Directors is identified in the table of Director Nominees in Proposal 3 -
Election of Directors.                                                          

Audit Committee                                                     

    The Audit Committee is composed of Linda H. Lamel, Patrick J. McLaughlin
and Robert F. Wright. Each member of the Audit Committee is an independent      
Director as determined by our Board, based on independence requirements under   
Securities and Exchange Commission rules and regulations and the listing        
requirements of NASDAQ In addition, the Board has determined that Robert F.     
Wright is an "audit committee financial expert," as defined by Securities and   
Exchange Commission rules and regulations.                                      

 The primary function of the Audit Committee is to assist the Board in
monitoring (i) the integrity of the financial statements of the Company, (ii)   
the independent auditor's qualifications and independence, (iii) the performance
of the Company's internal audit function and independent auditors, and (iv)     
compliance by the Company with legal and regulatory requirements. The Committee 
operates pursuant to a charter,                                                 

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approved by the Audit Committee and the Board, which sets out the               
responsibilities, authority and specific duties of the Audit Committee. The     
charter specifies, among other things, the structure and membership requirements
of the Audit Committee, as well as the relationship of the committee to the     
Company's independent auditors, the internal audit department, and management of
the Company. The Audit Committee charter is attached to this Proxy Statement as 
Attachment A. The Audit Committee met seven times during 2003.                  

Compensation Committee                                              

    Our Compensation Committee has the oversight responsibility with respect
to executive compensation and works with management to develop clear            
relationships between pay levels, financial performance and returns to          
shareholders, in order to align the Company's compensation structure with its   
organizational objectives. Further detail regarding the functions of the        
Compensation Committee is provided below, under the heading "Report of the      
Compensation Committee on Executive Compensation." The members of the           
Compensation Committee are Bradley E. Cooper, Mark M. Harmeling and Linda H.    
Lamel. The Board has determined that all of the members of the Compensation     
Committee are independent Directors, as that term is defined by the NASDAQ      
listing standards. The Compensation Committee met twice during 2003.            

Executive Committee                                                 

      Our Executive Committee has the authority to act between Board meetings on
behalf of the Board, on all matters allowed by law. The members of the Executive
Committee are Richard A. Barasch, Bradley E. Cooper, Bertram Harnett and Robert 
A. Spass. The Executive Committee did not meet in 2003.                         

Investment Committee                                                

Our Investment Committee reviews the Company's investment policy and
guidelines and portfolio performance. The members of the Investment Committee   
are Bradley E. Cooper, Bertram Harnett and Patrick J. McLaughlin. The Investment
Committee met twelve times during 2003.                                         

Nominating and Governance Committee                                 

    The Nominating and Governance Committee is composed of Robert F. Wright,
Mark M. Harmeling and Robert A. Spass, each of whom is independent as that term 
is defined by the NASDAQ listing standards. The purpose of the Nominating and   
Governance Committee is to make recommendations to the Board in order to assist 
the Board with its responsibilities, including:                                 

      (i)   the identification of individuals qualified to become Board members,

    (ii)  the selection of the director nominees for the next annual meeting
of shareholders,                                        

   (iii) the selection of director candidates to fill any vacancies on the
Board,                                                  

(iv)  the development and recommendation to the Board of a set of   
        corporate governance guidelines and principles applicable to the
Company (the "Corporate Code of Ethics"),               

   (v)   leading the Board in its annual review of the Board's performance
         and to oversee the annual review of the Chief Executive Officer's
performance, and                                        

(vi)  the recommendation to the Board of director nominees for each 
committee.                                              

    In so doing, the Committee will endeavor to maintain free and open means
of communication between the members of the Committee, other members of the     
Board, and management of the Company.                                           

    The Nominating and Governance Committee considers potential nominees for
Board membership suggested by its members and other Board members, as well as by
members of management and                                                       

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shareholders, when properly submitted in accordance with our bylaws. In         
addition, the Company may, at the request of the Nominating and Governance      
Committee, retain outside search firms to identify prospective Board nominees.  

The Nominating and Governance Committee will review a summary of the
nominee's qualifications, including materials provided by outside search firms  
or other parties. The Nominating and Governance Committee evaluates prospective 
nominees against the standards and qualifications set out in the Nominating and 
Governance Committee Charter, including:                                        

  o     experience in corporate governance, such as an officer or former
officer of a publicly held company;                     

o     experience in the Company's industry;                         

    o     experience as a board member of another publicly held company; and

o     academic expertise in an area of the Company's operations.    

 The Nominating and Governance Committee also considers other relevant
factors as it deems appropriate, including the current composition of the Board,
the balance of management and independent directors, senior leadership          
experience and the need for financial and accounting expertise. In additions,   
each member of the Board must have sufficient time available to carry out the   
significant responsibilities relating to serving on the Board. The Nominating   
and Governance Committee makes a recommendation to the full Board as to the     
persons who should be nominated by the Board, and the Board determines the      
nominees after considering the recommendation and report of the Nominating and  
Governance Committee.                                                           

     The Nominating and Governance Committee will consider director candidates
recommended by any shareholder entitled to vote in the election of directors,   
provided, however, that a shareholder may nominate a person for election as a   
director at a meeting only if written notice of such shareholder's intent to    
make such nomination has been provided to our Secretary as described above under
"Shareholder Proposals for 2005 Annual Meeting" in this Proxy Statement. The    
Nominating and Governance Committee will review and evaluate such shareholder   
nominations in the same manner as it evaluates all other nominees.              

   The Charter for the Nominating and Governance Committee was approved by
the Board on April 1, 2004 and is available on the Company's website at         
www.uafc.com and to any stockholder who otherwise requests a copy in writing to 
the Secretary of the Company at the address set forth in the Notice appearing   
before this Proxy Statement. The Nominating and Governance Committee met twice  
during 2003.                                                                    

Transaction Committee                                               

    Our Transaction Committee reviews and makes recommendations to the Board
on certain capital and acquisition transactions entertained by us. The          
Transaction Committee met once during 2003.                                     

 The information contained in this proxy statement with respect to the
Audit Committee charter, the Nominating and Governance Committee charter and the
independence of the non-management members of the Board shall not be deemed to  
be "soliciting material" or to be "filed" with the Securities and Exchange      
Commission, nor shall the information be incorporated by reference into any     
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that we specifically incorporate it by reference in a
filing.                                                                         

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DIRECTOR INDEPENDENCE                                                           

     In December 2003, the Board undertook a review of the independence of the
Directors of the Company in accordance with NASDAQ listing standards. During    
this review, the Board considered transactions and relationships between each   
director and any member of his or her immediate family and the Company, its     
subsidiaries and affiliates. The Board also examined transactions and           
relationships between directors or their affiliates and members of the Company's
senior management or their affiliates. The purpose of this review was to        
determine whether any such relationships or transactions were inconsistent with 
a determination that the director is independent.                               

     As a result of this review, the Board affirmatively determined that seven
of the nine Directors are independent, as that term is defined by NASDAQ listing
standards. The non-independent Directors are Richard Barasch, chief executive   
officer of the Company, and Bertram Harnett, a shareholder in Harnett, Lesnick &
Ripps, P.A. of Boca Raton, Florida, which was paid $490,258 in 2003 for legal   
services rendered to the Company.                                               

DIRECTOR COMPENSATION                                                           

      Directors who are not our employees, except for Mr. Harnett, receive a fee
of $1,000 for each meeting of the Board or committee meeting attended, unless   
the committee meeting is held immediately prior to or after a Board meeting. In 
addition, Directors who are not our employees, except for Mr. Harnett, receive a
retainer of $5,000 per year, payable quarterly. The Chairman of our Audit       
Committee and the Chairman of our Investment Committee each receive an          
additional fee of $15,000. In addition, our Directors are reimbursed for their  
travel and related expenses in connection with serving as Board members. In     
2003, each of our Directors was eligible to be granted options under our 1998   
ICP, and on June 3, 2003, each eligible Director was granted options to purchase
4,500 shares of common stock at an exercise price of $6.23, for a total of      
36,000 options granted.                                                         

REVISION TO DIRECTOR COMPENSATION                                               

     Based on an independent study, the Compensation Committee recommended and
the Board approved changes to Director compensation, effective April 1, 2004.   
The annual retainer for all directors who are not our employees was increased to
$10,000. Board and committee meeting fees are $1,000 for in person meetings and 
$500 for telephonic meetings. The fees for the Chairs of the Audit and          
Investment Committees were both increased to $20,000 per year. The Chairs of the
Compensation and the Nominating and Governance Committees will each begin to    
receive fees of $10,000 per year. Eligible Directors will continue to be granted
options at each Annual Meeting to purchase 4,500 shares of common stock with a  
market exercise price.                                                          

SHAREHOLDER COMMUNICATION WITH THE BOARD                                        

Shareholders may communicate with the Board, any of its constituent 
committees or any member thereof by means of a letter addressed to the Board,   
its constituent committees or individual directors and sent care of Chairman of 
the Nominating and Governance Committee at Universal American Financial Corp.,  
Six International Drive, Rye Brook, New York, 10573. All shareholder            
communications received by the Chairman of the Nominating and Governance        
Committee will be forwarded to the addressees of such communications            
accordingly.                                                                    

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REPORT OF THE AUDIT COMMITTEE                                                   

     The Audit Committee oversees the financial reporting process on behalf of
the Board. The Audit Committee reviewed and discussed the audited financial     
statements, including a discussion of the quality, not just the acceptability,  
of the accounting principles, the reasonableness of significant adjustments and 
the clarity of disclosures in the financial statements with management, which   
has the primary responsibility for the financial statements.                    

     Ernst & Young LLP, our independent auditor, is responsible for expressing
an opinion on the conformity of the Company's audited financial statements with 
generally accepted accounting principles.                                       

     The Audit Committee has also discussed with Ernst & Young LLP the matters
required to be discussed by Statement of Auditing Standards No. 61              
(Communications with Audit Committees), as amended, regarding the auditor's     
judgments about the quality of our accounting principles as applied in its      
financial reporting.                                                            

The Audit Committee received from Ernst & Young LLP the written     
disclosures and the letter required by Independence Standards Board Standard No.
1, and has discussed with Ernst & Young LLP their independence, and considered  
the compatibility of non-audit services with the auditors' independence.        

      The Audit Committee discussed with Ernst & Young LLP the overall scope and
plans for the respective audit. The Audit Committee met with Ernst & Young LLP, 
with and without management present, to discuss the results of their            
examinations, their evaluations of the Company's internal controls, and the     
overall quality of the Company's financial reporting. The Audit Committee held  
seven meetings during fiscal year 2003.                                         

Based upon the reviews and discussions referred to above, the Audit 
Committee recommended to the Board of Directors that the Company's audited      
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 for filing with the U.S. Securities and        
Exchange Commission, and selected Ernst & Young LLP as the independent auditor  
for 2004.                                                                       

Submitted by:                                                                   
The Audit Committee of Universal American Financial Corp.                       
Robert F. Wright, Chairman                                                      
Linda H. Lamel                                                                  
Patrick J. McLaughlin                                                           

    The information contained in the foregoing report shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange      
Commission, nor shall the information be incorporated by reference into any     
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the company specifically incorporates it by     
reference in a filing.                                                          

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FEES TO INDEPENDENT AUDITORS                                                    

      The Audit Committee selected Ernst & Young LLP as our independent auditors
for 2004. Ernst & Young LLP are currently our independent auditors and served as
our independent auditors for 2002 and 2003. The following table presents fees   
for services rendered by Ernst & Young LLP for each of the years ended December 
31, 2003 and 2002. All such services were approved by the Audit Committee in    
advance.                                                                        

                                                                [Download Table]

                              2003           2002   
                           ----------     ----------
                                                    
Audit fees                 $1,120,000     $  948,600
Audit related fees (1)        208,500         10,000
Tax fees (2)                  144,220         79,645
All other fees (3)             59,700         15,824
                           ----------     ----------
Total fees                 $1,532,420     $1,054,069
                           ==========     ==========

(1)   Principally consisted of purchase GAAP accounting, SEC filing, 401(k)     
   audit and Sarbanes-Oxley reviews in 2003 and reserve control testing in
2002.                                                               

(2)   Principally consisted of tax consultation and compliance assistance       
services in both 2003 and 2002.                                     

(3)   Principally consisted of fees for review of audit workpapers by third     
  parties and actuarial services in 2003 and actuarial services in 2002.

 The Audit Committee considered whether the provisions of the services
covered under "All other fees" above is compatible with maintaining the         
independence of Ernst & Young LLP and concluded that the non-audit services     
provided by Ernst & Young LLP was compatible with maintaining Ernst & Young     
LLP's independence.                                                             

   We have been advised by Ernst & Young LLP that substantially all of the
work done in conjunction with the audit of our financial statements for the year
ended December 31, 2003, was performed by permanent full time employees and     
partners of Ernst & Young LLP.                                                  

  Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire and will 
be available to respond to appropriate questions.                               

PRE-APPROVAL POLICY                                                             

The Audit Committee is responsible for pre-approving all audit and  
permissible non-audit services provided by the independent auditor. For audit   
services, each year the independent auditor provides the Audit Committee with an
engagement letter outlining the scope of the audit services proposed to be      
performed during the year and the cost for performing such services, which must 
be formally approved by the Audit Committee before the audit commences.         

     The Audit Committee's policies require specific pre-approval of all other
permitted services. As provided by the Audit Committee's policies, the Audit    
Committee has delegated to its chairman the authority to address any requests   
for pre-approval of services between Audit Committee meetings, up to a maximum  
of $25,000 per service engagement. The chairman must present any pre-approval   
decisions to the full Audit Committee at its next scheduled meeting.            

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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION                  

The Compensation Committee reviews and recommends to the Board the  
compensation of the Company's executive officers (including the executive       
officers named in the Executive Compensation section below). The Compensation   
Committee is made up of three independent, non-employee members of the board.   
The objective of the Company's compensation program is to provide a total       
compensation package that will enable the Company to:                           

-     attract, motivate and retain outstanding individuals;                     

-     align the financial interests of those individuals with the interests of  
the Company's shareholders;                                         

-     reward those individuals for increasing levels of profit and shareholder  
value; and                                                          

-     encourage management's stake in the long-term performance and success of  
the Company.                                                        

     In order to achieve these goals, the Compensation Committee establishes a
competitive and appropriate total compensation package for each executive       
officer, consisting primarily of four components - base salary, annual bonus,   
stock options and restricted stock awards. The Compensation Committee conducts  
an annual review of compensation relative to other life insurance companies and 
companies of similar size in the financial industry.                            

BASE SALARIES                                                                   

     The Compensation Committee establishes base salaries each year at a level
intended to be within the competitive market range of comparable companies.     
Other factors considered in determining base salary include the responsibilities
of the executive officer, experience, length of service and individual          
performance. During fiscal year 2002, base salaries of our Chief Executive      
Officer and four other most highly compensated executive officers (the "Named   
Executive Officers") increased an average of 7.7% over 2002. The Compensation   
Committee believes that the base salaries of the current executive officers are 
within the competitive market range of comparable companies.                    

CASH BONUSES AND RESTRICTED STOCK BONUSES                                       

    The Compensation Committee makes recommendations to the Board for awards
of cash bonuses to the executive officers. The amount of cash bonuses and       
restricted stock is primarily based upon the achievement of a certain level of  
operating profits, but also includes criteria such as revenue production for    
marketing executives and expenses relative to pre-determined budgets for        
administrative executives. The fiscal year 2003 cash bonus to our Named         
Executive Officers was, in the aggregate, 112.4% of their annualized base salary
at the date of the award. Restricted stock is stock in the Company which the    
executive officer must hold for a period of time before it can be sold. The     
financial benefit of an award of restricted stock may not be realized by the    
executive officer until the restrictions can be lifted from the stock. The total
restricted stock awarded to the executive officer group during fiscal year 2003 
amounted to 69,240 shares, or 0.1% of the average outstanding shares of the     
Company during 2003.                                                            

STOCK OPTIONS                                                                   

     An important component of the Company's executive compensation program is
the award of stock options. The Compensation Committee believes that stock      
options motivate the executive officers to remain focused on the overall        
long-term performance of the Company. Generally the award of a stock option     
creates no financial benefit to the executive unless there is appreciation in   
the price of the Company's stock after the award date. There were no stock      
options awarded to the Named Executive Officers during 2003.                    

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COMPENSATION OF THE CHIEF EXECUTIVE OFFICER                                     

     Mr. Barasch's compensation is governed by his employment agreement, dated
July 30, 1999, which provides the Compensation Committee discretion in          
determining his base compensation and target bonuses. Mr. Barasch's base salary 
for the twelve months from April 1, 2003 to March 31, 2004 was $721,000, an     
increase of 3% over his base salary in the prior twelve months. In addition, Mr.
Barasch was awarded a cash bonus of $1,185,000, or 164% of his base salary,     
based on the achievement of certain operating goals that had been set in the    
previous year. Additionally, Mr. Barasch was awarded 14,837 shares of our common
stock, which vest over four years. For the twelve months beginning April 1,     
2004, Mr. Barasch's salary was increased by 3% to $742,630 and his target bonus 
was set at 150% of his base salary.                                             

POLICY ON TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION                           

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") provides that executive compensation in excess of $1.0 million paid to  
certain of its executive officers in any calendar year must be performance-based
to be deductible for purposes of corporate income tax. The Compensation         
Committee will continue to rely on performance-based compensation programs for  
our executive officers. These programs will be designed to meet, in the best    
possible manner, future corporate business objectives. However, the Compensation
Committee may award compensation that is not fully deductible if it determines  
that such an award is consistent with its philosophy and in the best interests  
of the Company and its shareholders.                                            

The Compensation Committee                                                      
Mark M. Harmeling, Chairman                                                     
Bradley E. Cooper                                                               
Linda H. Lamel                                                                  

    The disclosure contained in the above section of this proxy statement is
not incorporated by reference into any of our filings under the Securities Act  
of 1933 or the Securities Exchange Act of 1934 that incorporate filings or      
portions thereof, (including this proxy statement or the "Executive             
Compensation" section of this proxy statement) without specific reference to the
incorporation of this section of this proxy statement.                          

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EXECUTIVE COMPENSATION                                                          

The following table shows the total compensation paid pursuant to   
employment agreements by the Company and its subsidiaries to our Chief Executive
Officer and our four most highly compensated executive officers (the "Named     
Executive Officers") for services rendered in all capacities to the Company and 
its subsidiaries for the fiscal years ended December 31, 2003, 2002 and 2001:   

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                     ANNUAL COMPENSATION                LONG-TERM COMPENSATION                
                                            ----------------------------------  ----------------------------------------------
                                                                                RESTRICTED        STOCK         ALL OTHER     
NAME, AGE AND PRINCIPAL POSITION            YEAR       SALARY         BONUS     STOCK $ (1)      OPTIONS      COMPENSATION (2)
--------------------------------            ----       ------         -----     -----------      -------      ----------------
                                                                                                                              
Richard A. Barasch (50)                     2003     $  715,750     $1,185,000  $  150,000             --     $    4,000      
Chairman & Chief Executive Officer          2002        653,440        735,000     375,000         13,417          4,000      
                                            2001        509,070        718,200     307,800         25,000          3,400      

Gary W. Bryant (54)                         2003     $  333,250     $  278,000  $  150,000             --     $    4,000      
Executive Vice President & Chief Operating  2002        304,000        154,700     126,300         25,000          4,000      
Officer                                     2001        283,250        135,100      57,900         45,000          3,400      

Robert A. Waegelein (43)                    2003     $  265,000     $  221,000  $  150,000             --     $    4,000      
Executive Vice President & Chief Financial  2002        241,580        129,500     115,500         25,000          4,000      
Officer                                     2001        214,240        110,600      47,400         45,000          3,400      

Jason J. Israel (51)(3)                     2003     $  264,328     $  217,000  $  150,000             --     $    4,000      
President of CHCS, Inc.                     2002        125,000         45,500      39,500         67,500          4,000      
                                            2001             --             --          --             --          3,400      

William E. Wehner (60)                      2003     $  220,250     $  121,000  $  100,000             --     $    4,000      
President of Pennsylvania Life Insurance    2002        211,300         75,250      72,250         15,000          4,000      
Company                                     2001        198,275         70,070      30,030         30,000          3,400      

-------------------                                                             

(1)   The Named Executive Officers were awarded restricted shares of our stock  
    on various dates. These shares are shown at the fair market value of our
common stock on the date of the award.                              

(2)   The amounts in this column represent the value of our common stock        
      contributed by us under the 401(k) plan to match contributions to the plan
on behalf of the Named Executive Officer.                           

(3)   Mr. Israel joined the Company in July 2002.                               

OPTION GRANTS IN LAST FISCAL YEAR                                               

There were no options to purchase common stock granted to the Named 
Executive Officers during 2003.                                                 

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION      
VALUES                                                                          

The following table sets forth information about options to purchase
common stock exercised by the Named Executive Officers and the number and value 
of options each of those officers held on December 31, 2003:                    

                                                        [Enlarge/Download Table]

                                                       NUMBER OF SECURITIES         VALUE OF UNEXERCISED     
                        SHARES                        UNDERLYING UNEXERCISED      IN-THE-MONEY OPTIONS AT    
                      ACQUIRED ON     VALUE      OPTIONS AT FISCAL YEAR-END (#)    FISCAL YEAR-END ($) (1)   
                                                 ------------------------------  ----------------------------
       NAME          EXERCISE (#)  REALIZED ($)  EXERCISABLE   UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
       ----          ------------  ------------  -----------   -------------     -----------    -------------
                                                                                                             
Richard A. Barasch           --            --       738,183        248,234       $5,042,559     $1,587,476   
Gary W. Bryant               --            --       447,500        157,500       $3,013,515     $  917,250   
Robert A. Waegelein          --            --       367,500        142,500       $2,446,875     $  818,350   
Jason J. Israel                                      31,500         36,000       $   97,695     $  117,180   
William E. Wehner            --            --       328,000        112,000       $2,214,540     $  658,935   


----------                                                                      

(1)   Calculated using the closing bid price on December 31, 2003 of $9.90 per  
     share and exercise prices ranging between $2.00 and $6.45 for exercisable
  options and ranging between $3.15 and $6.45 for unexercisable options.

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EMPLOYMENT AGREEMENTS                                                           

     The Company has entered into employment agreements with each of the Named
Executive Officers. The following chart summarizes certain terms of these       
employment agreements:                                                          

                                                        [Enlarge/Download Table]

   NAMED EXECUTIVE                                                  CURRENT      INITIAL       EXPIRATION   
       OFFICER                           TITLE                      SALARY    EMPLOYMENT TERM     DATE      
       -------                           -----                      ------    ---------------     ----      
                                                                                                            
 Richard A. Barasch  Chairman of the Board and Chief Executive     $ 742,630   Three years     July 30, 2005
                     Officer of the Company                                                                 

   Gary W. Bryant    Executive Vice President and Chief Operating  $ 370,000    Two years      July 30, 2005
                     Officer of the Company                                                                 

Robert A. Waegelein  Executive Vice President and Chief Financial  $ 320,000    Two years      July 30, 2005
                     Officer of the Company                                                                 

  Jason J. Israel    President of CHCS, Inc.                       $ 290,000     One year      June 17, 2005

 William E. Wehner   President of Pennsylvania Life Insurance      $ 228,660    Two years      July 30, 2005
                     Company                                                                                


   Each employment agreement provides for automatic one-year extensions of
the term of the employment agreement unless the Company or the Named Executive  
Officer party to such employment agreement provides the other party six months' 
prior written notice before the expiration of any employment term. Each         
employment agreement provides that the Named Executive Officer party to such    
agreement will be paid an annual salary as determined by such agreement in      
regular installments in accordance with the Company's usual payment practice.   
Annual increases shall be determined at the discretion of the Board. In         
addition, the Named Executive Officers will also receive an annual bonus based  
on the achievement of goals established by the Board.                           

 Additionally, the Named Executive Officers are eligible to receive an
additional compensation in the form of restricted stock and grants of stock     
options in accordance with the 1998 ICP.                                        

     The Named Executive Officers are entitled to benefits under the Company's
employee benefit plans on the same basis as those benefits are made available to
other senior executives of the Company. All reasonable business expenses will be
reimbursed to the executives in accordance with Company policies. In addition,  
each Named Executive Officer's employment agreement outlines his and the        
Company's obligations under various termination events. Each employment         
agreement also contains a non-compete clause covering the period of employment  
and the twelve months following termination of employment.                      

The employment agreements also provide severance in the event of    
termination of the Named Executive Officer by the Company without cause or if   
the Named Executive Officer resigns for good reason as each such term is defined
in the employment agreements. Mr. Barasch's employment agreement provides that  
he is entitled to, among other things, a lump sum payment equal to 2 times his  
base salary plus the lesser of (i) his bonus for the fiscal year prior to       
termination or (ii) his base salary. The employment agreements for Messrs.      
Bryant, Israel, Waegelein and Wehner provide that they are entitled to, among   
other things, a lump sum payment equal to the individual Named Executive        
Officer's base salary.                                                          

In addition, Mr. Barasch's employment agreement provides that if is 
terminated without cause or he resigns for "good reason" within 12 months after 
a "change of control", as each such term is defined in his employment agreement,
then Mr. Barasch is entitled to receive, among other things, a lump sum payment 
equal to two times his base salary (in addition to his severance noted above),  
continued coverage under the Company welfare benefit plans available to senior  
executives for an additional 12-month period, and the value of full vesting of  
Mr. Barasch's account balance under the Company's 401(k) plan. Each employment  
agreement for Messrs. Bryant, Israel, Waegelein and Wehner provides that if such
Named Executive                                                                 

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Officer is terminated without cause or resigns for "good reason" within 12      
months after a "change of control", as each such term is defined in such Named  
Executive Officer's employment agreement, then such Named Executive Officer is  
entitled to receive, among other things, a lump sum payment equal to one-half   
his base salary (in addition to their severance noted above), continued coverage
under the Company welfare benefit plans available to senior executives for an   
additional 6-month period, and the value of full vesting of such Named Executive
Officer's account balance under the Company's 401(k) plan.                      

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

INDEBTEDNESS OF MANAGEMENT                                                      

    The table below sets forth information regarding loans extended by us to
our Directors and executive officers. All indebtedness described below was      
incurred prior to July 30, 2002, the date the United States Sarbanes-Oxley Act  
of 2002 came into effect. In compliance with that legislation, no new personal  
loans to directors or executive officers were made or arranged, and no existing 
personal loans were renewed or modified, after July 30, 2002.                   

                                                        [Enlarge/Download Table]

                                                                                                                       AMOUNT     
                                                                                                                    OUTSTANDING   
                               NATURE OF                                        NATURE OF THE                     AS OF THE LATEST
                        RELATIONSHIP BY REASON         LARGEST AMOUNT OF        TRANSACTION IN                      PRACTICABLE   
                        OF WHICH SUCH PERSON'S           INDEBTEDNESS       WHICH THE INDEBTEDNESS                      DATE      
                    INDEBTEDNESS IS REQUIRED TO BE  OUTSTANDING AT ANYTIME         WAS INCURRED      RATE OF      (APRIL 5, 2003) 
        NAME                   DESCRIBED              DURING SUCH PERIOD              (A)           INTEREST (B)         (C)      
        ----                   ---------              ------------------              ---           ------------         ---      

                                                                                                                                  
Richard A. Barasch   Director, Executive Officer            $  78,750       Loan to purchase stock    4.2%               $ 0      
                                                                            of the Company                                        

Gary A. Bryant            Executive Officer                 $  87,500       Loan to purchase stock    4.2%               $ 0      
                                                                            of the Company                                        

William E. Wehner         Executive Officer                 $ 126,000       Loan to purchase stock    4.2%               $ 0      
                                                                            of the Company                                        

(a)   On December 31, 1998, the Company executed a Share Purchase Agreement ("UA
Purchase Agreement") with Capital Z Financial Services Fund II, L.P.
("Capital Z"), which was amended on July 2, 1999.                   

    Pursuant to the UA Purchase Agreement, certain members of management and
   insurance agents of Universal American and of the companies acquired on
   July 30, 1999 and holders of Series C Preferred Stock preemptive rights
purchased 3.8 million shares of common stock for $11.8 million (at a
    purchase price of $3.15 per share). We provided loans to certain members
of management to purchase the shares of common stock.               

(b)   The interest rate charged is variable, based on the prime rate for        
commercial loans.                                                   

(c)   In accordance with the terms of each of the loan agreements, these loans  
were repaid in cash on their due date of July 31, 2003.             

RELATED PARTY TRANSACTIONS                                          

    Bertram Harnett, a director of the Company, is a shareholder in Harnett,
Lesnick & Ripps, P.A. of Boca Raton, Florida, which was paid $490,258 in 2003   
for legal services rendered to the Company.                                     

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  

  The following table sets forth certain information as of April 5, 2004
with respect to the beneficial ownership of common stock by (i) each person     
known by us to own beneficially more than 5% of our outstanding common stock    
("5% Holder"), (ii) each person who is a Director of the Company or a nominee   
for election as such Director, (iii) each of the Named Executive Officers and   
(iv) all of our executive officers and directors as a group. Unless otherwise   
indicated, each such beneficial owner holds the sole voting and investment power
with respect to shares of our common stock outstanding. The common stock is the 
only class of voting securities outstanding.                                    

                                                        [Enlarge/Download Table]


                                                       AMOUNT AND NATURE OF                        
                                                       BENEFICIAL OWNERSHIP                        
                                                       --------------------                        
    NAME AND ADDRESS                                                        ACQUIRABLE             
           OF                                    CURRENTLY                    WITHIN     PERCENT OF
    BENEFICIAL OWNER                 STATUS      OWNED (A)                  60 DAYS (B)   CLASS (C)
    ----------------                 ------      ---------                  -----------   ---------
                                                                                                   
Capital Z Financial Services        5% Holder   25,086,972     (e,g,h)         54,000        46.3% 
 Fund II, L.P.                                                                                     
54 Thompson Street                                                                                 
New York, New York 10012                                                                           

Capital Z Financial Services        5% Holder      133,264                         --         *    
 Private Fund II, L.P.                                                                             
54 Thompson Street                                                                                 
New York, New York 10012                                                                           

Wellington Management Co. L.L.P.    5% Holder    2,921,500                         --         5.4% 
75 State Street                                                                                    
Boston, Massachusetts 02109                                                                        

Richard A. Barasch                  5% Holder,   2,556,062     (d)            753,367         6.0% 
6 International Drive               Director,                                                      
Rye Brook, New York 10573           Officer                                                        

Gary W. Bryant                      Officer        329,556                    475,000         1.5% 
600 Courtland Street                                                                               
Orlando, Florida 32804                                                                             

Bradley E. Cooper                   Director        34,216     (e)                 --        *     
54 Thompson Street                                                                                 
New York, New York 10012                                                                           

Mark M. Harmeling                   Director        31,808                     29,500        *     
108 Chestnut Street                                                                                
North Reading, Massachusetts 01864                                                                 

Bertram Harnett                     Director           951     (f)             26,500        *     
150 East Palmetto Park Road                                                                        
Boca Raton, Florida 33432                                                                          

Jason J. Israel                     Officer          8,629                     33,000        *     
3050 Universal Boulevard                                                                           
Weston, Florida 33331                                                                              

Linda H. Lamel                      Director            --                      1,500        *     
150 East 61st Street                                                                               
New York, New York 10021                                                                           

Eric W. Leathers                    Director         1,455     (g)                 --        *     
54 Thompson Street                                                                                 
New York, NY 10012                                                                                 

Patrick J. McLaughlin               Director        39,500                     27,500        *     
100 Chetwynd Drive                                                                                 
Rosemont, Pennsylvania 19010                                                                       

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                                                        [Enlarge/Download Table]


                                                   AMOUNT AND NATURE OF                        
                                                   BENEFICIAL OWNERSHIP                        
                                                   --------------------                        
    NAME AND ADDRESS                                                    ACQUIRABLE             
           OF                                CURRENTLY                    WITHIN     PERCENT OF
    BENEFICIAL OWNER                STATUS   OWNED (A)                  60 DAYS (B)   CLASS (C)
    ----------------                ------   ---------                  -----------   ---------

                                                                                               
Robert A. Spass                    Director     68,433     (h)                 --        *     
54 Thompson Street                                                                             
New York, New York 10012                                                                       

Robert A. Waegelein                Officer     239,012                    395,000         1.2% 
6 International Drive                                                                          
Rye Brook, New York 10573                                                                      

William E. Wehner                  Officer     382,840                    346,000         1.3% 
600 Courtland Street                                                                           
Orlando, Florida 32804                                                                         

Robert F. Wright                   Director    300,776                     25,500        *     
57 West 57th Street                                                                            
New York, New York 10019                                                                       

Directors and Officers as a Group                                                              
  (13 persons)                               3,993,238                  2,112,867        10.8% 


----------                                                                      

*     Percent of class is less than 1%                                          

(a)   The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or    
investment power with respect to any such security.                 

(b)   Options to purchase shares that are presently or will become exercisable  
within 60 days.                                                     

(c)   The percentages are based on the 54,207,096 shares of common stock        
outstanding (after deducting an aggregate of 212,000 shares held in 
    treasury) as of April 5, 2004 plus common stock issuable with respect to
options held by the person whose percentage of ownership is being   
     calculated which are presently or will become exercisable within 60 days.

(d)   Includes the following shares of which Mr. Barasch disclaims beneficial   
      ownership: 1,024,728 shares of common stock which are held directly by, or
in trust for, members of his immediate family; and 409,561 shares of
      common stock which are held in an irrevocable trust for the benefit of the
      family of Bertram Harnett (the "Barasch Universal Trust") of which Richard
Barasch is trustee.                                                 

(e)   Mr. Cooper, who is a director of the Company, is a shareholder of Capital 
     Z Partners, Ltd., the ultimate general partner of Capital Z. In addition,
   Mr. Cooper owns 5.7% of the voting capital stock of Capital Z Partners,
    Ltd. No person or entity owns 10% or more of the voting capital stock of
     Capital Z Partners, Ltd. Mr. Cooper disclaims beneficial ownership of all
shares of the Company's common stock that are beneficially owned by 
Capital Z.                                                          

(f)   Does not include shares held by the Barasch Universal Trust, of which Mr. 
Harnett disclaims beneficial ownership.                             

(g)   Mr. Leathers is a principal of Capital Z Partners, L.P. (the immediate    
   general partner of Capital Z) and disclaims beneficial ownership of all
shares of common stock beneficially owned by Capital Z.             

(h)   Mr. Spass, who is a director of the Company, is a shareholder of Capital Z
   Partners, Ltd., the ultimate general partner of Capital Z. In addition,
  Mr. Spass owns 5.7% of the voting capital stock of Capital Z Partners,
    Ltd. No person or entity owns 10% or more of the voting capital stock of
    Capital Z Partners, Ltd. Mr. Spass disclaims beneficial ownership of all
shares of the Company's common stock that are beneficially owned by 
Capital Z.                                                          

(i)   Based on information filed with the Securities and Exchange Commission by 
the beneficial owner on Schedule 13F.                               

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

      Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires our directors and executive officers, and persons who own more
than ten percent of a registered class of our equity securities, to file with   
the Securities and Exchange Commission and NASDAQ reports of ownership and      
changes of ownership of our common stock and other equity securities. Officers, 
directors and greater than ten percent shareholders are required by the         
Securities and Exchange Commission to furnish us with copies of all Section     
16(a) reports they file.                                                        

  To our knowledge, based solely on review of the copies of such reports
furnished to Universal American or written representations that no other reports
were required, we believe that during the 2003 fiscal year all filing           
requirements applicable to our officers, directors and greater than ten percent 
shareholders were filed timely.                                                 

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UNIVERSAL AMERICAN COMMON STOCK PRICE PERFORMANCE GRAPH                         

     The Performance Graph compares the Company's cumulative total shareholder
return on its common stock for the five year period between December 31, 1998 to
December 31, 2003, with the cumulative total returns of The NASDAQ Stock Market 
("NSM") and the NASDAQ Insurance Stocks ("NIS"). The comparison for each period 
assumes that $100 was invested on December 31, 1998 in each of the Company's    
common stock, the stocks included in The NASDAQ Stock Market Total Return Index 
and the stocks included in the NASDAQ Insurance Stocks Total Return Index.      

(GRAPH) 

                                                                [Download Table]

                                    1998    1999    2000    2001    2002    2003 
                                   ------  ------  ------  ------  ------  ------
                                                                                 
Universal American Financial Corp. 100.00  176.19  150.02  258.67  221.68  377.14
Nasdaq Stock Market                100.00  185.43  111.83   88.76   61.37   91.75
Nasdaq Insurance Stocks            100.00   77.56   97.40  104.39  105.21  130.03

   The disclosure contained in the above section of the proxy statement is
not incorporated by reference into any of our prior filings under the Securities
Act of 1933 or the Securities Exchange Act of 1934, as amended, that            
incorporated future filings or portions thereof, including this proxy statement 
or the "Executive Compensation" section of this proxy statement.                

OTHER MATTERS                                                                   

     As of the date of this Proxy Statement, the Board has no knowledge of any
business that will be presented for consideration at the Annual Meeting other   
than that described above. If any proposal not set forth in the Proxy Statement 
would be presented for action at the meeting, it is intended that the shares    
represented by proxies will vote with respect to such matters in accordance with
the judgment of the persons voting them.                                        

      A copy of the Annual Report has been mailed to every shareholder as of the
Record Date. The Annual Report is not to be considered proxy-soliciting         
material. If you do not receive the Annual Report, you may request a copy by    
writing to: Director, Shareholder Relations, Six International Drive, Rye Brook,
New York, 10573-1068 or by calling (914) 934-5200.                              

                                      By order of the Board of Directors

                          /s/  Joan M. Ferrarone

                     JOAN M. FERRARONE
             Secretary

Dated:      May 10, 2004                                                        
Rye Brook, New York                                     

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                                                                    ATTACHMENT I

UNIVERSAL AMERICAN FINANCIAL CORP.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

ORGANIZATION                                                                    

   This charter governs the operations of the Audit Committee of Universal
American Financial Corp. (the "Company"). The committee shall review and        
reassess the adequacy of the charter at least annually and recommend any changes
to the Board of Directors (the "Board"). Changes to be considered include those 
that are necessary as a result of new laws and regulations.                     

      The committee shall be appointed by the Board and shall be comprised of at
least three (3) directors who are in good standing, independent and financially 
literate. No member may have participated in the preparation of the financial   
statements of the Company or any current subsidiary of the Company at any time  
during the past three years. The Board shall designate one member to serve as   
Chairman and shall have power and authority to fill any vacancy in the          
committee.                                                                      

  Members of the committee must meet the independence requirements under
Securities and Exchange Commission rules and regulations and the listing        
requirements of NASDAQ. To be "independent", a member of the committee must not 
be an officer or employee of the company or any of its subsidiaries or have any 
relationship which, in the opinion of the Board, would interfere with the       
exercise of independent judgment in carrying out the responsibilities of a      
director. In addition, the Board has the affirmative responsibility to determine
that a director does not have any relationship that disqualifies him or her from
being independent. Specifically, to be "independent", committee members must    
NOT:                                                                            

a.    have been employed by the Company or any of its affiliates for the current
year or any of the past three years;                                

b.    have accepted or have a family member who has accepted any payments from  
      the Company or any of its affiliates during the current or any of the past
three fiscal year, other than compensation for service on the Board,
benefits under a tax-qualified retirement, or non-discretionary     
compensation;                                                       

c.    be, or have a Family Member who is, a current partner of the Company's    
 outside auditor or was a partner or employee of the Company's outside
  auditor who worked on the Company's audit during any of the past three
years;                                                              

d.    be a Family Member of an individual who is, or has been in any of the     
    past three years, employed by the Company or any of its affiliates as an
executive officer;                                                  

e.    be, or have a Family Member who is, a partner in, or a controlling        
 shareholder or an executive officer of, any organization to which the
      Company made, or from which the Company received payments for the property
   or services in the current or any of the past three fiscal years (other
     than those arising solely from investments in the Company's securities or
payments under a non-discretionary charitable contribution matching 
   program) that exceed five percent of the recipient's consolidated gross
revenues for that year, or $200,000, whichever is more; or          

f.    be, or have a Family Member who is, employed as an executive officer of   
   another entity where at any time during the past three years any of the
Company's executive officers served on that entity's compensation   
committee.                                                          

"Family Member" shall mean a person's spouse, parents, children and 
   siblings, whether by blood, marriage or adoption, or anyone residing in
such person's home.                                                 

    To be financially literate, a member must be able to read and understand
fundamental financial statements, including the Company's balance sheet, income 
statement and cash flow statement, or become able to do so within a reasonable  
period of time after appointment to the committee. In addition, at least one    
member of the committee shall be designated as the financial expert, which means
that member will have accounting or related financial management expertise,     
requisite certification in accounting, or any other comparable experience or    
background that results in such member's financial sophistication.              

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STATEMENT OF POLICY                                                             

   The Audit Committee will have the responsibility to assist the Board of
Directors of the Company in fulfilling its responsibilities to the shareholders,
potential shareholders, the investment community, and others relating to the    
Company's financial statements and the financial reporting process, the systems 
of internal accounting and financial controls, the internal audit function, the 
annual independent audit of the Company's financial statements, and the legal   
compliance and ethics programs as established by management and the Board.      

   In so doing, it is the responsibility of the committee to maintain free
and open means of communication among the committee, directors, independent     
auditors, the internal auditors and financial management of the Company. In     
discharging its role, the committee is empowered to inquire into any matter it  
considers appropriate to carry out its responsibilities, with access to all     
books, records, facilities and personnel of the Company. The committee has the  
power to retain outside counsel, independent auditors or other advisors to      
assist it in carrying out its activities, including compensation of the         
committee's counsel, independent auditors and other advisors. The committee     
shall have the sole authority to retain, compensate, direct, oversee and        
terminate counsel, independent auditors, and other advisors hired to assist the 
committee, who shall be accountable ultimately to the committee.                

MEETINGS                                                                        

 The committee shall meet at least four times a year and each time the
Company proposes to issue a press release with its quarterly or annual earnings 
information (these meetings may be combined with regularly scheduled meetings), 
or more frequently as circumstances may require. The Audit Committee may ask    
members of management or others to attend the meetings and provide pertinent    
information as necessary. The agenda for each meeting shall be prepared by the  
Chairman of the Audit Committee and, whenever reasonably practical, circulated  
to each member prior to the date of the meeting. The committee shall keep       
minutes of its proceedings. The committee shall conduct executive sessions with 
the outside auditors, chief executive officer ("CEO") ,chief financial officer  
("CFO"), chief internal audit executive ("CAE"), general counsel, outside       
counsel, director of financial reporting, controller, and anyone else as desired
by the committee. Following each meeting of the committee and whenever so       
requested by the Board, the committee shall report to the Board on the          
committee's activities, findings and recommendations.                           

RESPONSIBILITIES                                                                

The primary responsibility of the Audit Committee is to oversee the 
Company's financial reporting process on behalf of the Board and report the     
results of their activities to the Board. Management is responsible for         
preparing the Company's financial statements, and the independent auditors are  
responsible for auditing those financial statements. In carrying out its        
responsibilities, the committee shall establish and maintain flexible policies  
and procedures in order to best react to changing conditions and circumstances. 
The committee should take the appropriate actions to ensure that the Company's  
corporate accounting and financial reporting are in accordance with all         
requirements and are of the highest quality.                                    

 The following shall be the principal recurring processes of the Audit
Committee in carrying out its oversight responsibilities. The processes are set 
forth as a guide with the understanding that the committee may supplement them  
as appropriate or as the Board may request.                                     

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                                                                ATTACHMENT I

GENERAL                                                                         

-     The committee shall discuss with management, the internal auditors and the
independent auditors the adequacy and effectiveness of the Company's
 accounting and financial controls, including the Company's systems to
monitor the integrity of the Company's financial reporting process, 
internal controls regarding finance and accounting compliance.      

-     The committee shall inquire of management, the CAE, and the independent   
    auditors about significant risks or exposures facing the Company; assess
     the steps management has taken or proposes to take to minimize and manage
   such risks to the Company; and periodically review compliance with such
steps.                                                              

-     The committee shall inquire of the CEO and CFO regarding the "quality of  
earnings" of the company from a subjective as well as an objective  
standpoint.                                                         

-     The committee will monitor the independence and performance of the        
Company's independent auditors.                                     

-     The committee will provide a means of communication among the independent 
auditors, management and the Board.                                 

-     The committee will review and reassess the adequacy of the Audit Committee
   Charter at least annually, submit the charter to the Board for approval
    and have the document published at least every three years in accordance
with SEC regulations.                                               

-     The committee shall review with management and the independent auditor the
effect of any regulatory and accounting initiatives, as well as     
off-balance-sheet structures, if any.                               

-     The committee shall review with management and the independent auditors   
     the financial statements to be included in the Company's Annual Report on
Form 10-K, including their judgment about the quality, not just     
      acceptability, of accounting principles, the reasonableness of significant
      judgments, and the clarity of the disclosures in the financial statements.

-     The committee shall review and approve all related party transactions     
      involving directors or executive officers and review potential conflict of
interest situations where appropriate.                              

-     The committee shall review the interim financial statements with          
management and the independent auditors prior to the filing of the  
      Company's Quarterly Report on Form 10-Q. Also, the committee shall discuss
    the results of the quarterly review and any other matters required to be
     communicated to the committee by the independent auditors under generally
     accepted auditing standards. The chair of the committee may represent the
      entire committee for the purposes of this review with the prior consent of
the other members.                                                  

INDEPENDENT AUDITORS                                                            

-     The committee shall have a clear understanding with management, the Board 
     and the independent auditors that the independent auditors are ultimately
   accountable to the board and the Audit Committee, as representatives of
the Company's shareholders.                                         

-     The committee shall have the ultimate authority and responsibility to     
evaluate and, where appropriate, replace the independent auditors.  

-     Annually, the committee shall discuss with the auditors their independence
   from management and the Company and the matters included in the written
disclosures required by the Independence Standards Board.           

-     The committee needs to ascertain that the lead (or concurring) audit      
      partner from any public accounting firms performing audit services, serves
  in that capacity for no more than five fiscal years of the Company. In
  addition, ascertain that any partner other than the lead or concurring
partner serves no more than seven years at the partner level on the 
Company's audit.                                                    

-     Annually, the committee shall review and recommend to the Board the       
appointment of the Company's independent auditors, including the    
      establishment of the audit fees and pre-approval of any non-audit services
    provided by the independent auditors, including tax services, before the
services are rendered.                                              

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                                                                    ATTACHMENT I

-     The committee shall discuss with the independent auditors the overall     
 scope and plans for their respective audits including the adequacy of
staffing and compensation.                                          

-     The committee shall meet separately with the independent auditors, with   
and without management present, to discuss the results of their     
 examinations and any other matters required to be communicated to the
   committee by the independent auditors under generally accepted auditing
standards.                                                          

-     The committee shall review with the independent auditors all critical     
     accounting policies and practices used by the company and all alternative
    treatments of financial information within generally accepted accounting
   principles that have been discussed with management of the company, the
 ramifications of each alternative, and the treatment preferred by the
Company.                                                            

-     The committee shall review all material written communications between the
 independent auditors and management, such as any management letter or
schedule of unadjusted differences.                                 

-     The committee shall review with management and the independent auditors   
the Company's annual financial statements and related footnotes, the
    independent auditors' audit of the financial statements and their report
    thereon, the independent auditors' judgments about the quality, not just
   the acceptability, of the Company's accounting principles as applied in
its financial reporting, any significant changes required in the    
  independent auditors' audit plan, any serious difficulties or disputes
    with management encountered during the audit, and matters required to be
    discussed by Statement on Auditing Standards (SAS) No. 61, Communication
 With Audit Committees (AICPA, Professional Standards, vol. 1, AU sec.
380), as amended, related to the conduct of the audit.              

INTERNAL AUDIT DEPARTMENT                                                       

-     The committee shall review the organizational structure and qualifications
    of the internal audit department ("IAD"), including reviewing the annual
scope and plan of the IAD, the appointment and annual reviews of the
     senior IAD officer and summaries of findings prepared by the IAD together
with management's responses.                                        

-     The committee shall review with the independent auditor, the controller of
the Company, and the CAE, the audit scope and plan of the internal  
    auditors and the independent auditors. Address the coordination of audit
  efforts to assure the completeness of coverage, reduction of redundant
efforts, and the effective use of audit resources.                  

-     The committee shall review with management and the CAE, the significant   
  findings on internal audits during the year and management's responses
thereto, any difficulties the internal audit team encountered in the
    course of their audits, including any restrictions on the scope of their
     work or access to required information, any changes required in the scope
of their internal audit, the internal auditing department budget and
staffing, the IAD charter, the internal audit's compliance with the 
  Institute of Internal Auditors' (IIA's) Standards for the Professional
Practice of Internal Auditing (Standards).                          

LEGAL COMPLIANCE                                                                

-     On at least an annual basis, the committee will review with the Company's 
 counsel any legal matters that could have a significant impact on the
Company financial statements, the Company's compliance with laws    
  and regulations and inquiries received from regulators or governmental
agencies.                                                           

-     The committee shall periodically review the Company's code of conduct to  
ensure that it is adequate and up-to-date.                          

-     The committee shall review with the CAE and the Company's general counsel 
the results of their review of the monitoring of compliance with the
company's code of conduct.                                          

-     The committee shall review the procedures for the receipt, retention, and 
 treatment of complaints received by the Company regarding accounting,
      internal accounting controls, or auditing matters that may be submitted by
any party internal or external to the Company.                      

-     The committee shall review any complaints that might have been received,  
current status, and resolution if one has been reached.             

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                                                                    ATTACHMENT I

OTHER AUDIT COMMITTEE RESPONSIBILITIES                                          

-     The committee shall consider, with management, the rationale for employing
audit firms other than the principal independent auditors.          

-     The committee shall evaluate the independent auditors and the internal    
auditors.                                                           

-     The committee shall review procedures for the confidential, anonymous     
submission by employees of the Company of concerns regarding        
questionable accounting or auditing matters.                        

-     The committee shall review any submissions that have been received, the   
current status, and the resolution if one has been reached.         

-     The committee shall annually prepare a report to shareholders as required 
    by the Securities and Exchange Commission. The report should be included
in the Company's annual proxy statement.                            

-     The committee shall perform any other activities consistent with this     
     Charter, the Company's by-laws and governing law, as the committee or the
board of directors deems necessary or appropriate.                  

-     The committee shall review with management the policies and procedures    
 with respect to officers' expense accounts and perquisites, including
    their use of corporate assets, and consider the results of any review of
these areas by the internal auditor or the independent auditors.    

-     The committee shall maintain minutes of meetings and periodically report  
to the Board on significant results of the foregoing activities.    

-     The committee will review its effectiveness.                              

5 

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 ANNUAL MEETING OF SHAREHOLDERS OF

UNIVERSAL AMERICAN FINANCIAL CORP.

MAY 26, 2004

Please date, sign and mail
your proxy card in the
 envelope provided as soon
as possible.

Please detach along perforated line and mail in the envelope provided.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 1 AND 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
  ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]

3. Election of Directors: (TO SERVE UNTIL THE NEXT ANNUAL ELECTION OF           
DIRECTORS):                                                                     

             NOMINEES:

[ ]       FOR ALL NOMINEES                O     Richard A. Barasch              
                           O     Bradley E. Cooper
[ ]       WITHHOLD AUTHORITY              O     Mark M. Harmeling               
FOR ALL NOMINEES                O     Bertram Harnett       
                        O     Linda H. Lamel
[ ]       FOR ALL EXCEPT                  O     Eric W. Leathers                
(See instructions below)                                    
                               O     Patrick J. McLaughlin
                         O     Robert A. Spass
                          O     Robert F. Wright

INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark  
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to        
withhold, as shown here: 0                                                      

To change the address on your account, please check the box at right and        
indicate your new address in the address space above. Please note that changes  
to the registered name(s) on the account may not be submitted via this method.[]

                                                      FOR     AGAINST    ABSTAIN

1.    Proposal to amend our certificate of            [ ]       [ ]        [ ]  
incorporation to increase the authorized                            
shares of common stock.                                             

2.    Proposal to increase the number of shares       [ ]       [ ]        [ ]  
issuable under our Universal American                               
Financial Corp. 1998 Incentive Compensation                         
Plan.                                                               

In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting, or any adjournment or adjournments     
thereof.                                                                        

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED FOR ELECTION
OF DIRECTORS UNLESS OTHERWISE INDICATED.                                        

                                                        [Enlarge/Download Table]
                                                                                                                                 
Signature of Shareholder_____________________  Date:_____________  Signature of Shareholder___________________  Date:____________

NOTE: Please sign exactly as your name or names appear on this Proxy. When      
shares are held jointly, each holder should sign. When signing as executor,     
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized 
officer, giving full title as such. If signer is a partnership, please sign in  
partnership name by authorized person.                                  [ ]     

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UNIVERSAL AMERICAN FINANCIAL CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

MAY 26, 2004

     The undersigned shareholder of Universal American Financial Corp., hereby
appoints Richard Barasch and Robert Waegelein, and each of them, the proxies of 
the undersigned with full power of substitution, to vote, as indicated herein,  
all the shares of Common Stock of Universal American Financial Corp. standing in
the name of the undersigned at the close of business on April 5, 2004, at the   
Annual Meeting of Shareholders of the Company to be held at The Penn Club, 30   
West 44th Street, New York, New York 10036, at 9:30 a.m. on May 26, 2004, and at
any and all adjournments thereof, with all the powers the undersigned would     
possess if then and there personally present, as more fully described in the    
Proxy Statement for the meeting.                                                

      THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS SET FORTH ON THE
REVERSE SIDE, UNLESS OTHERWISE INDICATED THERE.                                 

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRE 14A’ Filing		Date		First		Last			Other Filings
		7/30/05		28
		6/17/05		28					424B2,  8-K
		2/15/05		4
		12/15/04		4					4
For Period End:		5/26/04		2		39			3,  4,  4/A,  DEF 14A
		5/10/04		2		32			10-Q,  4
Filed on:		4/28/04							4
		4/27/04		6
		4/5/04		2		39
		4/1/04		21		26
		3/31/04		6		26			10-Q
		2/13/04		18
		12/31/03		16		32			10-K,  11-K,  4,  5,  5/A
		7/31/03		29
		6/3/03		22					3,  3/A,  4,  DEF 14A
		4/5/03		29
		4/1/03		26					4,  4/A,  8-K
		12/31/02		24		27			10-K,  11-K,  5
		7/30/02		29
		12/31/01		16		27			10-K,  3,  5
		7/30/99		19		29			8-K
		7/2/99		29
		12/31/98		29		32			10-K,  10-K/A,  8-K,  DEF 14A
		4/28/98		7
									List all Filings