2008-08-22 18:17:03 -

- Fitch Ratings has placed the ratings of HealthMarkets, Inc. (HealthMarkets) on Ratings Watch Negative following the release of second quarter 2008 financial results. HealthMarkets' Issuer Default Rating (IDR) is 'BBB-'. A complete list of ratings is included at the end of this release.

The company's second quarter 2008 financial results reflect an ongoing trend of operating weakness relative

to prior years and Fitch's expectations. Fitch is concerned with these operating trends and the longer-term implication for capital strength at the insurance subsidiaries given the company's high financial leverage and fixed charge requirements.

Fitch will meet with the company's new management team in the coming 4-6 weeks. Following this review, if Fitch determines that operating earnings are not likely to show improvement over the next several quarters relative to performance shown to date in 2008, there is strong potential that the ratings will be lowered.

Fitch believes that HealthMarkets will be challenged to demonstrate a rebound in earnings for the remainder of 2008 due to a declining number of agents in the company's captive agency force, increased migration of membership to its lower margin health products and continued costs associated with legal and regulatory issues.

Fitch considers the company's current strong statutory capitalization at its insurance subsidiaries and good level of holding company cash favorably. Fitch's ratings on HealthMarkets and its subsidiaries also considers its established position as a seller of health insurance products covering individuals, families and small groups.

Fitch has placed the following ratings on Rating Watch Negative:

HealthMarkets, Inc.

--IDR of 'BBB-'.

The Chesapeake Life Insurance Company

--Insurer financial strength (IFS) of 'BBB'.

MEGA Life & Health Insurance Company

Mid-West National Life Insurance Company of Tennessee

--IFS of 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, Chicago
Manish J. Patel, +1-312-368-3188
Peter F. Patrino, CFA, +1-312-368-3266
Media Relations, New York
Sandro Scenga, +1-212-908-0278