ConnectiCare, Inc.

EXECUTIVE SUMMARY
ConnectiCare, Inc. (ConnectiCare) was organized in 1981 as a not-for-profit, Connecticut-based Health Maintenance Organization. As a result of significant changes in the national and regional healthcare environments over the past two decades, it became clear that a re-structuring was required to ensure the organization’s continued growth and financial stability, and to enable ConnectiCare to be able to provide the superior levels of service that its members and customer-employers were accustomed to receiving.

In July 1999, ConnectiCare was reorganized as a for-profit HMO and became a wholly-owned subsidiary of the newly formed ConnectiCare Holding Company, Inc. (“Holding Company”). 100% of Holding Company’s shares are held by the newly-formed, independent, non-profit Connecticut Health Foundation, Inc. (“Foundation”). State Attorney General Richard Blumenthal prescribed the process for the reorganization, which provided that the Foundation would eventually liquidate the shares it owned and use the proceeds of the sale to fund community programs designed to improve the health of Connecticut residents. The HMO would then operate as an independent, local, for-profit, commercial entity under private ownership.

The Attorney General also outlined an approved procedure for Holding Company to obtain the necessary investment capital for growth and expansion, while ensuring that the Foundation received fair value for its investment.

To carry out the capital raise, Holding Company and the Foundation retained healthcare industry consultants and investment bankers to assist in the search for qualified financial investors. For well over a year there were exploratory discussions with potential investors who indicated a willingness to make significant capital investment in Holding Company. This was a rigorous process for raising capital, one which was monitored throughout by the Connecticut Attorney General.

These are the events that brought the investors to this point, and the filing of Form A for the change in control of ConnectiCare. The Form A, with its supporting exhibits and affidavits, details the method of acquisition, the background of the applicant and certain related individuals, the nature, source and amount of consideration, the voting securities to be acquired and all other items as outlined in Connecticut Insurance Law. The equity investors are committed to helping ConnectiCare to continue its growth and superior service to its members and customer-employers.

ABOUT THE INVESTORS
The Carlyle Group is a leading global private equity investment firm founded in 1987. Carlyle has invested more than $4.5 billion in equity in corporate and real estate transactions with an aggregate acquisition value of $13.9 billion. The firm conducts its investment activities through focused industry groups, including healthcare, telecommunications, aerospace, and information technology.

Liberty Partners is a $1.5 billion private equity firm. With a professional staff of ten, Liberty focuses on growth equity investments in the technology and healthcare sectors as well as capital investments in traditional leveraged buyouts.

The Carlyle Group and Liberty Partners, through their respective affiliates, are investing in ConnectiCare because of its reputation for service, record of performance, fiscal strength and its potential for future growth. ConnectiCare’s financial performance has been very strong in recent years; at the same time the HMO is widely recognized for maintaining its high quality of service to members. The investors have expressed strong support for the management team that has achieved ConnectiCare’s “best in class” performance results and that has successfully managed ConnectiCare from a financial point-of-view.

ADDRESSING THE NEEDS OF STAKEHOLDERS
The purchase of Holding Company shares by the affiliates of The Carlyle Group and Liberty Partners takes into consideration the needs of important stakeholders.

The State of Connecticut: Connecticut will have a large, well-funded health foundation in place for the long-term to support programs designed to serve the healthcare needs of the people of Connecticut. Connecticut plan members, employers, and the state healthcare marketplace will benefit from ConnectiCare’s continued competitive presence as an independent, locally focused, Connecticut-based HMO. The transactions described above will result in the continued availability of ConnectiCare coverage for employers in the state, which has implications for job growth, competitive issues and continued economic expansion.

The Connecticut Health Foundation: The Foundation will receive more than $130 million in total funding, establishing it as a powerful philanthropic force in the state to address healthcare needs in unserved and under served communities. The Foundation will be able to fulfill its mission of having a significant, positive impact on the health of state residents. Furthermore, serving as a catalyst, the Foundation will build consensus and coalitions to create sustainable improvements in health services throughout the state.

ConnectiCare Members and Employer Groups: The availability of new capital will allow ConnectiCare to enhance its products and member-focused services. The HMO will maintain the bonds it has forged with individual members and their families through a process of commitment and service and continuous improvement. ConnectiCare will continue to operate as a locally-based and locally-focused health plan. Those employer-companies that have placed their healthcare insurance needs in ConnectiCare’s hands will benefit from a stable, financially secure, caring company with a proven track record of quality service and strong customer relationships. Members and employer groups will also be able to avail themselves of additional ConnectiCare services in the future as the company expands and offers other health care products. In addition, the company will move to expand services to members who reside in neighboring states.

Health Care Providers: ConnectiCare has consistently focused its attention on building provider relationships through “no hassle” service and expedited claims payment practices. The organization is known for its collaborative healthcare management initiatives. The company’s ability to maintain this level of quality service commitment -- which is evident in its continued “Excellent” accreditation by NCQA -- will be enhanced as a result of the transaction.

ConnectiCare Employees: ConnectiCare believes that it will be able to offer present employees increased job opportunities and career growth and to increase staffing because of the expected growth of the company in the future.

GOVERNANCE
Holding Company’s Board of Directors has been and will continue to be elected by its shareholders. The present six-person board will increase in size to eight members. Marcel Gamache, President & CEO, will continue as a board member. The investors have expressed their support for ConnectiCare’s strong management team, and are looking to that team to continue to lead the organization’s “best in class” performance.

CONCLUSION
The equity investment of the investors in Holding Company will have a positive impact on meeting the healthcare needs of Connecticut residents. The positive results of the transactions will include the following: the assistance of State residents with Foundation funds; the retention of a strong, locally based HMO; the continuance of statewide HMO competition; the continued protection of ConnectiCare members and customer-employers; and the securing and expansion of valuable job opportunities.