Banc of America Securities Health Care Conference May 21, 2004 The Four Seasons Hotel, Las Vegas

1. Banc of America Securities Health Care Conference May 21, 2004 The Four Seasons Hotel, Las Vegas PacifiCare Health Systems Howard G. Phanstiel Chairman & CEO

2. Cautionary Statement The statements made during this presentation that are not historical facts are forward-looking statements within the meaning of the Federal securities laws, and may involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the risks discussed in the company's most recent filings with the SEC, including the Form 10Q filed as of March 31, 2004, and the Form10K filed as of December 31, 2003.

3. Continued Market Expansion Largest purchaser of health care services in the Western U.S. 2004 Market Expansion • Medicare Supplement • PBM • Behavioral Health • A Fortune 200 company with 2004 goals of: • $12 billion in revenue • 2.3 million commercial lives • 735K Medicare+Choice HMO lives • 11.8 million specialty lives 2003 Health Plan + Specialty Companies 2003 Specialty Companies only 2004 Planned Specialty Company Expansion

4. Earnings Growth $350-$360 $296-$306 * Excluding effect of the adoption of FAS 142 relating to the amortization of goodwill

5. Free Cash Flow Growth $270-$280 • Free cash flow is defined as net income plus depreciation and amortization, less capital expenditures • Best measure of resources available at Parent to pay down debt, build statutory capital, pursue opportunistic acquisitions * Excludes cumulative effect of adoption of FAS 142 related to amortization of goodwill

6. Excess Statutory Capital At least 300% RBC in each core HMO state

7. Balance Sheet Strength • Higher credit ratings • 100 bp reduction in bank term loan interest rate • $175 million reduction in debt in connection with Q403 clawback • Debt-to-capital ratio at 3/31/04 = 24% vs 39% at 12/31/02

8. 2004 Guidance = 33% Pro Forma Net Income Growth

9. First Quarter 2004 Trends • Net income up 45% from Q103, ex Q102 favorable reserve development • Commercial business • Membership up 35K (2%) sequentially; 3rd consecutive quarter of commercial membership growth • CA membership up 6.5% year-over-year • MLR down 130 basis points year-over-year • Gross margin up 21% year-over-year • Retention >90% • Medicare+Choice business • First sequential M+C membership growth in 3 years • M+C MLR up 160 bp year-over-year, in line w/ guidance • SG&A up 30 bp year-over-year

10. 2004 Membership & Pricing Trends • Expect 5%-6% commercial membership increase in 2004 • Commercial premiums up 11%, over cost trends of 9.5% (after benefit adjustment) • premiums up 12% excluding FEHP account, with a 9% benefit buydown

11. 2005 Guidance • 18% net income growth from 2004 • $350-$360 million in net income • Estimated weighted average shares outstanding = 97.5 million

12. Strategy for Profit Growth • Grow Commercial Business Through Consumer-Aligned Health Plans • Introduced more than 20 new products/services over last 2 years, including PPO products and Self-Directed Health Plans • Re-entered individual & small group markets w/ significant success • Continuing our successful advertising/branding campaign • Maintaining focus on superior member satisfaction & customer service • Build Senior Solutions Products/ Distribution • Medicare+Choice: evolve to managed growth & avoid “benefit wars” • Medicare Supplement- expansion of broker network • Disease Mgmt. for fee-for-service beneficiaries- government’s PPO alternative • Expand PBM & Behavioral Membership • Leverage core competencies to generate unaffiliated membership growth • Superior business model as option to independent PBMs • Small acquisitions to strengthen product offerings