APPLIED UNDERWRITERS ESTABLISHES HCO TO REDUCE EMPLOYER WORKERS' COMPENSATION COSTS

SAN FRANCISCO, CA - June 1, 2004 - Applied Underwriters, the industry leader in integrated workers' compensation solutions, announced the establishment of a Workers' Compensation Health Care Organization ("HCO") to reduce costs to its California customers in advance of, and to enhance the prospective savings associated with, recently-passed SB 899. Applied Underwriters expects to have all of its California SolutionOne® customers enrolled by the end of June, and the company believes that at that time its HCO usage will immediately constitute the largest HCO in the state of California.

An HCO is an organization which has been certified by the State of California Division of Workers' Compensation (DWC) to provide effective and efficient health care to injured workers. An HCO must meet quality and service standards set by the DWC. It must include occupational medicine doctors who understand the workers' compensation system and the importance of helping injured employees return to work quickly and safely. The HCO coordinates medical care for work injuries, and helps employers develop temporary light-duty work assignments that an injured employee can perform while recovering from the injury. The HCO also answers injured workers' questions and provides them with helpful information.

The HCO will reduce Applied Underwriters' California customers' workers' compensation claims costs while providing better medical care to their injured employees. Implementation of an HCO is usually complex and creates additional service costs for the employer. However, because Applied Underwriters processes its customers' payroll as a part of SolutionOne, the Company can streamline the HCO enrollment and administration process, and provide its customers with HCO membership at no additional cost.

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Applied Underwriters is a premier workers' compensation and financial services company. The company's three products - SolutionOne®, EquityCompT, and Coverage Dynamics® - integrate workers' compensation coverage with employer-related services to ensure the success of small to medium-sized businesses. Its A.M. Best A IX rating assures unparalleled dependability and reliability. Founded in 1994, Applied Underwriters is headquartered in San Francisco, with a national customer service center in Omaha, NE. Additional information about the company is available at: www.applieduw.com.

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