Financial Research Corporation 100 Summer Street, Suite 1500 Boston, MA 02110 617-824-1325 www.frcnet.com INDUSTRY BRIEFING: Contact: Chris J. Brown March 21, 2005 617-824-1274 CBrown@frcnet.com FRC Projects a Healthy Outlook for Health Savings Accounts Boston, MA, March 21, 2005 – As one of the first firms in the industry to estimate long- term growth for health savings accounts (HSAs), FRC projects that this newest form of consumer-directed health plan could grow to 8.2 million accounts and nearly $50 billion in assets by year-end 2010. In addition to the potential for strong asset growth, FRC discusses other positive factors that are likely to impact the HSA market in its latest white paper, The Outlook for Health Savings Accounts. In this comprehensive white paper, FRC examines the attributes of HSAs and how financial services firms can identify the optimal role to play in this emerging marketplace. The paper provides insight not only into how HSAs can benefit consumers, employers, and financial services firms, but how they represent a positive step forward in solving the country’s mounting healthcare problems. • Marketable Features – For consumers, HSAs offer a multitude of benefits, including favorable tax treatment, an additional retirement savings vehicle, and full discretion over contribution levels, medical uses, and investment managers and products. • Distribution Models - Three distinct distribution models have emerged through which insurers, custodians or trustees, and recordkeepers distribute their products to the marketplace. • Market Drivers – As the country’s healthcare issues grow, including dramatically rising healthcare benefit costs, government shortfalls in Medicare, and an expanding number of uninsured individuals, HSAs, in conjunction with high-deductible health plans, address a number of these problems, which FRC believes will fuel interest in the accounts. Despite the positive outlook for HSAs, however, in its nascent stage, this market poses considerable risks for financial services firms, which should be carefully considered. While the industry shows promise, administering health savings accounts profitably can be a challenge for firms. Chris J. Brown, vice president and Director of Retirement Market Research at FRC, says "Because margins for health savings accounts will be slim early on, firms that have the greatest success in this market will be those that find ways to harness a core competency, be it recordkeeping, investment management, or serving as a custodian." FRC's white paper provides solutions to companies serving these three functional areas of health savings account management, and recommends strategies for success in the new market. Research for this study was based on a comprehensive review of the industry, and a series of in-depth interviews with insurers offering HSA-qualified high-deductible health plans (HDHPs), health savings account administrators, recordkeepers with experience managing both Archer Medical Savings Accounts (MSAs) and HSAs, mutual fund firms offering funds as investment options in HSAs, leading industry experts, and health savings account holders. About Financial Research Corporation Financial Research Corporation (FRC) provides the knowledge to build stronger relationships through product development and management, distribution solutions, and marketing strategies. For nearly 20 years, our insightful research and consulting services have been assisting marketing, product development, and strategic planning professionals in the creation of innovative products and services. Based in Boston, FRC is at the forefront of assisting its clients to comprehend and respond to the rapid changes occurring in the manufacture and distribution of investment products. Our more than 200 clients include the world’s leading asset managers and distributors. For more information, visit the FRC Web site at www.frcnet.com. FRC is a BISYS company. About BISYS The BISYS Group, Inc. (NYSE: BSG) provides outsourcing solutions that enable investment firms, insurance companies, and banks to more efficiently serve their customers, grow their businesses, and respond to evolving regulatory requirements. Its Investment Services group provides administration and distribution services for mutual funds, hedge funds, private equity funds, retirement plans and other investment products. Through its Insurance Services group, BISYS is the nation’s largest independent wholesale distributor of life insurance and a leading independent wholesale distributor of commercial property/casualty insurance, long-term care, disability, and annuity products. BISYS’ Information Services group provides industry-leading information processing, imaging, and back-office services to banks, insurance companies and corporate clients. Headquartered in New York, BISYS generates more than $1 billion in annual revenues worldwide. Additional information is available at www.bisys.com. Except for the historical information contained herein, the matters discussed in the press release are forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including but not limited to economic, competitive, governmental and technological factors affecting the Company’s operations, markets, services and related products, prices and other factors discussed in the Company’s periodic filings with the Securities and Exchange Commission.
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