Administaff Reports Increased Cash and Working Capital Related to Workers’ Comp, Health Care Programs

June 3, 2005

Administaff Inc., a national Professional Employer Organization (PEO), announced the reduction of $34.3 million of deposits the company had previously made under its workers’ compensation and health insurance programs.

In May 2005, Administaff received $16.8 million in deposits previously held by its workers’ comp insurance carrier, American International Group Inc. (“AIG”), related to the 2003-2004 policy. Under the arrangement with AIG, a portion of Administaff’s monthly premiums is set aside to fund the payment of claims, and any excess premiums funded into the program are returned to Administaff subsequent to the end of the policy period.

On June 1, 2005, Administaff finalized its recently announced three-year definitive agreement with its primary health insurance carrier, UnitedHealthcare. Under the new arrangement, the requirement for the current $17.5 million security deposit has been eliminated, and such amount will be used to reduce Administaff’s funding requirements in the second quarter of 2005.

“These developments reflect the successful management of our workers’ compensation and health insurance programs,” said Richard Rawson, Administaff president. “We appreciate the ongoing commitment of both AIG and UnitedHealthcare to help us control program costs while also providing premium benefits for worksite employees at our client companies.”

Administaff operates 38 sales offices in 21 major markets.

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