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WellPoint Reports First Quarter 2009 Results
Date:4/22/2009

-- Net income was $1.16 per share, including net realized investment losses of $0.46 per share, 8 percent higher than in the first quarter of 2008

-- Operating cash flow totaled $1.2 billion

-- Full year 2009 net income now expected to be in the range of $5.14 - $5.20 per share, including net realized investment losses of $0.46 per share

-- Insurance subsidiaries remain well-capitalized with statutory capital levels approximately $5.5 billion above state regulatory levels and $2.3 billion above Blue Cross and Blue Shield requirements

INDIANAPOLIS, April 22 /PRNewswire-FirstCall/ -- WellPoint, Inc. (NYSE: WLP) today announced that first quarter 2009 net income was $580.4 million, or $1.16 per share, including net realized investment losses of $228.4 million after-tax, or $0.46 per share. Net income in the first quarter of 2008 was $588.1 million, or $1.07 per share, which included net realized investment losses of $0.06 per share.

"Our first quarter was solid in light of the current economy, and it is clear that the performance improvement initiatives we put into place last year are generating positive results," said Angela F. Braly, president and chief executive officer of WellPoint, Inc. "While our membership levels have been impacted by employer workforce reductions, we continue to take action to make our products more attractive and create more value for our customers."

"We are pleased that, despite the economy, our enrollment in the National business increased by more than 400,000, or 3.6 percent, during the quarter. This is an indication that our value proposition remains market-leading, with the industry's broadest provider network, attractive discounts and excellent medical management services. We look forward to our new strategic alliance with Express Scripts to further improve upon our value proposition and deliver even better pharmaceutical services to our customers in the future," added Braly.

"We remain comfortable with our assumptions around core operating performance in 2009, and now expect better results in some of the capital management areas," said Wayne S. DeVeydt, executive vice president and chief financial officer of WellPoint, Inc. "We continue to manage our business to improve the consumer experience and enhance customer and shareholder value. We believe our successful operational improvements over the past year and the strategic actions we have taken so far in 2009 are achieving these goals."

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment totaled 34.6 million members at March 31, 2009, a decrease of 814,000 members, or 2.3 percent, from 35.4 million at March 31, 2008. The decline in membership was most significant in the Local Group business, which experienced a 620,000-member reduction from the prior year quarter. Enrollment in State Sponsored business declined by 416,000 members, as the Company withdrew from programs in Ohio and Connecticut during 2008 and early 2009. Membership declines were also experienced in the Individual and Senior businesses. These enrollment declines were partially offset by growth of more than 400,000 members in the National business.

Medical membership declined by 490,000, or 1.4 percent, in the first quarter of 2009. The Company's March 31, 2009, enrollment level of 34.6 million was in-line with management's expectation for total membership. Enrollment in fully insured employer-based products was lower-than-expected, while membership was ahead of plan in the self-funded businesses and the Consumer segment. As of March 31, 2009, self-funded enrollment comprised 54 percent of the Company's overall enrollment, compared with 53 percent at December 31, 2008.

Operating Revenue: Operating revenue was $15.3 billion in the first quarter of 2009, a small decrease of 0.4 percent from $15.4 billion in the first quarter of 2008. The decline reflected the impact of lower fully insured enrollment, particularly in the Commercial Business segment, offset by disciplined pricing across all medical lines of business and increased reimbursement in the Federal Employee Program.

Benefit Expense Ratio: The benefit expense ratio was 81.6 percent in the first quarter of 2009, a decrease of 350 basis points from 85.1 percent in the prior year quarter. The decline resulted principally from disciplined pricing and operational improvements in the Senior and Local Group businesses. First quarter 2008 results reflected less favorable prior period reserve development than was experienced in the first quarter of 2009. Medical claims reserves established at December 31, 2008 developed as expected, and were reestablished with a comparable level of conservatism at March 31, 2009.

Premium and Cost Trends: Trends represent Local Group fully insured business.

For the full year of 2009, underlying medical cost trends are projected to be in the range of 8.0 percent, plus or minus 50 basis points, in-line with the Company's prior expectation. Unit cost increases continue to be the primary driver of medical cost trends. The Company continues to price its business so that expected premium yield exceeds total cost trend, where total cost trend includes medical costs and selling, general and administrative ("SG&A") expense.

Days in Claims Payable: Days in Claims Payable ("DCP") as of March 31, 2009, was 47.9 days, an increase of 0.2 days from 47.7 days as of December 31, 2008. The increase in DCP was driven primarily by lower benefit expense per day in the first quarter of 2009. The Company continues to establish reserves for medical claims in a consistent and conservative manner.

SG&A Expense Ratio: The SG&A expense ratio was 15.5 percent in the first quarter of 2009, an increase of 90 basis points from 14.6 percent in the first quarter of 2009. The increase was driven primarily by the reestablishment of incentive compensation accruals in 2009, higher outside service costs and assessments related to the New York State Deficit Reduction Plan.

Operating Cash Flow: Operating cash flow for the three months ended March 31, 2009, was $1.2 billion, or 2.1 times net income. Operating cash flow for the three months ended March 31, 2008, totaled $1.0 billion, or 1.8 times net income.

Share Repurchase Program: During the first quarter of 2009, the Company repurchased 17.7 million shares of its common stock for $681.2 million. The Company's Board of Directors increased the share repurchase authorization during the quarter, and the Company had approximately $1.8 billion of the authorization remaining as of March 31, 2009. The Company will continue to evaluate future share repurchase activity subject to market conditions and in connection with the sale of its NextRx subsidiaries.

Investment Portfolio & Capital Position: During the first quarter of 2009, the Company recorded net realized investment losses of $352.5 million pre-tax, consisting of other-than-temporary impairments of equity securities and fixed maturity securities totaling $169.7 million and $135.3 million, respectively, and net realized losses of $47.5 million resulting primarily from sales of securities.

As of March 31, 2009, the Company's net unrealized loss position was $531.4 million, consisting of net unrealized losses on fixed maturity and equity securities of $385.0 million and $146.4 million, respectively.

As of March 31, 2009, statutory capital levels in the Company's insurance subsidiaries exceeded Blue Cross and Blue Shield Association requirements by approximately $2.3 billion and state regulatory levels by approximately $5.5 billion. Cash and investments at the parent company totaled approximately $1.0 billion.

REPORTABLE SEGMENTS

WellPoint, Inc. has the following reportable segments: Commercial Business, which includes the Local Group, National, UniCare, and Specialty Products lines of business; Consumer Business, which includes the Individual, Senior, and State Sponsored lines of business; and Other, which includes Comprehensive Health Solutions (including the Company's NextRx PBM operation), Federal Employee Program or "FEP" business, National Government Services, inter-segment sales and expense eliminations, and corporate expenses not allocated to the other reportable segments.

Operating revenue and operating gain are the key measures used by management to evaluate performance in each segment.

                                  WellPoint, Inc.
                           Reportable Segment Highlights
                                    (Unaudited)

      (In millions)                              Three Months Ended March 31
                                                 ---------------------------
                                                    2009      2008    Change
                                                    ----      ----    ------
      Operating Revenue
         Commercial Business                    $9,367.5  $9,488.2     (1.3%)
         Consumer Business                       4,035.4   4,100.0     (1.6%)
         Other Business:
           External Customers                    1,895.8   1,778.4      6.6%
           Intersegment Revenue                    715.2     613.5     16.6%
           Intersegment Eliminations              (715.2)   (613.5)   (16.6%)
                                                  ------    ------
         Other                                   1,895.8   1,778.4      6.6%
                                                 -------   -------
      Total Operating Revenue                   15,298.7  15,366.6     (0.4%)

      Operating Gain
         Commercial Business                      $902.7    $908.8     (0.7%)
         Consumer Business                         218.7    (120.2)    NM(1)
         Other                                     111.6      94.0     18.7%

      Operating Margin
         Commercial Business                         9.6%      9.6%      0 bp
         Consumer Business                           5.4%     (2.9%)   830 bp

                (1) "NM" = not meaningful                                     

Commercial Business: Operating gain for the Commercial Business segment was $902.7 million in the first quarter of 2009, a slight decrease of 0.7 percent compared with $908.8 million in the first quarter of 2008. The decrease reflected the impact of higher SG&A expenses and lower fully insured enrollment, which was substantially offset by a decline in the benefit expense ratio due to disciplined pricing and a higher level of favorable reserve development in 2009. Medical claims reserves established at December 31, 2008 developed as expected, and were reestablished with a comparable level of conservatism at March 31, 2009.

Consumer Business: Operating gain for the Consumer Business segment was $218.7 million in the first quarter of 2009, an increase of $338.9 million compared with an operating loss of $120.2 million reported in the first quarter of 2008. The performance improvement was driven primarily by the Senior business, due to product portfolio changes, disciplined pricing and a higher level of favorable reserve development in 2009. Medical claims reserves established at December 31, 2008 developed as expected, and were reestablished with a comparable level of conservatism at March 31, 2009.

Other: Operating gain in Other segment was $111.6 million in the first quarter of 2009, an increase of 18.7 percent compared with $94.0 million in the first quarter of 2008. The increase was driven by improved results in the Company's NextRx pharmacy benefit management operation. The Company transferred approximately one million members to its NextRx business from an outside vendor, effective January 1, 2009.

OUTLOOK

Full Year 2009 (assumes no impact from the Express Scripts transaction):

  • The Company now expects net income to be in the range of $5.14 - $5.20 per share, including net realized investment losses of $0.46 per share. This includes no realized investment gains or losses beyond those recorded in the three months ended March 31, 2009.

  • Year-end medical enrollment is now expected to be approximately 33.9 million members.

  • Operating revenue is now expected to total approximately $61.2 billion.

  • The benefit expense ratio is now expected to be approximately 82.7 percent.

  • The SG&A expense ratio is now expected to be approximately 15.6 percent.

  • Operating cash flow is expected to exceed $3.0 billion.

Basis of Presentation

  1. Operating gain is defined as operating revenue less benefit expense, selling expense, general and administrative expense, and cost of drugs. Operating gain is used to analyze profit or loss on a segment basis. Consolidated operating gain is a non-GAAP measure.
  2. Operating margin is defined as operating gain divided by operating revenue.
  3. Certain prior period amounts have been reclassified to conform to the current period presentation.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time ("EDT") to discuss its first quarter earnings results and updated outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

        888-423-3268 (Domestic)        800-475-6701 (Domestic Replay)
        651-291-5254 (International)   320-365-3844 (International Replay)

An access code is not required for today's conference call. The access code for the replay is 977146. The replay will be available from 1:45 p.m. EDT today until the end of the day on May 6, 2009. The call will also be available through a live webcast at www.wellpoint.com under "Investor Info." A webcast replay will be available following the call.

    Contacts:

    Investor Relations                           Media
    Michael Kleinman, 317-488-6713               Kristin Binns, 917-697-7802

About WellPoint, Inc.

WellPoint works to simplify the connection between Health, Care and Value. We help to improve the health of our communities, deliver better care to members, and provide greater value to our customers and shareholders. WellPoint is the nation's largest health benefits company, with approximately 35 million members in its affiliated health plans. As an independent licensee of the Blue Cross and Blue Shield Association, WellPoint serves members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as the Blue Cross Blue Shield licensee in 10 New York City metropolitan and surrounding counties and as the Blue Cross or Blue Cross Blue Shield licensee in selected upstate counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), Wisconsin; and through UniCare. Additional information about WellPoint is available at www.wellpoint.com.

                               WellPoint, Inc.
                  Membership & Prescription Volume Summary
                       (Unaudited and in Thousands)


                              March 31,    December 31,    March 31,
    Medical Membership            2009            2008         2008
    ------------------            ----            ----         ----
    Customer Type
    Local Group                 16,071          16,632       16,691

      National Accounts          7,034           6,720        6,743
      BlueCard                   4,836           4,736        4,726
                                 -----           -----        -----
    Total National              11,870          11,456       11,469

    Individual                   2,235           2,272        2,368
    Senior                       1,256           1,304        1,301
    State Sponsored              1,742           1,992        2,158
    FEP                          1,385           1,393        1,386
                                 -----           -----        -----
    Total Medical
     Membership                 34,559          35,049       35,373
                                ======          ======       ======

    Funding Arrangement
    Self-Funded                 18,646          18,520       18,354
    Fully-Insured               15,913          16,529       17,019
                                ------          ------       ------
    Total Medical
     Membership                 34,559          35,049       35,373
                                ======          ======       ======

    Reportable Segment
    Commercial                  28,141          28,304       28,421
    Consumer                     5,033           5,352        5,566
    Other                        1,385           1,393        1,386
                                 -----           -----        -----
    Total Medical
     Membership                 34,559          35,049       35,373
                                ======          ======       ======

    Other Membership
    ----------------
    Behavioral Health
     Membership                 23,525          23,568       23,373
    Life and Disability
     Membership                  5,470           5,477        5,594
    Dental Membership            4,374           4,560        4,805
    Vision Membership            2,782           2,614        2,542
    Medicare Part D
     Membership                  1,705           1,870        1,836

    PBM Prescription
     Volume Paid
     (Quarterly)
    ----------------
    Retail Scripts              59,391          60,858       61,722
    Mail Order Scripts           6,269           6,485        6,601
    Specialty Pharmacy
     Scripts                       200             199          146
                                   ---             ---          ---
    Total Scripts               65,860          67,542       68,469
                                ======          ======       ======


                                     Change from
                             --------------------------
                             December 31,      March 31,
    Medical Membership             2008            2008
    ------------------             ----            ----
    Customer Type
    Local Group                   (3.4%)          (3.7%)

      National Accounts            4.7%            4.3%
      BlueCard                     2.1%            2.3%
    Total National                 3.6%            3.5%

    Individual                    (1.6%)          (5.6%)
    Senior                        (3.7%)          (3.5%)
    State Sponsored              (12.6%)         (19.3%)
    FEP                           (0.6%)          (0.1%)
    Total Medical
     Membership                   (1.4%)          (2.3%)

    Funding Arrangement
    Self-Funded                    0.7%            1.6%
    Fully-Insured                 (3.7%)          (6.5%)
    Total Medical
     Membership                   (1.4%)          (2.3%)

    Reportable Segment
    Commercial                    (0.6%)          (1.0%)
    Consumer                      (6.0%)          (9.6%)
    Other                         (0.6%)          (0.1%)
    Total Medical
     Membership                   (1.4%)          (2.3%)

    Other Membership
    ----------------
    Behavioral Health
     Membership                   (0.2%)           0.7%
    Life and Disability
     Membership                   (0.1%)          (2.2%)
    Dental Membership             (4.1%)          (9.0%)
    Vision Membership              6.4%            9.4%
    Medicare Part D
     Membership                   (8.8%)          (7.1%)

    PBM Prescription
     Volume Paid
     (Quarterly)
    ----------------
    Retail Scripts                (2.4%)          (3.8%)
    Mail Order Scripts            (3.3%)          (5.0%)
    Specialty Pharmacy
     Scripts                       0.5%           37.0%
    Total Scripts                 (2.5%)          (3.8%)


                               WellPoint, Inc.
                      Consolidated Statements of Income
                                 (Unaudited)

                                         Three Months Ended
    (In millions, except per share
     data)                                      March 31
                                                --------
                                             2009       2008      Change
                                             ----       ----      ------
    Revenues
    Premiums                            $14,203.2  $14,234.4      (0.2%)
    Administrative fees                     941.5      969.6      (2.9%)
    Other revenue                           154.0      162.6      (5.3%)
                                            -----      -----
        Total operating revenue          15,298.7   15,366.6      (0.4%)
    Net investment income                   197.1      232.7     (15.3%)
    Net realized losses on investments     (352.5)     (45.6)   (673.0%)
                                           ------      -----
    Total revenues                       15,143.3   15,553.7      (2.6%)

    Expenses
    Benefit expense                      11,588.2   12,116.5      (4.4%)
    Selling, general and administrative
     expense
        Selling expense                     432.0      444.3      (2.8%)
        General and administrative
         expense                          1,933.1    1,804.3       7.1%
                                          -------    -------
            Total selling, general and
             administrative expense       2,365.1    2,248.6       5.2%
    Cost of drugs                           112.4      118.9      (5.5%)
    Interest expense                        116.1      119.0      (2.4%)
    Amortization of other intangible
     assets                                  67.9       71.5      (5.0%)
                                             ----       ----
    Total expenses                       14,249.7   14,674.5      (2.9%)

    Income before income taxes              893.6      879.2       1.6%

    Income tax expense                      313.2      291.1       7.6%
                                            -----      -----

    Net income                             $580.4     $588.1      (1.3%)
                                           ======     ======

    Net income per diluted share            $1.16      $1.07       8.4%
                                            =====      =====

    Diluted shares                          498.2      547.6      (9.0%)

    Benefit expense as a percentage of
     premiums                                81.6%      85.1%     (350) bp
    Selling, general and administrative
     expense as a percentage of total
     operating revenue                       15.5%      14.6%       90  bp
    Income before income tax expense as
     a percentage of total revenues           5.9%       5.7%       20  bp



                                  WellPoint, Inc.
                            Consolidated Balance Sheets

                                                  March 31,      December 31,
    (In millions)                                   2009              2008
                                                  ----------      -----------
                                                  (Unaudited)
    Assets
    Current assets:
       Cash and cash equivalents                    $2,378.1         $2,183.9
       Investments available-for-sale,
        at fair value:
            Fixed maturity securities                1,774.2          1,564.8
            Equity securities                          810.3          1,088.0
       Other invested assets, current                   16.8             23.6
       Accrued investment income                       164.6            172.8
       Premium and self-funded receivables           3,525.4          3,042.9
       Other receivables                             1,400.5          1,373.9
       Income taxes receivable                             -            159.9
       Securities lending collateral                   461.6            529.0
       Deferred tax assets, net                        730.8            779.0
       Other current assets                          1,220.9          1,212.2
                                                     -------          -------
    Total current assets                            12,483.2         12,130.0

    Long-term investments available-for-sale,
     at fair value:
            Fixed maturity securities               12,537.1         11,808.4
            Equity securities                           29.0             30.7
    Other invested assets, long-term                   705.3            703.2
    Property and equipment, net                      1,051.8          1,054.5
    Goodwill                                        13,460.3         13,461.3
    Other intangible assets                          8,761.7          8,827.2
    Other noncurrent assets                            386.4            387.9
                                                       -----            -----
    Total assets                                   $49,414.8        $48,403.2
                                                   =========        =========
    Liabilities and shareholders' equity
    Liabilities
    Current liabilities:
       Policy liabilities:
         Medical claims payable                     $6,168.0         $6,184.7
         Reserves for future policy benefits            63.4             64.5
         Other policyholder liabilities              1,677.7          1,626.8
                                                     -------          -------
       Total policy liabilities                      7,909.1          7,876.0
       Unearned income                               1,153.1          1,087.7
       Accounts payable and accrued expenses         3,003.6          2,856.5
       Income taxes payable                            196.0                -
       Security trades pending payable                  27.8              5.8
       Securities lending payable                      474.1            529.0
       Short-term borrowings                           100.0             98.0
       Current portion of long-term debt               710.5            909.7
       Other current liabilities                     1,766.6          1,657.6
                                                     -------          -------
    Total current liabilities                       15,340.8         15,020.3

    Long-term debt, less current portion             8,527.1          7,833.9
    Reserves for future policy benefits,
     noncurrent                                        662.8            664.7
    Deferred tax liability, net                      2,118.5          2,098.9
    Other noncurrent liabilities                     1,257.6          1,353.7
                                                     -------          -------
    Total liabilities                               27,906.8         26,971.5
    Shareholders' equity
    Common stock                                         4.8              5.0
    Additional paid-in capital                      16,278.1         16,843.0
    Retained earnings                                5,970.6          5,479.4
    Accumulated other comprehensive loss              (745.5)         (895.7)
                                                      ------           ------
    Total shareholders' equity                      21,508.0         21,431.7
                                                    --------         --------
    Total liabilities and shareholders'
     equity                                        $49,414.8        $48,403.2
                                                   =========        =========


                                 WellPoint, Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                                              Three Months
                                                              Ended March 31
                                                             ---------------
    (In millions)                                             2009      2008
                                                              ----      ----

    Operating activities
    Net income                                              $580.4    $588.1
    Adjustments to reconcile net income to net cash
     provided by operating activities:
            Net realized losses on investments               352.5      45.6
            Loss on disposal of assets                         0.3       0.2
            Deferred income taxes                            (10.5)     (6.0)
            Amortization, net of accretion                   109.6     118.9
            Depreciation expense                              26.1      25.8
            Share-based compensation                          24.8      37.0
            Excess tax benefits from share-based
             compensation                                     (0.7)    (11.1)
            Changes in operating assets and liabilities,
             net of effect of business combinations:
                    Receivables, net                        (486.1)   (454.0)
                    Other invested assets                     13.8      22.3
                    Other assets                              (7.5)   (135.8)
                    Policy liabilities                        31.2     502.1
                    Unearned income                           65.4      36.4
                    Accounts payable and accrued expenses    120.3     (48.3)
                    Other liabilities                         16.8      23.6
                    Income taxes                             347.1     289.0
                    Other, net                                 8.5       7.4
                                                               ---       ---
    Net cash provided by operating activities              1,192.0   1,041.2

    Investing activities
    Purchases of fixed maturity securities                (2,051.0) (1,742.9)
    Proceeds from sales and maturities of fixed maturity
     securities                                            1,159.0   2,581.5
    Purchases of equity securities                           (31.3)   (744.9)
    Proceeds from sales of equity securities                 168.4     377.4
    Purchases of other invested assets                       (18.8)    (61.8)
    Proceeds from sales of other invested assets               0.9      18.3
    Changes in securities lending collateral                  54.9      97.5
    Purchases of subsidiaries, net of cash acquired           (1.1)     (0.4)
    Proceeds from sales of subsidiaries, net of cash sold        -         -
    Purchases of property and equipment                      (68.9)    (79.0)
    Proceeds from sales of property and equipment              0.2       4.5
    Other, net                                                (3.2)        -
                                                              ----      ----
    Net cash (used in) provided by investing activities     (790.9)    450.2

    Financing activities
    Net (repayment of) proceeds from commercial paper
     borrowings                                             (273.1)    188.1
    Net proceeds from short-term borrowings                    2.0         -
    Proceeds from long-term borrowings                       990.3         -
    Repayment of long-term borrowings                       (228.1)     (2.7)
    Changes in securities lending payable                    (54.9)    (97.5)
    Changes in bank overdrafts                                19.5     144.7
    Repurchase and retirement of common stock               (681.2) (2,008.6)
    Proceeds from exercise of employee stock options and
     employee stock purchase plan                             17.9      57.7
    Excess tax benefits from share-based compensation          0.7      11.1
                                                               ---      ----
    Net cash used in financing activities                   (206.9) (1,707.2)
                                                            ------  --------

    Change in cash and cash equivalents                      194.2    (215.8)
    Cash and cash equivalents at beginning of period       2,183.9   2,767.9
                                                           -------   -------
    Cash and cash equivalents at end of period            $2,378.1  $2,552.1
                                                          ========  ======== 

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This document contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not generally historical facts. Words such as "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)", "intend", "estimate", "project" and similar expressions are intended to identify forward-looking statements, which generally are not historical in nature. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include: those discussed and identified in public filings with the U.S. Securities and Exchange Commission, or SEC, made by us; increased government participation in or regulation of health benefits, managed care and PBM operations; trends in health care costs and utilization rates; our ability to secure sufficient premium rate increases; our ability to contract with providers consistent with past practice; competitor pricing below market trends of increasing costs; reduced enrollment, as well as a negative change in our health care product mix; risks and uncertainties regarding the Medicare Part C and Medicare Part D Prescription Drug benefits programs, including those related to CMS sanctions, potential uncollectability of receivables resulting from processing and/or verifying enrollment (including facilitated enrollment), inadequacy of underwriting assumptions, inability to receive and process correct information, uncollectability of premium from members, increased medical or pharmaceutical costs, and the underlying seasonality of the business; a downgrade in our financial strength ratings; litigation and investigations targeted at health benefits companies and our ability to resolve litigation and investigations within estimates; our ability to meet expectations regarding repurchases of shares of our common stock; decreased revenues following the Express Scripts transaction; increased operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, that may be greater than expected following the Express Scripts transaction; our ability to consummate or realize the ultimate expected value of the Express Scripts transaction; the failure to receive regulatory approvals required for the Express Scripts transaction on the terms expected or on the anticipated schedule; our ability to meet expectations regarding the accounting and tax treatments of the Express Scripts transaction and the value of the Express Scripts transaction consideration; funding risks with respect to revenue received from participation in Medicare and Medicaid programs; non-compliance with the complex regulations imposed on Medicare and Medicaid programs; events that result in negative publicity for us or the health benefits industry; failure to effectively maintain and modernize our information systems and e-business organization and to maintain good relationships with third party vendors for information system resources; events that may negatively affect our license with the Blue Cross and Blue Shield Association; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; intense competition to attract and retain employees; unauthorized disclosure of member sensitive or confidential information; changes in the economic and market conditions, as well as regulations, that may negatively affect our investment portfolios and liquidity needs; possible restrictions in the payment of dividends by our subsidiaries and increases in required minimum levels of capital and the potential negative affect from our substantial amount of outstanding indebtedness; general risks associated with mergers and acquisitions; various laws and our governing documents may prevent or discourage takeovers and business combinations; future bio-terrorist activity or other potential public health epidemics; and general economic downturns. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by federal securities law, we do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in our SEC reports.


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