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WellPoint Reports Fourth Quarter and Full Year 2008 Results
Date:1/28/2009

INDIANAPOLIS, Jan. 28 /PRNewswire-FirstCall/ -- WellPoint, Inc. (NYSE: WLP) today announced that fourth quarter 2008 net income was $331.4 million, or $0.65 per share, including net realized investment losses of $350.5 million after-tax, or $0.69 per share. Net income in the fourth quarter of 2007 was $859.1 million, or $1.51 per share, which included net realized investment gains of less than $0.01 per share.

Full year 2008 net income was $2.5 billion, or $4.76 per share. These results included:

-- Net realized investment losses of $759.6 million after-tax, or $1.45 per share, consisting primarily of other-than-temporary impairments of certain equity and fixed maturity security investments;

-- An impairment charge related to certain intangible assets in the Company's State Sponsored business, which totaled $90.8 million after-tax, or $0.17 per share; and

-- Income tax benefits totaling $473.0 million, or $0.90 per share, resulting from the favorable resolution of certain federal and state tax matters.

Net income for the full year of 2007 was $3.3 billion, or $5.56 per share, which included $0.01 per share in net realized investment gains.

"Our fourth quarter operating results were in-line with our expectations, reflecting the actions taken to effectively manage our business both during the current economic downturn and for the long-term," said Angela F. Braly, president and chief executive officer of WellPoint, Inc. "While our enrollment levels are being impacted by rising unemployment, our customer retention rates remain very strong. As employers continue to reduce their workforces, we have alternatives for the impacted employees through individually-purchased products or government-sponsored plans."

"This environment places an even greater burden on managed care organizations to positively impact both the cost and quality of health care, and WellPoint is uniquely positioned to deliver the best value to the marketplace," added Braly. "As a Blue Cross and Blue Shield licensee, we have the most trusted brand in this industry and offer access to the largest network of doctors and hospitals in the United States. We supplement this with top-tier capabilities in the medical management and transparency areas, including consumer-directed health plans that have been shown to help optimize health care consumption and hold down medical cost trends."

"WellPoint remains in a strong financial position. We have solid liquidity at our parent company while our debt-to-capital ratio is just below our targeted range, and we expect to generate significant operating cash flow in 2009," said Wayne S. DeVeydt, executive vice president and chief financial officer of WellPoint, Inc. "Our reserves for medical claims are approximately $400 million, or 6.9 percent, higher than at December 31, 2007, and days in claims payable increased by 2.7 days during 2008. We believe that our balance sheet is conservative."

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment totaled 35.0 million members at December 31, 2008, an increase of 240,000 members, or 0.7 percent, from 34.8 million at December 31, 2007. The increase was driven by the National business, which added 504,000 members in 2008. Membership in the Company's Senior business grew by 54,000 and enrollment in the Federal Employee Program increased by 13,000. This growth in membership was partially offset by a decline of 206,000 in State Sponsored programs, primarily in Ohio, and attrition of 94,000 and 31,000 members in the Individual and Local Group businesses, respectively. The attrition in Individual and Local Group primarily resulted from the Company's non-Blue branded products, in which membership declined by 279,000 during the year. Enrollment in the Company's Blue branded Individual and Local Group products increased by 154,000 members in 2008.

During the fourth quarter of 2008, medical enrollment declined by 288,000 members, or 0.8 percent. Most of this decline occurred in the Company's Commercial Business segment and is a reflection of the economic downturn. While the Company's group retention rate remained above 90 percent, Commercial in-group enrollment declines totaled 148,000 in the fourth quarter as employers reduced workforces. The decline in membership was most pronounced in the National business and was experienced across a number of industries. Enrollment in the Consumer Business segment declined by 80,000, primarily related to Connecticut Medicaid members beginning to transition to other carriers.

Operating Revenue: Operating revenue was $15.4 billion in the fourth quarter of 2008, an increase of 0.7 percent from $15.3 billion in the fourth quarter of 2007. The increase was driven by premium rate increases in all medical lines of business and growth in the Company's Medicare Advantage products. These increases in revenue were partially offset by the loss of the New York State prescription drug contract and lower Commercial and State Sponsored fully insured membership.

Benefit Expense Ratio: The benefit expense ratio was 83.4 percent in the fourth quarter of 2008, an increase of 50 basis points from 82.9 percent in the prior year quarter. The increase resulted primarily from higher medical costs and membership mix changes in the Local Group business, including the timing of medical claims recognition. As previously disclosed, the Company strengthened reserves in the first quarter of 2008 when 2007 claims costs developed at a higher level than was anticipated at December 31, 2007. The Company also incurred a higher benefit expense ratio in its Medicare Advantage business during 2008.

These increases in the benefit expense ratio were partially offset by an improvement in the State Sponsored benefit expense ratio, reflecting the withdrawal from Ohio Medicaid business, and the loss of the New York State prescription drug contract, which had a benefit expense ratio higher than the overall Company average.

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

For the year ended December 31, 2008, underlying medical cost trends were less than 8.0 percent. 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 December 31, 2008, was 47.7 days, a 1.4 day decline from 49.1 days at September 30, 2008. The sequential decrease in DCP was driven primarily by medical benefit seasonality in the Commercial business, which experiences a higher benefit expense ratio in the fourth quarter of the year. DCP was equal to 47.7 days as of December 31, 2008, and June 30, 2008, and 2.7 days higher than the 45.0 days of DCP at December 31, 2007.

Medical claims payable totaled $6.2 billion as of December 31, 2008, a decrease of $87.8 million, or 1.4 percent, from September 30, 2008, reflecting a 0.9 percent sequential decline in fully insured membership and a reduction in claims inventories of 8.4 percent. 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 15.1 percent in the fourth quarter of 2008, an increase of 130 basis points from 13.8 percent in the fourth quarter of 2007. The increase reflected higher salary and wage expense, including the timing of incentive compensation accruals in 2007, and higher 2008 costs related to customer service and technology initiatives and accrued severance related to the recently announced workforce reduction.

Operating Cash Flow: Operating cash flow for the three months ended December 31, 2008, was $497.3 million, or 1.5 times net income. Operating cash flow for the year ended December 31, 2008, totaled $2.5 billion, or 1.0 times net income.

Share Repurchase Program: During the fourth quarter of 2008, the Company repurchased 6.3 million shares of its common stock for $229.2 million. For the year ended December 31, 2008, the Company repurchased 56.4 million shares, or approximately 10 percent of shares outstanding at December 31, 2007, for approximately $3.3 billion. As of December 31, 2008, the remaining Board- approved share repurchase authorization was approximately $1.0 billion. The Company will continue to evaluate future share repurchase activity subject to market conditions.

Investment Portfolio & Capital Position: During the fourth quarter of 2008, the Company recorded net realized investment losses of $543.2 million pre-tax, consisting of other-than-temporary impairments of equity securities and fixed maturity securities totaling $256.7 million and $188.9 million, respectively, and realized losses of $97.6 million resulting primarily from sales of securities.

As of December 31, 2008, the Company's gross unrealized investment loss position was approximately $1.1 billion, consisting of gross unrealized losses on fixed maturity and equity securities totaling $874.8 million and $234.8 million, respectively. As of December 31, 2008, the Company's gross unrealized gain position was $333.9 million, consisting of gross unrealized gains on fixed maturity and equity securities totaling $308.1 million and $25.8 million, respectively.

As of December 31, 2008, statutory capital levels in the Company's insurance subsidiaries exceeded Blue Cross and Blue Shield Association requirements by approximately $1.8 billion and state regulatory levels by approximately $4.9 billion. During the fourth quarter of 2008, $2.0 billion of dividends were paid from the insurance subsidiaries to the parent company.

REPORTABLE SEGMENTS

In 2008, 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 PBM and Behavioral Health operations), Federal Employee Plan 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 December 31
                                             2008        2007       Change
     Operating Revenue
         Commercial Business                $9,506.9    $9,603.7       (1.0%)
         Consumer Business                   4,100.6     3,957.9        3.6%
         Other Business:
           External Customers                1,818.7     1,764.4        3.1%
           Intersegment Revenue                733.8       638.5       14.9%
           Intersegment Eliminations          (733.8)     (638.5)     (14.9%)
         Other                               1,818.7     1,764.4        3.1%
     Total Operating Revenue                15,426.2    15,326.0        0.7%

     Operating Gain
         Commercial Business                  $698.1      $928.3      (24.8%)
         Consumer Business                     230.7       213.3        8.2%
         Other                                 122.6       137.7      (11.0%)

     Operating Margin
         Commercial Business                    7.3%        9.7%       (240)bp
         Consumer Business                      5.6%        5.4%         20 bp



                                 WellPoint, Inc.
                          Reportable Segment Highlights
                                   (Unaudited)

     (In millions)                             Year Ended December 31
                                             2008        2007      Change
     Operating Revenue
         Commercial Business               $38,009.3   $38,133.7      (0.3%)
         Consumer Business                  16,437.3    15,285.7       7.5%
         Other Business:
           External Customers                7,132.6     6,736.2       5.9%
           Intersegment Revenue              2,795.0     2,267.2      23.3%
           Intersegment Eliminations        (2,795.0)   (2,267.2)    (23.3%)
         Other                               7,132.6     6,736.2       5.9%
     Total Operating Revenue                61,579.2    60,155.6       2.4%

     Operating Gain
         Commercial Business                $3,281.3    $3,790.5     (13.4%)
         Consumer Business                     566.5       777.2     (27.1%)
         Other                                 500.0       416.5      20.0%

     Operating Margin
         Commercial Business                    8.6%        9.9%      (130) bp
         Consumer Business                      3.4%        5.1%      (170) bp


Commercial Business: Operating gain for the Commercial Business segment was $698.1 million in the fourth quarter of 2008, a decrease of 24.8 percent compared with $928.3 million in the fourth quarter of 2007. The decline primarily resulted from higher medical costs and membership mix changes in the Local Group business, including the timing of medical claims recognition. As previously disclosed, the Company strengthened reserves in the first quarter of 2008 when 2007 claims costs developed at a higher level than was anticipated at December 31, 2007.

The decline in operating gain also reflects lower fully insured enrollment in 2008, and a higher SG&A expense ratio reflecting increased compensation costs and expenses related to operational initiatives, including the recently announced workforce reduction.

Consumer Business: Operating gain for the Consumer Business segment was $230.7 million in the fourth quarter of 2008, an increase of 8.2 percent compared with $213.3 million in the fourth quarter of 2007. The increase was driven by improved results in State Sponsored operations, as the Company exited unprofitable Ohio Medicaid programs during the first half of 2008. Performance in the Company's Individual business also improved relative to the prior year quarter. These increases in operating gain were partially offset by lower results for the Senior business, primarily due to the benefit design of certain Medicare Advantage plans in 2008.


                                   OUTLOOK

    Full Year 2009:

-- The Company plans to provide more information at its 2009 Investor Conference on February 24, 2009.

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 Standard Time ("EST") to discuss its fourth quarter earnings results and preliminary outlook for 2009. 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. EST today until the end of the day on February 11, 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.

About WellPoint, Inc.

WellPoint is committed to improving the lives and health of the people and communities we serve by simplifying the connection between health, care and value. Our goal is to help shape the impact each health care decision has on individuals, the health care system at-large, and our communities. WellPoint's more than 42,000 associates work every day to help create the best health care value for our customers. Through collaborations with providers and with innovative programs, WellPoint's affiliated health plans reward healthy lifestyles and quality, safe and effective care. As the nation's largest health benefits company, with approximately 35 million members in its affiliated health plans, WellPoint is at the center of the health care system. This position provides us with the relationships and insights needed to help create affordable and actionable solutions that improve health care.

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)


                                                               Change from
                             December  December  September  December September
                                31,       31,        30,       31,       30,
    Medical Membership         2008      2007       2008      2007      2008
    Customer Type
    Local Group               16,632   16,663      16,683    (0.2%)    (0.3%)

       National Accounts       6,720    6,389       6,808     5.2%     (1.3%)
       BlueCard                4,736    4,563       4,785     3.8%     (1.0%)
    Total National            11,456   10,952      11,593     4.6%     (1.2%)

    Individual                 2,296    2,390       2,341    (3.9%)    (1.9%)
    Senior                     1,304    1,250       1,308     4.3%     (0.3%)
    State Sponsored            1,968    2,174       2,022    (9.5%)    (2.7%)
    FEP                        1,393    1,380       1,390     0.9%      0.2%
    Total Medical Membership  35,049   34,809      35,337     0.7%     (0.8%)

    Funding Arrangement
    Self-Funded               18,520   17,737      18,662     4.4%     (0.8%)
    Fully-Insured             16,529   17,072      16,675    (3.2%)    (0.9%)
    Total Medical Membership  35,049   34,809      35,337     0.7%     (0.8%)

    Reportable Segment
    Commercial Business       28,304   27,886      28,515     1.5%     (0.7%)
    Consumer Business          5,352    5,543       5,432    (3.4%)    (1.5%)
    Other Business             1,393    1,380       1,390     0.9%      0.2%
    Total Medical Membership  35,049   34,809      35,337     0.7%     (0.8%)

    Other Membership
    Behavioral Health
     Membership               23,568   20,230      23,588    16.5%     (0.1%)
    Life and Disability
     Membership                5,477    5,598       5,507    (2.2%)    (0.5%)
    Dental Membership          4,560    5,014       4,618    (9.1%)    (1.3%)
    Vision Membership          2,614    2,401       2,632     8.9%     (0.7%)
    Medicare Part D
     Membership                1,870    1,614       1,870    15.9%      0.0%

    PBM Prescription Volume
     Processed  (Quarterly)
      (1)
    Retail Scripts           101,524   91,393      96,759    11.1%      4.9%
    Mail Order Scripts         6,730    7,019       6,532    (4.1%)     3.0%
    Specialty Pharmacy
     Scripts                     275      193         244    42.5%     12.7%
    Total Scripts            108,529   98,605     103,535    10.1%      4.8%

    PBM Prescription Volume
     Paid (Quarterly) (1)
    Retail Scripts            60,858   56,833      58,621     7.1%      3.8%
    Mail Order Scripts         6,485    7,000       6,345    (7.4%)     2.2%
    Specialty Pharmacy
     Scripts                     199      131         177    51.9%     12.4%
    Total Scripts             67,542   63,964      65,143     5.6%      3.7%

    (1) Prescriptions processed represent all requests submitted to our PBM
        companies. Prescriptions processed may not ultimately agree to the
        amount paid for various reasons, including duplicative and non-covered
        submissions.



                                WellPoint, Inc.
                       Consolidated Statements of Income
                                  (Unaudited)

                                            Three Months Ended
    (In millions, except per share data)        December 31
                                             2008        2007      Change
    Revenues
    Premiums                               $14,291.0   $14,266.1       0.2%
    Administrative fees                        975.4       914.1       6.7%
    Other revenue                              159.8       145.8       9.6%
        Total operating revenue             15,426.2    15,326.0       0.7%
    Net investment income                      186.6       243.4     (23.3%)
    Net realized (losses) gains on
     investments                              (543.2)        0.6      NM (1)
    Total revenues                          15,069.6    15,570.0      (3.2%)

    Expenses
    Benefit expense                         11,924.7    11,822.0       0.9%
    Selling, general and administrative
     expense
        Selling expense                        440.8       433.4       1.7%
        General and administrative
         expense                             1,892.3     1,686.3      12.2%
            Total selling, general and
             administrative expense          2,333.1     2,119.7      10.1%
    Cost of drugs                              117.0       105.0      11.4%
    Interest expense                           115.9       125.3      (7.5%)
    Amortization of other intangible
     assets                                     71.1        75.2      (5.5%)
    Total expenses                          14,561.8    14,247.2       2.2%

    Income before income taxes                 507.8     1,322.8     (61.6%)

    Income tax expense                         176.4       463.7     (62.0%)

    Net income                                $331.4      $859.1     (61.4%)

    Net income per diluted share               $0.65       $1.51     (57.0%)

    Diluted shares                             508.5       570.6     (10.9%)

    Benefit expense as a percentage of
     premiums                                  83.4%       82.9%        50  bp
    Selling, general and administrative
     expense as a percentage of total
     operating revenue                         15.1%       13.8%       130  bp
    Income before income tax expense as a
     percentage of total revenues               3.4%        8.5%      (510) bp

    (1) "NM" = not meaningful



                                WellPoint, Inc.
                       Consolidated Statements of Income
                                  (Unaudited)

                                                Year Ended
    (In millions, except per share data)        December 31
                                             2008        2007      Change
    Revenues
    Premiums                               $57,101.0   $55,865.0       2.2%
    Administrative fees                      3,836.6     3,673.6       4.4%
    Other revenue                              641.6       617.0       4.0%
        Total operating revenue             61,579.2    60,155.6       2.4%
    Net investment income                      851.1     1,001.1     (15.0%)
    Net realized (losses) gains on
     investments                            (1,179.2)       11.2      NM (1)
    Total revenues                          61,251.1    61,167.9       0.1%

    Expenses
    Benefit expense                         47,742.4    46,037.2       3.7%
    Selling, general and administrative
     expense
        Selling expense                      1,778.4     1,716.8       3.6%
        General and administrative
         expense                             7,242.1     6,984.7       3.7%
            Total selling, general and
             administrative expense          9,020.5     8,701.5       3.7%
    Cost of drugs                              468.5       432.7       8.3%
    Interest expense                           469.8       447.9       4.9%
    Amortization of other intangible
     assets                                    286.1       290.7      (1.6%)
    Impairment of intangible assets            141.4         -        NM (1)
    Total expenses                          58,128.7    55,910.0       4.0%

    Income before income taxes               3,122.4     5,257.9     (40.6%)

    Income tax expense                         631.7     1,912.5     (67.0%)

    Net income                              $2,490.7    $3,345.4     (25.5%)

    Net income per diluted share               $4.76       $5.56     (14.4%)

    Diluted shares                             523.0       602.0     (13.1%)

    Benefit expense as a percentage of
     premiums                                  83.6%       82.4%       120  bp
    Selling, general and administrative
     expense as a percentage of total
     operating revenue                         14.6%       14.5%        10  bp
    Income before income taxes as a
     percentage of total revenues               5.1%        8.6%      (350) bp

    (1) "NM" = not meaningful



                                 WellPoint, Inc.
                           Consolidated Balance Sheets

                                               December 31,       December 31,
    (In millions)                                 2008                2007
                                               (Unaudited)
    Assets
    Current assets:
       Cash and cash equivalents                  $2,183.9          $2,767.9
       Investments available-for-sale, at
        fair value:
            Fixed maturity securities              1,561.3           1,832.6
            Equity securities                      1,091.5           1,893.7
       Other invested assets, current                 23.6              40.3
       Accrued investment income                     172.8             165.8
       Premium and self-funded
        receivables                                3,042.9           2,870.1
       Other receivables                           1,373.9             996.4
       Income taxes receivable                       159.9               0.9
       Securities lending collateral                 529.0             854.1
       Deferred tax assets, net                      779.0             559.6
       Other current assets                        1,212.2           1,050.4
    Total current assets                          12,130.0          13,031.8

    Long-term investments available-for-
     sale, at fair value:
            Fixed maturity securities             11,808.4          13,917.3
            Equity securities                         30.7              45.1
    Other invested assets, long-term                 703.2             752.9
    Property and equipment, net                    1,054.5             995.9
    Goodwill                                      13,461.3          13,435.4
    Other intangible assets                        8,827.2           9,220.8
    Other noncurrent assets                          387.9             660.8
    Total assets                                 $48,403.2         $52,060.0
    Liabilities and shareholders' equity
    Liabilities
    Current liabilities:
       Policy liabilities:
         Medical claims payable                   $6,184.7          $5,788.0
         Reserves for future policy
          benefits                                    64.5              63.7
         Other policyholder liabilities            1,626.8           1,832.2
       Total policy liabilities                    7,876.0           7,683.9
       Unearned income                             1,087.7           1,114.6
       Accounts payable and accrued
        expenses                                   2,856.5           2,909.6
       Security trades pending payable                 5.8              50.6
       Securities lending payable                    529.0             854.1
       Short-term borrowings                          98.0               -
       Current portion of long-term debt             909.7              20.4
       Other current liabilities                   1,657.6           1,755.0
    Total current liabilities                     15,020.3          14,388.2

    Long-term debt, less current portion           7,833.9           9,023.5
    Reserves for future policy benefits,
     noncurrent                                      664.7             661.9
    Deferred tax liability, net                    2,098.9           3,004.4
    Other noncurrent liabilities                   1,353.7           1,991.6
    Total liabilities                             26,971.5          29,069.6
    Shareholders' equity
    Common stock                                       5.0               5.6
    Additional paid-in capital                    16,843.0          18,441.1
    Retained earnings                              5,479.4           4,387.6
    Accumulated other comprehensive
     (loss) income                                  (895.7)            156.1
    Total shareholders' equity                    21,431.7          22,990.4
    Total liabilities and shareholders'
     equity                                      $48,403.2         $52,060.0



                               WellPoint, Inc.
                     Consolidated Statements of Cash Flows
                                   (Unaudited)
                                                    Year Ended December 31
    (In millions)                                   2008              2007

    Operating activities
    Net income                                    $2,490.7          $3,345.4
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
            Net realized losses (gains)
             on investments                        1,179.2             (11.2)
            Loss on disposal of assets                 7.2              11.3
            Deferred income taxes                   (481.4)           (105.5)
            Amortization, net of
             accretion                               466.3             466.0
            Impairment of intangible
             assets                                  141.4               -
            Depreciation expense                     105.4             120.2
            Share-based compensation                 156.0             177.1
            Excess tax benefits from
             share-based compensation                (16.0)           (153.3)
            Changes in operating assets
             and liabilities, net of effect
             of business combinations:
                    Receivables, net                (558.7)           (448.6)
                    Other invested
                     assets, current                 103.3              (3.0)
                    Other assets                    (340.2)            174.4
                    Policy liabilities               194.9             257.7
                    Unearned income                  (26.7)            125.5
                    Accounts payable and
                     accrued expenses               (106.3)           (235.2)
                    Other liabilities               (797.0)            176.5
                    Income taxes                     (47.3)            447.3
                    Other, net                        64.6               -
    Net cash provided by operating
     activities                                    2,535.4           4,344.6

    Investing activities
    Purchases of fixed maturity
     securities                                   (5,691.2)         (8,512.0)
    Proceeds from sales and maturities of
     fixed maturity securities                     6,864.5           8,327.4
    Purchases of equity securities                (1,327.5)         (1,389.2)
    Proceeds from sales of equity
     securities                                    1,083.1           1,411.7
    Purchases of other invested assets              (145.0)           (102.4)
    Proceeds from sales of other invested
     assets                                           32.8              10.4
    Changes in securities lending
     collateral                                      325.1              50.6
    Purchases of subsidiaries, net of
     cash acquired                                  (197.7)           (298.5)
    Proceeds from sales of subsidiaries,
     net of cash sold                                  5.0               -
    Purchases of property and equipment             (345.6)           (322.0)
    Proceeds from sales of property and
     equipment                                        12.7              57.3
    Other, net                                         -                (2.2)
    Net cash provided by (used in)
     investing activities                            616.2            (768.9)

    Financing activities
    Net (repayment of) proceeds from
     commercial paper borrowings                    (900.6)            502.8
    Net proceeds from short-term
     borrowings                                       98.0               -
    Proceeds from long-term borrowings               525.0           1,978.3
    Repayment of long-term borrowings                (38.7)           (509.7)
    Changes in securities lending payable           (325.1)            (50.6)
    Changes in bank overdrafts                        44.8            (117.1)
    Repurchase and retirement of common
     stock                                        (3,276.2)         (6,151.4)
    Proceeds from exercise of employee
     stock options and employee stock purchase
     plan                                            121.2             784.5
    Excess tax benefits from share-based
     compensation                                     16.0             153.3
    Net cash used in financing activities         (3,735.6)         (3,409.9)

    Change in cash and cash equivalents             (584.0)            165.8
    Cash and cash equivalents at
     beginning of year                             2,767.9           2,602.1
    Cash and cash equivalents at end of
     year                                         $2,183.9          $2,767.9



                               WellPoint, Inc.
                     Reconciliation of Medical Claims Payable


                                                  Year Ended December 31
    (In millions)                               2008       2007      2006


    Gross medical claims payable,
     beginning of period                    $5,788.0   $5,290.3   $4,853.4
    Ceded medical claims payable,
     beginning of period                       (60.7)     (51.0)     (27.7)
    Net medical claims payable, beginning
     of period                               5,727.3    5,239.3    4,825.7

    Business combinations and purchase
     adjustments                                 -         15.2       (6.4)

    Net incurred medical claims:
        Current year                        47,940.9   46,366.2   42,613.2
        Prior years (redundancies) (1)        (263.2)    (332.7)    (617.7)
    Total net incurred medical claims       47,677.7   46,033.5   41,995.5

    Net payments attributable to:
        Current year medical claims         42,020.7   40,765.7   37,486.0
        Prior years medical claims           5,259.9    4,795.0    4,089.5
    Total net payments                      47,280.6   45,560.7   41,575.5

    Net medical claims payable, end of
     period                                  6,124.4    5,727.3    5,239.3
    Ceded medical claims, end of period         60.3       60.7       51.0
    Gross medical claims payable, end of
     period                                 $6,184.7   $5,788.0   $5,290.3

    Current year medical claims paid as a
     percent of current year net incurred
     medical claims                             87.7%      87.9%      88.0%

    Prior year redundancies in the
     current period as a percent of prior
     year net medical claims payables less
     prior year redundancies in the current
     period                                      4.8%       6.8%      14.7%

    Prior year redundancies in the
     current period as a percent of prior year
     net incurred medical claims - as reported   0.6%       0.8%      1.9% (2)

    Prior year redundancies in the
     current period as a
        percent of prior year net
        incurred medical claims -
        adjusted for acquisitions                0.6%       0.8%      1.6% (2)

    (1) Negative amounts reported for net incurred medical claims related to
        prior years result from claims being settled for amounts less than
        originally estimated.

    (2) The reported 2006 ratio of prior year redundancies in the current
        period to prior year net incurred medical claims is impacted by having
        no net incurred medical claims for WellChoice, Inc. ("WC") in 2005, as
        WC was acquired on December 31, 2005.  The Company has provided an
        adjusted ratio in order to demonstrate this impact, which is
        calculated assuming WC had been owned for the entire year ended
        December 31, 2005.  Under this assumption, net incurred medical claims
        for the year ended December 31, 2005, would have been an estimated
        $37,676.0 million, rather than the reported $32,865.6 million.



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

The Company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), including statements in this press release, in presentations, filings with the Securities and Exchange Commission, or SEC, and reports to shareholders and in meetings with analysts and investors. The projections referenced in this press release are forward- looking and they are intended to be covered by the safe harbor for "forward- looking statements" provided by PSLRA. 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 our public filings with the SEC; increased government regulation of health benefits, managed care and pharmacy benefit management 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 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; 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 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 which 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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