WellPoint Reports Third Quarter 2010 Results

INDIANAPOLIS, Nov. 3, 2010 /PRNewswire-FirstCall/ –

– Net income was $1.84 per share, including net investment gains of $0.10
per share
– Medical enrollment totaled 33.5 million members as of September 30, 2010
– Selling, general and administrative expenses declined by $170 million
from the prior year quarter and the SG&A expense ratio declined by 30
basis points to 14.6 percent
– Full year 2010 net income is now expected to be at least $6.60 per
share, including net investment gains of $0.18 per share, partially
offset by an impairment charge of $0.03 per share

WellPoint, Inc. (NYSE: WLP) today announced that third quarter 2010 net income
was $739.1 million, or $1.84 per share, including net investment gains of $37.9
million after-tax, or approximately $0.10 per share. Net income in the third
quarter of 2009 was $730.2 million, or $1.53 per share, which included net
investment gains of $14.1 million after-tax, or $0.03 per share, and an
impairment charge totaling $134.4 million after-tax, or $0.28 per share.

Excluding the items noted above for each period, adjusted net income was $1.74
per share in the third quarter of 2010, compared with adjusted net income of
$1.78 per share in the prior-year quarter (refer to page 14 for a reconciliation
to the most directly comparable measures calculated in accordance with U.S.
generally accepted accounting principles, or “GAAP”).

“We are pleased with our third quarter performance, which exceeded our forecast
primarily due to higher than anticipated favorable reserve development and
disciplined administrative expense control. Membership was stable in the
quarter, and we continued to grow our Blue-branded businesses. Blue-branded
Commercial and Individual enrollment increased by 53,000 in the quarter and is
up 208,000 on a year-to-date basis, indicating that we continue to provide
excellent value for our customers in this difficult economy,” said Angela F.
Braly, chair, president and chief executive officer.

“As we prepare for 2011, we are projecting another year of strong growth in the
National Accounts business. We are also taking actions to further improve our
administrative efficiency and effectiveness, while delivering excellent service
and a superior customer experience, which is becoming increasingly important as
we continue to position our company for success in the changing marketplace,”
added Braly.

“Based on our overall performance, we have increased our year-end 2010
enrollment expectation by 200,000 members, and also raised full-year 2010
guidance for earnings per share to at least $6.60, or at least $6.45 on an
adjusted basis,” said Wayne S. DeVeydt, executive vice president and chief
financial officer. “We also expect to complete more than $4 billion of share
repurchases during 2010, representing a significant return of capital to our
shareholders following the sale of NextRx at the end of last year.”

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment was 33.5 million members at September 30, 2010, a
decrease of 382,000 members, or 1.1 percent, from approximately 33.9 million at
September 30, 2009. The decline occurred in the Company’s non-Blue business,
which experienced a reduction of 590,000 members, primarily due to the strategic
transfer of UniCare Individual and Group business in Texas and Illinois to
another Blue Cross & Blue Shield plan. The decline in non-Blue enrollment was
partially offset by growth of 76,000 members in Blue-branded Commercial and
Individual products, an increase of 66,000 members in the Federal Employee
Program (“FEP”), and growth of 35,000 and 31,000 members, respectively, in the
State Sponsored and Senior businesses.

Medical enrollment was stable in the third quarter of 2010, with membership in
Blue-branded Commercial and Individual businesses increasing by 53,000
sequentially, offset by continued attrition in non-Blue business. In total,
enrollment declined by 19,000 members, or 0.1 percent, from June 30, 2010.
Enrollment in both fully insured and self-funded products at September 30, 2010,
was higher than expected, and the Company has raised its year-end 2010
membership expectation to 33.3 million members, primarily due to the stabilizing
membership trends in its Commercial Business segment.

Operating Revenue: Operating revenue totaled approximately $14.3 billion in the
third quarter of 2010, a decrease of $872.6 million, or 5.7 percent, from $15.2
billion in the third quarter of 2009. The conversion of a large municipal group
to a self-funded arrangement during the second quarter of 2010 accounted for
more than 40 percent of the decline. The remaining reduction was partially
attributable to lower fully insured membership resulting from economic
conditions and the transfer of UniCare business in Texas and Illinois. Operating
revenue was also lower due to the sale of the NextRx pharmacy benefit management
subsidiaries (“NextRx”) in the fourth quarter of 2009.

Benefit Expense Ratio:The benefit expense ratio was 83.8 percent in the third
quarter of 2010, an increase of 170 basis points from 82.1 percent in the third
quarter of 2009, driven by the Senior and Individual businesses. The Senior
benefit expense ratio increased primarily due to the reduction in federal
reimbursement rates for the Medicare Advantage program in 2010. The Individual
benefit expense ratio increased primarily due to the delay in implementing rate
increases in California. The increases in Senior and Individual were partially
offset by an improvement in the benefit expense ratio for Local Group business.

During the third quarter of 2010, the Company recognized an estimated $110
million of higher than anticipated favorable reserve development, as compared to
$112 million of higher than expected favorable development that was recognized
in the same period of 2009.

Medical Cost Trends:Trends represent Local Group fully insured business.

For the full year of 2010, the Company now projects that underlying medical cost
trend will be in the range of 7.0 percent, plus or minus 50 basis points. Unit
cost increases continue to be the primary driver of overall medical cost trend,
while underlying utilization has been lower than expected in 2010.

Days in Claims Payable:Days in Claims Payable (“DCP”) as of September 30, 2010,
was 40.7 days, a decrease of 1.4 from 42.1 days as of June 30, 2010.
Approximately 0.9 days of the reduction related to the higher-than-anticipated
favorable reserve development recognized during the third quarter. The remaining
decline was driven by the conversion of large group accounts to self-funding
arrangements.

SG&A Expense Ratio: The SG&A expense ratio was 14.6 percent in the third quarter
of 2010, a decrease of 30 basis points from 14.9 percent in the third quarter of
2009. The decrease was driven by lower administrative costs, reflecting the
fourth quarter 2009 sale of NextRx and the Company’s ongoing efficiency
initiatives, partially offset by implementation costs related to health care
reform and the decline in operating revenue. Total SG&A expense declined by
$170.3 million, or 7.5 percent, relative to the third quarter of 2009.

Operating Cash Flow:Operating cash flow for the first nine months of 2010
totaled $829.7 million, and included $1.2 billion of tax payments related to the
fourth quarter 2009 sale of NextRx. Operating cash flow totaled $896.5 million
in the third quarter of 2010, or 1.2 times net income.

Share Repurchase Program: During the first nine months of 2010, the Company
repurchased 58.9 million shares of its common stock, or 13.1 percent of the
shares outstanding at December 31, 2009, for approximately $3.3 billion,
following the sale of NextRx. As of September 30, 2010, the Company’s remaining
Board-approved share repurchase authorization totaled $538.6 million. The
Company expects to utilize this authorization in the fourth quarter of 2010,
subject to market and industry conditions.

Investment Portfolio & Capital Position: During the third quarter of 2010, the
Company recorded net investment gains of $58.4 million pre-tax, consisting of
net realized gains from the sales of securities totaling $61.6 million,
partially offset by other than temporary impairments totaling $3.2 million. In
the third quarter of 2009, the Company experienced net investment gains of $21.5
million pre-tax, consisting of net realized gains from the sales of securities
totaling $52.2 million pre-tax, partially offset by other-than-temporary
impairments totaling $30.7 million. As of September 30, 2010, the Company’s net
unrealized gain position in the investment portfolio was $1.2 billion,
consisting of net unrealized gains on fixed maturity and equity securities
totaling $916.6 million and $250.9 million, respectively.

As of September 30, 2010, cash and investments at the parent company totaled
approximately $2.9 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 NextRx for the three and nine months ended September 30,
2009), 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)

Three Months Ended September
(In millions) 30
—————————–
2010 2009 Change
—- —- ——
Operating Revenue
Commercial
Business $8,512.1 $9,311.0 (8.6%)
Consumer Business 4,039.1 4,089.8 (1.2%)
Other 1,783.2 1,806.2 (1.3%)
——- ——-
Total Operating
Revenue 14,334.4 15,207.0 (5.7%)

Operating Gain
Commercial
Business $760.9 $628.0 21.2%
Consumer Business 261.7 520.0 (49.7%)
Other 17.1 133.2 (87.2%)
—- —–
Total Operating
Gain 1,039.7 1,281.2 (18.8%)

Operating Margin
Commercial
Business 8.9% 6.7% 220 bp
(620)
Consumer Business 6.5% 12.7% bp
Total Operating (110)
Margin 7.3% 8.4% bp
————— — — —–

(In millions) Nine Months Ended September 30
——————————
2010 2009 Change
—- —- ——
Operating Revenue
Commercial
Business $26,104.8 $28,018.3 (6.8%)
Consumer Business 12,044.2 12,215.7 (1.4%)
Other 5,278.6 5,537.5 (4.7%)
——- ——-
Total Operating
Revenue 43,427.6 45,771.5 (5.1%)

Operating Gain
Commercial
Business $2,485.0 $2,113.5 17.6%
Consumer Business 888.6 1,120.8 (20.7%)
Other 10.8 368.6 (97.1%)
—- —–
Total Operating
Gain 3,384.4 3,602.9 (6.1%)

Operating Margin
Commercial
Business 9.5% 7.5% 200 bp
(180)
Consumer Business 7.4% 9.2% bp
Total Operating
Margin 7.8% 7.9% (10) bp
————— — — ——-

Commercial Business: Operating gain for the Commercial Business segment was
$760.9 million in the third quarter of 2010, an increase of $132.9 million, or
21.2 percent, from $628.0 million in the third quarter of 2009. The increase was
driven by operating improvements in the Local Group business and included an
estimated $75 million of higher than anticipated favorable reserve development
recognized in the current year quarter. Approximately $64.0 million of
higher-than-anticipated favorable development was recognized in the Commercial
segment during the third quarter of 2009.

Consumer Business:Operating gain for the Consumer Business segment was $261.7
million in the third quarter of 2010, a decrease of $258.3 million, or 49.7
percent, compared with $520.0 million in the third quarter of 2009. The decline
in operating gain was driven by lower performance in the Senior and Individual
businesses. Results for the Company’s Medicare Advantage products declined as a
result of the reduction in federal reimbursement rates and lower risk score
settlement revenue in 2010. Individual business performance decreased due to the
delay in implementing rate increases in California and the recognition of a
premium credit to be issued to certain policyholders in Colorado during the
fourth quarter of 2010.

During the third quarter of 2010, the Company recognized an estimated $35
million of higher-than-anticipated reserve development in the Consumer segment,
compared with approximately $48.0 million of higher-than-anticipated favorable
development that was recognized in the prior year quarter.

Other:Operating gain in the Other segment declined by $116.1 million, or 87.2
percent, compared with the third quarter of 2009, due to the sale of NextRx in
the fourth quarter of 2009.

OUTLOOK

Full Year 2010:

– Net income is now expected to be at least $6.60 per share, including net
investment gains of approximately $0.18 per share recorded during the
first three quarters of 2010, partially offset by the first quarter
intangible asset impairment charge of $0.03 per share. This outlook
includes no net investment gains or losses or asset impairment charges
beyond those recorded during the first three quarters of 2010.
– Year-end medical enrollment is now expected to be 33.3 million,
consisting of 19.6 million self-funded members and 13.7 million fully
insured members.
– Operating revenue is expected to total approximately $58.0 billion.
– The benefit expense ratio is now expected to be approximately 83.7
percent.
– The SG&A expense ratio is now expected to be approximately 14.9 percent.
– Operating cash flowis expected to exceed $1.2 billion, including the
unfavorable impact of the $1.2 billion of first quarter tax payments
related to the prior year sale of the NextRx subsidiaries.

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.
Consolidated operating margin is a non-GAAP measure.
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 7:30 a.m. Eastern
Daylight Time (“EDT”) to discuss its third 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:

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

An access code is not required for today’s conference call. The access code for
the replay is 123547. The replay will be available from 11 a.m. EDT today until
the end of the day on Nov. 17, 2010. 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 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 more than 33 million members in
its affiliated health plans, and a total of more than 70 million individuals
served through all subsidiaries. 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.), and Wisconsin. In a majority of these service areas,
WellPoint does business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield
or Empire Blue Cross Blue Shield (in the New York service areas). WellPoint also
serves customers throughout much of the country as UniCare. Additional
information about WellPoint is available at www.wellpoint.com.

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

Change from
———–
September December September December September
30, 31, 30, 31, 30,
Medical
Membership 2010 2009 2009 2009 2009
———– —- —- —- —- —-
Customer
Type
Local Group 15,171 15,643 15,717 (3.0%) (3.5%)

National
Accounts 7,091 6,813 6,857 4.1% 3.4%
BlueCard 4,783 4,744 4,779 0.8% 0.1%
—– —– —–
Total
National 11,874 11,557 11,636 2.7% 2.0%

Individual 1,967 2,131 2,173 (7.7%) (9.5%)
Senior 1,256 1,215 1,225 3.4% 2.5%
State
Sponsored 1,752 1,733 1,717 1.1% 2.0%
FEP 1,453 1,391 1,387 4.5% 4.8%
Total
Medical
Membership 33,473 33,670 33,855 (0.6%) (1.1%)
====== ====== ======

Funding
Arrangement
Self-Funded 19,650 18,236 18,316 7.8% 7.3%
Fully-
Insured 13,823 15,434 15,539 (10.4%) (11.0%)
—— —— ——
Total
Medical
Membership 33,473 33,670 33,855 (0.6%) (1.1%)
====== ====== ======

Reportable
Segment
Commercial 27,050 27,356 27,530 (1.1%) (1.7%)
Consumer 4,970 4,923 4,938 1.0% 0.6%
Other 1,453 1,391 1,387 4.5% 4.8%
Total
Medical
Membership 33,473 33,670 33,855 (0.6%) (1.1%)
====== ====== ======

Other
Membership
———–
Behavioral
Health
Membership 23,776 22,965 22,883 3.5% 3.9%
Life and
Disability
Membership 5,152 5,393 5,425 (4.5%) (5.0%)
Dental
Membership 4,028 4,284 4,322 (6.0%) (6.8%)
Managed
Dental
Membership 4,280 3,949 3,953 8.4% 8.3%
Vision
Membership 3,475 3,088 3,037 12.5% 14.4%
Medicare
Part D
Membership 1,234 1,509 1,633 (18.2%) (24.4%)

WellPoint, Inc.
Consolidated Statements of Income
(Unaudited)

Three Months Ended
(In millions, except per share
data) September 30
————
2010 2009 Change
—- —- ——
Revenues
Premiums $13,366.7 $14,070.7 (5.0%)
Administrative fees 963.1 969.1 (0.6%)
Other revenue 4.6 167.2 (97.2%)
— —–
Total operating revenue 14,334.4 15,207.0 (5.7%)

Net investment income 205.4 196.6 4.5%
Net realized gains on
investments 61.6 52.2 18.0%

Other-than-temporary
impairment losses on
investments:
Total other-than-temporary
impairment losses on
investments (10.4) (69.1) 84.9%
Portion of other-than-
temporary impairment losses
recognized in
other comprehensive income 7.2 38.4 (81.3%)
— —-
Other-than-temporary
impairment losses recognized in
income (3.2) (30.7) 89.6%
—- —–

Total revenues 14,598.2 15,425.1 (5.4%)

Expenses
Benefit expense 11,204.7 11,552.8 (3.0%)
Selling, general and
administrative expense
Selling expense 400.7 420.6 (4.7%)
General and administrative
expense 1,689.3 1,839.7 (8.2%)
——- ——-
Total selling, general and
administrative expense 2,090.0 2,260.3 (7.5%)
Cost of drugs – 112.7 (100.0%)
Interest expense 106.3 110.6 (3.9%)
Amortization of other intangible
assets 60.4 66.0 (8.5%)
Impairment of other intangible
assets – 205.5 (100.0%)
— —–
Total expenses 13,461.4 14,307.9 (5.9%)

Income before income taxes 1,136.8 1,117.2 1.8%

Income tax expense 397.7 387.0 2.8%
—– —–

Net income $739.1 $730.2 1.2%
====== ======

Net income per diluted share $1.84 $1.53 20.3%
===== =====

Diluted shares 402.2 476.8 (15.6%)

Benefit expense as a percentage
of premiums 83.8% 82.1% 170 bp
Selling, general and
administrative expense as a
percentage of total operating
revenue 14.6% 14.9% (30) bp
Income before income tax expense
as a percentage of
total revenues 7.8% 7.2% 60 bp

WellPoint, Inc.
Consolidated Statements of Income
(Unaudited)

Nine Months Ended
(In millions, except per share
data) September 30
————
2010 2009 Change
—- —- ——
Revenues
Premiums $40,533.7 $42,397.2 (4.4%)
Administrative fees 2,865.1 2,887.4 (0.8%)
Other revenue 28.8 486.9 (94.1%)
—- —–
Total operating revenue 43,427.6 45,771.5 (5.1%)

Net investment income 608.8 599.4 1.6%
Net realized gains on
investments 146.5 20.4 NM (1)

Other-than-temporary
impairment losses on
investments:
Total other-than-temporary
impairment losses on
investments (53.2) (481.9) 89.0%
Portion of other-than-
temporary impairment losses
recognized in
other comprehensive income 24.2 72.2 (66.5%)
—- —-
Other-than-temporary
impairment losses recognized in
income (29.0) (409.7) 92.9%
—– ——

Total revenues 44,153.9 45,981.6 (4.0%)

Expenses
Benefit expense 33,571.1 35,127.1 (4.4%)
Selling, general and
administrative expense
Selling expense 1,206.2 1,273.8 (5.3%)
General and administrative
expense 5,265.9 5,421.3 (2.9%)
——- ——-
Total selling, general and
administrative expense 6,472.1 6,695.1 (3.3%)
Cost of drugs – 346.4 (100.0%)
Interest expense 305.9 343.7 (11.0%)
Amortization of other intangible
assets 182.0 200.5 (9.2%)
Impairment of other intangible
assets 21.1 205.5 (89.7%)
—- —–
Total expenses 40,552.2 42,918.3 (5.5%)

Income before income taxes 3,601.7 3,063.3 17.6%

Income tax expense 1,263.4 1,059.2 19.3%
——- ——-

Net income $2,338.3 $2,004.1 16.7%
======== ========

Net income per diluted share $5.52 $4.12 34.0%
===== =====

Diluted shares 423.4 487.0 (13.1%)

Benefit expense as a percentage
of premiums 82.8% 82.9% (10) bp
Selling, general and
administrative expense as a
percentage of total operating
revenue 14.9% 14.6% 30 bp
Income before income tax expense
as a percentage of
total revenues 8.2% 6.7% 150 bp

(1) “NM” = not meaningful

WellPoint, Inc.
Consolidated Balance Sheets

September 30, December 31,
(In millions) 2010 2009
————– ————-
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $2,246.2 $4,816.1
Investments available-for-sale,
at fair value:
Fixed maturity securities 16,733.9 15,696.9
Equity securities 1,072.9 1,010.7
Other invested assets, current 17.3 26.5
Accrued investment income 177.6 172.8
Premium and self-funded
receivables 3,176.4 3,281.0
Other receivables 908.4 879.5
Securities lending collateral 893.6 394.8
Deferred tax assets, net 416.0 523.8
Other current assets 1,297.1 1,268.6
——- ——-
Total current assets 26,939.4 28,070.7

Long-term investments available-
for-sale, at fair value:
Fixed maturity securities 231.9 230.4
Equity securities 32.3 32.5
Other invested assets, long-term 845.1 775.3
Property and equipment, net 1,206.7 1,099.6
Goodwill 13,265.4 13,264.6
Other intangible assets 8,056.5 8,259.3
Other noncurrent assets 455.1 393.0
—– —–
Total assets $51,032.4 $52,125.4
========= =========
Liabilities and shareholders’
equity
Liabilities
Current liabilities:
Policy liabilities:
Medical claims payable $4,956.3 $5,450.5
Reserves for future policy
benefits 57.9 62.6
Other policyholder liabilities 1,705.1 1,617.6
——- ——-
Total policy liabilities 6,719.3 7,130.7
Unearned income 989.4 1,050.0
Accounts payable and accrued
expenses 2,752.7 2,994.1
Income taxes payable 62.1 1,228.7
Security trades pending payable 264.0 37.6
Securities lending payable 894.9 396.6
Short-term borrowings 100.0 -
Current portion of long-term debt 706.5 60.8
Other current liabilities 1,652.6 1,775.2
——- ——-
Total current liabilities 14,141.5 14,673.7

Long-term debt, less current
portion 8,217.2 8,338.3
Reserves for future policy
benefits, noncurrent 653.8 664.6
Deferred tax liability, net 2,621.6 2,470.4
Other noncurrent liabilities 1,036.6 1,115.1
——- ——-
Total liabilities 26,670.7 27,262.1
Shareholders’ equity
Common stock 4.0 4.5
Additional paid-in capital 13,403.5 15,192.2
Retained earnings 10,581.8 9,598.5
Accumulated other comprehensive
income 372.4 68.1
—– —-
Total shareholders’ equity 24,361.7 24,863.3
——– ——–
Total liabilities and
shareholders’ equity $51,032.4 $52,125.4
========= =========

WellPoint, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended
September 30
—————–
(In millions) 2010 2009
—- —-

Operating activities
Net income $2,338.3 $2,004.1
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Net realized gains on
investments (146.5) (20.4)
Other-than-temporary
impairment losses recognized in
income 29.0 409.7
Loss on disposal of assets 1.3 9.0
Deferred income taxes 111.0 (7.7)
Amortization, net of accretion 364.3 337.7
Depreciation expense 78.2 78.7
Impairment of other intangible
assets 21.1 205.5
Share-based compensation 96.6 115.7
Excess tax benefits from share-
based compensation (25.1) (5.3)
Changes in operating assets and
liabilities, net of
effect of business combinations:
Receivables, net (22.8) (127.4)
Other invested assets 8.9 (39.0)
Other assets (89.9) 9.4
Policy liabilities (422.3) (492.7)
Unearned income (60.6) 10.3
Accounts payable and accrued
expenses (152.4) 243.6
Other liabilities (116.6) 18.0
Income taxes (1,143.9) 255.7
Other, net (38.9) 4.3
—– —
Net cash provided by operating
activities 829.7 3,009.2

Investing activities
Purchases of fixed maturity
securities (8,212.6) (5,331.1)
Proceeds from sales and
maturities of fixed maturity
securities 7,997.3 4,145.9
Purchases of equity securities (191.9) (195.0)
Proceeds from sales of equity
securities 157.1 453.3
Purchases of other invested
assets (67.9) (36.9)
Proceeds from sales of other
invested assets 25.4 2.4
Changes in securities lending
collateral (498.3) 142.3
Purchases of subsidiaries, net
of cash acquired (0.2) (66.3)
Purchases of property and
equipment (333.6) (272.3)
Proceeds from sales of property
and equipment 6.0 0.4
Other, net (50.2) (3.2)
—–
Net cash used in investing
activities (1,168.9) (1,160.5)

Financing activities
Net repayment of commercial
paper borrowings (109.5) (356.6)
Net proceeds from short-term
borrowings 100.0 2.0
Proceeds from long-term
borrowings 1,088.5 990.3
Repayment of long-term
borrowings (480.0) (602.9)
Changes in securities lending
payable 498.3 (142.3)
Changes in bank overdrafts (123.0) (354.6)
Repurchase and retirement of
common stock (3,345.1) (1,811.4)
Proceeds from exercise of
employee stock options and
employee stock purchase plan 116.2 77.6
Excess tax benefits from share-
based compensation 25.1 5.3
Net cash used in financing
activities (2,229.5) (2,192.6)
——– ——–

Effects of foreign currency
exchange rate changes on cash
and cash equivalents (1.2) 2.2
—- —

Change in cash and cash
equivalents (2,569.9) (341.7)
Cash and cash equivalents at
beginning of period 4,816.1 2,183.9
——- ——-
Cash and cash equivalents at end
of period $2,246.2 $1,842.2
======== ========

WellPoint, Inc.
Reconciliation of Medical Claims Payable

Nine Months Ended
September 30
—————–
(In millions) 2010 2009
—- —-
(Unaudited)

Gross medical claims payable,
beginning of period $5,450.5 $6,184.7
Ceded medical claims payable,
beginning of period (29.9) (60.3)
—– —–
Net medical claims payable,
beginning of period 5,420.6 6,124.4

Business combinations and purchase
adjustments – 2.8

Net incurred medical claims:
Current year 33,834.5 35,422.9
Prior years (redundancies) (1) (704.8) (751.9)
—— ——
Total net incurred medical claims 33,129.7 34,671.0

Net payments attributable to:
Current year medical claims 29,137.6 30,093.0
Prior years medical claims 4,486.9 5,007.3
——- ——-
Total net payments 33,624.5 35,100.3

Net medical claims payable, end of
period 4,925.8 5,697.9
Ceded medical claims, end of period 30.5 65.3
—- —-
Gross medical claims payable, end of
period $4,956.3 $5,763.2
======== ========

Current year medical claims paid as
a percent of
current year net incurred medical
claims 86.1% 85.0%

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 14.9% 14.0%

Prior year redundancies in the
current period as a
percent of prior year net incurred
medical claims 1.5% 1.6%

Years Ended December 31
———————–
(In millions) 2009 2008 2007
—- —- —-

Gross medical claims payable,
beginning of period $6,184.7 $5,788.0 $5,290.3
Ceded medical claims payable,
beginning of period (60.3) (60.7) (51.0)
—– —– —–
Net medical claims payable,
beginning of period 6,124.4 5,727.3 5,239.3

Business combinations and purchase
adjustments 2.8 – 15.2

Net incurred medical claims:
Current year 47,315.1 47,940.9 46,366.2
Prior years (redundancies) (1) (807.2) (263.2) (332.7)
—— —— ——
Total net incurred medical claims 46,507.9 47,677.7 46,033.5

Net payments attributable to:
Current year medical claims 42,056.9 42,020.7 40,765.7
Prior years medical claims 5,157.6 5,259.9 4,795.0
——- ——- ——-
Total net payments 47,214.5 47,280.6 45,560.7

Net medical claims payable, end of
period 5,420.6 6,124.4 5,727.3
Ceded medical claims, end of period 29.9 60.3 60.7
—- —- —-
Gross medical claims payable, end of
period $5,450.5 $6,184.7 $5,788.0
======== ======== ========

Current year medical claims paid as
a percent of
current year net incurred medical
claims 88.9% 87.7% 87.9%

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 15.2% 4.8% 6.8%

Prior year redundancies in the
current period as a
percent of prior year net incurred
medical claims 1.7% 0.6% 0.8%

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

WellPoint, Inc.
GAAP Reconciliation
(Unaudited)

WellPoint, Inc. has referenced “Adjusted Net Income” and “Adjusted Net
Income Per Share,” non-GAAP financial measures, in this document.
These non-GAAP financial measures are not intended to be
alternatives to any measure calculated in accordance with GAAP.
Rather, these non-GAAP financial measures are intended to aid
investors when comparing WellPoint, Inc.’s financial results among
periods. A reconciliation of these measures to the most directly
comparable measures calculated in accordance with GAAP is presented
below.

(In millions, except
per share data) Three Months Ended
——————
September 30, September 30,
2010 2009 Change
————– ————– ——

Net income $739.1 $730.2 1.2%
Add (net of tax):
Impairment of other
intangible assets,
net of $71.1 million
of tax benefits – 134.4
Subtract (net of tax):
Net investment gains,
net of tax expense
totaling $20.5
million and $7.4
million, respectively (37.9) (14.1)
Net adjustment items (37.9) 120.3
—– —–

Adjusted net income $701.2 $850.5 (17.6%)
====== ======

Diluted shares 402.2 476.8 (15.6%)

Net income per diluted
share $1.84 $1.53 20.3%
Adjusted net income
per diluted share $1.74 $1.78 (2.2%)

Nine Months Ended
—————–
September 30, September 30,
2010 2009 Change
————– ————– ——

Net income $2,338.3 $2,004.1 16.7%
Add (net of tax):
Net investment losses,
net of $137.0 million
of tax benefits – 252.3
Impairment of other
intangible assets,
net of tax benefits
totaling $7.4 million
and $71.1 million,
respectively 13.7 134.4
Subtract (net of tax):
Net investment gains,
net of $41.4 million
of tax expense (76.1) -
—– —
Net adjustment items (62.4) 386.7
—– —–

Adjusted net income $2,275.9 $2,390.8 (4.8%)
======== ========

Diluted shares 423.4 487.0 (13.1%)

Net income per diluted
share $5.52 $4.12 34.0%
Adjusted net income
per diluted share $5.38 $4.91 9.6%

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

WellPoint 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, in filings with the Securities and Exchange
Commission, or SEC, in 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
participation in, or regulation or taxation of health benefits and managed care
operations, including, but not limited to, the impact of the Patient Protection
and Affordable Care Act and the Health Care and Education Reconciliation Act of
2010; trends in health care costs and utilization rates; our ability to secure
sufficient premium rates including regulatory approval for and implementation of
such rates; 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 Medicare and Medicaid programs, including those
related to non-compliance with the complex regulations imposed thereon and
funding risks with respect to revenue received from participation therein; 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, increased
operating costs and potential customer and supplier losses and business
disruptions that may be greater than expected following the close of the Express
Scripts transaction; 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; possible restrictions in the payment of dividends by
our subsidiaries and increases in required minimum levels of capital and the
potential negative effect 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 public health epidemics and catastrophes; 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.