Greater Georgia Life Insurance Co. Ratings Raised to 'A'; Outlook Stable

Business Wire, June 30, 2004

NEW YORK -- Credit Rating:A/Stable/--

On June 30, 2004, Standard & Poor's Ratings Services raised its counterparty credit and financial strength ratings on Greater Georgia Life Insurance Co. (GGL) to 'A' from 'A-'.

The outlook is stable.

The upgrade on GGL, a wholly owned subsidiary of Blue Cross & Blue Shield of Georgia (BCBSGA; A /Stable/--), and an indirect wholly owned subsidiary of WellPoint Health Networks Inc. (WellPoint; A-/WatchNeg/A-2), is based on improved operating performance and the company's continued strategic importance in providing group and voluntary life and disability products in conjunction with BCBSGA health plan sales.

Outlook

In 2004, GGL's extremely strong characteristics will be somewhat offset by operating volatility because of a relatively small amount of life insurance in force. GGL is expected to maintain reasonable sales growth among small businesses in Georgia, especially when sold in conjunction with BCBSGA's portfolio of health benefits. GGL's revenue growth is expected to keep pace with the top-line growth of the holding companies at between 15%-20% in 2004. Although Anthem Inc. is expected to complete its acquisition of WellPoint in mid-2004, GGL will likely operate autonomously for the next 12-18 months. GGL's capital will remain extremely strong, with a capital adequacy ratio (CAR) of more than 300%, but earnings could be volatile due to reduced investment income from realized gains in 2003.

Major Rating Factors

--Link to health insurance market leader. BCBSGA is the leading health insurer in Georgia, with about 43% of the total private market, which is significant compared with its competitors. UnitedHealth Group Inc. (United), Aetna Inc., Cigna Corp., and Kaiser Foundation Health Plan Inc. (Kaiser) maintained market share of 11%, 8%, 7%, and 6%, respectively, in Georgia. In addition, the plan is the only health insurer with representation in all Georgia markets. Membership has grown at a healthy pace, reaching 2.5 million (2.9 million including BlueCard members) as of December 2003 from 1.7 million in 1999. As an independent licensee of the Blue Cross and Blue Shield Assoc., BCBSGA uses its strong brand name and value in products and services to maintain its position as a market leader in Georgia. GGL also has a strong name and reputation among local agents in Georgia.

--Extremely strong capitalization. GGL's capitalization is extremely strong at 334% as of year-end 2003. The parent, BCBSGA, remained capitalized at a level considered very strong based on a Standard & Poor's CAR of 153% at year-end 2003 and 2002. As such, both entities maintain capital above their current rating level.

--Good earnings. GGL has a strong history of earnings based on an earnings adequacy ratio of more than 360% for the five years ended Dec. 31, 2003, despite historical earnings volatility. On a GAAP basis, pretax income for the year ended 2003 was $7.6 million compared with $4.7 million and negative $3.1 million in 2002 and 2001, respectively. Pretax earnings in 2001 were hurt by a $2.8 million reserve associated with a structured settlement.

--Moderately aggressive investment strategy. BCBSGA has good quality, well-diversified investments, and continues to have a moderately aggressive investment strategy centered on bonds classified as either NAIC 1 or 2, U.S. government securities and short-term investments, respectively.

--Increasing competition. Despite BCBSGA's leading position, the company faces increasing competition from a variety of national and regional carriers. WellPoint's Specialty Products division underwrites group life insurance for more than 1.7 members, ranking it as the 19th-largest writer in the country. This position illustrates the exposure GGL's market has to overlap from other national insurers with greater product breadth. This competition reflects Georgia's robust economy (especially in the Atlanta region), industry consolidation, and tighter relationships between insurance carriers and providers. These pressures are somewhat offset, however, by the increased willingness of both insured members and employers to pay higher premiums for health benefits.

--Strong operating performance of parent and sister companies within the group. Blue Cross Blue Shield Health Care Plan of Georgia Inc. (BCBSHC) is a core company in the overall strategy of the BCBSGA group (comprising BCBSGA, BCBSHC, and GGL) and has a strong business position, very strong liquidity, and good capitalization. GGL has strong operating performance and capitalization, strategic importance to BCBSGA, and support from BCBSGA.

Ratings List

                                               To          From

Greater Georgia Life Insurance Co.

  Counterparty credit rating                 A/Stable/-- A-/Stable/--

  Financial strength rating                  A/Stable    A-/Stable

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find Ratings, then Credit Ratings Search.