A.M. Best Affirms Ratings of Blue Cross and Blue Shield of Florida, Inc.; Revises Outlook to Positive for Capital Health Plan

Business Wire, May 4, 2007

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a " of Blue Cross and Blue Shield of Florida, Inc. (BCBSF) and its wholly owned subsidiary, Health Options, Inc. (HOI) (both of Jacksonville, FL). A.M. Best has also affirmed the debt rating of "a-" of $149 million 8.25% surplus notes, due 2011 for BCBSF. The outlook for the aforementioned ratings is stable.

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of "a-" of Capital Health Plan, Inc. (CHP) (Tallahassee, FL). The outlook has been revised to positive from stable.

BCBSF is the largest health insurance company by a considerable margin in Florida, providing coverage to almost one-third of that market. The organization's strong revenue growth reflects high retention levels, new membership sales and high brand name recognition. BCBSF has further sharpened its business development strategy, aligning its value with customer needs and targeting certain geographies in order to selectively grow in preferred markets. The company has also taken targeted strategic pricing actions in order to solidify its competitive stance. BCBSF's historically favorable operating results have contributed to its strong growth in capital and surplus, raising its risk-based capital measures to the top quartile of the health insurance industry for companies of similar size and scope. The organization maintains a very favorable interest coverage ratio and a low debt-to-capitalization level on its outstanding debt.

However, BCBSF, like its industry peers, is faced with medical cost increases that outpace the growth in wages and inflation, driving the need for continued focus on delivering affordable solutions for members and the underserved. In order to meet the growing demands of the senior market, BCBSF created a Senior Strategic Business Unit as a vehicle with which to set acceptable standards for product quality, provider services and pricing levels.

CHP has exhibited consistent revenue growth and strong capital development, and its affiliation with BCBSF provides access to new product designs. CHP's operating performance achieved a high level of reliability while underwriting results fluctuate moderately. The company accumulated the large majority of its capital and surplus over the past five years.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.