1156039--2/19/2009--WELLPOINT

related topics

{regulation, government, change}

{system, service, information}

{capital, credit, financial}

{debt, indebtedness, cash}

{tax, income, asset}

{loan, real, estate}

{condition, economic, financial}

{operation, international, foreign}

{regulation, change, law}

{acquisition, growth, future}

{provision, law, control}

{product, market, service}

{personnel, key, retain}

{financial, litigation, operation}

Changes in state and federal regulations, or the application thereof, may adversely affect our business, financial condition and results of operations. Our inability to contain health care costs, implement increases in premium rates on a timely basis, maintain adequate reserves for policy benefits, maintain our current provider agreements or avoid a downgrade in our ratings may adversely affect our business and profitability. A reduction in the enrollment in our health benefits programs could have an adverse effect on our business and profitability. There are risks associated with contracting with The Centers for Medicare Medicaid Services, or CMS, to provide Medicare Part C and Medicare Part D Prescription Drug benefits. As a participant in Medicare and Medicaid programs, we are subject to complex regulations. If we fail to comply with these regulations, we may be exposed to sanctions and significant penalties. We are subject to funding risks with respect to revenue received from participation in Medicare and Medicaid programs. The value of our investments is influenced by varying economic and market conditions, and a decrease in value may result in a loss charged to income. Adverse securities and credit market conditions may significantly affect our ability to meet liquidity needs. Regional concentrations of our business may subject us to economic downturns in those regions. The health benefits industry is subject to negative publicity, which can adversely affect our business and profitability. We face competition in many of our markets and customers and brokers have flexibility in moving between competitors. A change in our health care product mix may impact our profitability. Our PBM companies operate in an industry faced with a number of risks and uncertainties in addition to those we face with our core health care business. As a holding company, we are dependent on dividends from our subsidiaries. Our regulated subsidiaries are subject to state regulations, including restrictions on the payment of dividends, maintenance of minimum levels of capital and restrictions on investment portfolios. We face risks related to litigation. We are a party to license agreements with the BCBSA that entitle us to the exclusive and in certain areas non-exclusive use of the Blue Cross and Blue Shield names and marks in our geographic territories. The termination of these license agreements or changes in the terms and conditions of these license agreements could adversely affect our business, financial condition and results of operations. Large-scale medical emergencies may have a material adverse effect on our business, financial condition and results of operations. We have built a significant portion of our current business through mergers and acquisitions and we expect to pursue acquisitions in the future. We have substantial indebtedness outstanding and may incur additional indebtedness in the future. As a holding company, we are not able to repay our indebtedness except through dividends from subsidiaries, some of which are restricted in their ability to pay such dividends under applicable insurance law and undertakings. Such indebtedness could also adversely affect our ability to pursue desirable business opportunities. The value of our intangible assets may become impaired. We may not be able to realize the value of our deferred tax assets. We face intense competition to attract and retain employees. An unauthorized disclosure of sensitive or confidential member information could have an adverse effect on our business, reputation and profitability. The failure to effectively maintain and upgrade our information systems could adversely affect our business. We are dependent on the success of our relationship with a large vendor for a significant portion of our information system resources and certain other vendors for various other services. Indiana law, and other applicable laws, and our articles of incorporation and bylaws, may prevent or discourage takeovers and business combinations that our shareholders might consider in their best interest. We also face other risks that could adversely affect our business, financial condition or results of operations, which include:

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1156039--2/19/2009--WELLPOINT_INC