On March 28, 2007, Standard&Poor's Ratings Services affirmed its 'A' counterparty credit and financial strength ratings on Highmark Inc., which does business as Highmark Blue Cross Blue Shield and Highmark Blue Shield. The outlook remains stable. The affirmation follows the announcement that Highmark Inc. and Independence Blue Cross (IBC) have agreed to merge. The ratings on Highmark are based on its strong competitive position and earnings profile, improving business diversification, and very strong capitalization and liquidity. Slightly offsetting these positive factors, the ratings are constrained by Highmark's challenging regulatory environment, with regulatory restrictions on its surplus, and the integration risks associated with the merger. Highmark is the largest health insurer in Pennsylvania and West Virginia, with 4.6 million
