On Oct. 29, 2007, Standard&Poor's affirmed its 'A' counterparty credit and financial strength ratings on Highmark Inc., which does business as Highmark BCBS&Highmark Blue Shield (Highmark). The outlook remains stable. The ratings are based on the company's strong competitive position, particularly in its core markets of Western and Central Pennsylvania, and its strong earnings profile, improving business diversification, very strong capitalization, and strong liquidity and financial flexibility. Slightly offsetting these positive factors, earnings have been lower than expectations through the first two quarters of 2007, driven by higher-than-expected medical costs, particularly in Western Pennsylvania. Highmark operates in a highly competitive health insurance market where organic growth opportunities are limited and intense price competition for existing business
