On Sept. 28, 2006, Standard&Poor's Ratings Services affirmed its 'A' counterparty credit and financial strength ratings on Highmark Inc. (d/b/a Highmark BCBS&Highmark Blue Shield; Highmark). The outlook is stable. The ratings are based on the company's strong competitive position and earnings profile, increased business diversification, and very strong capitalization and liquidity. Slightly offsetting these factors, Highmark operates in a challenging regulatory environment, with regulatory restrictions on its surplus, and acts as the insurer of last resort in the western and central regions of Pennsylvania. The outlook is stable. Health insurance enrollment is expected to increase by 3%-4% for full-year 2006, with flat growth in 2007. Capital adequacy is expected to remain at about 250% for 2006
