The financial strength rating on Highmark Inc. (d/b/a Highmark BlueCross BlueShield) is based on the company's strong competitive position in its core markets, very strong balance sheet characteristics, very strong liquidity, improved operating performance in 2010, and good business and earnings diversity through the specialty products unit. Highmark's geographic concentration, the continued unprofitability of its Direct Pay (state-sponsored and guaranteed issue) products, slightly unfavorable regulations, and its status as insurer of last resort in western and central Pennsylvania slightly offset its strengths. Standard&Poor's Ratings Services revised its outlook on Highmark to stable from negative on Dec. 13. This was based primarily based on Highmark's strong operating results through Sept. 30, 2010. In addition, we believe that Highmark's credit
