The insurer financial strength rating on Highmark Inc. (d/b/a Highmark BCBS and PA Blue Shield) (Highmark) is based on extremely strong capitalization, strong business profile, and strong, but prospectively diminished earnings resulting from Highmark's effort to retain its dominant market share in its primary operating regions. The rating also reflects uncertainties related to the termination of a joint operating agreement with Capital Blue Cross (CBC) in the central Pennsylvania region. This agreement, which terminated on April 1, 2002, served about 1.2 million members. Highmark's current business profile and earnings are adversely affected by this termination. In addition, future capitalization may be adversely affected by the termination of the agreement. Extremely strong capitalization. Highmark's capital adequacy ratio as measured by Standard
