For 70 years, CareFirst BlueCross BlueShield has served our members with one unwavering principle: our mission is your health.

CareFirst, Inc. faced a year of dramatic change in 2004, and we’re proud that our strong performance and innovative programs demonstrated steadfast commitment to our more than 3.3 million members. Through our affiliate Blues Plans — Group Hospitalization and Medical Services, CareFirst of Maryland and Blue Cross Blue Shield of Delaware — we remain focused on providing effective, high-quality and reliable health insurance.

During a year of accomplishment:

• Fourteen new directors joined CareFirst and affiliate boards. Together, the CareFirst, Inc. Board created the Mission Oversight Committee to foster our not-for-profit mission.
• CareFirst achieved our strongest ever financial performance, through reduced expenses, increased sales and improved care costs.
• CareFirst worked to keep health insurance affordable and available by developing health plans to control costs and meet members’ diverse needs.
• We harnessed the promise of the Internet by introducing quick, convenient ways for members and providers to communicate with us.
• CareFirst and its affiliate companies voluntarily adopted certain principles of the federal Sarbanes-Oxley law to proactively ensure high governance standards.

Also in 2004, the Mission Oversight Committee developed CareFirst Commitment, a $92-million plan advancing our not-for-profit mission. During 2005, we will:

• Help moderate premiums by forgoing $60 million in projected earnings.
• Invest $3.5 million to improve health care quality and safety.
• Respond to the special health needs of underserved ethnic and community groups.
• Commit $2.6 million — 2% of our net operating income — to charitable giving.

CareFirst strives in many ways to serve our members. For example, CareEssentials is our comprehensive disease and care management program that starts with prevention, and if members face serious illness, provides one-on-one guidance.

For the seventh consecutive year, a CareFirst affiliate has won a Brand Excellence Award from the national Blue Cross and Blue Shield Association — recognizing service and business performance.

This report describes how CareFirst is working to ensure that health care is delivered compassionately and efficiently, continuing a tradition that has earned us the trust of generations.