Financial Summary:

CareFirst turned in its strongest financial performance to date in 2004, with revenues of $4.98 billion*, up from $4.64 billion the year before. Our membership has reached a record 3.3 million, an indication of our continuing strength.

Net income was $140.5 million in 2004, compared to $171.3 million the year before, reflecting the pressures facing the health insurance industry. CareFirst’s net worth grew to $1.2 billion in 2004, reflecting financial stability that ensures that CareFirst will be there for our customers when they need us most.

* Beginning in 2004, CareFirst revenue does not include claims from self-insuring groups, in keeping with current accounting procedures. These funds, totaling $2.9 billion during 2004, previously were included in total revenue.
Results from prior years were also restated.

CareFirst 2004 Highlights:

Continued investments in technology led to the launch of the Unified Service System designed to enhance customer service efficiency and satisfaction. The results were strong:

• We handled over 41.7 million claims and processed over 99 percent within 30 days.
• Our customer service department handled almost 10 million calls during 2004.

A new subsidiary company was created for CareFirst to manage the FEP operations center in Washington, D.C. The FEP Operations Center:

• Processes 150 million claims per year
• Handles centralized enrollment processing for 4.5 million federal employees.

CareFirst and its affiliate companies voluntarily adopted principles of the federal Sarbanes-Oxley law to proactively ensure high governance standards.

CareFirst acquired The Dental Network, providing Maryland members with more dental coverage options.

CareFirst contracted with Davis Vision, a nationally recognized provider of vision services, to offer members a regional vision provider network and enhanced products.

National Claims Administrative Services, a CareFirst subsidiary, provided health care claims processing, data management and other administrative services to more than 200 self-insured, large group accounts and some 200,000 members nationally.