Anthem Blue Cross 2001 Annual Report Download - page 28

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Operating gain increased $25.0 million, or 24%, primarily due to improved underwriting results in Small
Group and Local Large Group businesses, exiting the Medicare + Choice market in Connecticut, and
higher overall membership. Operating margin decreased 10 basis points primarily due to the relatively lower
margins on our Maine business.
Membership increased 167,000, or 8%, primarily in Local Large Group and BlueCard businesses.
On January 17, 2002, a subsidiary of Anthem Insurance, Anthem Health Plans of Maine, Inc., signed a
stock purchase agreement to purchase the remaining 50% ownership interest in Maine Partners Health
Plan, Inc. for an aggregate purchase price of $10.6 million. Subject to the terms and conditions of the
agreement, the transaction is expected to close in the first quarter of 2002.
West
Our West segment is comprised of health benefit and related business for members in Colorado and
Nevada. The following table presents our West segment’s summarized results of operations for the years
ended December 31, 2001 and 2000:
($ in Millions) 2001 2000 % Change
Operating Revenue $ 774.4 $ 622.4 24%0
Operating Gain $ 20.1 $ 2.5 704%0
Operating Margin 2.6% 0.4% 220 bp
Membership (in 000s) 769 595 29%0
Operating revenue increased $152.0 million, or 24%, primarily due to higher premium rates designed to
bring our pricing in line with cost of care and higher membership in National and both Local Large Group
and Small Group businesses.
Operating gain increased $17.6 million, to $20.1 million in 2001, primarily due to improved underwriting
performance as a result of premium rate increases exceeding cost of care increases and higher average
membership, particularly in our Local Large Group business. This improvement in our operating gain
resulted in a 220 basis point increase in operating margin to 2.6% in 2001.
Membership increased 174,000, or 29%, to 769,000, due to increased BlueCard activity and higher sales in
Local Large Group and Small Group businesses. We exited the Medicare + Choice market in Colorado
effective January 1, 2002. At December 31, 2001, our Medicare + Choice membership in Colorado was
approximately 6,000. We expect no material effect on operating results from exiting this market.
We entered into an agreement with Sloan’s Lake HMO in Colorado for the conversion of Sloan’s Lake
HMO business effective January 1, 2001. The terms of the agreement include payment to Sloan’s Lake for
each member selecting our product at the group’s renewal date and continuing as our member for a
minimum of nine months. Through December 31, 2001, we added approximately 35,000 members from
Sloan’s Lake.
Specialty
Our Specialty segment includes our group life and disability, pharmacy benefit management, dental and
vision administration services, and third party occupational health services. The following table presents our
Specialty segment’s summarized results of operations for the years ended December 31, 2001 and 2000:
($ in Millions) 2001 2000 % Change
Operating Revenue $ 396.1 $ 332.3 19%0
Operating Gain $ 32.9 $ 24.9 32%0
Operating Margin 8.3% 7.5% 80 bp
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