S&P Affirms BCBS of Florida `A+' Rtgs; Outlook Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

Nov. 10, 2000-- Standard & Poor's today affirmed its single-'A'-plus counterparty credit and financial strength ratings on Blue Cross & Blue Shield of Florida Inc. (BCBSF). The outlook is stable.

Major Rating Factors:

-- Strong market position. BCBSF is the largest writer of health insurance in
Florida, with 2.7 million members as of June 30, 2000, which translates to a
26% share of the insured market in the state. Local market expertise and heavy
investments in managed care have contributed to strong growth in enrollment and
have positioned the company to capitalize on the changes in health care
delivery occurring throughout the state.

-- Proactive growth strategy. BCBSF has sought membership growth in the past
two years -- through both internal expansion and external acquisition -- as a
means of achieving its goal of 25% market penetration as measured by total
population. (The company was at 16% as of Dec. 31, 1999.) Standard & Poor's
considers the approximately 120,000 new members from the Principal Health Care
of Florida Inc. (PHCF) acquisition, who are now fully integrated into BCBSF, to
be a good strategic fit and consistent with BCBSF's growth strategy. The
distribution system acquired with this company is also generating a significant
volume of new business for BCBSF.

-- Excellent balance sheet. Risk-based capital is very strong, as evidenced by
Standard & Poor's capital adequacy ratio (CAR) of 173% for year-end 1999, which
is unchanged from the 1998 result. The plan assumed bank debt in December 1998
to finance its acquisition of PHCF. This debt totaled about $100 million. At
11% of GAAP equity as of Dec. 31, 1999, Standard & Poor's considers this a
modest amount of financial leverage.

-- Stabilized earnings profile. Earnings adequacy was good at 124% for year-end
1999 based on Standard & Poor's model and is expected to improve to 143% for
the year ending 2000. Consolidated pretax GAAP income is $61.1 million as of
June 30, 2000, versus the full-year 1999 result of $59.6 million. Earnings have
fallen below historical levels in the past two years because of less-favorable
medical trends. The highly competitive market in Florida also has contributed
to the margin pressure recently experienced. Because the market is now
exhibiting more sensible pricing, BCBSF's goal to gain better margins in its
business is likely to be achieved.

-- Levels of competition. Competition remains high in most areas of the state,
particularly in the small group market. Although overall enrollment trends
remain positive, the competitive environment limits pricing flexibility, and
BCBSF finds itself balancing the achievement of enrollment targets and earnings
targets.

Blue Cross & Blue Shield of Florida is a Security Circle insurer, which means that it voluntarily underwent Standard & Poor's most comprehensive analysis and was assigned ratings in one of the top four categories for financial security.

OUTLOOK: STABLE

The stable outlook reflects expectations that BCBSF's enrollment growth, earnings and capital levels will be consistent with the current rating levels. In the remaining half of 2000, enrollment is expected to increase by 3%, which translates to about 75,000 members. Consolidated pretax income is expected to be about $110 million-$120 million for full-year 2000. Capitalization is expected to remain at very strong levels, with an estimated CAR of 160%-170% in 2000, Standard & Poor's said. ---CreditWire