[July 29, 2015]

Anthem Reports Second Quarter 2015 Results

Anthem, Inc. (NYSE: ANTM) today announced that second quarter 2015 net income was $859.1 million, or $3.13 per share. These results included net gains of $0.03 per share. Net income in the second quarter of 2014 was $731.1 million, or $2.56 per share.

Excluding the items noted in each period, adjusted net income was $3.10 per share in the second quarter of 2015, an increase of 21.1 percent compared with adjusted net income of $2.56 per share in the prior year quarter (refer to the GAAP reconciliation table for a reconciliation to the most directly comparable measure calculated in accordance with U.S. generally accepted accounting principles, or "GAAP").

"We are pleased to report solid second quarter 2015 results as we make progress towards driving greater health care access, affordability and choice. Second quarter results reflect contributions from both our Commercial and Government businesses and we believe the growing diversity of our business model better serves our customers," said Joseph Swedish, president and chief executive officer.

"Second quarter results reflect continued execution across our businesses. During the quarter, we repurchased 4.0 million shares and distributed $163.9 million to shareholders in dividends while continuing to invest in our strategic pillars of provider collaboration, total cost of care management and consumer centricity to benefit our ability to serve members," said Wayne DeVeydt, executive vice president and chief financial officer.

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment totaled approximately 38.5 million members at June 30, 2015, an increase of approximately 1.3 million members, or 3.4 percent, from 37.3 million at June 30, 2014. Medicaid enrollment increased by 940,000 members and the Commercial & Specialty Business enrollment increased by 237,000 medical members as the Company experienced growth in the National and Local Group markets, partially offset by a decline in Individual enrollment. Enrollment also grew in the Medicare business and Federal Employee Program by 50,000 and 28,000, respectively.

Medical enrollment was relatively flat sequentially, decreasing by 10,000 members during the second quarter of 2015. The slight decline reflected enrollment losses in Local Group, Individual and National markets being mostly offset by enrollment gains in the Medicaid business.

Operating Revenue: Operating revenue was nearly $19.8 billion in the second quarter of 2015, an increase of approximately $1.5 billion, or 8.4 percent, compared with approximately $18.2 billion in the prior year quarter. The growth in revenue reflected premium increases to cover overall cost trends and higher enrollment in the Medicaid and Commercial self-funded businesses. These increases were partially offset by a decline in Local Group fully insured and Individual enrollment.

Benefit Expense Ratio: The benefit expense ratio was 82.1 percent in the second quarter of 2015, a decrease of 60 basis points from 82.7 percent in the prior year quarter. The decline was largely driven by an improvement in the Local Group business predominantly due to the timing of medical cost experience, improved medical cost performance in certain markets in the Medicaid and Medicare businesses and the impact of retro rate adjustments recorded during the quarter in the Medicaid business.

Medical claims reserves established at December 31, 2014, developed moderately better than the Company's expectation during the first six months of 2015, which resulted in offsetting adjustments for the risk stabilization programs from Health Care Reform.

Medical Cost Trend: For the full year 2015, the Company continues to expect that underlying Local Group medical cost trend will be in the range of 7.0% plus or minus 50 basis points.

Days in Claims Payable: Days in Claims Payable ("DCP") was 43.0 days as of June 30, 2015, a decrease of 2.7 days from 45.7 days as of March 31, 2015. The expected decrease was primarily due to an acceleration in payment speed during the quarter as the company worked through the normal first quarter peak season of new and renewal membership.

SG&A Expense Ratio: The SG&A expense ratio was 15.4 percent in the second quarter of 2015, a decrease of 40 basis points from 15.8 percent in the second quarter of 2014. The decrease was primarily driven by the impact of higher enrollment in the Medicaid business, which carries a lower average SG&A expense ratio than the consolidated company average and lower expenses associated with Individual open enrollment, which ended during the first quarter of 2015 versus the second quarter during 2014. These decreases were partially offset by higher administrative costs to support strong membership growth in 2015.

Operating Cash Flow: Operating cash flow was nearly $1.2 billion, or 1.4 times net income in the second quarter of 2015, and approximately $2.8 billion, or 1.6 times net income for the first six months of 2015. The company continues to expect its full year 2015 operating cash flow to be greater than $3.5 billion.

Share Repurchase Program: During the second quarter of 2015, the Company repurchased approximately 4.0 million shares of its common stock for nearly $637 million, or a weighted-average price of $157.89. During the first six months of 2015, the company repurchased almost 9.7 million shares of its common stock, or 3.6 percent of the shares outstanding as of December 31, 2014, for approximately $1.4 billion, or a weighted-average price of $145.63. As of June 30, 2015, the Company had approximately $4.3 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the second quarter of 2015, the Company paid a quarterly dividend of $0.625 per share, representing a distribution of cash totaling $163.9 million.

On July 28, 2015, the Audit Committee declared a third quarter 2015 dividend to shareholders of $0.625 per share. On an annualized basis, this equates to a dividend of $2.50 per share. The third quarter dividend is payable on September 25, 2015, to shareholders of record at the close of business on September 10, 2015.

Investment Portfolio & Capital Position: During the second quarter of 2015, the Company recorded net realized gains on investments totaling $92.3 million, partially offset by other-than-temporary impairment losses totaling $21.8 million. During the second quarter of 2014, the Company recorded net realized gains of $65.8 million, partially offset by other-than-temporary impairment losses totaling $10.9 million.

As of June 30, 2015, the Company's net unrealized gain position in the investment portfolio was $688.1 million, consisting of net unrealized gains on equity and fixed maturity securities totaling $473.1 million and $215.0 million, respectively. As of June 30, 2015, cash and investments at the parent company totaled approximately $2.2 billion.

Discontinued Operations: In late December 2013, the Company entered into agreements to divest its 1-800 CONTACTS subsidiary and related assets. The sales were completed on January 31, 2014. As a result, the current and prior period operating results of 1-800 CONTACTS have been classified as discontinued operations, net of the related tax effects.

REPORTABLE SEGMENTS

Anthem, Inc. has three reportable segments: Commercial & Specialty Business (comprised of the Local Group, National Accounts, Individual and Specialty businesses); Government Business (comprised of the Medicaid and Medicare businesses, National Government Services, and the Federal Employee Program); and Other (comprised of unallocated corporate expenses and certain other businesses that do not meet the quantitative thresholds for separate reportable segment disclosure).

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $912.0 million in the second quarter of 2015, a decrease of $7.6 million, or 0.8 percent, from $919.6 million in the second quarter of 2014. The decrease is a result of fully insured membership declines in the Local Group business, partially offset by a lower benefit expense ratio in the Local Group business due to the timing of medical cost experience and enrollment growth in the National and Local Group self-funded business.

Government Business: Operating gain in the Government Business segment was $609.7 million in the second quarter of 2015, an increase of $296.2 million, or 94.5 percent, from $313.5 million in the second quarter of 2014. The increase was driven by enrollment increases, improved medical cost performance in certain markets in the Medicaid and Medicare businesses and the impact of retro rate adjustments recorded during the quarter in the Medicaid business.

Other: The Company reported an operating loss of $9.6 million in the Other segment for the second quarter of 2015, compared with an operating loss of $10.2 million in the prior year quarter.

OUTLOOK

Full Year 2015:

• Net income is now expected to be greater than $9.55 per share, including greater than $0.45 per share of net unfavorable items. Excluding these items, adjusted net income is expected to be greater than $10.00 per share (refer to the GAAP reconciliation table).
• Medical membership is now expected to be in the range of 38,250,000 - 38,450,000. Fully insured membership is now expected to be in the range of 14,800,000 - 14,900,000 and self-funded membership is expected to be in the range of 23,450,000 - 23,550,000.
• Operating revenue is now expected to be approximately $78.0 billion.
• Benefit expense ratio is expected to be in the range of 82.9% plus or minus 30 basis points.
• SG&A ratio is expected to be in the range of 16.1% plus or minus 30 basis points.
• Operating cash flow is expected to be greater than $3.5 billion.

Basis of Presentation

1. Operating revenue and operating gain, both non-GAAP measures, are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain, is calculated as total operating revenue less benefit expense and selling, general and administrative expense. It does not include net investment income, net realized gains/losses on investments, other-than-temporary impairment losses recognized in income, interest expense, amortization of other intangible assets, loss on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management (refer to the GAAP reconciliation tables).
2. Operating margin is defined as operating gain divided by operating revenue. Consolidated operating margin is a non-GAAP measure.
3. In late December 2013, Anthem, Inc. entered into agreements to divest its 1-800 CONTACTS subsidiary and related assets. As a result, the Company reclassified the current and prior period results of 1-800 CONTACTS as discontinued operations, net of the related tax effects. The 1-800 CONTACTS subsidiary and related assets sale was completed on January 31, 2014.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:00 a.m. Eastern Daylight Time ("EDT") to discuss the company's second quarter results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

An access code is not required for today's conference call. The access code for the replay is 341163. The replay will be available from 11:00 a.m. EDT today, until the end of the day on August 12, 2015. The call will also be available through a live webcast at www.antheminc.com under the "Investors" link. A webcast replay will be available following the call.

About Anthem, Inc.

Anthem is working to transform health care with trusted and caring solutions. Our health plan companies deliver quality products and services that give their members access to the care they need. With nearly 70 million people served by its affiliated companies, including more than 38 million enrolled in its family of health plans, Anthem is one of the nation's leading health benefits companies. For more information about Anthem's family of companies, please visit www.antheminc.com/companies.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This document contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not generally historical facts. Words such as "expect(s)," "feel(s)," "believe(s)," "will," "may," "anticipate(s)," "intend," "estimate," "project" and similar expressions are intended to identify forward-looking statements, which generally are not historical in nature. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include: those discussed and identified in our public filings with the U.S. Securities and Exchange Commission, or SEC; increased government participation in, or regulation or taxation of health benefits and managed care operations, including, but not limited to, the impact of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, or Health Care Reform; trends in health care costs and utilization rates; our ability to secure sufficient premium rates including regulatory approval for and implementation of such rates; our participation in the federal and state health insurance exchanges under Health Care Reform, which have experienced and continue to experience challenges due to implementation of initial and phased-in provisions of Health Care Reform, and which entail uncertainties associated with the mix and volume of business, particularly in our Individual and Small Group markets, that could negatively impact the adequacy of our premium rates and which may not be sufficiently offset by the risk apportionment provisions of Health Care Reform; the ultimate outcome of our pending acquisition of Cigna Corporation ("Cigna") (the "Acquisition"), including our ability to achieve the synergies and value creation contemplated by the transaction within the expected time period or at all and the risk that unexpected costs will be incurred in connection therewith; the ultimate outcome and results of integrating our and Cigna's operations and disruption from the transaction making it more difficult to maintain businesses and operational relationships; the possibility that the Acquisition does not close, including, but not limited to, due to the failure to satisfy the closing conditions, including the receipt of required regulatory approvals and the receipt of approval of both our and Cigna's shareholders and stockholders, respectively; the risks and uncertainties detailed by Cigna with respect to its business as described in its reports and documents filed with the SEC; our ability to contract with providers consistent with past practice; competitor pricing below market trends of increasing costs; reduced enrollment, as well as a negative change in our health care product mix; risks and uncertainties regarding Medicare and Medicaid programs, including those related to non-compliance with the complex regulations imposed thereon and funding risks with respect to revenue received from participation therein; a downgrade in our financial strength ratings; litigation and investigations targeted at our industry and our ability to resolve litigation and investigations within estimates; medical malpractice or professional liability claims or other risks related to health care services provided by our subsidiaries; our ability to repurchase shares of our common stock and pay dividends on our common stock due to the adequacy of our cash flow and earnings and other considerations; non-compliance by any party with the Express Scripts, Inc. pharmacy benefit management services agreement, which could result in financial penalties, our inability to meet customer demands, and sanctions imposed by governmental entities, including the Centers for Medicare and Medicaid Services; events that result in negative publicity for us or the health benefits industry; failure to effectively maintain and modernize our information systems and e-business organization and to maintain good relationships with third party vendors for information system resources; events that may negatively affect our licenses with the Blue Cross and Blue Shield Association; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; intense competition to attract and retain employees; unauthorized disclosure of member or employee sensitive or confidential information, including the impact and outcome of investigations, inquiries, claims and litigation related to the cyber attack we reported in February 2015; changes in the economic and market conditions, as well as regulations that may negatively affect our investment portfolios and liquidity; possible restrictions in the payment of dividends by our subsidiaries and increases in required minimum levels of capital and the potential negative effect from our substantial amount of outstanding indebtedness; general risks associated with mergers and acquisitions; various laws and provisions in our governing documents that may prevent or discourage takeovers and business combinations; future public health epidemics and catastrophes; and general economic downturns. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by federal securities law, we do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in our SEC reports.

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