Pittsburgh, April 2, 2009 - Highmark Inc. today announced that the company remains financially stable even though sharply lower investment income contributed to a decline in net income in 2008 compared to 2007. The continued growth of Highmark's subsidiary companies and improved operations in its core health care business helped boost the company's performance.
Highmark had net income of $94.1 million in 2008, compared to $375.4 million in 2007. The company's 2008 net income represented 0.7 percent of the company's operating revenues, compared with 3.1 percent in 2007. Highmark's 2008 total operating revenues reached $13 billion, compared to $12 billion in 2007.
The decline in Highmark's investment income was attributable to a number of factors: the deterioration of the equity markets, lower interest rates and impairments on some assets in the company's investment portfolio due to substantial declines in their market value.
Nanette DeTurk, Highmark's executive vice president and chief financial officer, noted that Highmark's investment portfolio is well-diversified and fairly conservative, and the losses as a result of recent events are not significant relative to the company's total assets: "Our solid financial status is the result of a prudent investment strategy that has limited our exposure to higher-risk assets and stock market volatility. Amid the market turbulence, Highmark remains financially stable in our ability to pay claims and meet all our normal, day-to-day financial obligations."
The company's dental, vision and reinsurance businesses had a strong 2008 as they continue to support the company's core health care business. Combined, the three subsidiary companies had net income of $117.9 million.
Highmark's dental subsidiary, United Concordia Companies, Inc. (UCCI), was awarded a five-year active duty dental program contract by the U.S. Department of Defense (DoD). Under the contract, which begins in August 2009, UCCI will serve active duty service members annually. Since 1996, UCCI has administered dental benefits for the DoD TRICARE Dental Program, which includes 1.8 million dependents of active duty military personnel, reserve members and their dependents.
Highmark's vision companies continued to grow in 2008 with revenues reaching $1.2 billion. In 2008, the vision companies served nearly 17 million people, an increase of more than one million covered lives compared to 2007.
Despite the challenging economic climate, Highmark's health care business maintained a steady membership base. The company had approximately 4.8 million health care members at the end of 2008, virtually the same number as at the end of 2007.
Highmark continues to fulfill its corporate mission in a variety of ways. In 2008, Highmark contributed $130 million in support of its mission, including $121 million for programs to help hold down the cost or expand access to individual health insurance programs for lower-income families in the state's adultBasic program, uninsured children, and older adults.
The company also supported programs in Central and Western Pennsylvania to:
provide free dental and vision clinics for uninsured, underinsured and underserved individuals
help ensure that more than 2,500 non-profit organizations can provide valuable community services, such as screening and prevention programs, youth mentoring programs and nutritional education
establish school-based programs to address bullying, self-esteem, and nutrition education, through annual funding of the Highmark Healthy 5 program
Highmark paid $95.3 million in federal, state and local (non-payroll) taxes in 2008.
Highmark's consolidated balance sheet, capitalization and market position have been recognized by Standard & Poor's and A.M. Best, which rated Highmark "A" (Strong) and "A" (Excellent), respectively, during 2008.
Highmark's operating performance will be profiled in the company's 2008 annual report, which will be available online in late April. For more information about Highmark, an independent licensee of the Blue Cross and Blue Shield Association, visit www.highmark.com.
About Highmark Inc.
As one of the state's leading health insurers and with nearly 70 years of community involvement, Pittsburgh-based Highmark Blue Cross Blue Shield serves 3.1 million members. The company's mission is to provide access to affordable, quality health care enabling individuals to live longer, healthier lives. Highmark exerts an enormous economic impact throughout Pennsylvania. A recent study states that Highmark's positive impact exceeded $2.5 billion. Highmark Blue Cross Blue Shield employs more than 5,000 people in the region and provides the resources to give its members a greater hand in their health.
Highmark is an independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans. For more information, visit www.highmark.com.