THOMSON EDITOR: (Call begins in progress.)

ANGELA BRALY, PRESIDENT AND CEO, WELLPOINT, INC.: A pretax margin of 8.9% and operating cash flow of $4.4 billion. One of the factors that differentiates WellPoint from several competitors is that we have an excellent diversity and our membership and revenue base. Our geographic reach spans the entire country as we operate as Blue Cross or Blue Cross Blue Shield licenses in 14 states. We can operate as well nationally under the UniCare name. We are the largest insurer of individuals and small groups, yet we are also servicing large National Accounts with thousands of employees across multiple states.

We are the largest Medicaid managed care plan in the nation. We have a very strong senior business and about half of our customer base is fully insured and half is self-funded. This membership diversity positions us well for many different economic and political conditions, as we are not dependent on any one customer type to generate the majority of our revenue stream.

We offer a broad range of medical products from lower-cost HMO plans to more flexible PPO arrangements that have greater choice in the provider networks. We also offer other innovative plan designs, including consumer directed health plans. We are increasingly incorporating consumer-driven transparency features across our entire product portfolio so that all of our members can access these services even if they haven't specifically selected a tax advantage product.

We also offer a number of specialty products, such as pharmacy benefits management, behavioral health, life, dental, and vision.

Finally, we also offer a number of administrative services for our self-funded customers, including claims processing and health-care management programs.

I would like to now turn to our value proposition because we benefit from several unique competitive advantages that allow us to bring a superior offering to the marketplace. As a Blue Cross Blue Shield licensee, we offer products under the most recognizable brand in our industry. The 'consumers perception of the Blue brand consistently exceeds that of our competitors by a substantial margin, giving us a distinct marketing advantage. We have a very strong local presence in each of the states where we operate as a Blue licensee. Our market shares range from 14% to 47% with eight of our states having shares in excess of 30%. This home field advantage offers significant operational advantages. As the largest purchaser of medical services in a given region, we have more opportunities to obtain attractive provider contracts and establish working relationships that promote higher quality and collaboration. We can also offer more efficiency in our marketing efforts and more precision from an actuarial perspective.

We also offer extensive and cost-effective provider networks. The BlueCard program allows us to offer a leading national provider network to large multi-state employers. This network covers approximately 85% of all physicians in the U.S. with more than 95% of all hospitals, many of which are contracted at rates that reflect the significant local market shares that Blue licenses maintain. This program is one of the key reasons that our National Accounts business has grown so well in recent years.

Last year, we launched our 360 degree health program. It's the industry first program to integrate all aspects of health improvement and disease management into a centralized consumer-friendly resource. We have easy to access tools that assist our members in navigating the health-care system, using their health benefits and accessing the most comprehensive and appropriate care available. About 5% of our members represent more than half of our medical costs, so we can tailor our more complex disease management activities towards these higher risk populations while we offer numerous preventive care and wellness programs to the larger portion of our membership base that is relatively healthy.

The significant investments we've made in the areas of health-care management and consumer-driven technology are a competitive advantage. As the largest provider of health benefits in America, we have access to an incredible database of health information. We are continuing to find better ways to communicate this information to our members and make it easier for them to be more informed consumers of health-care.

This slide shows you an example of a resource that is available through our Lumenos health plans. One report was information about risk and recovery time for knee replacement and another on drug prices at specific pharmacies.

I would now like to turn to more specificity around our 15% plus EPS growth model. Our model is unchanged and it's fairly straightforward. We expect growth for profitable enrollment at 3% to 5% per year. We absolutely maintain our underwriting discipline. We are very focused on reducing our administrative expense ratio, increasing our specialty product penetration and effectively utilizing our cash flow. We have a very strong history of growth in the medical enrollment and we expect this to continue. Since 1999, our membership has increased from just over 6 million members to more than 34 million members. While most of this increase has come through merger activities, it is important to recognize that excluding acquired membership, our compound annual growth rate has been 9% over this period and we are expecting to add another 1.4 million members this year.

National Accounts has been our fastest-growing business for several years now. We've increased by 900,000 members or 9.5% over just last year. Success is continuing in 2007 and we expect to add 500,000 National Accounts lives by year end. Importantly, there is still plenty of room to further expand this business as our market share in this segment still trails our overall market share in many other states.

On January 1st of this year, we began the rollout of our Lumenos CDHP products across all of our regions and market segments. Membership in these plans increased dramatically in 2006 and our rollout has been very well-received across the country. We now offer Lumenos in ten of our Blue states with additional expansions anticipated.

Our Lumenos plans create incentives for health improvement that have been shown to significantly reduce medical costs not only in the first year of adoption, but in subsequent years as well. While we're still in the early stages of the life cycle of these products, the initial results are very encouraging.

We also view the uninsured market as a growth opportunity. Of the 45 million Americans currently without health insurance, 25% are eligible for public programs and 20% voluntarily choose not to purchase health insurance despite having the financial means to do so. There are State Sponsored programs. We try to identify individuals who are eligible for Medicaid and SCHIP to help them get enrolled so that they can start receiving primary and preventive care.

For the individuals who could afford private health insurance, we continue to develop innovative and cost-effective solutions, such as our Tonik and Blue Access Economy Plan that communicate the value of health insurance to this audience.

For the remaining 55% of the uninsured, we support eligibility expansion of public programs and the development of high-risk pools funded through broad-based initiatives. We have been very successful in these areas. Last year we enrolled 380,000 individuals who were previously uninsured.

We also view Medicaid as a growth opportunity as states are continuing to adopt managed care to address costs. In 2006, we were rewarded five new contracts in this business and we now have Medicaid operations in 14 states. We believe that states will continue to look at managed care. While states have traditionally contracted for assistance with their TANF populations, managed care is less penetrated in the aged, blind, and disabled and long-term care populations, which make up nearly 70% of Medicaid spending. We view the ABD and LTC Medicaid populations as a significant future growth opportunity.

Our senior market is expanding and as the baby boomers age and begin to retire, we expect growth in this market to continue. We offer a wide range of senior products with 350,000 Medicare Advantage members and just under 900,000 Medicare Supplement members.

Also, we are a Part D provider nationally with nearly 1.6 million members. We added 45,000 senior members and 22,000 Medicare Part D members in the first quarter, and we're expecting additional growth throughout the rest of the year.

While I've outlined a number of opportunities for growth in our top line, we must grow in a very disciplined manner. Our EPS growth model is based on disciplined pricing in line with medical costs and we have had excellent success in this area. In fact, over the last seven years, the variance in our benefit expense ratio has been notably less than those of our largest public competitors.

Our first-quarter 2007 reported benefit expense ratio was higher when compared to the prior year due to, first, unfavorable claims experience in State Sponsored business in certain geographies; two, seasonality in Medicare Part D; and then third, the timing of prior period development in our commercial and consumer business.

As discussed in our first-quarter call, we do not believe that the Medicare Part D seasonality and our CCB prior period development to be problematic areas, as both are just timing-related issues.

In our State Sponsored business, we're anticipating rate increases in addition to taking actions such as recontracting with providers and implementing cost-of-care-related initiatives. We believe we will be successful in returning these geographies to targeted profitability levels.

We continue to expect our benefit expense ratio to be 81.9% for the full year. One of the reasons that we've had such stability in our benefit expense ratio is the deep talent of our actuarial team. We have five former chief actuaries of stand-alone health plans on our staff along with 130 credentialed actuaries and 100 actuarial students. Staff is structured so that most of our actuaries are deeply integrated into our business operations while allowing our corporate team to maintain strong controls and oversight.

Our membership base also provides us with flexibility in our pricing, which helps to maintain a stable benefit expense ratio. Just under one-third of our Fully Insured membership renews on January the 1st and because we have such a large block of individual and small group business that renews at other times, we have the ability to monitor the trend throughout the year and adjust rates up or down on a significant portion of our business.

Since we constantly price in line with our medical trends, we continue to focus rigorously on reducing our administrative cost ratio in order to improve margins. Over the last six years, we've cut 570 basis points out of the SG&A ratio and we're expecting to take another 110 basis points out this year. While some of the SG&A ratio improvement is driven by growth in revenue, we also have a number of operating cost reduction activities that should help control costs on a PM/PM basis. Our incremental WellChoice synergies, office space optimization, outsourcing initiatives, particularly related to simple service in claims inquiries that can be handled effectively by outside partners at a lower cost.

To achieve even greater efficiencies, we are embracing the use of technology throughout our operations. Our EDI and auto adjudication rates each increased by about 300 basis points in 2006. Importantly, the utilization of our Web-based services also increased significantly. More than 80% of the claims and eligibility calls we receive in our service centers relate to information currently available on our Web sites. So even though we are finding ways to answer these questions in a lower cost manner, ultimately our goal is to eliminate these phone calls altogether.

The longer-term IT strategy is to significantly reduce the product support costs and reinvest these savings into higher return projects that drive product and service innovation. Due to our history of acquisitions, we have a number of claims processing systems across the country. We intend to continue to reduce the number of systems over time using our low-risk migration strategy, having successfully migrated 33 systems over the past eight years and we're targeting the retirement of several more systems over the next few years. Beyond 2007, we believe there are additional opportunities to reduce the SG&A ratio as we realized efficiencies from our new organizational structure and further leveraged technological capabilities.

Our specialty products are a great opportunity for us to improve our profitability. We have a full array of specialty products with the largest health plan owned PBM in the country and the fourth largest overall. Our specialty pharmacy is rapidly growing. Behavior health operations are up now to 17 million members. The life and dental businesses have 6 million and 5 million members, respectively, and vision membership now exceeds 2 million members. Many of these specialty products are excellent complements to our health products and have strengthened relationships with customers.

We had excellent specialty product membership growth last year, adding more than 2.2 million members in our combined behavioral health, life and disability, dental, and vision businesses. We expect this trend of exceptional growth to continue throughout 2007. Specialty products typically have higher margins than health insurance products and therefore significantly enhance our overall profitability. We expect the operating margin contribution percentage from specialty products to increase in the coming years as we continue to grow membership.

The final component of our model is to effectively use our cash flow. We have consistently generated operating cash flow well in excess of net income, reflecting the high quality of our earnings. That trend is continuing this year as we're forecasting operating cash flow to exceed $4.4 billion. The first priority in our capital strategy is to reinvest in our business either through the development of new products and services or through acquisitions. We have some modest debt repayment scheduled this year and importantly, we're committed to returning capital to shareholders and we're forecasting $3 billion of share repurchases this year.

Now I would like to just spend a few minutes on where we see this Company headed through our strategic plan. Our plan is focused on two differentiating strategies, where we are to become the most trusted choice for consumers and a leader in affordable quality care. We've undertaken a number of key projects in both areas. One of our goals is to help facilitate access to customize clinical information at the point of care, which will ultimately help improve the efficiency of our health-care system. We are the first in our industry to develop and deploy a fully functional personal health record that automatically gathers and stores extensive claims data in one central location, providing members with online access to their personal health history at any time. With better information in the hands of members and providers, we're increasingly able to promote adherence to evidence-based medicine. We're tying provider compensation to clinical outcomes. Today, we have programs that include more than 20,000 physicians and 550 hospitals nationwide. We believe we can significantly increase participation in these pay-for-performance programs in the coming years.

You may have heard about our Anthem Care Comparison services that we launched last year in partnership with General Motors. This Web site tool allows our members to compare costs and quality information for 39 elective and common medical procedures performed at the Dayton area facilities and is being rolled out to other areas in the Midwest.

For hospital procedures, we have provided an all-in price that includes hospital, doctor, lab, anesthesia, and all other fees allowing consumers to make an informed decision based on a total picture scenario. Here's an example of this tool for a knee replacement. At one facility, the cost was less than $10,000 while at another it's almost $18,000. But as you know, cost really means very little without corresponding quality information. Through Anthem Care Comparison, you could also find that the lower-priced facility had performed fewer knee replacements than comparable facilities and experienced complication rates that were in line with expectations.

This is an example of innovation and effectively using our unmatched claims data and we have expanded it to four other geographies this spring, eventually bringing it across the country. Ultimately, our goal is to use health information to decrease costs, improve quality, and reduce variation in the care across the nation.

Let me conclude with a few investment considerations for you to take away from this presentation. Health-care costs continue to rise at a faster pace than overall inflation and are now projected to comprise approximately 20% of the gross domestic product by 2016. We believe that our strategic plan positions us very well to address this continued rise in health-care expenditures as we bring a superior value proposition to the marketplace and a strong voice in the community that helps in advocating a choice-based private health-care market.

The health insurance sector is continuing an era of consolidation. Back in 1995, the ten largest companies enrolled just 27% of the market, whereas today, the ten largest plans have about 52% of the market. Considering the investments required to effectively compete in new areas like consumer-directed health-care and comply with ever-changing regulations, many smaller plans are deciding to leave the industry or partner with larger plans to improve their competitive position.

WellPoint has a consistent track record of delivering on our financial promises to Wall Street and we expect this to continue. With our projected earnings of $5.54 per share for 2007, our compound annual EPS growth rate will be 22% over a six-year period.

So in summary, we believe that WellPoint is a compelling investment opportunity with strong growth prospects, and I hope that you agree. Thank you for your interest and now we'll be happy to take your questions in the time remaining.

UNIDENTIFIED PARTICIPANT: They will bring a mike by so that you can speak into the webcast.

If you don't mind, I'd like to open with a question on Medicaid, which you talked about with respect to ABD and some of the other opportunities. WellPoint has added over half a million lives in what, the last 18 months. Do you see the expansion in the future mostly in the existing markets through the growth that you describe or are you looking at other markets as well?

ANGELA BRALY: We continue to look at all markets in terms of the criteria that we would use for Medicaid contracts. We don't like all marketplaces in terms of the Medicaid contracts and we have to see an environment where the state we think would be a good contracting partner from a Medicaid perspective.

UNIDENTIFIED PARTICIPANT: What are the criteria for the markets that makes them attractive or not?

ANGELA BRALY: We look at each market and we examine the population in the market, the selection in terms of the Medicaid contracting process. We do need to see that it is a sustainable market and contracting environment over time. So we look at the maturity of the state in terms of Medicaid managed care, the opportunities that might exist. And our data has showed us that a Medicaid managed care member is actually much more efficient, it's a better quality, obviously, of life for the Medicaid beneficiary, but there's really good data, especially in states where they have had primarily fee-for-service Medicaid experiences that we can make a tremendous difference for the state.

UNIDENTIFIED PARTICIPANT: One of the things that you've highlighted several times in the period between when your elevation was announced and then becoming CEO is the opportunity potentially in Pennsylvania. What is the process that has to take place there before that can be ultimately resolved one way or the other?

ANGELA BRALY: Well, we haven't specifically spoken to Pennsylvania or the Blue combination there. We are actually very supportive of the Blues in Pennsylvania who are combining high market independence. And they are doing that and we are not directly involved. We are supportive, obviously, of the consolidation of the Blue plans as we have been a consolidator there and there are some very compelling business reasons for those two plans to come together.

UNIDENTIFIED PARTICIPANT: So it's your expectation that those two plans will ultimately merge?

ANGELA BRALY: I believe they will.

UNIDENTIFIED PARTICIPANT: What is the Blue Cross Blue Shield Association's position on consolidation?

ANGELA BRALY: The Blue Cross Association has over time developed an analysis of when the plans come together. Obviously, as WellPoint and Anthem and then WellChoice came together, we became a bigger percentage of the Blues overall, but the Blues don't directly have an approval process. That means there's a licensure process around that, but the requirements are easily met by merging plans.

UNIDENTIFIED AUDIENCE MEMBER: Wayne, by my calculation, about half the Company reports to you in now all of the roles that you had and the ones that you've now achieved. Have you may view -- has the Company made any decision about what's going to be done, with the position that you had and the responsibilities that you had [as yours mo-moan]?

WAYNE DEVEYDT, EVP AND CFO, WELLPOINT, INC.: No, I think at this point in time, the responsibilities I had previously I'm going to maintain. Obviously this is a very unexpected event that you try to be as prepared for these unexpected events as you can be. But obviously my role as Chief of Staff, I will not maintain that role. We're going to look very expeditiously on filling that role. I plan to maintain the Chief Accounting Officer role in the near term, but I do plan to announce somebody new for that. We have a number of very, very good internal candidates. But with any type of situation like this, we want to make sure we always have the absolute best candidate, so we will also consider external candidates in this process.

ANGELA BRALY: And let me assure you one of our strongest core competencies is succession, planning and talent management, and that allowed us to have a smooth transition from Larry to me. It has allowed us to have a very smooth transition from Dave to Wayne. We're very enthusiastic about him taking on this role, because not only had he been our Chief Accounting Officer, but he had been responsible for Investor Relations as well as being Chief of Staff. So from those perspectives, has a true understanding of our business, of the financial processes in our business, the rigor and discipline that we apply there, and through the Chief of Staff role, really saw the enterprise and the operational functions over the last year.

WAYNE DEVEYDT: Joe, one comment I would like to make though is -- I think one of the questions that I will get from many of you over the near term will be my philosophy, and I want to make sure everybody in this room understands and on the webcast that I'm fully committed to the 15% earnings per share growth and believe that that is sustainable for not only the near term, but the longer term.

UNIDENTIFIED PARTICIPANT: We think it's a compelling opportunity as well for investment and we appreciate very much you coming out, especially on such short notice. Congratulations on your promotion, both of you.

ANGELA BRALY: Thank you, Joe. We very much appreciate it. Thank you all.

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