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Anthem, Inc. Reports Results for the Third Quarter 2004
     *  Enrollment increased 890,000 members, or 8 percent over September 2003
     *  Administrative expense ratio improved 180 basis points
     *  Net income per share increased 23 percent
     *  Operating cash flow reached $409.6 million, or 1.7 times net income
     *  Board authorized additional $500 million for share repurchase program

INDIANAPOLIS, Oct. 27 /PRNewswire-FirstCall/ -- Anthem, Inc. (NYSE: ATH) today announced third quarter 2004 net income increased to $242.1 million, or $1.70 per share, compared with net income of $196.5 million, or $1.38 per share, for the third quarter of 2003. Net income in the third quarters of 2004 and 2003 each included net realized gains of $0.03 per share.

"We continued to expand our leading market positions with sustained enrollment growth, allowing us to further leverage administrative costs over a larger membership base. It is clear that employers and individuals across our regions value Anthem's product offerings, broad network reach, attractive discounts, and distinctive customer service," said Larry C. Glasscock, chairman, president and chief executive officer of Anthem, Inc. "While we remain very focused on delivering distinctive service to our members, we are also very committed to completing our proposed merger with WellPoint Health Networks, which will provide even greater benefits for all of our members."

Consolidated Highlights

Membership: Medical enrollment exceeded 12.7 million members at September 30, 2004, increasing by 890,000 members, or 8 percent, since September 30, 2003. Membership gains from National Accounts were the primary drivers of growth, including a 20 percent increase in non-BlueCard membership. Enrollment growth in the Individual and Small Group businesses complemented the National expansion. Total medical enrollment increased by 810,000 members, or 7 percent, since December 31, 2003.

Operating Revenue: Operating revenue increased by 13 percent, to $4.7 billion, compared with $4.2 billion in the third quarter of 2003. The growth in revenues was attributable to disciplined pricing and solid membership gains, with the Small and Local Large Group businesses contributing most significantly to the overall increase.

Benefit Expense: The benefit expense ratio increased by 170 basis points, to 82.7 percent, compared with 81.0 percent in the third quarter of 2003. The increase reflected lower than anticipated medical costs in the third quarter of 2003 and a return to more sustainable levels in the third quarter of 2004. The current quarter also included a 20 basis point benefit associated with $8.7 million in net favorable prior year reserve development.

Premium and Cost Trends: Medical cost trend for fully insured group business, on a rolling twelve month basis, remained relatively stable and is anticipated to be within prior expectations of 9.5 to 10.5 percent for the full year 2004.

Pricing remained disciplined and premium increases were sufficient to cover cost increases, which have been driven primarily by professional and outpatient services.

Administrative Expense: The administrative expense ratio improved by 180 basis points to 16.9 percent, compared with 18.7 percent in the third quarter of 2003. Focused, disciplined management of administrative expenses over a larger membership base and lower incentive compensation costs contributed to the decline.

Included in the third quarter 2004 results was $5.6 million in severance expenses due to a workforce reduction made possible by continued process and productivity improvements, primarily in the East region.

Operating Cash Flow: Third quarter 2004 operating cash flow totaled $409.6 million, or 1.7 times net income.

Days in Claims Payable: Days in claims payable decreased 2.0 days, to 47.2 days as of September 30, 2004, compared with 49.2 days as of June 30, 2004. The reduction was primarily attributable to adjudicating claims at a faster pace and a reduction in claim inventories.

Share Repurchase Program: During the third quarter of 2004, 1.0 million shares were repurchased for $82.2 million at an average price of $82.24 per share. On October 25, 2004, Anthem's Board of Directors approved a new share repurchase program authorizing an additional $500 million to purchase shares, subject to market conditions.



                                 Anthem, Inc.
              Operating Segment Highlights - Third Quarter 2004
                                 (Unaudited)

                             Three Months Ended         Nine Months Ended
    ($ in Millions)             September 30               September 30
                           2004      2003    Change    2004      2003   Change
    Operating Revenue:
       Midwest           $1,966.0  $1,693.6     16%  $5,727.4  $4,960.3   15%
       East               1,256.4   1,160.5      8%   3,610.9   3,387.0    7%
       West                 299.7     266.6     12%     863.1     774.1   11%
       Southeast          1,065.3     950.4     12%   3,111.6   2,795.3   11%
    Regional Health
     Segments             4,587.4   4,071.1     13%  13,313.0  11,916.7   12%
       Specialty            279.1     194.2     44%     809.1     533.4   52%
       Other:
          External
           Customers         45.9      43.8      5%     135.4     142.5   (5%)
          Intercompany
           Eliminations    (183.5)   (123.3)    49%    (528.4)   (331.7)  59%
       Total Other         (137.6)    (79.5)    73%    (393.0)   (189.2)   -
    Total Operating
     Revenue              4,728.9   4,185.8     13%  13,729.1  12,260.9   12%

    Operating Gain
     (Loss):
       Midwest             $145.3    $108.9     33%    $390.0    $323.6   21%
       East                  82.3      75.4      9%     231.6     212.8    9%
       West                  24.1      32.6    (26%)     77.8      79.9   (3%)
       Southeast             94.0      82.0     15%     301.6     243.4   24%
    Regional Health
     Segments               345.7     298.9     16%   1,001.0     859.7   16%
       Specialty             19.5      18.7      4%      54.9      47.6   15%
       Other                (21.0)    (38.6)   (46%)    (47.4)    (97.4) (51%)


Regional Health Segments: Operating revenue and operating gain are the key measures used by management to evaluate performance in each segment. Operating gain for the regional health segments in total improved 16 percent compared with the third quarter of 2003, driven by enhanced results in the National business.

Significantly improved administrative expense ratios were realized in each health segment. These improvements were partially offset by higher benefit expense ratios, which returned to more sustainable levels in the third quarter of 2004.

Third quarter 2004 operating gain included $8.7 million in net favorable prior year reserve development, consisting of $12.7 million in favorable development in the Midwest region and $4.0 million in unfavorable development in the East region. The net favorable prior year reserve development was partially offset by $5.6 million in severance expenses, primarily in the East region.

Included in the results for the third quarter of 2003 was $30.0 million of premium refunds to certain policyholders in the Southeast region and a $10.0 million contribution to the Anthem Foundation by the East region.

Specialty: Operating gain increased by 4 percent compared with the third quarter of 2003. Strong growth in the pharmacy benefit management operation, including a 44 percent increase in mail-order prescription volume, was partially offset by results in the other Specialty businesses.

Other: Operating loss in this segment was lower in 2004 compared with the same period of 2003, primarily due to lower incentive compensation expenses.

Anthem, Inc.'s Earnings Outlook

* Net income per share for the fourth quarter of 2004 is expected to be relatively consistent with results for the third quarter of 2004.

* Net income expectations for full year 2004 increased to $7.05 to $7.10 per share from $6.95 to $7.05 per share. These expectations include $0.31 per share in tax benefits associated with a change in Indiana laws governing the state's high-risk health insurance pool and $0.19 per share in net realized gains.

* Net income for full year 2005 is expected to reach at least $7.60 per share, or a 15 percent improvement on a comparable basis to 2004.

Basis of Presentation

1. Operating gain is defined as operating revenue less benefit expense and administrative expense. Operating gain is used to analyze profit or loss on a segment basis only and not on a consolidated basis. Consolidated operating gain is a non-GAAP measure.

2. All income per share amounts are on an after-tax, diluted per share basis.

3. Certain prior year amounts have been reclassified to conform to current year presentation.

Conference Call and Webcast

Anthem will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time to discuss its third quarter earnings results and outlook. The conference call can be accessed by dialing 888-423-3268 (International 612-332-0630). No access-code is required. The webcast can be accessed at Anthem's web site, http://www.anthem.com , under Investor Relations. Please visit the website or dial in at least 15 minutes in advance. A replay of the call will be available after 12:45 p.m. today until the end of the day on November 10, 2004 by dialing 800-475-6701 (International 320-365-3844), access-code 691033.

About Anthem

    Anthem's mission is to improve the health of the people it serves.
Anthem, Inc. is an Indiana-domiciled publicly traded company that, through its
subsidiary companies, provides health care benefits to more than 12.7 million
people.  Anthem is the fourth largest publicly traded health benefits company
in the United States and an independent licensee of the Blue Cross and Blue
Shield Association.  Anthem is the Blue Cross and Blue Shield licensee for
Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Maine, Colorado, Nevada
and Virginia, excluding the Northern Virginia suburbs of Washington, D.C.
Anthem had assets of $14.1 billion as of September 30, 2004, and full year
2003 revenue of $16.8 billion.  More information about Anthem is available at
http://www.anthem.com .



                                 Anthem, Inc.
                              Membership Summary
                                 (Unaudited)
    (In Thousands)                                               Change
                           September  September  December  September  December
                               30,        30,       31,        30,       31,
                              2004       2003      2003       2003      2003
    Customer Type
    Local Large Group        3,929      3,868     3,869         2%        2%
    Small Group              1,300      1,223     1,257         6%        3%
    Individual               1,284      1,182     1,202         9%        7%
    National Accounts(1)     5,202      4,574     4,596        14%       13%
    Medicare Advantage          91         96        94        (5%)      (3%)
    Federal Employee Program   712        699       699         2%        2%
    Medicaid                   219        205       210         7%        4%
    Total                   12,737     11,847    11,927         8%        7%

    Funding Arrangement
    Self-Funded              7,076      6,368     6,412        11%       10%
    Fully Insured            5,661      5,479     5,515         3%        3%
    Total                   12,737     11,847    11,927         8%        7%

    Operating Segments
    Midwest                  6,072      5,624     5,688         8%        7%
    East                     2,688      2,621     2,600         3%        3%
    West                     1,133        931       939        22%       21%
    Southeast                2,844      2,671     2,700         6%        5%
    Total                   12,737     11,847    11,927         8%        7%

(1) Includes 3,089 BlueCard members as of September 30, 2004, 2,809 as of September 30, 2003 and 2,816 as of December 31, 2003.



                                 Anthem, Inc.
                      Consolidated Statements of Income
                                 (Unaudited)

    ($ In Millions, Except Per Share Data)     Three Months Ended
                                                   September 30
                                                2004         2003     Change
    Revenues
    Premiums                                 $4,335.3     $3,857.1      12%
    Administrative fees                         344.8        297.4      16%
    Other revenue                                48.8         31.3      56%
        Total operating revenue               4,728.9      4,185.8      13%
    Net investment income                        67.9         70.8      (4%)
    Net realized gains on investments             6.2          5.2      19%
    Total revenue                             4,803.0      4,261.8      13%

    Expenses
    Benefit expense                           3,583.8      3,123.3      15%
    Administrative expense                      800.9        783.5       2%
    Interest expense                             32.9         32.9       -
    Amortization of other intangible assets      11.3         11.9      (5%)
    Total expense                             4,428.9      3,951.6      12%

    Income before income taxes and
     minority interest                          374.1        310.2      21%

    Income taxes                                131.0        112.1      17%
    Minority interest                             1.0          1.6     (38%)

    Net income                                 $242.1       $196.5      23%

    Net income per diluted share                $1.70        $1.38      23%

    Diluted shares (in millions)                142.7        142.7       -

    Benefit expense as a percentage of
     premiums                                    82.7%        81.0%    170 bp
    Administrative expense as a
     percentage of total operating revenue       16.9%        18.7%   (180)bp
    Income before income taxes and
     minority interest as a
     percentage of total revenue                  7.8%         7.3%     50 bp



                                 Anthem, Inc.
                      Consolidated Statements of Income
                                 (Unaudited)

    ($ In Millions, Except Per Share Data)      Nine Months Ended
                                                   September 30
                                                2004         2003    Change
    Revenues
    Premiums                                $12,577.5    $11,289.0     11%
    Administrative fees                       1,011.5        879.4     15%
    Other revenue                               140.1         92.5     51%
        Total operating revenue              13,729.1     12,260.9     12%
    Net investment income                       211.8        207.9      2%
    Net realized gains on investments            40.7          7.7      -
    Total revenue                            13,981.6     12,476.5     12%

    Expenses
    Benefit expense                          10,343.1      9,177.2     13%
    Administrative expense                    2,377.5      2,273.8      5%
    Interest expense                             97.4         98.6     (1%)
    Amortization of other intangible assets      33.7         35.6     (5%)
    Total expense                            12,851.7     11,585.2     11%

    Income before income taxes and
     minority interest                        1,129.9        891.3     27%

    Income taxes                                351.7        321.8      9%
    Minority interest                             2.6          4.0    (35%)

    Net income                                 $775.6       $565.5     37%

    Net income per diluted share                $5.43        $3.98     36%

    Diluted shares (in millions)                142.8        142.0      1%

    Benefit expense as a percentage of
     premiums                                    82.2%        81.3%    90 bp
    Administrative expense as a
     percentage of
     total operating revenue                     17.3%        18.5%  (120)bp
    Income before income taxes and
     minority interest as a
     percentage of total revenue                  8.1%         7.1%   100 bp




                                 Anthem, Inc.
                         Consolidated Balance Sheets

    ($ In Millions)                            September 30,      December 31,
                                                    2004               2003
                                                (Unaudited)
    Assets
    Current assets:
       Investments available-for-sale, at
        fair value                                $7,237.1          $6,915.2
       Cash and cash equivalents                     710.6             464.5
       Receivables, net                            1,601.1           1,419.3
       Other current assets                           77.9              66.0
    Total current assets                           9,626.7           8,865.0

    Restricted cash and investments                   59.2              58.3
    Property and equipment, net                      499.8             510.5
    Goodwill and other intangible assets           3,638.0           3,677.1
    Prepaid pension benefits                         240.7             258.3
    Other noncurrent assets                           72.1              69.4
    Total assets                                 $14,136.5         $13,438.6

    Liabilities and shareholders' equity
    Liabilities
    Current liabilities:
       Policy liabilities:
         Unpaid life, accident and health
          claims                                  $1,899.3          $1,866.8
         Future policy benefits                      380.3             372.6
         Other policyholder liabilities              503.4             505.0
       Total policy liabilities                    2,783.0           2,744.4
       Unearned income                               395.5             411.1
       Accounts payable and accrued
        expenses                                     445.7             493.4
       Bank overdrafts                               378.6             401.7
       Income taxes payable                           67.3             147.6
       Other current liabilities                     743.5             573.3
    Total current liabilities                      4,813.6           4,771.5

    Long term debt, less current portion           1,520.4           1,662.8
    Postretirement benefits                          182.0             188.4
    Deferred income taxes                            465.7             524.8
    Other noncurrent liabilities                     354.1             291.2
    Total liabilities                              7,335.8           7,438.7

    Shareholders' equity
    Common stock                                       1.4               1.4
    Additional paid in capital                     4,810.2           4,708.7
    Retained earnings                              1,882.3           1,154.3
    Unearned restricted stock
     compensation                                     (1.8)             (3.2)
    Accumulated other comprehensive
     income                                          108.6             138.7
    Total shareholders' equity                     6,800.7           5,999.9
    Total liabilities and shareholders'
     equity                                      $14,136.5         $13,438.6



                                 Anthem, Inc.
                    Consolidated Statements of Cash Flows
                                 (Unaudited)

                                                Nine Months Ended September 30
    ($ In Millions)                                  2004              2003

    Operating activities
    Net income                                      $775.6            $565.5
    Adjustments to reconcile net income
     to net cash provided by operating activities:
            Net realized gains on investments        (40.7)             (7.7)
            Depreciation, amortization
             and accretion                           181.0             183.6
            Deferred income taxes                      0.1             120.6
            Gain on sale of assets                    (0.4)             (0.2)
            Changes in operating assets
             and liabilities, net of
             effect of purchases and divestitures:
                    Restricted cash and
                     investments                      (1.7)             (7.9)
                    Receivables                      (74.0)           (221.6)
                    Other assets                     (15.1)             (1.0)
                    Policy liabilities                38.6              (1.0)
                    Unearned income                  (15.6)             30.5
                    Pension and
                     postretirement
                     benefits                         11.2             (82.5)
                    Accounts payable and
                     accrued expenses                (48.4)            (33.3)
                    Other liabilities                (94.7)            168.6
                    Income taxes                     (33.2)             12.1
    Cash provided by operating activities            682.7             725.7

    Investing activities
    Purchases of investments                      (4,870.1)         (3,623.3)
    Sales or maturities of investments             4,516.7           3,163.3
    Proceeds from settlement of cash flow hedge       20.3                 -
    Purchase of subsidiaries, net of cash acquired       -              (3.5)
    Sale of subsidiaries, net of cash sold               -              (2.8)
    Proceeds from sale of property and equipment       1.5               5.2
    Purchases of property and equipment              (85.6)            (83.1)
    Cash used in investing activities               (417.2)           (544.2)

    Financing activities
    Proceeds from long term borrowings
     and exchange of remarketed
     subordinated debentures included
     in Equity Security Units                          5.7                 -
    Payments on long-term borrowings                     -            (100.0)
    Repurchase and retirement of common stock        (82.2)           (143.9)
    Proceeds from employee stock purchase
     plan and exercise of stock options               57.1              37.6
    Cash used in financing activities                (19.4)           (206.3)

    Change in cash and cash equivalents              246.1             (24.8)
    Cash and cash equivalents at
     beginning of period                             464.5             694.9
    Cash and cash equivalents at end of period      $710.6            $670.1



                                 Anthem, Inc.
          Reconciliation of Unpaid Life, Accident and Health Claims

                                                    Nine Months Ended
                                                       September 30
    ($ In Millions)                                 2004          2003
                                                        (Unaudited)

    Balances at beginning of period,
     net of reinsurance                          $1,856.4      $1,821.2

    Business acquisitions, divestitures,
     purchase adjustments and reclassifications     (14.0)        (15.5)
         Subtotal                                 1,842.4       1,805.7

    Incurred related to:
        Current year                             10,512.5       9,353.1
        Prior years (redundancies) (1)             (169.9)       (181.3)
    Total incurred                               10,342.6       9,171.8

    Paid related to:
        Current year                              8,765.1       7,725.5
        Prior years                               1,533.8       1,399.1
    Total paid                                   10,298.9       9,124.6

    Balances at end of period, net of
     reinsurance                                  1,886.1       1,852.9
    Reinsurance recoverables at end of period        13.2           8.9
    Reserve gross of reinsurance recoverables
     on unpaid claims at end of period           $1,899.3      $1,861.8

    Current year paid as a percent of
     current year incurred                           83.4%         82.6%

    Prior year incurred redundancies in the
     current period as a percent of prior year
     incurred claims                                  1.4%          1.8% (2)


                                                    Years Ended December 31
    ($ In Millions)                              2003        2002       2001


    Balances at beginning of period,
     net of reinsurance                       $1,821.2    $1,352.7   $1,382.1

    Business acquisitions, divestitures,
     purchase adjustments and
     reclassifications                           (20.6)      379.4     (139.1)
         Subtotal                              1,800.6     1,732.1    1,243.0

    Incurred related to:
        Current year                          12,462.3     9,965.1    7,843.1
        Prior years (redundancies) (1)          (226.1)     (150.7)     (96.4)
    Total incurred                            12,236.2     9,814.4    7,746.7

    Paid related to:
        Current year                          10,685.4     8,396.4    6,521.5
        Prior years                            1,495.0     1,328.9    1,115.5
    Total paid                                12,180.4     9,725.3    7,637.0

    Balances at end of period,
     net of reinsurance                        1,856.4     1,821.2    1,352.7
    Reinsurance recoverables at
     end of period                                10.4         4.8        7.6
    Reserve gross of reinsurance
     recoverables on unpaid claims
     at end of period                         $1,866.8    $1,826.0   $1,360.3

    Current year paid as a percent of
     current year incurred                        85.7%       84.3%      83.1%

    Prior year incurred redundancies
     in the current period as a percent of
     prior year incurred claims                    2.3% (2)    1.9%       1.5%

(1) Negative amounts reported for incurred related to prior years result from claims being settled for amounts less than originally estimated. The redundancy of $169.9 million shown in the above table represents an estimate based upon claims activity from January 1, 2004 to September 30, 2004, and is subject to change based upon future paid claim activity.

(2) This ratio is impacted by having only five months of incurred claims for the Southeast segment in 2002. If the Southeast segment had been included for the full year 2002, the ratio would have been approximately 1.6% for the first nine months of 2003 and 2.0% for the full year 2003.

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

This press release contains certain forward-looking information about Anthem, Inc. ("Anthem") 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 historical facts. Words such as "expect(s)," "feel(s)," "believe(s)," "will," "may," "anticipate(s)" and similar expressions are intended to identify forward-looking statements. 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 the control of Anthem, 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 public filings with the U.S. Securities and Exchange Commission ("SEC") made by Anthem; trends in health care costs and utilization rates; our ability to secure sufficient premium rate increases; competitor pricing below market trends of increasing costs; increased government regulation of health benefits and managed care; significant acquisitions or divestitures by major competitors; introduction and utilization of new prescription drugs and technology; a downgrade in our financial strength ratings; litigation targeted at health benefits companies; our ability to contract with providers consistent with past practice; our ability to consummate Anthem's merger with WellPoint Health Networks Inc., to achieve expected synergies and operating efficiencies in the merger within the expected time-frames or at all and to successfully integrate our operations; such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the transaction; the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; our ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction and the value of the transaction consideration; future bio-terrorist activity or other potential public health epidemics; 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. Anthem does 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 Anthem's various SEC reports, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2003 and Quarterly Reports on Form 10-Q for the reporting periods of 2004.

SOURCE  Anthem, Inc.
    -0-                             10/27/2004
    /CONTACT:  Investor Relations: Tami Durle, +1-317-488-6390,
tami.durle@anthem.com , or Media: James Kappel, +1-317-488-6400,
james.kappel@anthem.com , both of Anthem, Inc./
    /Web site:  http://www.anthem.com /
    (ATH)

CO:  Anthem, Inc.
ST:  Indiana
IN:  HEA
SU:  ERN CCA MAV ERP

TM-KN 
-- DEW012 --
0129 10/27/2004 06:00 EDT http://www.prnewswire.com
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