To our shareholders,

When I assumed the role of WellPoint’s Interim President and CEO last August, I made three commitments to our investors, our customers, our Board, and our associates: we would meet our financial and operational objectives, close the Amerigroup transaction, and take the necessary steps to position your company for success. I am pleased to say we delivered on each of these commitments, and I am proud of what we’ve accomplished.

WellPoint’s financial performance improved over the course of 2012, driven by a combination of better core operating performance and favorability in our capital management areas. Membership was up 5.5 percent, bringing our total medical membership to more than 36 million, and we continued to manage our expenses responsibly while funding a diverse portfolio of strategic initiatives. Together, these factors led to full year net income of $2.7 billion and adjusted net income of $7.56 per share, an 8.0 percent increase over 2011.

Outside of our financial performance, we took important steps in 2012 to position our company for the opportunities ahead. We centered our strategy around four key growth areas: Medicare, the Medicare-Medicaid dual eligibles, the emerging health insurance exchanges, and our specialty businesses, specifically vision and dental. We then matched the top talent from our company and our recent acquisitions to create a best-in-class leadership team with deep market knowledge and specialized operational expertise. By aligning our strategy and structure, we've empowered our leaders, enabling them to better influence and more nimbly react to the factors that impact their businesses.

Near the end of 2012, we also successfully completed our acquisition of Amerigroup, a significant accomplishment and testament to the leaders and workgroups on both sides of the transaction. We now serve over 4.5 million Medicaid beneficiaries in 20 states, giving us the largest Medicaid footprint in the industry. By retaining key operating talent and leveraging the proven care management models of both Amerigroup and our CareMore subsidiary, we now have unmatched capabilities to manage care for the nation’s growing high risk, high needs populations.

We are encouraged by the progress made in 2012, and anticipate a solid 2013. This year will be one of continued investment as we prepare for the market changes and full implementation of health reform in 2014. We remain focused on growth, and will continue to refine our operating procedures while making meaningful investments in infrastructure, technology, and new capabilities. A number of these initiatives are highlighted throughout this report, and, together with our other strategic investments, they represent our roadmap to becoming the strongest competitor in our markets and delivering steady, predictable results.

I am optimistic about our long-term outlook, and my confidence in our future is reinforced by the Board’s selection in February 2013 of Joseph R. Swedish to serve as WellPoint’s next CEO. Health care is undergoing an unprecedented transformation, and success will require innovative thinking, new collaborative relationships, and a willingness to take bold action. Joe is a seasoned CEO with a proven track record of leading large, complex health care organizations in challenging market and policy environments. I know I speak for all of WellPoint when I say we look forward to working with Joe, and are confident his vision and his passion for operational excellence will accelerate our positive momentum.

It has been my sincere privilege to serve as WellPoint’s Interim President and CEO, and I have enjoyed the opportunity to meet and interact with many of you over the past several months. Your investment in our company is an investment in a strategy, a leadership team, and more than 43,000 associates that are committed to our customers, dedicated to our communities, and sharply focused on delivering exceptional value to our shareholders. Thank you for your continued confidence in our company and your support of WellPoint’s mission.

In closing, I’d like to recognize our associates for their hard work and their unwavering support throughout this transition. They approached the challenges of 2012 with tenacity and resolve, and both our success and our bright future belong to them. I am proud of how they’ve performed, humbled to have led them, and honored to work in partnership with them each and every day.

John Cannon,
Interim President and CEO