Ladies and gentlemen, thank you for standing by and welcome to the WellPoint Conference Call. At this time all lines are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to the company’s management.

Good morning and welcome to WellPoint's second quarter earnings conference call. I'm Michael Kleinman, Vice President of Investor Relations. With me this morning are Angela Braly, our President and Chief Executive Officer; and Wayne DeVeydt, Executive Vice President and Chief Financial Officer. Angela will begin this morning’s call with an overview of our second quarter results, actions, and accomplishments. Wayne will then offer a detailed review of our second quarter financial performance and current guidance which will be followed by a question-and-answer session. Ken Goulet, Executive Vice President and President of our Commercial Business and Brian Sassi, Executive Vice President and President of our Consumer Business are available to participate in the question-and-answer session. We will be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of WellPoint. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our press release this morning and in our quarterly and annual filings with the SEC. I will now turn the call over to Angela.

Thank you, Michael, and good morning. Today, we are pleased to announce second quarter 2009 net income of $694 million or $1.43 per share. This included net investment losses of $0.07 per diluted share. This compares to net income in the second quarter of 2008 of $751 million or $1.44 per share which included net investment losses of $0.03 per share. We now expect our full year 2009 earnings per share to be $5.06 to $5.12 including net investment losses of $0.54 per share. Our updated guidance reflects an improved outlook for our consumer business and in the capital management areas of our company, partially offset by a more cautious outlook for the commercial segment. Results in our consumer segment have improved significantly from last year and are running ahead of our plan due to certain operational and strategic actions we’ve implemented over the last several quarters. Our commercial business, however, is clearly being impacted by the economic downturn, and my leadership team and I are diligently managing this business during these challenging times. The economic impact is most apparent in our enrollment levels. Medical membership fell by 338,000 in the quarter, almost equally split between fully insured and self-funded business. Our customer retention levels remain strong and generally consistent with historic levels at nearly 90% overall. However, we continue to experience negative in-group change which is membership loss within our continuing group customer base that is primarily related to work force reductions. Negative in-group change impacted commercial membership by 254,000 members during the second quarter. More than 75% of the year-to-date commercial membership decline we’ve experienced is directly related to the economy as reflected by our negative in-group change of approximately 500,000 lives since December 31, 2008. This was the primary reason that our national business declined by 154,000…

We had a solid quarter in the consumer segment and in the capital management areas which helped offset the economic impact experience by our commercial segment. Premium income was $14.1 billion in the second quarter of 2009, a $222 million or 2% decrease from the prior year quarter, primarily due to fully insured membership declines in our commercial business and our exit from certain state-sponsored programs including the Ohio Medicaid program. These decreases were partially offset by premium rate increases and increased reimbursement in the FPP program. Administrative fees were $977 million in the second quarter of 2009, up $11 million or 1% over the prior year quarter, primarily due to revenues generated by DeCare following our acquisition, self-funded membership growth in national accounts, and improved pricing in local groups self-funded accounts, partially offset by lower revenues in national government services business and our exit from the Connecticut Medicaid program. Despite the significant increase in unemployment and due to our diverse membership base, we had only a slight decline in operating revenue of approximately 1%. As Angela noted earlier, our benefit expense ratio decreased by 40 basis points to 82.9% in the second quarter of 2009 from the prior year quarter. This was due to higher than anticipated prior year development and operational improvements in our consumer reporting segment, partially offset by an increase in the benefit expense ratio for the commercial segment. We now expect our benefit expense ratio to be 82.9% for the full year of 2009, an increase of 20 basis points from our prior guidance. This updated forecast reflects the estimated impact of the economy, expected utilization pattern including an increase in COBRA related expenses, and an expected elevated flu season later this year, partially offset by an improved expectation for the consumer business. Directionally, the…

Operator, please open the queue for questions.

(Operator Instructions). Your first question comes from the line of Justin Lake - UBS.

My first question is on the guidance change. It looks like if you back out the $100 million of positive development that wasn’t in guidance previously, you had something in the neighborhood of $300 million guide-down here. Is there a number that you can talk to as far as walking us through what you’re building in there? You broke up the parts as far as flu. Can you give us some more detail as far as where that $300 million comes from, and when specifically you saw the increase in trend that’s driving some of that especially since your cash flow was of positive in the quarter?

Justin, I’m going to let Wayne take you through in a little more detail the $300 million that you’re talking about, but I want to say first given all the circumstances, most notably the unemployment, we really believe now is not the time to change our guidance, so as Wayne you takes you through this very explicitly, I think you just need to keep that in mind.

If you look at the $300 million, I would break it into two buckets; the first bucket being the first half of the year where we had the $100 million of reserved releases and really what’s driving the offset to that is the commercial fully insured member months represented about $70 million of that where we had deterioration beyond our expectations. As you know in our original guidance, we had assumed a 10% unemployment rate by the end of the year. In our Blue states, that number is already up to 9.7% as of June 30. So, the member months are coming off at a faster pace than we expected in the first half of the year. That obviously will tail off for the second half; nonetheless, it was part of the $70 million in the first half. In addition, for the first six months of the year, while the flu season was not a major driver, I think we all would agree we had somewhat of a more moderate flu season in the first quarter; I think there was a little bit of a swine flu panic, I would say, in the second quarter, but consolidated for the six months, it was only about a $20 million impact over our expectations; but that’s about $20 million of that $100 million. Then, the other $10 million is really mix shift utilization that we really just started to see in the last part of this quarter, meaning specifically June. So, that accounts for the first $100. If you looked then for our outlook, our outlook then for the other $200 million deterioration in operating earnings for the second half of the year really follows that same path. For example, if you start with the fully insured commercial membership months, we further…

Just a quick followup then on that utilization uptick; can you give us any details as far as what you’ve seen so far; it sounded like this uptick happened in June. Can you tell what you’re seeing from your July utilization metrics and maybe cash flow that could tell us whether this is white noise or whether it looks like a trend.

At this point it’s hard to say; we haven’t closed out July yet, we are tracking a lot of different statistics that we have. We do see our days per thousand and outpatient visits per thousand are both up just ever so slightly right now, but in line with what I think we would expect. Again, it’s early; cash flow can change quickly, but so far our cash flow seems to be holding in okay. Again, I don’t know that we want to declare anything though because I think things can flip within a month and I think that’s very evident in how good results look for us from our perspective just through the mid part of the second quarter. So, I don’t want to say that it is white noise, but it very well could be, but again, I think the cautious outlook is really a priority right now. The other thing I would add and I am sure the question may come up is that relative to overall reserve position, I think it’s also very important to recognize that we believe at June 30th we have a very conservative balance sheet still, and we believe we’re reserving in a very consistent manner with our historical practices clearly based on the reserve grow-forward, I think many of you would have expected more than $100 million to be released; I think at this point we would prefer to maintain a cautious and conservative outlook and maintain that conservatism in the balance sheet; that is not included in any of our guidance. So, if in fact things are better, that effect would fall too, but at this point, we think, being cautious is really the more prudent thing to do.

Our next question comes from the line of Chris Carter - Citi.

Just wondering if you could remind us what the MLRs for the COBRA lives are?

The MLRs historically have averaged between 150% to 200%. So, if you take historical averages, which are generally trending closer to the higher end of that range, I think it’s fair to say that as new lives come on, they are not as high of a risk, but nonetheless, we still think that kind of a midpoint of where we think these lives are coming in at is around closer to 175%. These are not good risk coming on to the book and that is part of the reason that we are taking it by the run rate perspective.

So, the 175% is a good way to look at the new lives coming on to your book?

Remember that they are not new lives, they’re existing group members who are electing COBRA and more of them are electing the COBRA given the subsidies; so what we’re saying is the whole population that we’re designing as COBRA members, typically it’s about 1.6% of our membership, which it was at December 31st; now it’s close to 2.2% of our fully insured members, and so those are existing members who are sticking around on COBRA who are utilizing and producing an MLR at that rate.

Our next question comes from the line of Joshua Raskin - Barclays Capital.

One clarification; the $720 million win, are you saying that all but $100 million was replenished?

Josh, at this point in time we believe the vast majority with the exception of $100 million has been replenished. I think it’s important to recognize though Josh that at December 31st that balance had a higher fully insured membership base associated with it and higher inventories. The theory is that as we pay down inventories as that membership base declines the absolute medical claims payable balance will come down, but it doesn’t mean that we’re being less conservative in the level of redundancy that we would expect. So, yes, Josh, we would like to believe that that would prove to be true and that we will see more conservatism come through in the latter half of the year.

We can look at relative to medical costs, but I think that ratio was probably more important, but I guess just in terms of the cost trend expectations in the second half, I just want to make sure I understand what you guys are assuming; are you assuming because it doesn’t sound like there was higher than expected cost in the second quarter, it sounds like you are assuming a higher level in the second half, but is that an accelerating trend and is this based on June data specifically or the second quarter; some of the competitors have been talking about using more recent claims even though that’s not necessarily the most sound actuarial method because the new data seems to be coming in a little bit higher; I am just curious what exactly is that expectation. Then, sort of as a correlated question; why are healthy members losing insurance more than the sick members?

Josh, let me speak to a couple of things. One is, we have really worked on the foundational operational improvement over the last 12 months and I think we’re seeing the benefit of it in terms of the claims inventories going down year-over-year almost 40% and this last quarter even in the 20% range, so we’re seeing the claims data on a faster basis. I think we’re making or having better analysis as a result of that, and specifically we did see in the last month, as Wayne said June, some indications of trend ticking up which is why as we look out we say we’re expecting to be at the higher end of our range; the 8% plus or minus 50 basis points. In terms of whether or not we’re wading that differently, I wouldn’t necessarily think we’re doing that. Our actuaries are looking at all the trends; they are also factoring in the fact that we have accelerated these inventory declines, and that’s frankly in our DCP coming down because we’re faster at paying clients. So, I think that gives us some more accuracy. I think though as I said earlier, we think given the unemployment factors and what they may be contributing here, it’s time to be cautious and appropriate about what we might be seeing in trends as well as as we said the COBRA and the flu. In terms of the healthy members, why do we think the healthy members might be staying off; all I can go through what we’re seeing, we did kind of a member exit study around when group members leave, why is it that they’re leaving; it’s definitely driven by the economy, but he can give you a little bit of flavor there for why it is maybe that the healthy members might be dropping.

Josh, I can’t give in granularity exactly why the healthier members are leaving, but let me give you a couple of data points. First, we are looking very heavily at the macroeconomic trends and how they’re impacting the business, and the vast majority of our membership losses are due to the economy, over 75% of our member loss is due to job change and job loss. When we look at the underlying factors of our business, our active canceled loss ratios are very favorable, meaning the members that are canceling and leaving us not due to economy but due to canceling our allowed to unknowns that we’re retaining is favorable in the way that we’re managing the business and have continued to manage it. Secondly, we feel that the age of our membership is not significantly impacted. We’ve been tracking the age to see the demographics of our book and how that is impacting us and the age specifically has not changed more than it normally does. So, as we dig into it and look at our research, it does appear that our business mix shift has changed slightly and that’s primarily because of the member loss of those leaving us due to the economy and as we’ve tracked them, they are lower utilizers; I won’t speculate, I’ll just say those are the facts that we have seen and those are the individuals that have left and it has impacted our business mix change that way.

Josh, the one thing I would add is that because of this unique environment we’re in and understanding human behavior through layoffs and recessions and how that all comes about, I think that’s why we’ve said that our best estimate is that the second half of the year is about $125 million between mix shift and COBRA. So, what is hard for us to get our hands completely around is how much of that is, and we have a pretty gauge, we think COBRA is about half of that, but we do think some of that is just individuals that loss their jobs too running out and sort of getting some procedures done potentially, and we see a little bit of a utilization pattern there. Again, at this point, we have a lot of data points that says that it appears we’re having a mix shift and we’re having some higher members, but as Angela said, that really was predominantly noticed in the last month of the quarter, but we think to ignore that in this environment again wouldn’t be prudent. So we are taking that and run rating that for the latter half of this year.

That makes sense; so June was the high end of the 8% plus or minus 50 basis points?

Yes.

That’s the assumed run rate for the second half?

Yes.

Our next question comes from the line of Matthew Borsch - Goldman Sachs.

Could you just maybe drill down a little bit in terms of what you’re seeing, price competition; I think in California you had not so recently alluded to aggressive competitor in that market, wondering if there’s any change in your view there and anything else you can give us, on maybe the Northeast.

Matt, we’ve got the experts here; Ken and Brian. So, I am going to turn it over to them.

I’ll start and talk about the employer group and Brian I think will address individual and seniors. The marketplace continues to be competitive, but rational. We see pockets of increased competition from time to time and you’ve mentioned California. We’ve identified in the past that California small group was very competitive due to a variety of items but due to a marketplace competitor. That competitor did have significant rate increases on 07/01/09 and should help us as we move forward in one of our key states; our position should improve and we should be in a better position; the second primary competitor across California and others has just indemnified that they have missed some trends and that they’ll be pricing more rationally going forward. So, by looking our key states, we are seeing a more firming up of pricing which is one of the areas that we had run into. Others are various pockets, there are some non-profit areas in a couple of our states, have swings of what I would say is more competitive pricing, but in general, the marketplace I feel is firming up in that the pricing is coming tighter as competitors are identifying trends similar to our own or the pricing range similar to our own.

For individual, we’re still seeing relatively rational pricing, although in some of the key markets, particularly California, I think Aetna recently announced that they are raising rates in several other key markets including California as well as the other Blue competitors that we have in that state just recently announced some pretty healthy rate increases too. So, I think that will help the overall competitive environment.

On the 2010 outlook, can you just directionally tell us if you think at this point your operating earnings excluding share repurchase will be up in 2010 or not?

I don’t want to get ahead of my board here, but I think having operating earnings be positive next year will be a very difficult challenge. I do think that as we work toward it, we would like to neutralize as much of a downslope that could be there, but again, I think especially because some of the investments we want to make, and again, I don’t want to get ahead of my board, but I would not expect operating earnings growth next year in this environment. If the unemployment environment continues where it’s at, the COBRA that we expect to pick up in the second half of this year, and I don’t expect that to go away next year, and the mix shift that goes with that, I think coupled with the CMS headwind and marginal impression on senior will make operating earnings growth next year a significant challenge.

That said Matt, everything we talked about today and talked about generally with respect to 2010, we were excluding the express group transaction may affect below the line of taking out those shares as well.

Our next question comes from the line of Doug Simpson - Morgan Stanley.

Wayne, maybe to push a little bit on this; sorry to be the dead horse, but you beat in Q1 and beat in Q2, you talked about a June uptick in utilization from the healthy members in the COBRA; can you just give us a sense, if you had seen these same trends in ’07, how would you think about the second half in the year. I am just trying to gauge how much the uncertain backdrop is factoring into your thoughts on the second half.

I am going to speak to that a little bit and I answered one of the earlier questions by saying we think given what we’re seeing about unemployment, we were very conservative, we thought in terms of overall employment and we’re looking at our Blue states in particular at a weighted average there, and what happened this year obviously is that the unemployment rate ticked up faster so that member months are gone longer and so now there is an assumption while it’s higher and we’ve raised our expectations about unemployment for the rest of the year, we’re expecting that to continue to flatten out a little bit as we go forward and not really tail off until the end of 2010. So, given just the volume we’re being thoughtful about that. Then, we’ve had this debate about whether the economy induces this slight uptick we’ve seen in utilization, and so we think given the outlook we think it’s appropriate to be thoughtful about what that trend might be billed and what we think effectively the second flu season or the continuation of the first flu season is. As I said earlier, I really do think now is not the time for us to change our guidance.

Our next question comes from the line of Scott Fidel - Deutsche Bank Securities.

First question, maybe if you can talk about how you expect the budget deal in California will impact the MediCal and Healthy Families businesses.

Based on what we know today, we’re not anticipating an impact to MediCal. There will be potential impact to Healthy Families and we know that there are eligibility changes; in fact new enrolment is being capped. So that will put downward pressure on membership as no new members come on and members lapse each month. Then, there was an additional $50 million cut that was part of the signed budget package for Healthy Families. It is not clear yet how that’s going to manifest itself in terms of either reduced benefits, eligibility, or rates. So, I think it’s a little too soon to tell, but we’re closely monitoring the situation.

Then, I just have a followup question just on reform; maybe if you can about this contemplated new tax on insurers that is being discussed in the Senate Finance Committee and how you think that would potentially impact the pricing and margins for the industry, and then also, if the tax only focused on plans with an actual value of $25,000, what percentage of plans actually have an actuarial value of over $25,000?

Let me try and address it. I don’t really know that we know the exact percentage of our book that would exceed that; I don’t really believe that the market will adapt to that, if the tax were approved, it would adapt and you would see benefits not exceeding whatever those thresholds might be in reality. So, I think it really puts into question whether or not you get the yield from a tax perspective off those kinds of benefits; and generally, if we’re taxing the benefit packages, this is an initiative; all of this reform discussion is really intended to have sustainable solutions around affordability. Adding taxes onto premiums doesn’t have that impact.

Our next question comes from the line of Christine Arnold - Cowen Investments.

I have a question about the commercial MLR; if I take the $100 million in positive development and I take the federal employees out and I attribute it to your government business, I get a commercial MLR that’s up about 200 basis points year-over-year. First of all, is that in the hunt?

Christine, first of all the $100 million is predominantly coming out of consumer.

Yes, in fact Christine, I would say it’s almost all consumer, on the $100 million; there is even less than a penny in commercial potentials. I’d say it is all consumer at this point. So, that is not impacting the commercial directly, but directionally, you’re absolutely right. We’re elevating it, and again, the vast majority of that elevation really is related to those items we talked about in the second half of the year that would take in the cautious view on being the COBRA, the potential second flu season that could occur, and then the mix shift utilization.

Right, I put the $100 million in government assuming that kind of thing is consumer. So, the commercial MLR is up about 200 basis points year-over-year?

It’s slightly south of that; that’s correct Christine.

You’re expecting a 200 basis point increase in the commercial MLR year-over-year for the third quarter and fourth quarter as well?

As you know Christine, we’re not giving the quarterly guidance, but I do think we have a level of conservatism that we still believe in our balance sheet which also impacts that MLR and from an outlook perspective, we are assuming some level of medical management that we will do in the latter half; so, it’s fair to run rate that 200 basis point throughout the back half of the year, but I will tell you clearly that fourth quarter MLR will be the highest quarter for us based on our expectations right now.

I am just trying to get an understanding how you’re thinking about it; so you are thinking the 200 basis points of MLR deterioration in commercial year-over-year that you saw in the second quarter will improve because of medical management and you’re not including any benefit from any reserved releases in the second half; is that fair?

That’s correct.

How much medical management improvement are you expecting and what are you doing to achieve that?

I appreciate you asking us what we are doing about it. I think that’s a great place to have Ken talk a little bit about products and Brian to talk a little bit of Stay Covered. Ken, you want to talk about some of the products and medical management initiatives?

Christine, a couple of things. First, when you do look at MLR and I want to address just one piece of that; it’s primarily as we mentioned in the comment; it’s very heavily driven by Ohio and California and that is where the economy and the macro impacts are greater than other areas of our states. We’re right now in California, we’re having an 11.6% unemployment rate, in Ohio, we are having an 11.1% unemployment rate; both significantly greater than the severe end of the thoughts we had going into the year. We do have a variety of what I’ll call annual benefit changes that are going into place, that went into place midyear this year, which are product driven reductions where we’ve implemented changes to our product portfolio which will change our utilization pattern such as emergency room deductibles, a number of items that were used to bring us up to speed in our book and our product portfolio that will reduce cost overall, but not be a big piece when an employer is making decisions regarding overall product need and product purchases. We do have a lot of products coming out. Angela had mentioned what are we doing in new product releases; we also have a number of new products coming out, our Blue product which is our lower cost product across the board. We’ve done the HMO selector, a new HMO product portfolio in California. Our Anthem Alliance which is a product we’ve rolled out in Connecticut, and several others, but I would say the primary driver is really our annual benefit changes which will have a significant impact on our MLRs moving forward.

Christine, I want to talk about just some of the medical management initiatives specifically. We’re always looking at contracting and re-contracting and in particular we’re looking at hospital coding practices; our 360-degree healthcare management programs are really getting recognized, I would say some of the national account sales we’re seeing are a reflection of that, and those programs we think were showing their effectiveness and really getting to the right member, and then we’re looking at very specific areas; we’re looking at neonatal, spinal surgery, chronic kidney disease, end-stage renal disease; we’re focusing our utilization management on some high-cost facilities because in addition to the utilization slightly ticking up, we have seen people going to certain higher-cost facilities, and now we’re really zeroing in on that. Our AIM radiology subsidiary is really getting some traction and we’re able to turn that technology on to cardiology and other things. So, we’ve got some very specific initiatives and then the Stay Covered thing, Brian is going to speak to it.

The Stay Covered project is really a cross functional initiative between commercial and consumer to try and retain those commercial members that are losing coverage and encouraging enrolment in our individual plans or our senior plans. We have an estimated about 2 million people that leave WellPoint plans involuntarily each year. Obviously, this year has been an unusual year. So, there is a tremendous opportunity for us to retain more of these members, either our individual or senior. So, we’ve initiated a comprehensive program where we have new messages and advertising, very targeted direct mail programs, focused dedicated websites, and broker communications to really keep people covered with WellPoint. We’ve got some key pilots going with our national accounts and a very focused effort in the state of Ohio, and then as those programs develop further, we’ll be rolling that out in some of our other key geographies.

Christine, the last thing I just want to add is just to circle back and then full circle which is, no we have not assumed any positive development at all related to the benefit expense in commercial, and we do believe we’re conservatively reserved there and two is, many of these medical management items you’ve heard about were things that we had well underway before the spike part of it I’ll call normal course of business items. So, we’re not baking in what I would call much benefit from new medical management initiatives in the second half of the year. So, anything we do will help to try to mitigate that in some way shape or form, but just recognize those initiatives, really are difficult. Here we are getting ready to start to August; so you can’t just turn them on tomorrow. So, as they roll out over the back half of the year you really will start getting the full run rate benefits going into the following year. So, we’re not baking in a whole lot of benefit relative to that MLR related to the new medical management initiatives.

Our next question comes from the line of Thomas Carroll - Stifel Nicolaus & Co. Thomas Carroll - Stifel Nicolaus & Co.: Just to continue the discussion on the medical cost trend component in your comments you made; have you observed a change in provider behavior as a result of the recession that perhaps is helping to drive some of the higher trend to perhaps utilization, and you’re just making some utilization comments. We’ve had another competitor who was talking about this as being a primary reason they were pointing to higher costs.

Tom, we’re studying that very carefully and we have seen an increase in acuity levels, some of which we attribute to the fact that the CRG reimbursement methodology changed in late 2007 and so we’re really digging deep into the coding to really understand that, and as I just said, we’re seeing the mix of facilities change slightly, so people are going to some of the higher cost facilities and we think that it’s driving some of the higher acuity as well. We’re seeing that specifically sometimes around the children’s hospitals, there tend to be a higher cost and some utilization is picking up there; and so, what we’re doing about it again is evaluating those coding issues. Looking at acuity, we also took a cut looking at what we think are elective type procedures and where those are being done and we’re working those into our hospital negotiation strategy. Thomas Carroll - Stifel Nicolaus & Co.: Okay, and then just as an administrative question, what is your CapEx you’re thinking about for this year?

We’re fully loaded and this would include both what we expend must be capitalized, so fully loaded is about 650 a year and that’s a combination of certain components of lights on. I expect that next year that that will continue, and again, subject to board approval, there are some investments that we will want to make going into next year, and again, I don’t want to get ahead of our board, but I do think there are some areas where we could really drive some long-term value for our shareholders in terms of 2011 and thereafter we make some of those investments. Thomas Carroll - Stifel Nicolaus & Co.: Could you quickly run through what you’re expecting to dividend from your subsidiaries again this year?

Yes, Wayne covered that in his remarks.

For the year we had said that we would expect an ordinary dividend of at least $2.4 billion with dividend year-to-date slightly under $900 million; so, we would expect in the second half of the year an additional $1.5 billion of ordinary dividends from subsidiaries. As you know, with the way the OTTI rules are, we’re always forced to book all the downside through the P&L but you never get the book the upside, and since December 31st, our underlying portfolio has improved by over $700 million, almost $740 million. That apparently then increases the statutory equity of our sales which will give us an opportunity then to do some extraordinary dividends; now I hate to quote what that could be because that subject is state by state approved, but I would say that it’s safe to say that the floor on dividend for the back half of this year would be 1.5 and I would expect to see it somewhere north of that.

Our next question comes from the line of Carl McDonald - Oppenheimer & Co. Carl McDonald - Oppenheimer & Co.: Could you update us on where things stand with respect to the CMS and the Medicare sanctions?

We are continuing to work with CMS; they have requested some additional information which we’re in the process of collecting and sending to them, and that will be complete within the next week or so; we’re actively preparing for participation in open enrollment and submitting our marketing materials, etc., to CMS. Carl McDonald - Oppenheimer & Co.: Your assumption is that this will be lifted before the marketing season begins?

That is our working assumption, yes. Carl McDonald - Oppenheimer & Co.: And, can you also give us some color on how the Medicaid business performed this quarter and also spiking out if the favorable development contributed to that?

State sponsored did contribute to the favorable development. Our state sponsored business continues to perform better than our expectations this year primarily as a result of a lot of the actions that we took earlier this year and last year.

The one thing I would say, Carl, is that I think there’s been some individuals that are seeing some higher utilization and spikes in the Medicaid, we’re not seeing it, but I also think it’s important to recognize that the states we were having those issues in the past and one of those being Connecticut, we made the decision to pull out off; so, I think when we look at our core states, as Brian mentioned, they’re performing pretty well and we put a lot of initiatives and changed the leadership there, so we think we’re seeing the benefits of those investments as well.

And I think in California which is our largest Medicaid state, we’ve now converted over 80%, 85% of our contracts to capitation, so that does insulate us from some of the utilization risk.

Our last question comes from the line of Ana Gupta - Sanford Bernstein Co.

I have a couple of questions on reforms; the first one is, as a former Blue consolidator, can you provide your perspective on this regional co-op network thing that’s being proposed by Senate Finance, and followup to that is, what is your expectation on the outlook for Blue consolidation given that’s the growth lever for you?

Yes, Ana you started off by saying we were a former Blue consolidator; we don’t think of our sales as a former Blue consolidator but as a compelling partner for future Blue consolidation as well. I think it’s unclear in terms of where Senate Finance is going to come out either on the co-op or on exchange related questions of state versus regional. In the past, whether it was Medicaid or others where there was an approach that was regional, it’s really hard to sustain a regional approach, and it really comes down to being state based, either you look at it on a federal level or you look at it on a state level. So, we are yet to see how this regional idea is going to prove itself out or be implemented, and we would obviously favor a state based system no matter what because we think there are significant differences very locally and obviously reflect how we manage our business and the benefits we think of managing on a more local basis.

One more followup, given your exposures concentrated in the individual and microgroup site, how are you and the industry advocating with congress around MLR caps and then the leakage potentially into a regulated exchange which might have MLR caps?

The problem with MLR caps that we’ve seen and talked about for a long time is they really drive the wrong incentive, they actually drive the incentive to increase the medical cost rather than decrease them, and so, we think they’re not a positive contribution to the reform dialogue. We did bring solutions for the individual and the small-group market, but what we are bringing to the table is just information and data about what it means because some of these changes have a very disruptive impact in terms of transition. You’re going to have the rating, the rules that we’re discussing now give us broad bandwidth to differentiate and we have experienced rating, and that’s going to change pretty dramatically; so, we think there are some big transition issues that people really need to think about, be aware of, understand what the potential for rate shock is, and then work on mechanisms to help mitigate that. So, we’re actively participating in that and providing data and information about what it could mean in a real world context.

Thanks Angela.

I think unfortunately we are not going to be able to take any more comments, but in closing I want to reiterate that we are pleased with our earnings per share so far this year and we remain confident in our guidance for the remainder of the year. We are managing through turbulent economic times and are currently taking a number of steps that will improve our future performance. Our building a better WellPoint program will help us serve our customers more effectively and efficiently. We will continue to keep our customers first, one of our core values, and strive to excel even more at day to day executions. As our customers win, so does our entire organization including our shareholders. We are keeping our promise to simplify the connection between health care and value for our customers and our shareholders. I want to thank all of you for your interest in WellPoint and for participating in our call this morning. I’m going to turn it back over to the operator to provide the call replay information.

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