CareFirst reported net income of $85 million for 2002, down nearly 14 percent from the $98.7 million reported in 2001. The decrease was due primarily to an “other than temporary impairment” (OTTI) adjustment in the company’s investment portfolio. Excluding this OTTI adjustment and adjustments for discontinued operations, net income for 2002 was approximately $105 million, an increase of about 13 percent over the prior year.

Membership grew 4 percent in 2002, reaching 3.24 million members by year-end. Enrollment growth was particularly strong in Delaware where the addition of several large accounts increased total membership by 16 percent. Total enrollment at the Delaware affiliate has increased 49 percent since the affiliation with CareFirst. Membership growth in the Washington area was also strong in 2002 – up nearly 12 percent.

CareFirst’s market strength rests on its ability to effectively contain administrative expenses, to maximize its brand identity and to maintain the company’s high standards of customer service. CareFirst administrative cost ratio in 2002 dropped to 8.4 percent of total revenues, down from 9.1 percent in the prior year. For CareFirst customers, this means that approximately 90 cents of every revenue dollar last year was allocated to health care and related services.

CareFirst’s revenues on consolidated operations, including premiums and premium-equivalents, rose to $6.7 billion in 2002, up from slightly less than $6 billion in 2001. The company’s reserves – a measure of financial strength used to assess an insurer’s ability to cover claims, meet unexpected contingencies and provide a source of funding to invest in product and service improvements – rose to $874 million at year-end 2002, an 11 percent gain from year-end 2001, using generally accepted accounting practices.