<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of
1934 For the quarterly period ended June 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number: 001-12617
Trigon Healthcare, Inc.
(Exact name of registrant as specified in its charter)
Virginia 54-1773225
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2015 Staples Mill Road, Richmond, VA 23230
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (804) 354-7000
Not Applicable
------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Title of each class Outstanding at August 10, 2000
------------------- ------------------------------
Class A Common Stock, $0.01 par value 37,644,024 shares
<PAGE>
TRIGON HEALTHCARE, INC. and SUBSIDIARIES
SECOND QUARTER 2000 FORM 10-Q
TABLE OF CONTENTS
Page
----
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 1
Consolidated Statements of Operations for the Three Months and
Six Months Ended June 30, 2000 and 1999 2
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive
Income for the Three Months and Six Months Ended June 30, 2000 and 1999 3
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 19
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIGON HEALTHCARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December
2000 1999
---------------- ---------------
<S> <C>
Assets
------
Current assets
Cash $ 7,089 2,530
Investment securities, at estimated fair value 1,737,247 1,738,515
Premiums and other receivables 387,303 397,499
Deferred income taxes 14,868 16,827
Other 15,997 14,099
---------------- ---------------
Total current assets 2,162,504 2,169,470
Property and equipment, net 55,283 51,238
Deferred income taxes 51,659 59,499
Goodwill and other intangibles, net 13,858 14,561
Restricted investments, at estimated fair value 7,032 9,887
Other assets 9,271 9,460
---------------- ---------------
Total assets $ 2,299,607 2,314,115
================ ===============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Medical and other benefits payable $ 548,898 544,120
Unearned premiums 130,986 120,290
Accounts payable and accrued expenses 71,811 81,867
Deferred income taxes - -
Other liabilities 212,431 257,231
---------------- ---------------
Total current liabilities 964,126 1,003,508
Obligations for employee benefits, noncurrent 44,818 49,287
Medical and other benefits payable, noncurrent 66,747 65,929
Long-term debt 247,933 248,039
Minority interest in subsidiary 11,466 10,395
---------------- ---------------
Total liabilities 1,335,090 1,377,158
---------------- ---------------
Shareholders' equity
Common stock 376 382
Capital in excess of par 812,283 816,517
Retained earnings 155,336 112,896
Unearned compensation (2,938) (1,926)
Accumulated other comprehensive income (loss) (note 6) (540) 9,088
---------------- ---------------
Total shareholders' equity 964,517 936,957
Commitments and contingencies (note 7)
---------------- ---------------
Total liabilities and shareholders' equity $ 2,299,607 2,314,115
================ ===============
</TABLE>
See notes to consolidated financial statements
1
<PAGE>
TRIGON HEALTHCARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months and six months ended
June 30, 2000 and 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
-------------- ------------- ------------ ------------
<S> <C>
Revenues
Premium and fee revenues
Commercial $ 462,402 416,933 904,688 817,560
Federal Employee Program 116,623 110,325 227,873 214,292
Amounts attributable to self-funded arrangements 347,121 312,402 681,208 595,796
Less: amounts attributable to claims under
self-funded arrangements (307,323) (276,862) (601,279) (526,712)
-------------- ------------- ------------ ------------
618,823 562,798 1,212,490 1,100,936
Investment income 28,020 23,442 56,003 45,402
Net realized losses (7,321) (4,191) (5,432) (14,109)
Other revenues 5,717 5,843 11,340 12,173
-------------- ------------- ------------ ------------
Total revenues 645,239 587,892 1,274,401 1,144,402
Expenses
Medical and other benefit costs
Commercial 375,012 341,267 740,091 671,211
Federal Employee Program 110,525 104,514 217,402 204,600
-------------- ------------- ------------ ------------
485,537 445,781 957,493 875,811
Selling, general and administrative expenses 116,022 112,962 226,531 219,280
Interest expense 4,096 1,177 8,068 2,377
-------------- ------------- ------------ ------------
Total expenses 605,655 559,920 1,192,092 1,097,468
-------------- ------------- ------------ ------------
Income before income taxes and minority interest 39,584 27,972 82,309 46,934
Income tax expense 9,730 9,193 23,728 15,541
-------------- ------------- ------------ ------------
Income before minority interest 29,854 18,779 58,581 31,393
Minority interest 1,090 477 1,599 1,012
-------------- ------------- ------------ ------------
Net income $ 28,764 18,302 56,982 30,381
============== ============= ============ ============
Earnings per share (note 5)
Basic net income $ 0.77 0.43 1.51 0.72
============== ============= ============ ============
Diluted net income $ 0.75 0.43 1.48 0.71
============== ============= ============ ============
Weighted average number of common shares outstanding
Basic 37,543 42,178 37,741 42,178
============== ============= ============ ============
Diluted 38,583 42,827 38,541 42,832
============== ============= ============ ============
</TABLE>
See notes to consolidated financial statements
2
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TRIGON HEALTHCARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME (UNAUDITED)
For the three months and six months ended June 30, 2000 and 1999
(in thousands)
<TABLE>
<CAPTION>
2000 1999
---------------- ----------------
<S> <C>
Balance as of April 1, 2000 $ 941,465 1,069,556
Net income 28,764 18,302
Net unrealized losses on investment
securities, net of income taxes (4,785) (13,386)
---------------- ----------------
Comprehensive income 23,979 4,916
---------------- ----------------
Purchase and reissuance of common stock under stock options and other
employee benefits plans, including tax benefits and
net of amortization (3,996) (2,185)
Change in common stock held by consolidated grantor trusts 3,998 (350)
Purchase and retirement of common stock (929) (19,971)
---------------- ----------------
Balance as of June 30, 2000 $ 964,517 1,051,966
================ ================
Balance as of January 1, 2000 $ 936,957 1,071,224
Net income 56,982 30,381
Net unrealized losses on investment
securities, net of income taxes (9,628) (25,678)
---------------- ----------------
Comprehensive income 47,354 4,703
---------------- ----------------
Purchase and reissuance of common stock under stock options and other
employee benefit plans, including tax benefits and
net of amortization (6,063) (3,220)
Change in common stock held by consolidated grantor trusts 3,596 (770)
Purchase and retirement of common stock (17,327) (19,971)
---------------- ----------------
Balance as of June 30, 2000 $ 964,517 1,051,966
================ ================
</TABLE>
See notes to consolidated financial statements
3
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TRIGON HEALTHCARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30, 2000 and 1999
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
2000 1999
---------------- ----------------
<S> <C>
Net income $ 56,982 30,381
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 7,233 9,929
Amortization of unearned compensation 1,977 465
Accretion of discounts and amortization of premiums, net (8,676) (6,330)
Change in allowance for doubtful accounts receivable (1,047) 1,212
Decrease in premiums and other receivables 12,305 24,152
Increase in other assets (1,853) (6,300)
Increase in medical and other benefits payable 21,363 19,903
Increase in unearned premiums 11,128 16,259
Decrease in accounts payable and accrued expenses (10,088) (3,892)
Decrease in other liabilities (45,827) (8,324)
Change in deferred income taxes 15,206 (1,944)
Increase in minority interest 1,751 1,012
Increase (decrease) in obligations for employee benefits (4,469) 9,278
Loss on disposal of property and equipment and other assets 52 78
Realized investment losses, net 5,432 14,109
---------------- ----------------
Net cash provided by operating activities 61,469 99,988
---------------- ----------------
Cash flows from investing activities
Proceeds from sale of property and equipment and other assets 5 221
Capital expenditures (11,518) (9,564)
Cash transferred with the sale of subsidiary, net of cash received (15,337) -
Investment securities purchased (2,259,721) (1,898,243)
Proceeds from investment securities sold 1,880,679 1,388,003
Maturities of fixed income securities 373,803 441,527
---------------- ----------------
Net cash used in investing activities (32,089) (78,056)
---------------- ----------------
Cash flows from financing activities
Payments on long-term debt (245,000) -
Change in commercial paper notes 244,894 -
Purchase and reissuance of common stock under employee
benefit plans, including tax benefits (8,263) (3,685)
Change in common stock purchased by consolidated grantor trusts 3,596 (770)
Purchase and retirement of common stock (17,327) (19,971)
Change in outstanding checks in excess of bank balance (2,721) 3,318
---------------- ----------------
Net cash used in financing activities (24,821) (21,108)
---------------- ----------------
Net increase in cash 4,559 824
Cash - beginning of period 2,530 7,500
---------------- ----------------
Cash - end of period $ 7,089 8,324
================ ================
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
TRIGON HEALTHCARE, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements prepared by Trigon
Healthcare, Inc. and its subsidiaries (collectively, Trigon or the Company)
are unaudited, except for the balance sheet information as of December 31,
1999, which is derived from the Company's audited consolidated financial
statements, pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, the consolidated financial statements do
not include all of the information and the footnotes required by generally
accepted accounting principles for complete financial statements. These
consolidated interim financial statements should be read in conjunction
with the audited consolidated financial statements included in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of such
consolidated financial statements have been included. The results of
operations for the three months and six months ended June 30, 2000 are not
necessarily indicative of the results for the full year.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
2. LONG TERM DEBT AND COMMERCIAL PAPER
The Company has a $300 million revolving credit agreement with a syndicate
of banks, which expires February 2002. The credit agreement provides for
various borrowing options and rates and requires the Company to pay a
facility fee on a quarterly basis. The credit agreement also contains
certain financial covenants and restrictions including minimum net worth
requirements as well as limitations on dividend payments. In conjunction
with the issuance of commercial paper notes during the first quarter of
2000, the Company repaid the $245 million outstanding on the revolving
credit agreement. There were no amounts borrowed under this agreement as of
and for the three months ended June 30, 2000. The weighted average interest
rate for the period the borrowings were outstanding during the three months
and six months ended June 30, 1999 was 5.15% and 5.23%, respectively.
In March 2000, the Company commenced a private placement commercial paper
program providing for the issuance of up to $300 million in aggregate
maturity value of commercial paper notes. The notes were issued at par less
a discount representing an interest factor. Under the program, they may
also be issued at par as interest bearing notes. The notes may be issued
with varying maturities up to a maximum of one year from issuance. As of
June 30, 2000, outstanding notes under the commercial paper program totaled
approximately $244.9 million with an average maturity of 25 days. The
weighted-average discount yield on the outstanding commercial paper notes
5
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was 6.77% as of June 30, 2000. The commercial paper is backed by the
revolving credit agreement. The commercial paper notes have been classified
as long-term debt in the accompanying consolidated statements of financial
condition based on the Company's ability and intent to maintain borrowings
of at least this amount for more than one year.
3. INCOME TAXES
The effective tax rate on income before income taxes and minority interest
for the three months ended June 30, 2000 and 1999 was 24.6% and 32.9%,
respectively. The effective tax rate on income before income taxes and
minority interest for the six months ended June 30, 2000 and 1999 was 28.8%
and 33.1%, respectively. The effective tax rate for the three months and
six months ended June 30, 2000 includes a $2.7 million tax benefit realized
during the second quarter of 2000 related to the sale of its Mid-South
subsidiary (note 8). Excluding this tax benefit, the effective tax rate for
the three months and six months ended June 30, 2000 was 31.5% and 32.1%,
respectively. The effective tax rates for 2000 and 1999, excluding the $2.7
million tax benefit, differ from the statutory tax rate of 35% primarily
due to the Company's investments in tax-exempt municipal bonds which
reduces the effective tax rate by the effect of the tax-exempt investment
income earned.
In conjunction with the Demutualization, the Company was required to make a
payment of $175 million to the Commonwealth of Virginia (Commonwealth
Payment) which was expensed and paid in prior years. The Company claimed
the $175 million Commonwealth Payment as a deduction. The Internal Revenue
Service has denied this deduction during the course of its audit of the
Company. The Company continues to pursue the deduction. In addition, the
Company has filed a lawsuit claiming deductions for losses incurred on the
termination of certain customer and provider contracts. See note 7.
Favorable resolution of these claims is subject to various uncertainties,
including whether the deductions will be allowed at all and, in the case of
the claim for losses on the termination of customer and provider contracts,
the amount of the deductions, if any, that will be allowed. While the
Company believes that its claims have merit, it cannot predict the ultimate
outcome of the claims. The Company has not recognized the impact of the
claims, if any, in the consolidated financial statements.
4. CAPITAL STOCK
The Company commenced its previously announced second stock repurchase
program in February 2000 following completion of its first stock repurchase
program. During the second quarter of 2000, the Company purchased and
retired 19,000 shares of its common stock at a cost of approximately
$929,000 bringing the total shares purchased during 2000 to 555,906 at a
cost of approximately $17.3 million. The excess of the cost of the acquired
shares over par value is charged on a pro rata basis to capital in excess
of par and retained earnings.
In February 2000, the Board of Directors granted 87,681 shares of the
Company's common stock as restricted stock awards in accordance with the
provisions of the 1997 Stock Incentive Plan (Incentive Plan). The shares
vest on a pro rata basis over three years. The recipients of the restricted
stock awards generally may not dispose or otherwise transfer the restricted
stock until vested. For grants of restricted stock, unearned compensation
6
<PAGE>
equivalent to the fair market value of the shares at the date of grant is
recorded as a separate component of shareholders' equity and subsequently
amortized to compensation expense over the vesting period. A total of
104,848 restricted shares were outstanding as of June 30, 2000.
Amortization for the three months ended June 30, 2000 and 1999 was $708,000
and $301,000, respectively and $2 million and $465,000 for the six months,
respectively.
5. NET INCOME AND NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share for the three months and six months ended June 30, 2000
and 1999 (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Numerator for basic and diluted earnings per
share - net income $ 28,764 18,302 56,982 30,381
=================================================================================================================
Denominator
Denominator for basic earnings per share -
weighted average shares 37,543 42,178 37,741 42,178
Effect of dilutive securities
Employee and director stock options and
nonvested restricted stock awards 1,040 649 800 654
-----------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share 38,583 42,827 38,541 42,832
-----------------------------------------------------------------------------------------------------------------
Basic net income per share $ 0.77 0.43 1.51 0.72
=================================================================================================================
Diluted net income per share $ 0.75 0.43 1.48 0.71
=================================================================================================================
</TABLE>
Shares of nonvested restricted stock are not considered outstanding in
computing the weighted-average number of common shares for basic earnings
per share.
6. COMPREHENSIVE INCOME
The reclassification entries under SFAS No. 130, Reporting Comprehensive
Income, for the three months ended June 30, 2000 and 1999 were as follows
(in thousands):
<TABLE>
<CAPTION>
2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C>
Net unrealized losses on investment securities, net of income taxes
Net unrealized holding losses arising during the period, net of
income tax benefit of $5,138 and $9,472 $ (9,545) (16,110)
Less: reclassification adjustment for net losses included in net
income, net of income tax benefit of $2,561 and $1,467 (4,760) (2,724)
---------------------------------------------------------------------------------------------------------
Net unrealized losses on investment securities, net of income taxes $ (4,785) (13,386)
=========================================================================================================
</TABLE>
7
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The reclassification entries under SFAS No. 130, Reporting Comprehensive
Income, for the six months ended June 30, 2000 and 1999 were as follows (in
thousands):
<TABLE>
<CAPTION>
2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C>
Net unrealized losses on investment securities, net of income taxes
Net unrealized holding losses arising during the period, net of
income tax benefit of $7,085 and $19,561 $ (13,159) (34,849)
Less: reclassification adjustment for net losses included in net
income, net of income tax benefit of $1,901 and $4,938 (3,531) (9,171)
---------------------------------------------------------------------------------------------------------
Net unrealized losses on investment securities, net of income taxes $ (9,628) (25,678)
=========================================================================================================
The components of accumulated other comprehensive income as of June 30,
2000 and December 31, 1999 were as follows (in thousands):
June 30, December 31,
2000 1999
--------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on investment securities, net of income
tax expense (benefit) of $(121) and $5,063 $ (225) 9,403
Minimum pension liability, net of income taxes of $169 (315) (315)
--------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (loss) $ (540) 9,088
========================================================================================================
</TABLE>
7. LITIGATION
On June 9, 2000, the Company's subsidiary, Trigon Insurance Company, filed
a lawsuit against the federal government for the recovery of federal income
tax overpayments for the years 1989 through 1995. If successful, the
Company expects to recover approximately $60 million in cash refunds plus
interest of about $40 million and to receive tax refunds for the years 1996
through 1999 of about $15 million. In addition, if the Company is
successful it could receive substantial additional tax credits that could
lower federal income tax liability in future years.
The lawsuit, filed in the United States District Court for the Eastern
District of Virginia, relates to the initial valuation and deductibility of
the Company's assets when, along with other Blue Cross Blue Shield
organizations, it became subject to federal income taxation in 1987. As
part of this change in tax status, Congress provided that if a Blue Cross
or Blue Shield organization disposed of an asset that it had acquired while
tax-exempt, its taxable gain or loss would be computed by reference to the
asset's fair market value at the time the organization became subject to
tax. The Company is seeking deductions for losses incurred on the
termination of certain customer and provider contracts that were held by it
on January 1, 1987, based on the fair market value of the contracts on that
date.
The Internal Revenue Service asserts that the Company is not entitled to
deduct losses incurred on the termination of these contracts. The
resolution of the Company's refund claim is subject to uncertainties,
including whether the court will allow the deductions and, if so, the
amount of the deductions that will be allowed. While the Company believes
that its claim is meritorious, it cannot predict the ultimate outcome of
the claim.
8
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The Company and certain of its subsidiaries are involved in various other
legal actions occurring in the normal course of their business. While the
ultimate outcome of such litigation cannot be predicted with certainty, in
the opinion of Company management, after consultation with counsel
responsible for such litigation, the outcome of those actions is not
expected to have a material adverse effect on the financial condition and
results of operations of the Company.
8. MID-SOUTH EXIT OF HEALTH INSURANCE MARKET AND SALE OF COMPANY
During the second quarter of 2000, the Company charged $6.4 million against
the claim reserves for future losses and charged $0.5 million against the
accrual of certain other exit costs for payments related to the Mid-South
exit accrual, bringing the year-to-date charges against the claim reserves
for future losses and accrual of certain other exit costs to $12.2 million
and $1.1 million, respectively.
On June 1, 2000, the sale all of the issued and outstanding shares of
Mid-South was completed. The purchase price approximated net book value.
The Company retained responsibility for certain medical claims and other
exit costs incurred prior to the sale on June 1, 2000. The stock purchase
agreement also included a purchase price adjustment provision tied to the
financial performance of the Mid-South individual business for the period
from June 1, 2000 through December 31, 2002. The remaining accrual for
future losses on this business is expected to be sufficient to satisfy any
potential payments under this provision of the stock purchase agreement.
9
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9. SEGMENT INFORMATION
The following table presents information by reportable segment for the
three months and six months ended June 30, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
Health Government All
Insurance Programs Investments Other Total
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
Three months ended June 30,
2000
Revenues from external customers $ 502,200 116,623 - 5,123 623,946
Investment income and net realized losses - - 20,699 - 20,699
Intersegment revenues 3,523 - - 1,901 5,424
Depreciation and amortization expense 3,341 62 5 395 3,803
Income before income taxes and minority
interest 28,632 1,665 20,699 420 51,416
1999
Revenues from external customers $ 452,684 110,325 - 5,213 568,222
Investment income and net realized losses - - 19,251 - 19,251
Intersegment revenues 3,221 - - 1,527 4,748
Depreciation and amortization expense 3,848 67 5 369 4,289
Income (loss) before income taxes and
minority interest 18,029 (620) 19,251 207 36,867
Six months ended June 30,
2000
Revenues from external customers $ 984,617 227,873 - 10,328 1,222,818
Investment income and net realized losses - - 50,571 - 50,571
Intersegment revenues 6,603 - - 3,668 10,271
Depreciation and amortization expense 6,745 121 10 763 7,639
Income before income taxes and minority
interest 52,720 1,318 50,571 1,306 105,915
1999
Revenues from external customers $ 887,119 214,292 - 10,861 1,112,272
Investment income and net realized losses - - 31,293 - 31,293
Intersegment revenues 6,012 - - 2,981 8,993
Depreciation and amortization expense 9,534 135 9 712 10,390
Income before income taxes and minority
interest 32,738 87 31,293 864 64,982
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
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A reconciliation of reportable segment total revenues, income before income
taxes and minority interest and depreciation and amortization expense to
the corresponding amounts included in the consolidated statements of
operations for the three months and six months ended June 30, 2000 and 1999
is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------------
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Revenues
Reportable segments
External revenues $ 623,946 568,222 1,222,818 1,112,272
Investment revenues 20,699 19,251 50,571 31,293
Intersegment revenues 5,424 4,748 10,271 8,993
Other corporate revenues 594 419 1,012 837
Elimination of intersegment revenues (5,424) (4,748) (10,271) (8,993)
-----------------------------------------------------------------------------------------------------------------
Total revenues $ 645,239 587,892 1,274,401 1,144,402
=================================================================================================================
Profit or Loss
Reportable segments $ 51,416 36,867 105,915 64,982
Corporate expenses not allocated to segments (7,736) (7,718) (15,538) (15,671)
Unallocated amount - interest expense (4,096) (1,177) (8,068) (2,377)
-----------------------------------------------------------------------------------------------------------------
Income before income taxes and minority interest $ 39,584 27,972 82,309 46,934
=================================================================================================================
Depreciation and amortization expense
Reportable segments $ 3,803 4,289 7,639 10,390
Not allocated to segments (185) (199) (406) (461)
-----------------------------------------------------------------------------------------------------------------
Depreciation and amortization expense $ 3,618 4,090 7,233 9,929
=================================================================================================================
</TABLE>
11
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Substantially all of the revenues of Trigon Healthcare, Inc. and subsidiaries
(collectively, Trigon or the Company) are generated from premiums and fees
received for health care services provided to its members and from investment
income. Trigon's expenses are primarily related to health care services provided
which consist of payments to physicians, hospitals and other providers. A
portion of medical costs expense for each period consists of an actuarial
estimate of claims incurred but not reported to Trigon during the period. The
Company's results of operations depend in large part on its ability to
accurately predict and effectively manage health care costs.
The Company divides its business into four reportable segments: health
insurance, government programs, investments and all other. Its health insurance
segment offers several network products, including health maintenance
organizations (HMO), preferred provider organizations (PPO) and traditional
indemnity products with access to the Company's participating provider network
(PAR) as well as Medicare supplement plans. The government programs segment
includes the Federal Employee Program (FEP) and claims processing for Medicare.
Through its participation in the national contract between the Blue Cross and
Blue Shield Association and the U.S. Office of Personnel Management (OPM), the
Company provides health benefits to federal employees in Virginia. FEP revenues
represent the reimbursement by OPM of medical costs incurred including the
actual cost of administering the program, as well as a performance-based share
of the national program's overall profit. The Company discontinued its role as a
claims processing intermediary for the federal government with the Medicare Part
A program in Virginia and West Virginia, effective August 31, 1999.
Additionally, the Company discontinued its role as the primary provider of
computer processing capabilities for Medicare Part A claims processing to
certain other Blue Cross and Blue Shield organizations during November 1999. As
an administrative agent for Medicare, the Company allocated operating expenses
to determine reimbursement due for services rendered in accordance with the
contract. Medicare claims processed were not included in the consolidated
statements of operations and the reimbursement of allocated operating expenses
was recorded as a reduction of the Company's selling, general and administrative
expenses. All of the investment portfolios of the consolidated subsidiaries are
managed and evaluated collectively within the investment segment. The Company's
other health-related business, including disease management programs,
third-party administration for medical and workers' compensation, health
promotion and similar products, is reflected in an "all other" category.
Within the Company's health insurance network product offerings, employer groups
may choose various funding options ranging from fully-insured to partially or
fully self-funded financial arrangements. While self-funded customers
participate in Trigon's networks, the customers bear all or portions of the
claims risk.
12
<PAGE>
ENROLLMENT
The following table sets forth the Company's enrollment data by network:
As of June 30,
------------------------------
2000 1999
----------------------------------------------------------- ----------------
Health Insurance
Commercial
HMO 283,744 260,853
PPO 442,393 325,202
PAR 145,116 157,348
Medicaid / Medicare HMO 56,708 52,250
Medicare supplement 119,936 119,558
----------------------------------------------------------- ----------------
Total commercial excluding Mid-South 1,047,897 915,211
Self-funded 693,813 671,320
Processed for other Blue Cross and Blue
Shield organizations (ASO) 5,142 4,731
----------------------------------------------------------- ----------------
Total health insurance excluding Mid-South 1,746,852 1,591,262
----------------------------------------------------------- ----------------
Government
Federal Employee Program (PPO) 221,853 216,468
----------------------------------------------------------- ----------------
Total government 221,853 216,468
----------------------------------------------------------- ----------------
Total excluding Mid-South 1,968,705 1,807,730
Mid-South, commercial - 104,057
Mid-South, ASO - 22,514
----------------------------------------------------------- ----------------
Total 1,968,705 1,934,301
=========================================================== ================
PREMIUM AND PREMIUM EQUIVALENTS BY NETWORK SYSTEM
The following table sets forth the Company's premium and premium equivalents by
network (in thousands):
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------ ------------------------------
2000 1999 2000 1999
--------------------------------------------------------------- --------------- -------------- ---------------
<S> <C>
Health Insurance
Commercial
HMO $ 112,492 98,409 221,064 193,482
PPO 189,886 128,997 366,673 252,753
PAR 69,204 71,278 139,266 142,943
Medicaid / Medicare HMO 29,048 27,917 55,203 46,017
Medicare supplement 61,772 57,397 122,482 114,415
--------------------------------------------------------------- --------------- -------------- ---------------
Total commercial excluding Mid-South 462,402 383,998 904,688 749,610
Self-funded 347,121 312,402 681,208 595,796
--------------------------------------------------------------- --------------- -------------- ---------------
Total health insurance excluding Mid-South 809,523 696,400 1,585,896 1,345,406
Government
Federal Employee Program (PPO) 116,623 110,325 227,873 214,292
--------------------------------------------------------------- --------------- -------------- ---------------
Total government 116,623 110,325 227,873 214,292
--------------------------------------------------------------- --------------- -------------- ---------------
Total excluding Mid-South 926,146 806,725 1,813,769 1,559,698
Mid-South, commercial - 32,935 - 67,950
--------------------------------------------------------------- --------------- -------------- ---------------
Total $ 926,146 839,660 1,813,769 1,627,648
=============================================================== =============== ============== ===============
</TABLE>
13
<PAGE>
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Premium and fee revenues increased 10.0% to $618.8 million in the second quarter
of 2000 from $562.8 in the second quarter of 1999. The $56.0 million increase is
due to a combination of rate increases and enrollment growth in the Company's
health insurance segment's HMO and PPO networks, offset by expected declines in
the segment's PAR network enrollment and the third quarter 1999 Mid-South market
exit. Commercial revenue from the Virginia HMO, PPO and PAR networks increased
20.4% to $462.4 million in the second quarter of 2000 from $384.0 million in the
second quarter of 1999. This increase is attributed to a 14.3% increase in
member months and a 5.4% increase in revenue per member. The Mid-South market
exit resulted in a $32.9 million decrease in commercial revenue. Overall,
premium revenues on a per member per month basis for the Company's commercial
business increased 8.4% to $148.73 for the second quarter of 2000 from $137.19
for the second quarter of 1999. Self-funded margins increased $4.3 million or
12.0% due to an 8.5% increase in margin per member per month. The government
segment's FEP revenues increased 5.7% to $116.6 million from $110.3 million in
the second quarter of last year. The increase is due to increased medical costs
to be reimbursed by OPM and a 2.5% increase in enrollment.
Total enrollment increased to 1,968,705 as of June 30, 2000 from 1,934,301 as of
June 30, 1999. The increase of 34,404 was a result of a 29,019 increase in the
Company's health insurance segment, reflecting an increase of 155,590 members in
the Virginia enrollment offset by a decrease of 126,571 members due to the
Mid-South market exit, and a 5,385 increase in the government segment. The
Virginia enrollment increase was the result of a 132,686 increase in commercial
enrollment, a 14.5% increase, and a 22,493 increase in self-funded enrollment.
Enrollment in the HMO network increased by 8.7% over the prior year and accounts
for 32.5% of the total commercial enrollment. Enrollment in the PPO network as
of June 30, 2000 increased 36.0% over June 30, 1999 and accounts for 42.2% of
the Company's commercial enrollment. Growth in PPO was offset by an expected
decline of 7.8% in the Company's PAR network as members migrate into more
tightly managed networks. The PAR network enrollment represents 13.8% of the
Company's commercial enrollment. Self-funded enrollment increased 3.4% as of
June 30, 2000.
Investment income increased 19.5% to $28.0 million in the second quarter of 2000
from $23.4 million in the second quarter of 1999. Net realized losses were $7.3
million in the second quarter of 2000 as compared to $4.2 million in the second
quarter of 1999. The increase in investment income is due to growth in
investment assets caused by positive operating cash flow, favorable total return
on investments and an increase in long-term debt during the second quarter of
1999. The increase in net realized losses for the second quarter of 2000 is due
to a shift in asset allocation from medium quality to investment grade bonds.
Medical costs increased 8.9% to $485.5 million in the second quarter of 2000
from $445.8 million in the second quarter of 1999. The $39.8 million increase is
a result of growth in the Virginia health insurance segment's commercial
enrollment partially offset by Mid-South's market exit in the third quarter of
1999, expected levels of medical cost inflation and an increase in the
government segment's FEP medical costs reimbursed by OPM. The medical cost per
14
<PAGE>
member per month for the Company's commercial business increased 7.4% to $120.63
in the second quarter of 2000 from $112.29 in the second quarter of 1999.
Combined with an 8.4% increase in commercial premium revenues per member per
month, the loss ratio on commercial business decreased to 81.1% in the second
quarter of 2000 from 81.9% in the second quarter of 1999. As a result of medical
cost management initiatives, cost and utilization trends have been maintained at
levels consistent with current pricing and margin objectives. The implementation
of the "three-tier" drug benefit co-pay program continues to positively impact
pharmacy costs with a cost trend of 7.1% for the twelve month period ended June
30, 2000 compared to 10.2% for the twelve month period ended June 30, 1999. The
Company has negotiated a new pharmacy contract to be effective January 1, 2001
that will improve the existing contractual arrangement. Outpatient cost per
member increased 2.1% for the twelve month period ended June 30, 2000 as
outpatient fee schedules continue to benefit cost trends. The Company continues
to take an active role in working with physicians through peer-to-peer
communication and implementation of national medical management guidelines.
Selling, general and administrative expenses (SG&A) increased by 2.7% to $116.0
million in the second quarter of 2000 from $113.0 million in the second quarter
of 1999. This increase is attributed to the incremental commissions and
operations costs resulting from the enrollment increase offset by the reduction
of expenses due to Mid-South. The SG&A ratio decreased to 12.5% in the second
quarter of 2000 from 13.4% in the second quarter of 1999. The decrease in the
SG&A ratio, due to the increased enrollment and revenue, provides the
opportunity to leverage the increased revenue with long-range investments
including e-commerce technology, systems infrastructure and customer service
enhancements. These investments, while impacting the SG&A ratio, will contribute
operational improvements and efficiencies. The Company expects the SG&A ratio to
increase throughout the remainder of the year as these investments occur.
Interest expense in the second quarter of 2000 was $4.1 million compared to $1.2
million in the second quarter of 1999. The increase is primarily the result of a
net increase in long-term debt of approximately $160 million beginning in the
third quarter of 1999.
Income before income taxes and minority interest increased $11.6 million to
$39.6 million in the second quarter of 2000 from $28.0 million in the second
quarter of 1999. The increase is a result of higher investment income of $4.6
million and a $13.1 million increase in operating income (defined as premium and
fee revenues and other revenues less medical and other benefit costs and
selling, general and administrative expenses), offset by higher interest expense
of $2.9 million and increased net realized losses of $3.1 million. Operating
income increased primarily due to growth in the health insurance segment.
The effective tax rate on income before income taxes and minority interest for
the second quarter of 2000 and 1999 was 24.6% and 32.9%, respectively. The
effective tax rate differs from the statutory tax rate of 35% primarily due to
the Company's investments in tax-exempt municipal bonds and a $2.7 million tax
benefit recorded during the second quarter of 2000 related to the sale of
Mid-South.
15
<PAGE>
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Premium and fee revenues increased 10.1% to $1.2 billion in the first six months
of 2000 from $1.1 billion in the first six months of 1999. The $111.6 million
increase is due to a combination of rate increases and enrollment growth in the
Company's health insurance segment's HMO and PPO networks, offset by expected
declines in the segment's PAR network enrollment and the third quarter 1999
Mid-South market exit. Commercial revenue from the Virginia HMO, PPO and PAR
networks increased 20.7% to $904.7 million in the first six months of 2000 from
$749.6 million in the first six months of 1999. This increase is attributed to a
14.4% increase in member months and a 5.5% increase in revenue per member. The
Mid-South market exit resulted in a $68.0 million decrease in commercial
revenue. Overall, premium revenues on a per member per month basis for the
Company's commercial business increased 8.5% to $147.62 for the first six months
of 2000 from $136.05 for the first six months of 1999. Self-funded margins
increased $10.8 million or 15.7% due to a 12.5% increase in margin per member
per month. The government segment's FEP revenues increased 6.3% to $227.9
million from $214.3 million in the first six months of last year. The increase
is due to increased medical costs to be reimbursed by OPM and a 2.5% increase in
enrollment.
Investment income increased 23.3% to $56.0 million in the first six months of
2000 from $45.4 million in the first six months of 1999. Net realized losses
decreased to $5.4 million in the first six months of 2000 from $14.1 million in
the first six months of 1999. The increase in investment income is due to growth
in investment assets caused by positive operating cash flow, favorable total
return on investments and an increase in long-term debt during the second
quarter of 1999. The decline in net realized losses for the first six months of
2000 is due to more favorable market conditions for fixed income securities.
Medical costs increased 9.3% to $957.5 million in the first six months of 2000
from $875.8 million in the first six months of 1999. The $81.7 million increase
is a result of growth in the Virginia health insurance segment's commercial
enrollment partially offset by Mid-South's market exit in the third quarter of
1999, expected levels of medical cost inflation and an increase in the
government segment's FEP medical costs reimbursed by OPM. The medical cost per
member per month for the Company's commercial business increased 8.1% to $120.77
in the first six months of 2000 from $111.70 in the first six months of 1999.
Combined with an 8.5% increase in commercial premium revenues per member per
month, the loss ratio on commercial business decreased to 81.8% in the first six
months of 2000 from 82.1% in the first six months of 1999. As a result of
medical cost management initiatives, cost and utilization trends have been
maintained at levels consistent with current pricing and margin objectives. The
implementation of the "three-tier" drug benefit co-pay program continues to
positively impact pharmacy costs with a cost trend of 7.1% for the twelve month
period ended June 30, 2000 compared to 10.2% for the twelve month period ended
June 30, 1999. The Company has negotiated a new pharmacy contract to be
effective January 1, 2001 that will improve the contractual arrangement.
Outpatient cost per member increased 2.1% for the twelve month period ended June
30, 2000 as outpatient fee schedules continue to benefit cost trends. The
Company continues to take an active role in working with physicians through
peer-to-peer communication and implementation of national medical management
guidelines.
16
<PAGE>
SG&A expenses increased by 3.3% to $226.5 million in the first six months of
2000 from $219.3 million in the first six months of 1999. This increase is
attributed to the incremental commissions and operations costs resulting from
the enrollment increase offset by the reduction of expenses due to Mid-South.
The SG&A ratio decreased to 12.4% in the first six months of 2000 from 13.4% in
the first six months of 1999. The decrease in the SG&A ratio, due to the
increased enrollment and revenue, provides the opportunity to leverage the
increased revenue with long-range investments including e-commerce technology,
systems infrastructure and customer service enhancements. These investments,
while impacting the SG&A ratio, will contribute operational improvements and
efficiencies. The Company expects the SG&A ratio to increase throughout the
remainder of the year as these investments occur.
Interest expense in the first six months of 2000 was $8.1 million compared to
$2.4 million in the first six months of 1999. The increase is primarily the
result of a net increase in long-term debt of approximately $160 million
beginning in the third quarter of 1999.
Income before income taxes and minority interest increased $35.4 million to
$82.3 million in the first six months of 2000 from $46.9 million in the first
six months of 1999. The increase is a result of decreased net realized losses of
$8.7 million, higher investment income of $10.6 million and a $21.8 million
increase in operating income (defined as premium and fee revenues and other
revenues less medical and other benefit costs and selling, general and
administrative expenses), offset by higher interest expense of $5.7 million.
Operating income increased primarily due to growth in the health insurance
segment.
The effective tax rate on income before income taxes and minority interest for
the first six months of 2000 and 1999 was 28.8% and 33.1%, respectively. The
effective tax rate differs from the statutory tax rate of 35% primarily due to
the Company's investments in tax-exempt municipal bonds and a $2.7 million tax
benefit recorded during the second quarter of 2000 related to the sale of
Mid-South.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash are premiums and fees received and
investment income. The primary uses of cash include health care benefit expenses
and capitation payments, brokers' and agents' commissions, administrative
expenses, income taxes and repayment of long-term debt. Trigon generally
receives premium revenues in advance of anticipated claims for related health
care services.
The Company's investment policies are designed to provide liquidity to meet
anticipated payment obligations and preserve capital. Trigon fundamentally
believes that concentrations of investments in any one asset class are unwise
due to constantly changing interest rates as well as market and economic
conditions. Accordingly, the Company maintains a diversified investment
portfolio consisting both of fixed income and equity securities, with the
objective of producing a consistently growing income stream and maximizing
risk-adjusted total return. The fixed income portfolio includes government and
corporate securities, both domestic and international, with an average quality
17
<PAGE>
rating of "A" as of June 30, 2000. The portfolio had an average contractual
maturity of 7.4 years as of June 30, 2000. A portion of the fixed income
portfolio is designated as a short-term fixed income portfolio and is intended
to cover near-term cash flow needs and to serve as a buffer for unanticipated
business needs. The equity portfolios contain readily marketable securities
ranging from small growth to well-established Fortune 500 companies. The
international portfolio is diversified by industry, country and currency-related
exposure. As of June 30, 2000, the Company's equity exposure, comprised of
direct equity as well as equity-indexed investments, was 12% of the total
portfolio, as compared to 14% as of December 31, 1999.
The Company has a $300 million revolving credit agreement with a syndicate of
banks, which expires February 2002. In conjunction with the issuance of
commercial paper notes during the first quarter of 2000, the Company repaid the
outstanding balance of $245 million during the first quarter of 2000. There were
no amounts borrowed under this agreement as of and for the three months ended
June 30, 2000.
In March 2000, the Company commenced a private placement commercial paper
program providing for the issuance of up to $300 million in aggregate maturity
value of commercial paper notes. As of June 30, 2000, outstanding notes under
the commercial paper program totaled approximately $244.9 million with an
average maturity of 25 days. The commercial paper is backed by the revolving
credit agreement. The commercial paper notes have been classified as long-term
debt in the consolidated statements of financial condition based on the
Company's ability and intent to maintain borrowings of at least this amount for
more than one year.
The Company commenced its previously announced second stock repurchase program
in February 2000 following completion of its first stock repurchase program.
During the second quarter of 2000, the Company purchased and retired 19,000
shares of its common stock at a cost of approximately $929,000 bringing the
total shares purchased during 2000 to 555,906 at a cost of approximately $17.3
million.
The Company believes that cash flow generated by operations and its cash and
investment balances will be sufficient to fund continuing operations, capital
expenditures and debt repayment costs for the foreseeable future. The nature of
the Company's operations is such that cash receipts are principally premium
revenues typically received up to three months prior to the expected cash
payment for related health care services. The Company's operations are not
capital intensive, and there are currently no commitments for major capital
expenditures to support existing business.
FORWARD-LOOKING INFORMATION
This Item, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and this Form 10-Q contain certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including, among other things, statements concerning future earnings,
premium rates, enrollment and medical and administrative costs. Such
forward-looking statements are subject to inherent risks and uncertainties, many
of which are beyond the control of the Company, that may cause actual results to
differ materially from those contemplated by such forward-looking statements.
Factors that may cause actual results to differ materially from those
18
<PAGE>
contemplated by such forward-looking statements include, but are not limited to,
rising health care costs, business conditions and competition in the managed
care industry, government action and other regulatory issues. Additional
information concerning factors that could cause actual results to differ
materially from those in forward-looking statements is contained in the
Company's Annual Report on Form 10-K under the caption "Forward-Looking
Information."
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a result of its investing and borrowing activities, the Company is exposed to
financial market risks, specifically those resulting from changes in interest
rates, foreign currency exchange rates and marketable equity security prices. No
material changes have occurred in the Company's exposure to financial market
risks since December 31, 1999. A discussion of the Company's market risk is
incorporated by reference in Part II, Item 7A of the Company's Annual Report on
Form 10-K.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(a) On June 9, 2000, the Company's subsidiary, Trigon Insurance Company, filed
a lawsuit against the federal government for the recovery of federal income
tax overpayments for the years 1989 through 1995. If successful, the
Company expects to recover approximately $60 million in cash refunds plus
interest of about $40 million and to receive tax refunds for the years 1996
through 1999 of about $15 million. In addition, if the Company is
successful it could receive substantial additional tax credits that could
lower federal income tax liability in future years.
The lawsuit, filed in the United States District Court for the Eastern
District of Virginia, relates to the initial valuation and deductibility of
the Company's assets when, along with other Blue Cross Blue Shield
organizations, it became subject to federal income taxation in 1987. As
part of this change in tax status, Congress provided that if a Blue Cross
or Blue Shield organization disposed of an asset that it had acquired while
tax-exempt, its taxable gain or loss would be computed by reference to the
asset's fair market value at the time the organization became subject to
tax. The Company is seeking deductions for losses incurred on the
termination of certain customer and provider contracts that were held by it
on January 1, 1987, based on the fair market value of the contracts on that
date.
The Internal Revenue Service asserts that the Company is not entitled to
deduct losses incurred on the termination of these contracts. The
resolution of the Company's refund claim is subject to uncertainties,
including whether the court will allow the deductions and, if so, the
amount of the deductions that will be allowed. While the Company believes
that its claim is meritorious, it cannot predict the ultimate outcome of
the claim.
The Company and certain of its subsidiaries are involved in various other
legal actions occurring in the normal course of their business. While the
ultimate outcome of such litigation cannot be predicted with certainty, in
the opinion of Company management, after consultation with counsel
responsible for such litigation, the outcome of those actions is not
expected to have a material adverse effect on the financial condition and
results of operations of the Company.
19
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on April 26, 2000, the
following members were elected to the Board of Directors:
Votes For Votes Withheld
--------- -------------
Lenox D. Baker, Jr., M.D. 24,551,001 421,352
Joseph S. Mallory 24,538,456 433,897
Donald B. Nolan, M.D. 24,551,256 421,097
Hubert R. Stallard 24,548,729 423,624
The matters voted upon at the Annual Meeting of Shareholders and the results of
the voting were as follows:
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Abstained Nonvotes
--------- ------- --------- --------
<S> <C>
Approval of amendments to the Company's 1997 Stock
Incentive Plan 20,380,030 2,643,592 191,979 1,756,752
Ratification of KPMG LLP as independent auditors of
the Company for 2000 24,841,820 29,160 101,373 --
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following is a list of exhibits filed with the Form 10-Q:
Exhibit
Number Description
------- -----------
11 -- Computation of per share earnings (losses) for the three months
and six months ended June 30, 2000. Exhibit has been omitted
as the detail necessary to determine the computation of per
share earnings can be clearly determined from the material
contained in Part I of this Form 10-Q.
27 -- Financial Data Schedule.
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K:
None filed during the three months ended June 30, 2000.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIGON HEALTHCARE, INC.
Registrant
Dated: August 11, 2000 By: /s/ Thomas R. Byrd
--------------------
THOMAS R. BYRD
SENIOR VICE PRESIDENT & CHIEF
FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER)
<PAGE>
EXHIBIT INDEX
Exhibit
Number
27 -- Financial Data Schedule.
