IBC annual report : John George

While individuals saw their 401(k) portfolios plummet in 2008, Independence Blue Cross took it on the chin in a line on their balance sheet that reflects investment gains or losses.

In 2007, that line was a positive $35.1 million for IBC. Last year, Philadelphia's largest health insurer posted a $88.98 million investment loss.

Overall, IBC's net loss for 2008 was $78.7 million, down from a $170.9 million profit the previous year.

The company's gross underwriting income climbed slightly to $11.4 billion last year from $11 billion in 2007. Its surplus dropped to $1.3 billion from $1.7 billion during the same time period.

In its annual report released last week, IBC noted: "The challenging times underscore the need to maintain an adequate surplus so that our members have assurance that if there is an unforeseen natural or economic disaster we are able to pay their claims. Despite the decline in surplus, [IBC] remains a financially stable company, and the current level of surplus still places [IBC] in the 'efficient' surplus range, as defined by the Pennsylvania Insurance Department."

Surplus levels were among the many issues raised in 2008 when the state held 10 hearings on IBC's proposal to merge with Highmark Inc. of Pittsburgh. IBC and Highmark withdrew their proposal at the start of 2009 after it became clear the state insurance department would only approve the deal if one of the companies relinquished their "Blue" brand mark so another health insurer could use it to compete with the merged entity.

"We were disappointed that our consolidation with Highmark did not take place," said Joseph A. Frick, president and CEO of IBC, in the annual report. "However, the detailed analysis of our business that we undertook yielded invaluable insights that will lead to more efficiencies and innovation for our customers."

In 2008, Frick said, the company doubled the number of hospitals in its pay-for-performance program, welcomed 228 business into its "wellness partners" program that provides customized wellness programs and events for employers and enrolled almost 20,000 moms-to-be in its prenatal care program.

On a personal note, Frick said a 2007 battle with colon cancer prompted him to make health and fitness a personal priority. "I am proud to say that on May 4, at age 55, I participated for the first time in the 10-mile 2008 Blue Cross Broad Street Run," he said. "Yes, countless runners flashed by me, but I finished. At the 2009 race I'm determined to pass a few people myself."

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