We continued to be guided by sound principles of business management that focus on providing quality products, superior service and value to our 3.4 million customers throughout Delaware, Maryland, Northern Virginia and Washington, D.C., while at the same time demonstrating our commitment to the community. The highlights of the CareFirst record of achievement in 2005 are summarized in this report. Of special note is CareFirst Commitment, our multi-year corporate initiative to address the health care needs of our customers and the communities we serve.

To help make health care more affordable, we reduced CareFirst’s target net income for 2005 by $60 million and absorbed another $20 million in new HMO premium taxes that otherwise would have been passed on to our members in Maryland. Both actions resulted in lower premium increases for our members in a year in which national health care spending again reached an all-time high. We vigorously sought to close the gaps in health care access and delivery for the increasingly diverse communities CareFirst serves. We entered into new partnerships with hospitals and physicians to improve the quality of care delivered to our members. In addition, we joined with others to promote patient safety and improve the overall efficiency of the health care system.

Going forward, CareFirst remains committed to improving and expanding on our efforts of the past and to exploring new and innovative approaches to improve care in the future. We will not lose sight of what is most important – our commitment to the interests and good health of those who depend on us to cover their health care needs. We at CareFirst are grateful for your support and will stay focused on your needs going forward, just as we have for more than 70 years.

Sincerely,

William L. Jews President and Chief Executive Officer

Michael R. Merson Chairman, CareFirst, Inc. Board of Directors