Health Care Service Corporation, a Mutual Legal Reserve Company 2015 FHLB INSURANCE CONFERENCE

Health Care Service Corporation, a Mutual Legal Reserve Company HEALTH CARE SERVICE CORPORATION

3 Health l Dental l Life l Disability l Connectivity l Pharmacy l Health IT 15 million members largest U.S. health insurer 4 th Wholly Owned Subsidiaries Partially Owned Partnerships More than Health Care Service Corporation

4 HCSC Today 30 Billion in Revenue –Additional 30 Billion in “Premium Equivalents” from our Self Insured Business Largest non-investor-owned health insurer in the country –Fourth largest overall by measure of membership Serves more than 15 million members across 5 states –Blue Cross Blue Shield License in Illinois, Montana, New Mexico, Oklahoma and Texas –Service over 3 million affiliated members through BlueCard and other operating subsidiaries Via the BlueCard network, HCSC members have access to hospitals and physicians in over 200 countries and approximately 96% of hospitals and 92% of physicians in the United States HCSC employs nearly 23,000

5 HCSC Today Strong local and national policy presence Elected to participate in all ACA Exchanges within our 5 states Strategically keep focus on “local” presence Committed to our non-investor owned status Invested in a diversified strategy, in pace with changes to the industry Dedicated to: –Expanding the access to high quality and cost effective health, –Equipping our members with information and tools so they can make the best health care decisions for themselves and their families

HCSC: A Purpose Driven Organization 6 To do everything in our power to stand with our members in sickness and in health. INTEGRITY Everyone deserves it. COMMITMENT We put our heart into our work. Always do the right thing. RESPECT We are dedicated professionally and personally. CARING

7 HCSC & FHLB - Part of a Broader Strategy Pre-ACA Strategy - Unsecured Debt –Heading into ACA, HCSC strategically obtained unsecured debt ($500M 10Y 144A & $400M Revolver) –Improved preparedness to face the uncertainty of health reform and the potential volatility in underwriting margins –Enhanced capacity to fund growth opportunities, capabilities, strategic acquisitions and investments –Established a presence in the capital markets increasing investors’ awareness of HCSC and a pricing marker relative to peers Post ACA - Emphasizing Lower Cost and Flexibility of Secured Debt –Optimize inherent attributes of non-public corporate structure –Leverage HCSC capital structure to low cost financing  Leverage the risk averse investment philosophy, investment portfolio returns of 3-4%, investments comprise over 75% of HCSC’s capital –Supplement external capital sources –Collateralized borrowing is generally more accessible across all market cycles Leverages portfolio assets –Substantially reduces the cost of external borrowing –Provides opportunity to garner a positive spread against borrowing costs Increases financial flexibility, options outside of accessing commercial banks and capital markets FHLB typically one of the least expensive borrowing costs, optimize the firm’s weighted average cost of capital (WACC).