Edgar Filing: ANTHEM INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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[_] Preliminary Proxy Statement

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Rule 14A-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-12

Anthem, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:

Reg. (S) 240.14a-101
SEC 1913 (3-99)

[LOGO] ANTHEM

April 2, 2002

To Our Shareholders:

The Board of Directors joins us in extending to you a cordial invitation to
attend the 2002 Annual Meeting of Shareholders of Anthem, Inc. The meeting will
be held at the Hilbert Circle Theatre, 45 Monument Circle, Indianapolis,
Indiana, at 11:00 a.m. Indianapolis time on Monday, May 13, 2002.

In addition to voting on the matters described in this Proxy Statement, we
will review the Company's 2001 business results and discuss our plans for 2002
and beyond. There will be an opportunity to discuss matters of interest to you
as a shareholder.

We hope many Anthem, Inc. shareholders will find it convenient to be present
at the meeting, and we look forward to greeting those personally able to
attend. It is important that your shares be represented and voted whether or
not you plan to be present. THEREFORE, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN, PLEASE COMPLETE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED, OR YOU CAN VOTE THROUGH THE INTERNET OR BY
TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. No postage
is necessary if the envelope is mailed in the United States. The prompt return
of your proxy card will save the expense involved in further communications.
Any shareholder attending the meeting may vote in person even if a proxy card
has been returned.

We hope that you will be able to attend the meeting, and we look forward to
seeing you.

Sincerely,

/s/ L. Ben Lytle

L. BEN LYTLE
Chairman of the Board

/s/ Larry C. Glasscock

LARRY C. GLASSCOCK
President and Chief Executive Officer

ANTHEM, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 2002

The Annual Meeting of Shareholders of Anthem, Inc. will be held at the
Hilbert Circle Theatre, 45 Monument Circle, Indianapolis, Indiana, on Monday,
May 13, 2002, at 11:00 a.m., Indianapolis time, for the following purposes:

(1) To elect five directors to serve until the 2005 Annual Meeting of
Shareholders and until their successors are elected and have qualified;

(2) To ratify the appointment of Ernst & Young LLP as auditors for the
Company for 2002; and

(3) To transact such other business as may properly come before the meeting.

All shareholders of record at the close of business on March 4, 2002 will be
eligible to vote.

It is important that your shares be represented at this meeting. Whether or
not you expect to be present, please fill in, date, sign and return the
enclosed proxy card in the accompanying addressed, postage-prepaid envelope, or
you can vote through the Internet or by telephone by following the instructions
on the enclosed proxy card. If you attend the meeting, you may revoke your
proxy and vote in person.

By Order of the Board of Directors

/s/ Nancy L. Purcell

Nancy L. Purcell, Secretary

ANTHEM, INC.

120 Monument Circle
Indianapolis, IN 46204

PROXY STATEMENT

Annual Meeting of Shareholders
May 13, 2002

This Proxy Statement is being furnished to shareholders on or about April 2,
2002 in connection with a solicitation by the Board of Directors of Anthem,
Inc. (the "Company") of proxies to be voted at the Annual Meeting of
Shareholders to be held at 11:00 a.m., Indianapolis time, Monday, May 13, 2002,
at the Hilbert Circle Theatre, 45 Monument Circle, Indianapolis, Indiana, for
the purposes set forth in the accompanying Notice.

At the close of business on March 4, 2002, the record date for the Annual
Meeting, there were 103,388,914 shares of Common Stock of the Company
outstanding and entitled to vote at the meeting. On all matters, including the
election of directors, each shareholder will have one vote for each share held.
In order for business to be conducted at the Annual Meeting, a quorum must be
present. A quorum will be present if 25% of the votes entitled to be cast on a
matter are represented in person or by proxy.

Whether or not you expect to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy card in the enclosed postage-prepaid
envelope in order to ensure your representation at the meeting. You can also
vote your shares through the Internet or by telephone by following the
instructions on the accompanying proxy card. If you want to vote through the
Internet or by telephone, you must do so before 11:59 p.m. (EDT), May 12, 2002.
You may revoke your proxy at any time prior to the Annual Meeting. If a
shareholder executes more than one proxy, the proxy having the latest date will
revoke any earlier proxies. A shareholder attending the meeting will be given
the opportunity to revoke his or her proxy and vote in person.

Unless revoked, a proxy will be voted at the meeting in accordance with the
instructions of the shareholder in the proxy, or, if no instructions are given,
for the election as directors of all nominees listed under Proposal 1 and for
Proposal 2. Election of directors will be determined by the vote of a plurality
of the votes cast on such election. Approval of Proposal 2 will be subject to
the vote of a greater number of votes cast favoring approval than the votes
cast opposing it. A proxy may indicate that all or a portion of the shares
represented by such proxy are not being voted with respect to a specific
proposal. This could occur, for example, when a broker is not permitted to vote
shares held in street name on certain proposals in the absence of instructions
from the beneficial owner. Shares that are not voted with respect to a specific
proposal will be considered as not present and entitled to vote on such
proposal, even though such shares will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. As a result, with respect to Proposals 1 and 2, neither broker
non-votes nor abstentions will affect the determination of whether such
proposals will be approved.

The Board of Directors knows of no matters, other than those described in
the attached Notice of Annual Meeting of Shareholders, which are to be brought
before the meeting. If other matters properly come before the meeting, it is
the intention of the persons named in the accompanying proxy card to vote such
proxy in accordance with their judgment on such matters.

The cost of the solicitation of proxies will be borne by the Company. The
Company has engaged Georgeson Shareholder Communications, Inc. to assist in the
solicitation of proxies. Georgeson will receive a fee of approximately $7,000
plus reasonable out-of-pocket expenses for this work. The Company also will
reimburse banks, brokers or other custodians, nominees and fiduciaries for
their expenses in forwarding the Company's proxy materials to beneficial owners
and seeking instruction with respect thereto. In addition, directors, officers
or other employees of the Company, without additional compensation, may solicit
proxies from shareholders in person, or by telephone, facsimile transmission or
other electronic means of communication.

ELECTION OF DIRECTORS

Nominees

The Board of Directors of the Company consists of thirteen directors divided
into three classes. Two classes contain four directors each, and the third
class contains five directors. The term of one class of directors expires each
year. Generally, each director serves until the Annual Meeting of Shareholders
held in the year that is three years after such director's election and until
such director's successor is elected and has qualified.

Five directors are to be elected at the meeting, each to hold office for a
term to expire at the 2005 Annual Meeting of Shareholders and until his or her
successor is elected and has qualified. It is the intention of the persons
named in the accompanying form of proxy to vote such proxy for the election to
the Board of Directors of Mrs. Susan B. Bayh, Messrs. Allan B. Hubbard, William
G. Mays and William J. Ryan and Senator Donald W. Riegle, Jr. Each of the
nominees for director is presently a director, has consented to being named as
a nominee in this Proxy Statement and has indicated a willingness to serve if
elected. However, if any such person is unable or unwilling to accept
nomination or election, it is the intention of the persons named in the
accompanying form of proxy to nominate such other person as director as they
may in their discretion determine, in which event the shares will be voted for
such other person.

Unless otherwise indicated below, the principal occupation of each director
or nominee has been the same for the last five years. There is no family
relationship between any of the directors or executive officers of the Company.

NOMINEES FOR DIRECTOR

Three-year term to expire at the Annual Meeting of Shareholders in 2005

Susan B. Bayh, age 42, has been a director of Anthem, Inc. since 2001 and a
director of Anthem Insurance Companies, Inc. ("Anthem Insurance") since 1998.
Mrs. Bayh has been a Distinguished Visiting Professor in the College of
Business Administration at Butler University since 1994. She was a member of
the International Joint Commission between the United States and Canada from
1994 to 2001. Mrs. Bayh is a director of Corvas International, Inc.
(biotechnology), Cubist Pharmaceuticals, Inc. (biotechnology), Curis, Inc.
(biomedical), Emmis Communications Corporation (telecommunications) and
Esperion Therapeutics, Inc. (biopharmaceutical). She is also a member of the
Board of Trustees of Butler University.

Allan B. Hubbard, age 54, has been a director of Anthem, Inc. since 2001 and
a director of Anthem Insurance since 1999. He has been President of E&A
Industries (management company for various manufacturing companies) since 1993.
From 1991 to 1992, Mr. Hubbard served as Deputy Chief of Staff to the Vice
President of the United States. Mr. Hubbard is a director of The Hudson
Institute, Maxon Corporation (manufacturer), the Indiana Chamber of Commerce
and the Indiana Manufacturers Association.

William G. Mays, age 56, has been a director of Anthem, Inc. since 2001 and
a director of Anthem Insurance since 1993. He has been President and Chief
Executive Officer of Mays Chemical Company, Inc. (chemical distribution) since
1980. Mr. Mays is a director of Vectren Corporation (gas and electric utility),
the Indiana University Foundation and the National Minority Supplier
Development Council.

Senator Donald W. Riegle, Jr., age 64, has been a director of Anthem, Inc.
since 2001 and a director of Anthem Insurance since 1999. In April 2001, he
joined APCO Worldwide as Chairman of APCO Government Affairs. From 1995 to
2001, he was Deputy Chairman of Shandwick International (global
communications). He served in the U.S. Senate from 1976 through 1994 and in the
U.S. House of Representatives from 1967 through

1975. He is a director of Rx Optical, E. Team (Internet emergency management
company) and Tri-Union Development Corp. (oil and gas development company).

William J. Ryan, age 58, has been a director of Anthem, Inc. since 2001 and
a director of Anthem Insurance since 2000. He has served as Chairman, President
and Chief Executive Officer of Banknorth Financial Group since 1990. He is a
director of the University of New England. Mr. Ryan is also a trustee of Colby
College and the Portland Museum of Art. He served as Chairman of the Board of
the former Blue Cross Blue Shield of Maine.

The Board of Directors recommends a vote FOR each of the nominees listed
above.

DIRECTORS CONTINUING IN OFFICE

Term expiring at the Annual Meeting of Shareholders in 2003

Larry C. Glasscock, age 53, has served as President and Chief Executive
Officer and as a director of Anthem, Inc. since 2001 and as President and Chief
Executive Officer and a director of Anthem Insurance since October 1999. He
joined Anthem Insurance in April 1998 as Senior Executive Vice President and
Chief Operating Officer. He was named President and Chief Operating Officer in
April 1999 and succeeded L. Ben Lytle as Chief Executive Officer upon Mr.
Lytle's retirement in October 1999. Prior to joining Anthem Insurance, Mr.
Glasscock served as Chief Operating Officer of CareFirst, Inc. from January
1998 to April 1998. Mr. Glasscock was President and Chief Executive Officer of
Group Hospitalization and Medical Services, Inc., which did business as Blue
Cross Blue Shield of the National Capital Area, from 1993 to January 1998 and
oversaw its affiliation with Blue Cross Blue Shield of Maryland. Prior to
moving to the health insurance industry, he served as President and Chief
Operating Officer and a director of First American Bank, N.A. (Washington, DC)
from 1991 until 1993 when the bank was sold. During 1991, Mr. Glasscock was
President and Chief Executive Officer of Essex Holdings, Inc. (an Ohio-based
capital investment firm). He also held various executive positions during his
twenty-year tenure with Ameritrust Corporation, a Cleveland, Ohio bank holding
company. Mr. Glasscock is a director of Zimmer Holdings, Inc. (orthopaedic
industry).

William B. Hart, age 58, has been a director of Anthem, Inc. since 2001 and
a director of Anthem Insurance since 2000. He was President of The Dunfey Group
(capital consulting firm) from 1986 to 1998. Since 1999, he has been Chairman
of the National Trust for Historic Preservation. He served as Chairman of the
Board of the former Blue Cross Blue Shield of New Hampshire.

L. Ben Lytle, age 55, has been a director and the Chairman of the Board of
Anthem, Inc. since 2001. He has been a director of Anthem Insurance since 1987
and Chairman of the Board of Anthem Insurance since 1997. Mr. Lytle served as
President of Anthem Insurance from March 1989 to April 1999 and as Chief
Executive Officer of Anthem Insurance from March 1989 to October 1999, when he
retired. He is an Executive-in-Residence at the University of Arizona School of
Business, Adjunct Fellow at the American Enterprise Institute and Senior Fellow
at the Hudson Institute. He is a director of CID Equity Partners (venture
capital firm), Duke Realty Corporation (real estate investment firm),
Healthx.com (privately held company providing internet services to small
insurance companies) and Monaco Coach Corporation (manufacturer of motor
coaches and recreational vehicles).

B. LaRae Orullian, age 68, has been a director of Anthem, Inc. since 2001
and a director of Anthem Insurance since 2000. She has been Vice Chair of
Guaranty Bank and a Director of the Guaranty Corporation in Denver, Colorado
since 1997. She is also the Chair of the Audit Committee of Guaranty Bank. From
1977 to 1997, Ms. Orullian held various executive positions with the Women's
Bank of Denver. Ms. Orullian also serves as Vice Chair of the Board of Frontier
Airlines, Inc. and as the Chair of its Audit Committee. She served as Chair of
the Board of the former Blue Cross Blue Shield of Colorado and Nevada.

Term expiring at the Annual Meeting of Shareholders in 2004

Victor S. Liss, age 65, has been a director of Anthem, Inc. since 2001 and a
director of Anthem Insurance since 1997. He has been President, Vice Chairman
and Chief Executive Officer of Trans-Lux Corporation (electronics) since 1993.
He is a trustee of Norwalk Hospital in Norwalk, Connecticut.

James W. McDowell, Jr., age 60, has been a director of Anthem, Inc. since
2001 and a director of Anthem Insurance since 1993. He founded McDowell &
Associates (business management consulting) in 1992 after serving as Chief
Executive Officer of Dairymen, Inc. from 1980 to 1992. He is a director of
Fifth Third Bank, Kentucky. Mr. McDowell was Chairman of the Board of the
former Blue Cross Blue Shield of Kentucky.

George A. Schaefer, Jr., age 56, has been a director of Anthem, Inc. since
2001 and a director of Anthem Insurance since 1995. He has been President and
Chief Executive Officer of Fifth Third Bancorp since 1990. He is also a
director of Fifth Third Bancorp. Mr. Schaefer is Vice Chairman of the Board of
the University of Cincinnati. He is a trustee of the Children's Hospital in
Cincinnati, Ohio.

Dennis J. Sullivan, Jr., age 70, has been a director of Anthem, Inc. since
2001 and a director of Anthem Insurance since 1995. He is an Executive
Counselor for Dan Pinger Public Relations, a position he also held from April
1993 to September 2000. Mr. Sullivan served as interim President and Chief
Executive Officer of Gaylord Entertainment Company from September 2000 to May
2001. He is a director of Fifth Third Bancorp and Fifth Third Bank, as well as
a member of the Executive Committee and Chairman of the Audit Committee of each
such company.

Meetings and Committees of the Board of Directors

During 2001, the Board of Directors of the Company held five meetings.
During the period in 2001 for which he or she served as a director, no director
attended fewer than 75% of the total meetings of the Board of Directors and
each committee on which he or she served.

There are five standing committees of the Board of Directors. From time to
time, the Board of Directors, in its discretion, may form other committees. Set
forth below are the primary responsibilities and membership of each of the
committees.

The Executive Committee

Between meetings of the Board of Directors, the Executive Committee has and
may exercise the powers and authority of the Board. The Executive Committee did
not meet during 2001.

Members of the Executive Committee are: L. Ben Lytle (Chairman), Larry C.
Glasscock (Vice Chairman), Victor S. Liss, William G. Mays, and James W.
McDowell, Jr.

The Audit Committee

The Audit Committee, composed entirely of non-employee directors, assists
the Board of Directors in its oversight of the Company's accounting and
financial reporting principles and policies and internal audit controls and
procedures, in its oversight of the Company's financial statements and the
independent audit thereof, in selecting, evaluating and, where deemed
appropriate, replacing the outside auditors, in evaluating the independence of
the outside auditors, and in its oversight of the Company's Compliance Program
and Standards of Business Conduct. See "Audit Committee Report" and the Audit
Committee Charter attached as Appendix A to this Proxy Statement. The Audit
Committee met four times during 2001.

Members of the Audit Committee are: Victor S. Liss (Chairman), George A.
Schaefer, Jr. (Vice Chairman), Allan B. Hubbard, James W. McDowell, Jr., B.
LaRae Orullian, and Senator Donald W. Riegle, Jr. Mr. Schaefer

is the President and Chief Executive Officer of Fifth Third Bancorp, with which
the Company has a banking and borrowing relationship. The Board of Directors
has determined that, based on the materiality of the relationship to the
parties, the relationship does not interfere with Mr. Schaefer's exercise of
independent judgment.

The Compensation Committee

The Compensation Committee, composed entirely of non-employee directors,
reviews and recommends to the Board of Directors the Company's overall
compensation policy, reviews and approves the compensation of executive
officers and administers the Company's stock plans. The Compensation Committee
met two times during 2001.

Members of the Compensation Committee are: William G. Mays (Chairman),
William J. Ryan (Vice Chairman), Victor S. Liss, B. LaRae Orullian, and Dennis
J. Sullivan, Jr.

The Planning Committee

The Planning Committee reviews and monitors the annual operating plan,
recommends strategies to achieve the strategic plan, and reviews integration
plans for mergers, acquisitions and other corporate transactions. The Planning
Committee met two times during 2001.

Members of the Planning Committee are: James W. McDowell, Jr. (Chairman),
Senator Donald W. Riegle, Jr. (Vice Chairman), Susan B. Bayh, William B. Hart,
L. Ben Lytle, and William J. Ryan.

The Board Governance and Executive Development Committee

The Board Governance and Executive Development Committee reviews the
qualifications of potential Board members, makes recommendations with respect
to electing directors and filling vacancies on the Board, reviews the operation
and organization of the Board, assists in the design and implementation of
executive training and development programs, and provides counsel on executive
succession planning. The Board Governance and Executive Development Committee
also will consider shareholder nominations for directors. For a description of
the requirements regarding shareholder nominations and other proposals, see the
Company's By-Laws, a copy of which may be obtained from the Secretary of the
Company. The Board Governance and Executive Development Committee met once
during 2001.

Members of the Board Governance and Executive Development Committee are: L.
Ben Lytle (Chairman), Susan B. Bayh (Vice Chairman), William B. Hart, William
G. Mays, George A. Schaefer, Jr., and Dennis J. Sullivan, Jr.

Compensation of Directors

The compensation of non-employee directors of Anthem, Inc. is made in the
form of an annual retainer, meeting and chair fees and stock-based awards. Each
non-employee director receives an annual retainer fee of $40,000, paid in equal
quarterly installments for Board membership, a meeting fee of $1,500 for
attendance at each Board meeting and a meeting fee of $1,200 for attendance at
each standing or special committee meeting, with an additional $3,000 annual
retainer for the chairperson. The Board of Directors has approved an increase
in the annual retainer of Mr. Lytle, the Chairman of the Board, to $140,000,
beginning in the third quarter of 2002. Employee directors are not paid a fee
for their service as a director. Fees paid to directors may be deferred under
the Board of Directors' Deferred Compensation Plan, which provides a method of
deferring payment until a date selected by the director. Fees deferred accrue
interest at the same rate as in effect from time to time under the Deferred
Compensation Plan for employees. Under the 2001 Stock Incentive Plan, the Board
of Directors has elected to pay non-employee directors one-half of their
retainer fees in the Company's Common Stock beginning with the third quarter of
2002 retainer payment. Non-employee directors may also elect to receive all

or a part of their other fees, including their remaining retainer, in the
Company's Common Stock. In addition, the Board of Directors has authorized a
grant effective May 3, 2002 to each non-employee director of a non-qualified
stock option to purchase 15,000 shares of the Company's Common Stock (other
than Mr. Lytle, who will receive an option to purchase 25,000 shares of Common
Stock) at a price equal to the fair market value of a share of stock on the
grant date. The Board of Directors has also approved an annual grant, beginning
in 2003, to each non-employee director, and grants to new non-employee
directors upon their election to the Board, of non-qualified stock options to
purchase shares of Common Stock, with the exercise price to be equal to the
fair market value of a share of stock on the date of grant.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Common Stock, to file reports of ownership with the Securities and Exchange
Commission. Such persons also are required to furnish the Company with copies
of all Section 16(a) forms they file.

Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during 2001, its executive officers, directors, and greater than 10%
shareholders complied with all applicable filing requirements.

Executive Officers

As used throughout this Proxy Statement, the term "executive officers"
refers to Larry C. Glasscock, President and Chief Executive Officer, David R.
Frick, Executive Vice President and Chief Legal and Administrative Officer,
Samuel R. Nussbaum, M.D., Executive Vice President and Chief Medical Officer,
Michael L. Smith, Executive Vice President and Chief Financial and Accounting
Officer, Marjorie W. Dorr, President, Anthem East, Keith R. Faller, President,
Anthem Midwest, Michael D. Houk, President, National Accounts, Caroline S.
Matthews, Chief Operating Officer, Anthem Blue Cross and Blue Shield in
Colorado and Nevada, John M. Murphy, President, Specialty Business Division of
Anthem and Jane E. Niederberger, Senior Vice President and Chief Information
Officer.

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of January 31, 2002, the number of shares
of Common Stock of the Company beneficially owned by each of the Company's
directors, by each of the Company's Chief Executive Officer and the Company's
four other most highly compensated executive officers, based on salary and
bonus earned during 2001 (the "Named Executive Officers"), and by all directors
and executive officers as a group. Except as otherwise indicated below, each
individual owns such shares of Common Stock directly with sole investment and
sole voting power.

The number of shares beneficially owned by the directors and executive
officers is very small because, as of January 31, 2002, the only shares of the
Company's Common Stock that directors or executive officers may beneficially
own are the shares that they, their spouses or their other immediate family
members received as eligible statutory members in connection with Anthem
Insurance's demutualization. Under limitations set in connection with Anthem
Insurance's demutualization, directors and executive officers of the Company
will not be able to buy shares of the Company's Common Stock, and the Company
may not grant stock options or other stock awards or payments to its directors
and executive officers, until May 3, 2002.

Number of Shares Percent of Class
Name Position Beneficially Owned (if more than 1%)
---- ---------------------- ------------------ -----------------

Susan B. Bayh.................................... Director 0 --
Larry C. Glasscock............................... President and Chief
Executive Officer and
Director 0 --
William B. Hart.................................. Director 0 --
Allan B. Hubbard................................. Director 0 --
Victor S. Liss................................... Director 0 --
L. Ben Lytle..................................... Chairman of the Board
of Directors 0 --
William G. Mays.................................. Director 0 --
James W. McDowell, Jr............................ Director 0 --
B. LaRae Orullian................................ Director 0 --
Senator Donald W. Riegle, Jr..................... Director 0 --
William J. Ryan.................................. Director 0 --
George A. Schaefer, Jr........................... Director 0 --
Dennis J. Sullivan, Jr........................... Director 0 --
David R. Frick................................... Executive Vice
President and Chief
Legal and
Administrative Officer 0 --
Michael L. Smith................................. Executive Vice
President and Chief
Financial and
Accounting Officer 0 --
Marjorie W. Dorr................................. President, Anthem East 0 --
Keith R. Faller.................................. President, Anthem
Midwest 0 --
All current directors and executive officers as a
group (22 persons)............................. 24 --

Under the Indiana demutualization law, for a period of five years following
the effective date of Anthem Insurance's demutualization, no person may acquire
beneficial ownership of 5% or more of the outstanding shares of the Company's
Common Stock without the prior approval of the Indiana Insurance Commissioner
and the Board of Directors. The effective date of Anthem Insurance's
demutualization was November 2, 2001. The Indiana Insurance Commissioner has
adopted rules under which, during this five year period, passive institutional
investors could purchase 5% or more but less than 10% of the Company's
outstanding Common Stock with the prior approval of the Board of Directors and
prior notice to the Indiana Insurance Commissioner. However, as of the date of
this Proxy Statement, the Company is not aware that any shareholder
beneficially owns 5% or more of the outstanding shares of the Company's Common
Stock.

COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation Table

The following table sets forth certain information regarding compensation
paid during each of the Company's last two years to the Company's Named
Executive Officers.

Long Term
Compensation
- ------------
Annual Compensation Payouts
----------------------------------- ------------
Other Annual LTIP All Other
Name and Principal Position Year Salary Bonus(1) Compensation(2) Payouts(3) Compensation(4)
--------------------------- ---- -------- ---------- --------------- ------------ ---------------

Larry C. Glasscock......................... 2001 $900,000 $2,160,000 $129,156 $12,431,458 $83,213
President and Chief Executive Officer 2000 800,000 1,600,000 65,675 0 51,467
David R. Frick............................. 2001 $410,000 $ 691,000 $ 95,349 $ 6,356,634 $32,820
Executive Vice President and Chief Legal 2000 410,000 656,000 16,968 297,049 24,523
and Administrative Officer
Michael L. Smith........................... 2001 $410,000 $ 656,000 $ 86,115 $ 4,214,884 $30,038
Executive Vice President and Chief 2000 375,000 600,000 437 44,557 18,750
Financial and Accounting Officer
Keith R. Faller............................ 2001 $400,000 $ 640,000 $ 97,912 $ 3,781,110 $26,375
President, Anthem Midwest 2000 350,000 490,000 30,202 178,229 12,779
Marjorie W. Dorr........................... 2001 $400,000 $ 790,000 $194,414 $ 1,725,136 $28,720
President, Anthem East(5) 2000 306,731 413,558 25,406 80,202 13,456

--------
(1) The amounts in this column represent the Annual Incentive Plan awards
earned during the specified year, which are paid in the following year. The
amounts shown for 2001 also include any discretionary bonuses paid in 2001.
(2) For 2001: None of the named individuals received perquisites or other
personal benefits in excess of the lesser of $50,000 or 10% of the total of
their salary and bonus. Amounts include the above-market portion of
interest paid on the deferred compensation for Mr. Glasscock ($33,543), Mr.
Frick ($56,307), Mr. Smith ($3,909), Mr. Faller ($20,216) and Ms. Dorr
($10,149) and the above-market portion of interest paid on the deferred
long-term incentive payments for Mr. Glasscock ($95,613), Mr. Frick
($39,042), Mr. Smith ($82,206), Mr. Faller ($77,696) and Ms. Dorr ($6,343).
Ms. Dorr's amount also includes $177,922 for reimbursement of relocation
expenses.
For 2000: Mr. Glasscock received $42,000 in cash and $20,812 in
reimbursements as part of the Directed Executive Compensation Program
including financial counseling fees for $8,892. None of the other named
individuals received perquisites or other personal benefits in excess
of the lesser of $50,000 or 10% of the total of their salary and bonus.
Amounts include the above-market portion of interest paid on the
deferred compensation for Mr. Glasscock ($2,863), Mr. Frick ($4,897),
Mr. Smith ($437), Mr. Faller ($3,072) and Ms. Dorr ($1,421) and the
above-market portion of interest paid on the deferred long-term
incentive payments for Mr. Frick ($12,070) and Mr. Faller ($27,130).
Ms. Dorr's amount also includes $23,985 for reimbursement of relocation
expenses.
(3) The amounts in this column represent long-term incentive payouts received
or deferred in the year indicated for prior performance cycles. Amounts
shown for 2001 include the long-term incentive payouts received or deferred
in 2001 for a three-year period of time pursuant to the 1998-2000 Long-Term
Incentive Plan.
(4) The amounts in this column represent matching contributions under the
Company's 401(k) and Deferred Compensation Plans.
(5) Ms. Dorr was appointed President of Anthem East, effective July 29, 2000.

Annual Incentive Plan

Under the Annual Incentive Plan (the "AIP"), employees are eligible to
receive cash awards based upon the achievement of performance measures
established by the Compensation Committee. Such cash awards are stated as a
percentage of salary payable to the eligible employees, with a range of targets
from 5% to 120%. Actual amounts payable are adjusted up or down for performance
at or above targeted levels of performance, with a threshold award of 50% of
target if minimum results are achieved and a maximum award of 200% of target if
maximum results are achieved. Amounts payable under the AIP are paid during the
year immediately following the performance year and are payable only upon
approval of the Compensation Committee. An employee must be employed before
October 1 of the plan year in order to receive a payment under the AIP in
respect of such fiscal year. Also, employees must be actively employed by the
Company on the last business day of the plan year to receive an award. In the
event of a death, disability or an approved retirement of an employee, a
prorated amount may be payable in accordance with administrative guidelines.

Long-Term Incentive Plan

Senior executives, as may be recommended by the Chief Executive Officer and
approved by the Compensation Committee, are participants in the Long-Term
Incentive Plan (the "LTIP"). The LTIP operates during successive three-year
periods. Employees must be actively employed by the Company on the last
business day of the period to receive an award. Under the LTIP, the
Compensation Committee establishes performance goals for the Company at the
beginning of each three-year performance period, which include specific
strategic objectives such as growth in net income, operating margin and
comparison of performance against peer companies. At the end of the period, the
Compensation Committee judges the performance of the Company against the
established goals. For each participant, a target award is established as a
percentage of base salary with the payouts for executives expected to range
from 30% to 150% of the annual base salary for each year of the three-year
period. Actual amounts payable are adjusted up or down for performance above or
below targeted levels of performance with an expected threshold award of 50% of
target if minimum results are achieved. Awards under the LTIP in each
three-year period become payable upon approval of the Compensation Committee
and are paid in the year immediately following the end of the period, with the
executive having the option to defer payment. In the event of a change of
control of the Company, an amount may be payable at the discretion of the
Compensation Committee.

The table below provides information concerning estimated target awards
during the period 2001-2003 depending upon achievement of the performance goals.

Long-Term Incentive Plan (2001-2003)

Estimated Future Payouts
under Non-Stock Price-
Based Plan (1)(2)
Performance ------------------------
Name Period Threshold Target
---- ----------- ---------- ----------

Larry C. Glasscock 2001-2003 $2,025,000 $4,050,000
David R. Frick.... 2001-2003 $ 738,000 $1,476,000
Michael L. Smith.. 2001-2003 $ 738,000 $1,476,000
Keith R. Faller... 2001-2003 $ 540,000 $1,080,000
Marjorie W. Dorr.. 2001-2003 $ 420,000 $ 840,000

--------
(1) Payout scheduled to occur in 2004.
(2) Under the LTIP, there is no maximum limitation.

Stock Incentive Plan

The Company has a Stock Incentive Plan (the "Stock Plan"), the purposes of
which are to promote the interests of the Company and its shareholders and to
further align the interests of the Company's employees with its shareholders.
Directors, executives and employees, as selected by the Compensation Committee,
participate in the Stock Plan. The Compensation Committee administers the Stock
Plan and has complete discretion to determine whether to grant incentive
awards, the types of incentive awards to grant and any requirements and
restrictions relating to incentive awards. The Stock Plan is an omnibus plan,
which allows for the grant of stock options, restricted stock, stock
appreciation rights, performance stock and performance awards.

The Stock Plan reserves for issuance 5,000,000 shares of the Company's
Common Stock for incentive awards to employees and non-employee directors. In
addition, 2,000,000 shares have been reserved solely for issuance under grants
of stock options to substantially all of the Company's employees (and for
issuance under similar grants that may be made to new employees) not
participating in the Company's LTIP. Options covering 1,479,000 of these shares
were granted to substantially all employees at the time of the initial public
offering. If any grant is for any reason canceled, terminated or otherwise
settled without the issuance of some or all of the shares of Common Stock
subject to the grant, such shares will be available for future grants. Until
May 3, 2002, the Company may not make any grants under the Stock Plan to its
directors or any executive who participates in the LTIP.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the "Stock Purchase Plan") is intended to
comply with Internal Revenue Code (S)423 and to provide a means by which to
encourage and assist employees in acquiring a stock ownership interest in the
Company. The Company anticipates implementing the Stock Purchase Plan in June
2002. The Stock Purchase Plan is administered by the Compensation Committee,
and the Compensation Committee will have complete discretion to interpret and
administer the Stock Purchase Plan and the rights granted under it. Any
employee of the Company is eligible to participate, as long as such employee's
customary employment is more than 20 hours per week, more than five months in a
calendar year, and the employee does not own stock totaling 5% or more of the
voting power or value of the Company. No employee will be permitted to purchase
more than $25,000 worth of stock in any calendar year. The Stock Purchase Plan
reserves for issuance and purchase by employees 3,000,000 shares of stock.

Employees become participants by electing payroll deductions from 1% to 15%
of gross compensation. Payroll deductions are accumulated during each plan
quarter and applied toward the purchase of stock on the last trading day of
each plan quarter. Once purchased, the stock is accumulated in the employee's
investment account. The purchase price per share equals 85% (or such higher
percentage as may be set by the Compensation Committee) of the lower of the
fair market value of a share of Common Stock on (i) the first trading day of
the plan quarter, or (ii) the last trading day of the plan quarter.

401(k) Plan

On July 1, 1979, the Company established the Anthem 401(k) Long Term Savings
Investment Plan (the "401(k) Plan"), a defined contribution plan. The 401(k)
Plan is designed to provide all of the Company's employees with a tax-deferred,
long-term savings vehicle. The Company makes matching contributions in an
amount equal to 50% of the first 6% of the employee's salary that an employee
contributes. Company matching contributions begin the first quarter following
one year of service. None of the Company's matching contributions is in the
form of the Company's Common Stock. Employees can elect to contribute from 1%
to 20% of their salaries, and have a choice of nine investment funds in which
to invest their contributions. The Company also provides a Self-Managed Account
option. The Self-Managed Account option offers 401(k) Plan participants the
opportunity to invest in over 3,000 mutual funds of their choice. Beginning in
June 2002, the Company expects to add an additional investment option. This
investment option will be in the form of the Company's Common Stock. Employee
contributions and the Company matching contributions vest immediately.

Deferred Compensation

Highly compensated employees, as defined in the Internal Revenue Code, are
eligible to participate in an unfunded non-qualified deferred compensation
plan. There are three types of deferral options in the plan. The Restoration
Option allows deferral amounts that are limited under the Company's 401(k) Plan
and restores company match that would otherwise be contributed in the Company's
401(k) Plan. The Supplemental Option allows an additional deferral of base
salary and commissions, up to 80%, above the Restoration Option and these
deferrals are not matched by the Company. The Annual Incentive Deferral Option
allows an additional deferral of annual incentive compensation above the
Restoration Option and is matched at a rate of 3%.

The declared interest rate on deferred amounts is the average of the 10-year
U.S. Treasury Note monthly average rates for the 12-month period ending on
September 30 of the previous year, plus 150 basis points. Interest is accrued
daily, posted monthly and compounded annually. The retirement rate is credited
at 125% of the declared interest rate. Distributions are made at the end of the
quarter of termination or retirement based on the participant's filed
distribution election or as otherwise specified in the plan document. Limited
in-service withdrawals are available in the event of unforeseeable financial
emergencies.

Retirement Plan

The Company sponsors a non-contributory pension plan for certain employees
that is qualified under Internal Revenue Code (S)401(a) and subject to the
Employee Retirement Income Security Act (the "Qualified Plan"). The Company
also sponsors the Anthem Supplemental Executive Retirement Plan (the "SERP")
which provides additional benefits payable out of the Company's general assets
to certain participants. The benefits under the SERP are equal to the benefits
those participants cannot receive under the Qualified Plan because of Internal
Revenue Code limits on benefits and restrictions on participation by highly
compensated employees, as defined in the Internal Revenue Code.

On January 1, 1997, the Company converted the Qualified Plan from a final
average compensation pension plan into a cash balance pension plan. The
Qualified Plan covers substantially all full-time, part-time and temporary
employees, including executive officers, and provides a set benefit at age 65,
the normal retirement age under the Qualified Plan.

Under the Qualified Plan, at the end of each calendar quarter, a bookkeeping
account for each participant is credited with (1) an amount based on the
participant's compensation and years of service (the "Pay Credit"), and (2)
interest based on the average of the monthly yields for 10-year U.S. Treasury
Security Constant Maturities for the twelve month period ending on September 30
of the preceding plan year. The Pay Credit equals a percentage of the
participant's compensation for the plan year and is determined according to the
following schedule:

Pay
Years of Service Credit
---------------- ------

Up to and including 4. 3%
5-9............. 4%
10-19............ 5%
20+............. 6%

The definition of compensation in the Qualified Plan is the participant's
total earned income, including base salary, commissions, overtime pay, and cash
bonuses, before it is reduced by any before-tax contributions the participant
makes to the 401(k) Plan and flexible benefit plan. Compensation does not
include imputed income, car allowances, non-qualified deferred compensation,
severance payments, payment of accrued paid time off days, payments under the
Directed Executive Compensation Program, or similar items.

The SERP continues the calculation of the retirement benefits on a uniform
basis. Any excess benefit accrued to a participant under the SERP will be
payable according to one of five payment options available under the SERP at
termination or retirement.

Messrs. Glasscock, Frick, Smith and Faller and Ms. Dorr receive benefits
under both the Qualified Plan and the SERP. The estimated benefits, under both
the Qualified Plan and the SERP, payable in a lump sum upon retirement at
normal retirement age are as follows: Mr. Glasscock ($2,579,317), Mr. Frick
($725,384), Mr. Smith ($985,860), Mr. Faller ($4,058,285), and Ms. Dorr
($3,895,890). These estimates use 2001 base pay and annual bonus for all future
years and assume that the Named Executive Officers remain actively employed
until normal retirement age. Mr. Faller's benefit amount has been reconciled
due to the transition of his benefits to the Qualified Plan.

In addition, the employment agreements for Messrs. Glasscock, Frick and
Smith set forth a Replacement Ratio SERP benefit, calculated as a retirement at
age 62 or the date of termination, if later than age 62, in an amount equal to
50% of the executive's average annual pay during the three highest consecutive
calendar years of his final five calendar years of employment. The benefit will
be offset by the amount payable under the Qualified Plan and the SERP. The
estimated replacement ratio SERP benefit payable upon retirement at age 65 is
as follows: Mr. Glasscock ($999,564 annually), Mr. Frick ($479,664 annually),
and Mr. Smith ($406,992 annually). These estimates use 2001 base salary and
annual bonus for all future years and assume that such Named Executive Officers
remain actively employed until normal retirement age.

Employment Agreements

The Company has entered into employment agreements with certain of its
executive officers, including Messrs. Glasscock, Frick, Smith, Faller and Ms.
Dorr, that provide for each executive's continued employment with the Company.
The current terms of the employment agreements are effective through December
31, 2005 for Mr. Glasscock and December 31, 2004 for Messrs. Frick, Smith and
Faller and Ms. Dorr.

Under these agreements, each eligible executive's terms and conditions of
employment, including rate of base salary, incentive compensation
opportunities, participation in employee benefit plans and perquisites are
addressed.

The employment agreements provide that the Company will have the right at
any time to terminate an executive's employment and that any executive will
have the right to terminate his or her employment at the Company. Under the
employment agreements with Messrs. Glasscock, Frick and Smith, the Company will
provide them for the remainder of the term with the following benefits in the
event of termination by the Company other than for cause, in the event of an
approved retirement or in the event of termination by the executive for good
reason (as those terms are defined in the employment agreements):

. salary;

. all unvested prior long-term incentive awards;

. annual incentive and long-term incentive awards for the year of
termination based upon the achievement of the performance goals for the
plans for the entire year of termination prorated to reflect the full
number of months the executive was employed;

. an amount equal to 80% of any target annual incentive and target long-term
incentive opportunities;

. an amount equal to 20% of any target annual incentive and target long-term
incentive opportunities if the executive is available for consultation up
to a maximum of eight days each quarter of the year;

. medical and dental plan benefits and directed executive compensation for
which the executive would otherwise have been eligible to receive; and

. the Replacement Ratio SERP Benefit described under "--Retirement Plan."

Section 280G and Section 4999 of the Code limit deductions for compensation
paid to certain senior executives if the payment is contingent on a change of
ownership or effective control of a corporation. This

deduction is limited to the average taxable compensation of the affected
executive for the five years prior to the year that the change of control
occurred. If the payments to the executive equal or exceed three times such
average taxable compensation, the deduction is limited pursuant to Code Section
280G and these payments are referred to as "golden parachute" payments. In
addition, Code Section 4999 imposes a 20% nondeductible excise tax on the
executive on all nondeductible payments.

Pursuant to their employment agreements, in the event Messrs. Glasscock,
Frick or Smith is a recipient of a "golden parachute" payment, we will make an
additional gross-up payment to the executive in order to put him in the same
after tax position that he would have been in had no excise tax been imposed.
The gross-up will result in the Company paying not only the excise tax payable
by the executive but also the income and excise taxes on the additional
payments.

Under the employment agreements for Ms. Dorr and Mr. Faller, the Company
will provide them with the following benefits in the event of termination by
the Company other than for cause:

. salary;

. all unvested prior long-term incentive awards;

. an amount equal to 50% of any target annual incentive and target long-term
incentive opportunities; and

. medical and dental plan benefits for which the executive would otherwise
have been eligible to receive.

The employment agreements for Ms. Dorr and Mr. Faller also state that the
foregoing benefits are limited to either the greater of one year or the
remainder of the term.

Under these agreements, Messrs. Glasscock, Frick and Smith agree not to
compete as an equity owner or employee with the Company or its subsidiaries for
the greater of (i) two years after the executive's termination for any reason
or (ii) the remainder of the term after their termination by the Company other
than for cause, after an approved retirement or after termination by the
executive for good reason. Mr. Faller and Ms. Dorr are subject to the same
limitation but for the greater of one year or the remainder of the term after
their termination other than for cause.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee, among other things, approves compensation for
the Company's executive officers. The Compensation Committee members during
2001 were Victor S. Liss, William G. Mays, B. LaRae Orullian, William J. Ryan
and Dennis J. Sullivan, Jr. None of the Compensation Committee members were
involved in a relationship requiring disclosure as an interlocking director, or
under Item 404 of Regulation S-K, or as a former officer or employee of the
Company.

Certain Relationships and Related Transactions

In the ordinary course of business, the Company from time to time may engage
in transactions with other corporations or financial institutions whose
officers or directors are also directors of the Company. Transactions with such
corporations and financial institutions are conducted on an arm's length basis
and may not come to the attention of the directors of the Company or of the
other corporations or financial institutions involved.

Mr. Lytle, Chairman of the Board of Directors, retired as Chief Executive
Officer in October 1999. Pursuant to his employment agreement and retirement
agreement, the Company pays Mr. Lytle $400,000 annually until

December 31, 2002 for his consultation services up to a maximum of eight days
per quarter. In addition, in any quarter in which the Company has requested Mr.
Lytle to provide more than eight days of consultation, he is to be paid five
hundred dollars ($500) per hour, up to a maximum of five thousand dollars
($5,000) per day.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee reviews and recommends to the Board of Directors
the Company's overall compensation policy, reviews and approves the
compensation of executive officers and administers the Company's stock plans.

The Compensation Committee is composed of five directors. All members of the
Compensation Committee are "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended, and "non-employee
directors" within the meaning of Section 16b-3 of the Securities Exchange Act
of 1934.

The main objective of the Company's executive compensation program is to pay
for performance that increases shareholder value based upon competitive market
pay practices. The Company pays executives, including Named Executive Officers,
through:

--Base Salary

--Annual Bonus

--Long-Term Incentives

Each is described below under "Elements of the Compensation Package."

Compensation Philosophy

For executives, the Compensation Committee, with the assistance of
independent consultants, establishes total pay targets based on the competitive
marketplace for comparable jobs. Individual salaries are determined by
evaluating the executive's experience, level and scope of responsibility and
individual performance. The Compensation Committee points out that the
companies used for evaluation of competitive compensation may not, in all
cases, be the same as those companies comprising the industry peer group used
in the performance graph on page 17. Using these total pay targets, the
Compensation Committee determines the appropriate competitive mix of
compensation that will motivate the executives to achieve the Company's
performance and strategic objectives.

The Company's executive compensation philosophy is to target base salaries
at the median of the market data based on relevant industry survey findings,
and to provide an opportunity for total cash compensation (base salary plus
cash incentive) to be such that superb performance will result in upper
quartile market total cash compensation levels for executives. In this way, the
Compensation Committee seeks to have a significant portion of annual executive
compensation based on the Company's performance.

Annual bonus amounts and long-term incentive payments are based on
performance as compared to plan goals. Amounts are not guaranteed to any
executive because they are tied to the Company's business results. The annual
bonus recognizes short-term corporate business results, business unit results
and workgroup results. Long-term incentives for the executives are based upon
sustained corporate-wide results, linked directly to growth in the Company's
net income and operating margin and comparison of performance against peer
companies.

The Compensation Committee regularly monitors the Company's compensation
program, keeping in mind the Company's strategic goals as well as industry
practices and trends.

The Compensation Committee expects the Company's executives to demonstrate
confidence in the Company's future by owning a substantial amount of the
Company's stock. In particular, we expect the executive officers to own stock
valued at between two and five times their salaries by the end of a five year
period. The Compensation Committee is expected to review ownership levels
annually.

The Company believes that the compensation paid to its Named Executive
Officers is fully deductible to the Company because it complies with Section
1.162-27(e)(5) of the Internal Revenue Code. This section generally exempts the
Company for a period of three calendar years following the calendar year in
which its initial public offering occurred from having to comply with the
requirements of Section 162(m).

Elements of the Compensation Package

Base Salary

Base salary provides competitive annual compensation that reflects the scope
and nature of basic job responsibilities. For the Named Executive Officers, the
Compensation Committee grants merit-based salary increases, if appropriate,
based on an individual's performance and an assessment of whether the current
salary is competitive relative to executives in comparable positions at the
Company's peer companies. The President and CEO grants merit-based salary
increases to all other executives based on the same factors.

Annual Bonus

Nearly all of the Company's employees, including executive officers, are
eligible to earn awards under the Annual Incentive Plan (the "AIP"). The AIP
was designed to motivate all employees with competitive awards based upon
achievement of competitive financial and operational goals. No awards are made
under the AIP unless the Company attains certain performance goals.

In particular, the performance goals under the AIP are based on a comparison
of corporate-wide, business unit and workgroup performance in relation to the
following factors: the Company's net income, the Company's operating gain,
business unit operating gain, and workgroup goals. Financial results must be
achieved within the context of customer service, quality and financial
integrity standards. The Company generally rewards performance that meets
operational plans with target pay at levels established based on competitive
market data. Better or worse performance can result in an individual bonus that
can range from 0 to 200% of target.

Long-Term Incentive

The Company offers long-term incentives to its executives under the Anthem
2001-2003 Long-Term Incentive Plan described beginning on page 9. The design of
the plan focuses management on delivering competitively superior long-term
results, aligning executives' interests with shareholder interests, ensuring
that executives have incentive opportunities comparable to their counterparts
at the Company's competitors, and motivating key executives to remain with the
Company.

Stock Incentive

Due to regulatory constraints related to Anthem Insurance's demutualization,
the Company cannot grant stock-based awards to its executive officers until May
3, 2002. At that time, the Compensation Committee intends to implement a stock
incentive plan based on the Company's total pay philosophy and competitive
data, as well as Company and individual performance.

Other Compensation and Benefit Programs

The executive officers also participate in the Company's non-qualified
deferred compensation plan, pension plan and supplemental executive retirement
plan, all of which are discussed in more detail beginning on page 11.

Compensation of President and Chief Executive Officer

The Company's President and Chief Executive Officer, Larry C. Glasscock,
participates in each of the compensation programs available to other
executives. The Company's compensation philosophy as it relates to

Mr. Glasscock is to target base salary at the median of the market data based
on relevant industry survey findings, and to provide an opportunity for total
cash compensation (base salary plus cash incentive) to be such that superb
performance will result in upper quartile market total cash compensation. In
this way, the Compensation Committee seeks to have a significant portion of Mr.
Glasscock's annual compensation be based on the Company's performance.

Under Mr. Glasscock's leadership, during 2001 the Company exceeded its
financial goals and accomplished its strategic objectives. FORTUNE magazine
identified the Company as one of America's most admired health care companies.
Mr. Glasscock's base salary for 2001 was $900,000, which the Compensation
Committee believes is in the competitive range for comparable positions. Mr.
Glasscock was also paid the maximum amount of $2,160,000 for performance under
the Company's Annual Incentive Plan for 2001.

Compensation Committee

William G. Mays, Chairman
William J. Ryan, Vice Chairman
Victor S. Liss
B. LaRae Orullian
Dennis J. Sullivan, Jr.

PERFORMANCE GRAPH

The following graph compares the cumulative total return to shareholders of
the Company's Common Stock for the period from October 30, 2001, the date of
the Company's initial public offering, through December 31, 2001, with the
cumulative total return over such period of (i) the Standard & Poor's 500 Stock
Index (the "S&P 500 Index") and (ii) the Morgan Stanley Healthcare Payor Index
(the "MS Healthcare Payor Index"). The graph assumes an investment of $100 on
October 30, 2001 in each of the Company's Common Stock, the S&P 500 Index and
the MS Healthcare Payor Index (and the reinvestment of all dividends). The
performance shown is not necessarily indicative of future performance.

The comparisons shown in the graph below are based on historical data and
the Company cautions that the stock price performance shown in the graph below
is not indicative of, and is not intended to forecast, the potential future
performance of the Company's Common Stock. Information used in the graph was
obtained from Bloomberg Financial Markets, a source believed to be reliable,
but the Company is not responsible for any errors or omissions in such
information.

Comparison of Cumulative Total Return* Among Anthem, Inc.,
the S&P 500 Index and the MS Healthcare Payor Index

[CHART]

Anthem, Inc. S&P 500 Index MS Healthcare Payor Index

October 30, 2001 100.00 100.00 100.00
December 31, 2001 121.03 108.62 108.89

October 30, December 31,
2001 2001
----------- ------------

Anthem, Inc.............. 100.00 121.03
S&P 500 Index............ 100.00 108.62
MS Healthcare Payor Index 100.00 108.89

*Total Return based on $100 initial investment and reinvestment of dividends.

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that may incorporate future
filings (including this Proxy Statement, in whole or in part), the preceding
Compensation Committee Report on Executive Compensation, the stock price
Performance Graph and the Audit Committee Report contained in this Proxy
Statement shall not be incorporated by reference in any such filings.

APPOINTMENT OF AUDITORS

The firm of Ernst & Young LLP served as the Company's auditors for the
fiscal year ended December 31, 2001. The Board of Directors has selected Ernst
& Young LLP to continue in that capacity for 2002 and is submitting this matter
to shareholders for their ratification. In the event of a negative vote, a
selection of other auditors will be made by the Board of Directors. A
representative of Ernst &Young LLP is expected to be present at the Annual
Meeting, will be given an opportunity to make a statement if he or she desires
and is expected to be available to respond to appropriate questions.
Notwithstanding approval by the shareholders, the Board of Directors reserves
the right to replace the auditors at any time upon the recommendation of the
Audit Committee of the Board of Directors.

The Board of Directors recommends a vote FOR the
appointment of Ernst &Young LLP.

AUDIT COMMITTEE REPORT

The Audit Committee of the Company's Board of Directors is composed of six
"independent directors" as that term is defined by the listing standards of the
New York Stock Exchange. The Audit Committee operates under a written charter
adopted by the Board of Directors which is attached hereto as Appendix A.

The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. The Company's management is responsible for
the Company's financial statements and reporting process, including the system
of internal controls, and has represented to the Audit Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States. The independent
auditors are responsible for performing an independent audit of the Company's
consolidated financial statements and expressing an opinion on the conformity
of those audited consolidated financial statements with accounting principles
generally accepted in the United States.

In fulfilling its responsibilities, the Audit Committee has reviewed and
discussed the audited consolidated financial statements with the Company's
management and the independent auditors. The Audit Committee discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). In addition,
the Audit Committee has discussed with the independent auditors the auditors'
independence from the Company and its management, including the matters in the
written disclosures which were received by the Audit Committee from the
independent auditors as required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).

Based on the reviews and discussions referred to above, the Audit Committee
has recommended, and the Board of Directors has approved, that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001 for filing with the Securities
and Exchange Commission.

Audit Committee

Victor S. Liss, Chairman
George A. Schaefer, Jr., Vice Chairman
Allan B. Hubbard
James W. McDowell, Jr.
B. LaRae Orullian
Senator Donald W. Riegle, Jr.

AUDITORS' FEES

Audit Fees

Fees paid to Ernst & Young LLP for the annual audit of the 2001 consolidated
financial statements were $1,750,000.

Financial Information Systems Design and Implementation Fees

Ernst & Young LLP was not engaged for design and implementation of financial
information systems in 2001.

All Other Fees

All other fees paid to Ernst & Young LLP for services in 2001 totaled
$2,453,902. Of this amount, fees for other audit and attestation services
(including insurance regulatory audits, employee benefit plan audits and
services related to the demutualization and initial public offering) were
$1,813,257, and fees for other non-audit services, including tax services and
business continuity planning, were $640,645. The Audit Committee believes that
other non-audit services provided by Ernst & Young LLP are compatible with
maintaining such firm's independence.

SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING

The date by which shareholder proposals must be received by the Company for
inclusion in proxy materials relating to the 2003 Annual Meeting of
Shareholders is December 3, 2002.

In order to be considered at the 2003 Annual Meeting, shareholder proposals
must comply with the advance notice and eligibility requirements contained in
the Company's By-Laws. The Company's By-Laws provide that shareholders are
required to give advance notice to the Company of any nomination by a
shareholder of candidates for election as directors and of any business to be
brought by a shareholder before an annual shareholders' meeting. Specifically,
the By-Laws provide that for a shareholder to nominate a person for election to
the Company's Board of Directors, the shareholder must be entitled to vote for
the election of directors at the meeting and must give timely written notice of
the nomination to the Secretary of the Company. The By-Laws also provide that
for business to be properly brought before an annual meeting by a shareholder,
the shareholder must have the legal right and authority to make the proposal
for consideration at the meeting and the shareholder must give timely written
notice thereof to the Secretary of the Company. In order to be timely, a
shareholder's notice must be delivered to the principal executive offices of
the Company not less than 90 days nor more than 120 days prior to the first
anniversary of the preceding year's annual meeting. In the event that the date
of the annual meeting is advanced by more than 30 days or delayed by more than
60 days from such anniversary date, notice by the shareholder must be delivered
not earlier than the 120th day prior to such annual meeting and not later than
the close of business on the later of the 90th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. The notice must contain specified information about
each nominee or the proposed business and the shareholder making the nomination
or proposal.

The specific requirements of these advance notice and eligibility provisions
are set forth in Section 1.4 and Section 1.5 of the Company's By-Laws, a copy
of which is available upon request. Such requests and any shareholder proposals
should be sent to the Secretary of the Company at the principal executive
offices of the Company.

By Order of the Board of Directors

/s/ Nancy L. Purcell

Nancy L. Purcell, Secretary

APPENDIX A

ANTHEM, INC.
AUDIT COMMITTEE CHARTER

I. Composition. The Audit Committee shall be comprised of at least three
directors, each of whom shall have no relationship to Anthem, Inc. or its
subsidiaries (the "Company") that may interfere with the exercise of their
independence from management of the Company and shall otherwise satisfy the
applicable membership requirements under the rules of the New York Stock
Exchange, Inc., as such requirements are interpreted by the Board of Directors
in its business judgment. All committee members should be financially literate
and at least one member should have accounting or related financial management
experience.

II. Purposes. The purposes of the Audit Committee are to assist the Board of
Directors:

A. in its oversight of the Company's accounting and financial reporting
principles and policies and internal audit controls and procedures;

B. in its oversight of the Company's financial statements and the
independent audit thereof;

C. in selecting, evaluating and, where deemed appropriate, replacing the
outside auditors (or nominating the outside auditors to be proposed for
shareholder approval in any proxy statement);

D. in evaluating the independence of the outside auditors; and

E. in its oversight of the Company's Compliance Program and Standards of
Business Conduct.

The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity of the
Company's financial statements. Management and the internal auditing department
are responsible for maintaining appropriate accounting and financial reporting
principles and policies and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
outside auditors are responsible for planning and carrying out a proper audit
of the Company's annual financial statements, timely reviews of the Company's
quarterly financial statements prior to the filing of each quarterly report on
Form 10-Q, and other procedures. In fulfilling their responsibilities
hereunder, it is recognized that members of the Audit Committee are not
full-time employees of the Company and are not, and do not represent themselves
to be, accountants or auditors by profession or experts in the fields of
accounting or auditing including in respect of auditor independence. As such,
it is not the duty or responsibility of the Audit Committee or its members to
conduct "field work" or other types of auditing or accounting reviews or
procedures or to set auditor independence standards, and each member of the
Audit Committee shall be entitled to rely on (1) the integrity of those persons
and organizations within and outside the Company from which it receives
information, (2) the accuracy of the financial and other information provided
to the Audit Committee by such persons or organizations absent actual knowledge
to the contrary (which shall be promptly reported to the Board of Directors)
and (3) representations made by management as to any information technology,
internal audit and other non-audit services provided by the auditors to the
Company.

The outside auditors for the Company are ultimately accountable to the Board
of Directors (as assisted by the Audit Committee). The Board of Directors, with
the assistance of the Audit Committee, has the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the outside
auditors (or to nominate the outside auditors to be proposed for shareholder
approval in the proxy statement).

The outside auditors shall submit to the Company annually a formal written
statement delineating all relationships between the outside auditors and the
Company ("Statement as to Independence"), addressing each non-audit service
provided to the Company and at least the matters set forth in Independence
Standards Board No. 1.

A-1

The outside auditors shall submit to the Company annually a formal written
statement of the fees billed for each of the following categories of services
rendered by the outside auditors: (1) the audit of the Company's annual
financial statements for the most recent fiscal year and the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year; (2) information technology consulting services for the
most recent fiscal year, in the aggregate and by each service (and separately
identifying fees for such services relating to financial information systems
design and implementation); and (3) all other services rendered by the outside
auditors for the most recent fiscal year, in the aggregate and by each service.

III. Meetings. The Audit Committee shall meet four times annually, or more
frequently if circumstances dictate. The Audit Committee should meet separately
at least annually with management, the director of the internal auditing
department and the outside auditors to discuss any matters that the Audit
Committee or any of these persons or firms believe should be discussed
privately. The Audit Committee may request any officer or employee of the
Company or the Company's outside counsel or outside auditors to attend a
meeting of the Audit Committee or to meet with any members of, or consultants
to, the Audit Committee. Members of the Audit Committee may participate in a
meeting of the Audit Committee by means of conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.

IV. Duties and Powers. To carry out its purposes, the Audit Committee shall
have the following duties and powers:

A. With respect to the outside auditor:

1. to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;

2. to review the fees charged by the outside auditors for audit and
non-audit services;

3. to ensure that the outside auditors prepare and deliver annually a
Statement as to Independence (it being understood that the outside
auditors are responsible for the accuracy and completeness of this
Statement), to discuss with the outside auditors any relationships or
services disclosed in this Statement that may impact the objectivity and
independence of the Company's outside auditors and to recommend that the
Board of Directors take appropriate action in response to this Statement
to satisfy itself of the outside auditors' independence;

4. to consider the effect of the outside auditors' provision of (a)
information technology consulting services relating to financial
information systems design and implementation and (b) other non-audit
services to the Company on the independence of the outside auditors (it
being understood that the Audit Committee will rely on the accuracy of
the information provided by the outside auditors as to the services
provided and the fees paid and will rely on the representations of
management in connection with such consideration); and

5. to instruct the outside auditors that the outside auditors are
ultimately accountable to the Board of Directors and Audit Committee.

B. With respect to the internal auditing department:

1. to participate in the appointment, promotion, or dismissal of the
director of the internal audit department, and help determine his or her
qualifications, reporting hierarchy, and compensation;

2. to advise the director of the internal auditing department that he
or she is expected to provide to the Audit Committee summaries of and,
as appropriate, the significant reports to management prepared by the
internal auditing department and management's responses thereto;

3. to review the internal audit function of the Company, including
the proposed programs for the coming year and integration of such
programs with the independent auditors, with particular attention to
maintaining the best possible effective balance between independent and
internal auditing resources;

A-2

4. to review the results of the annual corporate officers' and
directors' expense reimbursement audit, and results of the approvals
authority review; and

5. to review with the internal audit department and management the
adequacy of the Company's insurance on its assets and business.

C. With respect to financial reporting principles and policies and
internal controls and procedures:

1. to advise management, the internal auditing department and the
outside auditors that they are expected to provide to the Audit
Committee a timely analysis of significant financial reporting issues
and practices;

2. to consider any reports or communications (and management's and/or
the internal auditing department's responses thereto) submitted to the
Audit Committee by the outside auditors required by or referred to in
AICPA Statement on Auditing Standards No. 61 (as codified by AU Section
380).

3. to meet with management, the director of the internal auditing
department and/or the outside auditors:

(a) to discuss the scope of the annual audit;

(b) to discuss the audited financial statements;

(c) to review the quarterly financial statements with financial
management and the independent auditors prior to the filing of the
Form 10-Q (or prior to the press release of results, if possible) to
determine that the independent auditors do not take exception to the
disclosure and content of the financial statements, and discuss any
other matters required to be communicated to the Audit Committee by
the auditors (the chair of the Audit Committee may represent the
entire Audit Committee for purposes of this review);

(d) to discuss any significant matters arising from any audit or
report or communication referred to in items B.2. or C.2. above,
whether raised by management, the internal auditing department or the
outside auditors, relating to the Company's financial statements;

(e) to review the form of opinion the outside auditors propose to
render to the Board of Directors and shareholders;

(f) to discuss significant changes to the Company's auditing and
accounting principles, policies, controls, procedures and practices
proposed or contemplated by the outside auditors, the internal
auditing department or management; and

(g) to inquire about significant risks and exposures, if any, and
the steps taken to monitor and minimize such risks.

4. to obtain from the outside auditors assurance that the audit was
conducted in a manner consistent with Section 10A of the Securities
Exchange Act of 1934, as amended, which sets forth certain procedures to
be followed in any audit of financial statements required under the
Securities Exchange Act of 1934; and

5. to discuss with the Company's Chief Legal and Administrative
Officer any significant legal matters that may have a material effect on
the financial statements, the Company's compliance policies, including
material notices to or inquiries received from governmental agencies.

D. With respect to reporting and recommendations:

1. to prepare any report, including any recommendation of the Audit
Committee, required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement;

A-3

2. to review this Charter at least annually and recommend any changes
to the full Board of Directors; and

3. to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the above
and other matters as the Audit Committee may deem necessary or
appropriate.

E. With respect to compliance matters:

1. to review with appropriate Company personnel the actions taken to
ensure compliance with the Company's Compliance Program and Standards of
Business Conduct; and

2. to review the programs and practices of the Company designed to
ensure compliance with applicable laws and regulations and to monitor
the results of these compliance efforts, including:

(a) to review the activities of the Compliance Department and the
effectiveness of its efforts in promoting compliance with the law and
the governing contracts;

(b) to review the reporting systems, such as the Ethics Helpline,
used by associates and other agents of the Company to report, without
fear of retribution, improper or criminal conduct by persons in the
organization;

(c) to review enforcement and discipline standards and procedures
to see that they are consistently enforced and effective; and

(d) to review the steps taken after an offense is detected to
determine if an appropriate response is made and if preventative
measures are put in place.

V. Resources and Authority. The Audit Committee shall have the resources and
authority appropriate to discharge its responsibilities, including the
authority to engage outside auditors for special audits, reviews and other
procedures and to retain special counsel and other experts or consultants.

A-4

SKU2320-PS-0402

Anthem, Inc.
Annual Meeting of Shareholders

Monday, May 13, 2002
11:00 a.m. Local Time

Hilbert Circle Theatre
45 Monument Circle
Indianapolis, IN 46204

--------------------------------------------------------------------------------

ANTHEM, INC.
PROXY/VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
May 13, 2002

_________________________________________________________________

PROXY

This PROXY is solicited by the Board of Directors for use at the Annual Meeting
of Shareholders on May 13, 2002. Your shares of stock will be voted as you
specify. If no choice is specified, your proxy will be voted "for" all nominees
listed under Item 1 and "for" Item 2, and in the discretion of the proxy holder
on any other matter which may properly come before the Annual Meeting of
Shareholders and all adjournments or postponements of the meeting.

By signing this PROXY, you revoke all prior proxies and appoint Larry C.
Glasscock, David R. Frick and Michael L. Smith, or any of them, as proxies, with
the power to appoint substitutes, to vote your shares of common stock of Anthem,
Inc. on the matters shown below and on any other matters which may come before
the Annual Meeting of Shareholders and all adjournments of the meeting.

1. Elect Susan B. Bayh, Allan B. Hubbard, William G. Mays, Senator Donald W.
Riegle, Jr. and William J. Ryan as directors

2. Ratify the appointment of Ernst & Young LLP as auditors for Anthem, Inc.
for 2002

SEE REVERSE SIDE. We encourage you to vote by telephone or the Internet.
However, if you wish to vote by mail, just complete, sign and date the reverse
side of this card and use the enclosed envelope (or send to Anthem, Inc., P.O.
Box 43065 Providence, RI 02940-3065); if you wish to vote in accordance with the
Board of Directors' recommendations, you need not mark any voting boxes.

-----------
SEE REVERSE
SIDE
-----------

Anthem/R/
P.O. Box 43068
Providence, RI 02940-3068

Vote your Proxy by any one of the following methods!
---
----------------- ----------------
Vote by Telephone Vote by Internet
----------------- ----------------

Your vote is important! Your vote is important!
Call Toll-free anytime on a Touch-Tone Phone: Log on anytime to:
1-877-779-8683 www.eproxyvote.com/ath

Follow these four easy steps: Follow these four easy steps:
----------------------------- -----------------------------

1. Read the Proxy Statement and Proxy Card 1. Read the Proxy Statement and
2. Call the Toll-free number 2. Go to the Internet site
1-877-779-8683 www.eproxyvote.com/ath
3. Enter your Voter Control Number 3. Enter your Voter Control Num
located on your Proxy Card above your name located on your Proxy Card a
4. Follow the recorded instructions 4. Follow the instructions prov

Electronic distribution of proxy materials saves time, postage and printing
costs, and is environmentally friendly. To sign up for electronic distribution
of proxy materials in the future, log on to www.eproxyvote.com/ath

Do not return your Proxy Card if you are voting by Telephone or Internet.

Please see the reverse side of this card if you plan
to attend the Annual Meeting.

------------
Vote by Mail
------------

To vote by mail, detach and return the proxy card below.
--------------------------------------------------------------------------------

Please mark
[X] votes as in
this example.

The Board of Directors recommends a vote FOR Item 1.

FOR WITHHELD
1.Election of Directors ALL NOMINEES* FROM ALL
(01) Susan B. Bayh, [_] [_]
(02) Allan B. Hubbard,
(03) William G. Mays, *Except as indicated below
(04) Senator Donald W. Riegle, Jr., and
(05) William J. Ryan

----------------------------------------------------------------------------
To withhold vote from any individual nominee, write nominee's name(s) above.

The Board of Directors recommends a vote FOR Item 2.

FOR AGAINST ABSTAIN
2 Ratify the appointment of [_] [_] [_]
Ernst & Young LLP as auditors
for Anthem, Inc. for 2002

Signature: Date: Signature: Date:
--------------- ------- -------------- ---------
(If held jointly)

Please sign exactly as name(s) appears hereon. Joint owners should each sign
personally. When signing as executor, administrator, corporation officer,
attorney, agent, trustee, guardian, or in other representative capacity,
please state your full title as such.