<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

[X]    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934
       For the fiscal year ended December 31, 1999

                                       OR

[  ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934.

                        Commission file number 001-12617

                             Trigon Healthcare, Inc.
             (Exact name of registrant as specified in its charter)
                Virginia                                    54-1773225
       (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                   Identification No.)

                  2015 Staples Mill Road, Richmond, VA  23230
                    (Address of principal executive offices)

       Registrant's telephone number, including area code (804) 354-7000

Securities registered pursuant to Section 12(b) of the Act:
     Class A Common Stock, $.01 Par Value              New York Stock Exchange
             (Title of Class)                             (Name of Exchange)

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    [ X ] Yes   [   ]  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 27, 2000 was approximately $1,266,419,000 (based on the
last reported sales price of $33 5/8 per share on March 27, 2000, on the New
York Stock Exchange).

As of March 27, 2000, 37,663,024 shares of the registrant's Class A Common
Stock, par value $.01 per share, were issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Certain portions of Trigon Healthcare Inc.'s Annual Report to Shareholders for
the year ended December 31, 1999 into Parts II and IV of this Form 10-K.
Certain portions of Trigon Healthcare Inc.'s definitive Proxy Statement dated
March 24, 2000 for the Annual Meeting of Shareholders into Part III of this Form
10-K.
<PAGE>

                            TRIGON HEALTHCARE, INC.
                      INDEX TO ANNUAL REPORT ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                       -------
                                                     PART I
<S>         <C>                                                                                        <C>
Item 1.     Business.................................................................................        1
Item 2.     Properties...............................................................................       13
Item 3.     Legal Proceedings........................................................................       14
Item 4.     Submission of Matters to a Vote of Security Holders......................................       14

                                                     PART II
Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters....................       14
Item 6.     Selected Financial Data..................................................................       14
Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations....       14
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk...............................       14
Item 8.     Financial Statements and Supplementary Data..............................................       14
Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....       15

                                                    PART III
Item 10.    Directors and Executive Officers of the Registrant.......................................       15
Item 11.    Executive Compensation...................................................................       15
Item 12.    Security Ownership of Certain Beneficial Owners and Management...........................       15
Item 13.    Certain Relationships and Related Transactions...........................................       15
                                                     PART IV
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........................       15
</TABLE>
<PAGE>

PART I

Item 1.  Business

DEMUTUALIZATION AND INITIAL PUBLIC OFFERING

Effective February 5, 1997, Blue Cross and Blue Shield of Virginia (dba Trigon
Blue Cross Blue Shield) completed its conversion from a mutual insurance company
to a stock insurance company in accordance with a Plan of Demutualization
("Demutualization").  In accordance with the Demutualization, Blue Cross and
Blue Shield of Virginia changed its name to Trigon Insurance Company (dba Trigon
Blue Cross Blue Shield) ("Trigon Insurance") and became a wholly owned
subsidiary of Trigon Healthcare, Inc. (Trigon Healthcare, Inc. and subsidiaries
herein collectively referred to as "Trigon" or the "Company").  The membership
interests of Blue Cross and Blue Shield of Virginia's eligible members were
converted into Class A common stock of Trigon Healthcare, Inc., or, in certain
circumstances, cash.  The Demutualization also required the Company to complete
an Initial Public Offering ("IPO") of stock simultaneously with the conversion.
Accordingly, Trigon Healthcare, Inc. issued 17.8 million shares of Class A
common stock at $13 per share in the IPO, generating net proceeds of $215.2
million.  In connection with the Demutualization, the Company was required to
make a payment of $175 million to the Commonwealth of Virginia ("Commonwealth
Payment") in February 1997.  The Commonwealth Payment was accrued and reflected
as an extraordinary charge in the consolidated financial statements for 1996.
The Company used approximately $90 million of the net proceeds and $85 million
in borrowings under a revolving credit agreement to fund this payment.  The
Company also used approximately $91.1 million of the offering proceeds to pay
certain eligible members cash in lieu of shares of common stock that would
otherwise have been issued to such eligible members pursuant to the
Demutualization.

GENERAL

The Company is the largest managed health care company in Virginia, serving
nearly 1.9 million members primarily through statewide and regional provider
networks.  The Company's membership represents approximately 27% of the Virginia
population and 32% of the Virginia population in those areas where Trigon has
the exclusive right to use the Blue Cross and Blue Shield service marks and
tradenames.

The Company divides its business into four segments: health insurance,
government programs, investments and all other.  The Company's health insurance
segment provides a comprehensive spectrum of managed care products primarily
through three network systems with a range of utilization and cost containment
controls.  Within the Company's network product offerings, employer groups may
choose various funding options ranging from fully insured to partially or fully
self-funded financial arrangements.  While self-funded customers participate in
Trigon's networks, the claims are not underwritten by Trigon but are funded by
the groups.  As of December 31, 1999, fully insured, also referred to as
commercial, products covered 974,717 members and made up 52.2% of total
enrollment.  Its components include: three HMO networks which, with 274,184
members, are the Company's most tightly managed and cost efficient networks; the
preferred provider organization ("PPO") networks which, with 378,406 members,
offer greater choice of providers than Trigon's HMO networks; and the
participating provider ("PAR") network which, with 151,673 members, is the
Company's broadest and most flexible network.  Commercial products also include
Medicare supplement plans with 119,050 members and the Medicaid HMO plans with
49,174 members.  On July 2, 1999, the Company announced that it would withdraw
its Medicare + Choice HMO product effective January 1, 2000 due to concerns
about reduced government reimbursements for Medicare + Choice plans.  As of
December 31, 1999 enrollment in this product stood at 2,230 members.  Self-
funded enrollment as of December 31, 1999 was 677,545 members and represents
36.3% of total enrollment.  Self-funded arrangements are available to groups
with more than 100 employees and are typically utilized by groups with more than
1,000 employees.  Trigon charges self-funded groups an administrative fee based
on the number of members in a group or the group's claims experience.  In
addition, most self-funded groups purchase aggregate and/or claim specific stop
loss coverage.  In exchange for a premium, the group's aggregate liability is
capped for the year or the group's liability on any one episode of care is
capped.

On October 5, 1999, the Company announced that Mid-South Insurance Company (Mid-
South), a subsidiary, intended to exit the health insurance market effective
April 30, 2000. The Company's decision was due to the continued unacceptable
performance and increased medical costs of Mid-South. On March 1, 2000, Trigon
signed a

                                       1
<PAGE>

definitive agreement to sell Mid-South to another carrier.  The pending
sale, which is subject to regulatory approval, does not affect Mid-South's exit
from the group health insurance market. However, completion of the sale would
eliminate the need for approximately 18,000 Mid-South individual members to find
replacement coverage.  As of September 30, 1999 Mid-South covered 93,000
members.  The Company excluded all Mid-South enrollment from its reported
December 31, 1999 membership.

The government programs segment includes the Federal Employee Program ("FEP")
and claims processing for Medicare.  Through its participation in the national
contract between the Blue Cross and Blue Shield Association ("BCBSA") and the
U.S. Office of Personnel Management ("OPM"), the Company provides health
benefits to federal employees in Virginia.  FEP revenues represent the
reimbursement by OPM of medical costs incurred including the actual cost of
administering the program, as well as a performance-based share of the national
program's overall profit.  As of December 31, 1999, FEP enrollment stood at
216,089 members and represents 11.6% of total enrollment.  The FEP is the
Company's largest customer, representing 19.1% of total consolidated revenues
during 1999.  The Company discontinued its role as a claims processing
intermediary for the federal government with the Medicare Part A program in
Virginia and West Virginia effective August 31, 1999.  Additionally, the Company
discontinued its role as the primary provider of computer processing
capabilities for Medicare Part A claims processing to certain other Blue Cross
and Blue Shield plans during November 1999.  As an administrative agent for
Medicare, the Company allocated operating expenses to determine reimbursement
due for services rendered in accordance with the contract.  Medicare claims
processed are not included in the consolidated statements of operations and the
reimbursement of allocated operating expenses is recorded as a reduction of the
Company's selling, general and administrative expenses.

All of the investment portfolios of the consolidated subsidiaries are managed
and evaluated collectively within the investment segment.  The Company's other
health-related business, including disease management programs, third-party
administration for medical and workers compensation, health promotions and
similar products, is reflected in an "all other" category.

Refer to Note 23,  "Segment Information," on pages 53 and 55 of the Company's
1999 Annual Report to Shareholders, which are incorporated herein by reference,
for financial information relating to reportable segments.

The following table sets forth the data by network for the last five years:

                         ENROLLMENT BY NETWORK SYSTEM

<TABLE>
<CAPTION>
                                                                          As of December 31,
                                                   1999           1998           1997           1996           1995
                                             ---------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>            <C>            <C>
Health Insurance
Commercial
   HMO.......................................        274,184        255,879        255,548        219,866        166,536
   PPO.......................................        378,406        297,939        263,828        230,675        212,322
   PAR.......................................        151,673        165,239        192,825        236,383        296,716
   Medicaid/Medicare HMO.....................         51,404         31,338         35,488         28,306          6,357
   Medicare supplement.......................        119,050        121,322        125,686        128,015        129,252
                                             ---------------------------------------------------------------------------
Total commercial excluding Mid-South.........        974,717        871,717        873,375        843,245        811,183
Self-funded..................................        672,906        639,971        654,004        664,862        641,633
Processed for other Blue Cross and Blue
   Shield Plans (ASO)........................          4,639          5,545         15,728         70,330         64,558
                                             ---------------------------------------------------------------------------
Total health insurance excluding Mid-South...      1,652,262      1,517,233      1,543,107      1,578,437      1,517,374
                                             ---------------------------------------------------------------------------
Government
Federal Employee Program (PPO)...............        216,089        213,017        207,457        197,241        198,561
                                             ---------------------------------------------------------------------------
Total government                                     216,089        213,017        207,457        197,241        198,561
                                             ---------------------------------------------------------------------------
Total excluding Mid-South....................      1,868,351      1,730,250      1,750,564      1,775,678      1,715,935
Mid-South, commercial........................             --        105,056         64,143         49,251         19,857
Mid-South, ASO...............................             --         26,065         25,663         35,620         63,826
                                             ---------------------------------------------------------------------------
Total........................................      1,868,351      1,861,371      1,840,370      1,860,549      1,799,618
                                             ---------------------------------------------------------------------------
</TABLE>

                                       2
<PAGE>

SIGNIFICANT CUSTOMERS

Trigon's two largest customers are the FEP and the Commonwealth of Virginia
("COV").  FEP represents 19.1% of total consolidated revenues.  The contract
renews automatically for a term of one year each January 1, unless either party
gives written notice at least 60 days prior to the date of renewal.  Under the
program, a special FEP reserve is maintained at the national level as a
protection against adverse claims trends.  However, if the contract should
terminate with a negative balance in the FEP special reserve, the losses would
be allocated to participating plans as subcontractors based on a ratio of the
Company's past five year claims experience as a percent of the total program's
experience.  As of December 31, 1999, the national reserve stood at 4.3 months
of claims and administrative payments in reserve, which is above the target of a
3.0 month reserve base.  Since 1972, the Company has provided health benefits to
employees and retirees of COV.  The current contract, which includes both self-
funded and fully insured product offerings, represented 15.0% of premium and
premium equivalents during 1999. There are currently approximately 120,000 COV
employees in these two product offerings.  On February 9, 2000, the COV awarded
the Company the next multi-year contract effective July 1, 2000 to administer
its statewide, self-funded medical/surgical health care benefits programs. These
employees also will have other health benefit plan choices since the COV's new
contract provides for selected other carriers to offer medical/surgical plans to
employees.  In October 1999, the COV awarded the Company contracts to administer
the dental and prescriptions drug benefits programs for the same employees
covered by the medical/surgical contract.  In addition to the self-funded
product offering, the Company currently offers the COV a fully insured HMO
product with enrollment of 23,707 members as of December 31, 1999.  The Company
decided not to re-bid on this portion of the contract because the current
contract has not generated acceptable returns. The HMO portion of the current
COV contract will expire June 30, 2000.

NETWORKS

Trigon's HMO, PPO and PAR networks provide for the delivery of health care
services at reduced costs due to favorable network arrangements with health care
providers and by including members in health care decisions.  The Company has
the largest membership base in Virginia, which generally allows it to negotiate
contracts with its Virginia providers that specify favorable rates and
incorporate utilization management and other cost controls.  Members assume
responsibility for a portion of health care costs through copayments,
coinsurance and annual deductible contract provisions.  Members may choose to
receive health care services from providers not part of the network at an
additional cost to the member.  Trigon believes that the copayment, coinsurance,
annual deductible provisions and out of network costs enhance its ability to
control costs by encouraging members to take more responsibility for their
health care decisions.

Trigon established its first HMO in 1984 and now operates three separate HMOs.
HealthKeepers, Inc. ("HealthKeepers") is a state qualified HMO that operates
primarily in the central, eastern and southwestern areas of Virginia.  Peninsula
Health Care, Inc. ("PHC"), a joint venture owned 51% by Trigon, is a state
qualified HMO operating primarily on the Peninsula in Eastern Virginia.  The
Company owns 80% of Priority Inc. (acquired in 1995), which owns a federally
qualified HMO, Priority Health Care, Inc. ("Priority"), operating in the
Tidewater area in Eastern Virginia.  As of December 31, 1999, the HMO networks
included approximately 2,300 primary care physicians, 7,700 specialist
physicians and 53 acute care hospitals throughout Virginia.  Members choose a
primary care physician who is responsible for coordinating health care services
for the member.  The HMO product portfolio is presented to customers as a stand-
alone HMO offering, or through "Blue Advantage," a program which includes HMO
and PPO options administered and priced as a single program and which can only
be utilized by groups that contract with Trigon on an exclusive basis.  The
Company's PPO network is a statewide PPO network which, as of December 31, 1999,
included approximately 14,500 physicians and 89 acute care hospitals within
Virginia.  Members may seek care from any PPO network physician depending on
services required.  Trigon's PAR network provides more traditional health
coverage and included approximately 15,300 physicians and 89 acute care
hospitals.  The PAR network offers members more providers to choose from,
greater customization of benefit design and fewer restrictions in the use of
non-network providers than the PPO network.  Trigon expects that its PAR network
and products will continue to be an important offering for groups desiring
greater flexibility and choice in networks and benefits, as well as a source of
new PPO and HMO members.  Trigon also offers Medicaid HMO products to
participants in the Aid to Families with Dependent Children program and the
Aged, Blind and Disabled Individuals programs in the Peninsula and Tidewater
regions of Virginia and within the City of Richmond and five surrounding
counties in central Virginia.

                                       3
<PAGE>

Trigon's networks have contracts with hospitals, physicians and other
professionals at reduced rates due to the volume of business it offers to health
care providers that are a part of the network.  Hospital provider contracts,
typically three to five years in duration, are generally paid on the basis of
per diems (i.e., fixed fee schedules where the daily rate is based on the type
of service; primary method of in-patient reimbursement), per case per admission
(i.e., fixed fee schedules for all services during a member's hospitalization),
or a percentage of covered charges with limits on the subsequent year increases.
The average rate negotiated with hospitals under this arrangement is lower than
the hospital's average standard retail charges.  Services not subject to special
per case or per diem payment arrangements are generally paid according to a fee
schedule or as a percentage of billed charges. Beginning in 1997, the Company
changed its method of reimbursing hospitals for outpatient procedures which has
led to substantial savings.  Over a three-year period, the Company converted its
facility outpatient contracts from a percent of covered charges to a fixed fee
reimbursement schedule for 6,500 procedures.  When considering whether to
contract with a physician, the Company conducts a credentialing program to
evaluate the applicant's professional experience, including licensure.  The
Company's HMO network provides reimbursement to almost all of the primary care
physicians in the HMO network on a capitated basis.  Specialists are reimbursed
based on a fee schedule or, in some cases, on a capitated basis.  Some ancillary
services, lab services, behavioral health and vision services are also
capitated.  PPO and PAR physician provider contracts employ fixed fee schedules,
which are below standard billing rates.  Physician fee schedule payments are set
by the Company using Medicare's Resource Based Relative Value System
methodologies and are generally adjusted annually.

UTILIZATION MANAGEMENT

Trigon also manages health care costs in its networks by using utilization
management system guidelines for the networks that are intended to address
quality of care and help to ensure that only appropriate services are rendered
and that such services are provided in the most cost-effective manner.  Trigon
recognizes that the right care in the right setting at the right time using the
right provider for the right price equates to quality medical care.  In the HMO
network, the primary care physicians are considered to be the overall manager of
the individual's health care needs and manage and optimize care through the use
of referrals and by approving all specialty care before it is rendered.  In
addition, the HMO reviews all high cost services needed by individual members
that are not provided by the primary care physician.  The Company also manages
health care costs and quality by reviewing monthly cost and utilization trends
within all networks.  Utilization rates and cases are reviewed in the aggregate
and by service type to identify opportunities for better quality and cost
control.  In addition, the highest cost services are studied to determine if
costs can be reduced by using new, less expensive technologies or by creating
additional networks or contracts, such as networks for ambulatory care, to
reduce provider costs.  The Company requires pre-admission approval of all
hospital and skilled nursing facility stays and concurrent review of length of
stay.  Trigon uses the Milliman & Robertson Healthcare Management Guidelines
(M&R) complimented by InterQual(R) as its medical necessity decision support
criteria.  M&R guidelines were developed based on nationwide best practices
benchmarks that maximize efficiency in health care delivery.  InterQual(R) is a
nationally recognized, evidence-based criteria set developed through peer review
medical literature.  The Company also modifies the decision support guidelines
based on input from its regional physician panels, thus ensuring the guidelines
are well supported by network providers.  Trigon prospectively reviews the
medical necessity of home health, private duty nursing and durable medical
equipment.  Also, the Company retrospectively reviews physician practice
patterns.  Physicians are required to meet certain profiling criteria that
indicate cost effective and quality practice standards.  All new medical
technologies are reviewed in advance in an attempt to ensure that only safe and
effective new medical procedures are covered.  Additionally, the Company also
employs a comprehensive disease management program.  In this program, the
Company identifies those members having certain chronic diseases, such as asthma
and diabetes, and proactively works with the member and the physician to
facilitate appropriate treatment, help to ensure compliance with recommended
therapies and educate members on lifestyle modifications to manage the disease.
The Company believes that the program promotes the delivery of efficient care
and helps to improve the quality of health care delivered.

QUALITY

Trigon's HMO quality improvement standards are modeled on those of the National
Committee on Quality Assurance ("NCQA"), an independent, nonprofit institution
that reviews and accredits health maintenance and managed care organizations.
The quality improvement program instituted by the Company's HMOs provides for
the review of quality of care service and the initial and ongoing review of the
credentials of all network providers.  This

                                       4
<PAGE>

credentialing process includes a review of whether the provider has the
necessary licenses, is qualified in the specialty indicated and meets standards
for safety, sanitation and accessibility. The HMO reviews the findings with a
quality improvement committee, which includes practicing physicians from the HMO
network. In addition, quality of care services are monitored through profiling
and data analysis, member satisfaction surveys and problem case review. During
1998, the Company obtained three-year full accreditation from the NCQA for
HealthKeepers, its largest HMO. PHC earned a three-year full accreditation from
the NCQA in December 1999. The three-year full accreditation is granted to
companies that have excellent programs for continuous quality improvement and
meet NCQA's rigorous standards.

The Company has an active program to evaluate the quality and appropriateness of
care provided by its PPO and PAR networks.  Provider credentialing, profiling
and member satisfaction, along with monitoring of outcomes and clinical studies
are all performed to monitor and manage quality of care.  Network physicians and
other providers participate in quality management programs overseen by medical
advisory panels.  Using the Company's computerized medical information database,
these programs involve profiles of the tests, types of treatment and procedures
performed for specific diagnoses by these physicians, as well as reviews of
aggregate data.  The American Accreditation Health Care Commission/URAC has
awarded Trigon Insurance a full, two-year accreditation for health utilization
management services.  Trigon Insurance has been certified since 1992.

MARKETING

Trigon markets its products and services to both individuals and groups.  The
individual products are marketed principally through direct marketing
initiatives and through brokers.  The group market includes small, medium and
large group employers.  The smaller group employers generally use insurance
brokers to assist in the selection of products and analysis of the actual cost
of competing plans.  As the group size grows, employers may use consultants to
assist them in the tailoring of benefits and networks.  The larger group
employers are generally more sophisticated purchasers, often engaging
consultants to work with the Trigon sales staff to tailor benefit and network
design to match their specific needs more closely.  In addition, Trigon has a
direct sales staff that markets the full range of Trigon products and services.

COMPETITION

The health care industry is highly competitive both in Virginia and in other
states in the southeastern and mid-Atlantic United States into which the Company
principally intends to expand.  Managed care companies, including large, well-
capitalized companies which market managed care products nationwide, have also
identified the southeastern and mid-Atlantic regions of the United States as
being favorable for expansion.  In some cases, market entrants, as well as
existing health care companies, have competed with the Company for business by
offering very favorable pricing terms to customers.  The Company faces this
increased competition in the areas in which it is licensed to use the Blue Cross
and Blue Shield service marks and tradenames.  In areas outside of its licensed
territory, the Company's ability to successfully compete may be adversely
affected by its inability to use the Blue Cross and Blue Shield service marks
and tradenames, by the presence of competitors that are able to use such service
marks and tradenames in the areas and by the Company's lack of substantial
market share or established provider networks in these areas.  The Company also
faces competition from a trend among health care providers to combine and form
their own networks in order to contract directly with employer groups and other
prospective customers to provide health care services.  It is possible that such
overall increased competition will exert strong pressures upon Trigon's
profitability, its ability to increase enrollment and its ability to
successfully pursue growth in areas both within and outside of Virginia.

INVESTMENTS

The Company's investment policies are designed to provide liquidity to meet
anticipated payment obligations and preserve capital.  Trigon fundamentally
believes that concentrations of investments in any one asset class are unwise
due to constantly changing interest rates as well as market and economic
conditions.  Accordingly, the Company maintains a diversified investment
portfolio consisting both of fixed income and equity securities, with the
objective of producing a consistently growing income stream and maximizing risk-
adjusted total return.  The fixed income portfolio includes government and
corporate securities, both domestic and international, with an average quality
rating of A as of December 31, 1999.  The portfolio had an average contractual
maturity of 7.4 years as of December

                                       5
<PAGE>

31, 1999. A portion of the fixed income portfolio is designated as a short-term
fixed income portfolio and is intended to cover near-term cash flow needs and to
serve as a buffer for unanticipated business needs. The equity portfolios
contain readily marketable securities ranging from small growth to well-
established Fortune 500 companies. The international portfolio is diversified by
industry, country and currency-related exposure. As of December 31, 1999, the
Company's equity exposure, comprised of direct equity as well as equity-indexed
investments, was 11.0% of the total portfolio, as compared to 14.0% as of
December 31, 1998.

The Company utilizes internal and external investment managers.  Both the
internal and external managers invest within guidelines established by the
Company designed to fit into the overall investment strategy.  These guidelines
establish minimum quality and diversification requirements that, among other
things, provide limitations on the allowable investment for a single issuer as
well as currency exposure for those managers investing in international
securities.

As of December 31, 1999, the composition of the Company's fixed income
investment securities by rating is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                   ESTIMATED
                                                                     FAIR         PERCENT
                         RATING (1)                                  VALUE        OF TOTAL
------------------------------------------------------------    --------------------------
<S>                                                           <C>                <C>
AAA.........................................................     $     676,708       43.5%
AA..........................................................            63,754        4.1
A...........................................................            94,085        6.0
BBB.........................................................           151,530        9.7
BB..........................................................           297,802       19.1
B...........................................................           240,618       15.5
CCC or lower................................................             1,910        0.1
Not rated (principally, other fixed income investment funds)            30,709        2.0
                                                                 ------------------------
Total.......................................................     $   1,557,116      100.0%
                                                                 ------------------------
</TABLE>

(1) Ratings are assigned by Standard & Poor's Corporation, Moody's Investor
    Service, Inc. or Fitch Investors Service, L.P.

Refer to Note 4, "Investment Securities," on pages 38 through 40 of the
Company's 1999 Annual Report to Shareholders, which are incorporated herein by
reference, for financial information relating to the Company's investment
securities.

Other than currently or formerly occupied Company property or through mortgage-
backed securities, the Company has no investment in real estate or mortgage
loans.

INFORMATION SYSTEMS

The Company develops and maintains its own information systems.  Information
systems have played and will continue to play a key role in ongoing plans to
continually improve quality, lower costs and improve service for the Company's
customers.  Trigon's centralized common database and analytical technologies
allow for increasingly more sophisticated methods of managing costs and quality
of care.  The database includes comprehensive information on virtually all
physicians and hospitals and approximately one third of the population in
Virginia, which assists Trigon in analyzing the medical and economic performance
of providers and the medical and economic experience of specific customer groups
and individuals.  The Company believes that its information systems are a
competitive advantage and are sufficient to meet its current needs and future
expansion plans.

The Company uses an integrated set of applications software to support marketing
and underwriting, eligibility and billing, electronic claims submission, claims
administration, managed care programs and corporate financial management.  A
combination of custom developed and licensed systems is used to meet the unique
needs of different products and markets.  An overall systems architecture is
maintained to promote consistency of data, processing rules and flexibility.
Different systems serving the unique products or markets feed data to a
corporate information and decision support system.  This decision support system
provides a single source of information for

                                       6
<PAGE>

all of the Company's data reporting and analytic needs. This includes
operational and financial performance, underwriting and marketing analysis,
utilization management and actuarial reporting.

Refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Readiness Disclosure" on page 26 of the
Company's 1999 Annual Report to Shareholders, which is incorporated herein by
reference, for a discussion of the Year 2000 issue, the steps taken by the
Company to address it and the effects on the Company.

REGULATION

HEALTH CARE REFORM - FEDERAL and VIRGINIA.  The Company's business is subject to
a changing legal, legislative and regulatory environment.  Some of the more
significant current issues that may affect the Company's business include:

 .  efforts to expand tort liability of health plans;

 .  proposed class action lawsuits targeting the health care industry's efforts
   to deliver quality care at affordable costs; and

 .  initiatives to increase health care regulation.

Pending initiatives to increase health care regulation at the federal level
include "managed care reform" and "patients' bill of rights" legislation.  The
bill that has passed the House of Representatives would expand tort liability
for health plans and change the practices for defining medical necessity.  The
corresponding bill that passed the Senate lacks similar provisions.  Given these
differences between the House and Senate bills and the general uncertainty of
the political process, it is not possible to determine what, if any, legislation
will ultimately be enacted or what the effect on the Company of any such
legislation would be.  Moreover, there can be no assurance that additional
legislative and regulatory initiatives will not be undertaken in the future, to
address "patient protection," to engage in structural reform of the health care
industry in order to reduce the escalation in health care costs or to make
health care more accessible.  Such reform, if it occurs, could adversely affect
Trigon's results of operations or financial condition.

At the state level, the Virginia General Assembly, in its 2000 Session, did not
pass legislation that would substantially increase health care costs, restrict
choice or drive up the number of uninsured Virginians.  At this time, the health
care legislation that did pass is not expected to have a material effect on the
Company's results of operations or financial condition.

Several major companies in the health care industry have had proposed class
action lawsuits filed against them by a coalition of plaintiffs' attorneys.
Given that no such lawsuits are currently pending against the Company and given
the uncertainties of predicting the outcome of litigation generally, it is not
possible to determine at this time what the ultimate effect, if any, on the
Company of any such litigation would be.

INSURANCE COMPANY AND HMO REGULATION.  Trigon Insurance, Trigon Health and Life
Insurance Company ("Trigon Health and Life"), a health and life company, and the
three HMO subsidiaries are subject to the insurance laws and regulations of the
Commonwealth of Virginia, the domiciliary state of these companies.  Mid-South
is domiciled in North Carolina and is subject to the laws and regulations of
that state.  In addition, Trigon Health and Life and Mid-South are subject to
the insurance laws and regulations of the other jurisdictions in which they are
licensed or authorized to do business.  These insurance laws and regulations
generally give state regulatory authorities broad supervisory, regulatory and
administrative powers over insurance companies and insurance holding companies
with respect to most aspects of their businesses.  This regulation is intended
primarily for the benefit of the policyholders and enrollees and not investors.
Regulatory authorities exercise extensive supervisory power over health and life
insurance companies and HMOs with respect to licensing; the approval of policy
forms and policies used; the nature of, and limitations on, a company's
investments; the periodic examination of the operations of the companies; the
form and content of annual statements and other reports required to be filed on
the financial condition of the companies; the establishment of minimum capital
or net worth requirements for these companies and other requirements.
Additionally, the HMOs are subject to regulation regarding quality assurance,
covered benefits, contracts between the HMO and its health care providers, the
accessibility of providers in the service area of an HMO and other requirements.
State regulatory authorities require the insurance companies and the HMOs to

                                       7
<PAGE>

maintain restricted investments represented by interest-bearing investment
securities, which are held by trustees or the state regulatory agencies as a
special fund for the policyholders and enrollees if the company fails to meet
its obligations in that state.

Trigon Insurance, the HMO subsidiaries, Trigon Health and Life and Mid-South are
required to file periodic statutory financial statements in each jurisdiction in
which they are licensed.  Trigon has one federally qualified HMO that is also
subject to regulation and review by the OPM and certain other federal
authorities, with which it must file periodic reports.  Areas covered by federal
law are similar to those covered by state law and regulation.  In addition, one
of the Company's HMOs offered a Medicare risk product through December 31, 1999
that subjected that HMO to regulation and review by the U.S. Department of
Health and Human Services and certain other federal authorities as well.  Trigon
Insurance, the HMO subsidiaries, Trigon Health and Life and Mid-South are
periodically examined by the insurance departments of the jurisdictions in which
they are licensed to do business.

INSURANCE HOLDING COMPANY REGULATION.  Trigon Healthcare, Inc. is not regulated
as an insurance company but, as the direct or indirect owner of all the capital
stock of Trigon Insurance, the three HMOs, Trigon Health and Life and Mid-South,
is regulated as an insurance holding company and subject to the insurance
holding company acts of Virginia and North Carolina, the states in which the
subsidiaries are domiciled.  These acts contain certain reporting requirements
as well as restrictions on transactions between an insurer or HMO and its
affiliates.  The Virginia insurance holding company laws and regulations
generally require insurance companies and HMOs within an insurance holding
company system to register with the State Corporation Commission and to file
with the State Corporation Commission certain reports describing capital
structure, ownership, financial condition, certain intercompany transactions and
general business operations.  In addition, various notice and reporting
requirements generally apply to transactions between insurance companies and
HMOs and their affiliates within an insurance holding company system, depending
on the size and nature of the transactions.  Virginia insurance holding company
laws and regulations require prior regulatory approval or, in certain
circumstances, prior notice of, certain material intercompany transfers of
assets as well as certain transactions between insurance companies, HMOs, their
parent holding companies and affiliates.

Additionally, holding company acts (including those of Virginia and North
Carolina) restrict the ability of any person to obtain control of an insurance
company or HMO without prior regulatory approval.  Without such approval (or an
exemption), no person may acquire any voting security of an insurance holding
company which controls a Virginia insurance company or HMO, or merge with such a
holding company, if as a result of such transaction such person would "control"
the insurance holding company.  "Control" is defined as the direct or indirect
power to direct or cause the direction of the management and policies of a
person and is presumed to exist if a person directly or indirectly owns or
controls 10% or more of the voting securities of another person.

RISK-BASED CAPITAL REQUIREMENTS.  Virginia and North Carolina have statutory
risk-based capital ("RBC") requirements for health and other insurance
companies.  Such requirements are intended to assess the capital adequacy of
life and health insurers, taking into account the risk characteristics of an
insurer's investments and products.  The formula for calculating such RBC
requirements, set forth in instructions adopted by the NAIC, is designed to take
into account asset risks, insurance risks, interest rate risks and other
relevant risks with respect to an individual insurance company's business.
Under these laws, an insurance company must submit a report of its RBC level to
the Virginia State Corporation Commission or Insurance Commissioner of North
Carolina, as appropriate, as of the end of the previous calendar year.

The RBC requirements categorize insurance companies according to the extent to
which they meet or exceed certain RBC thresholds.  The law requires increasing
degrees of regulatory oversight and intervention as an insurance company's RBC
declines.  The level of regulatory oversight ranges from requiring the insurance
company to inform and obtain approval from the domiciliary Insurance
Commissioner of a comprehensive financial plan for increasing its RBC to
mandatory regulatory intervention requiring an insurance company to be placed
under regulatory control in a rehabilitation or liquidation proceeding.

As of December 31, 1999, the RBC levels of Trigon Insurance, Trigon Health and
Life and Mid-South, as calculated in accordance with the NAIC RBC instructions,
exceeded all RBC thresholds.

                                       8
<PAGE>

The NAIC has proposed that states adopt RBC standards for HMOs.  On March 10,
2000, the Governor of Virginia signed into law the RBC standards for HMOs that
become effective January 1, 2001 and include interim monitoring provisions
between July 1, and December 31, 2000.  The Company has determined that, as of
December 31, 1999, the RBC levels for each of its HMOs exceed all RBC thresholds
under the new law.

RESTRICTIONS ON DIVIDENDS.  In the event the Company determines to pay
dividends, the principal source of funds to pay dividends to stockholders would
be dividends received by the Company from its subsidiaries, including Trigon
Insurance.  Virginia insurance laws and regulations restrict the payment of
extraordinary dividends declared by insurance companies, including health care
insurers such as Trigon Insurance, in a holding company system.  An insurance
company is prohibited from paying an extraordinary dividend unless it obtains
the approval of the State Corporation Commission.  An extraordinary dividend is
one which, together with the amount of dividends and distributions paid by the
insurance company during the immediately preceding 12 months, exceeds the lesser
of (i) 10% of the insurance company's statutory surplus to policyholders as of
the preceding December 31 or (ii) the insurance company's statutory net income
(not including realized capital gains) for the preceding calendar year.
Further, an insurance company may not pay a dividend unless, after such payment,
its surplus to policyholders is reasonable in relation to its outstanding
liabilities and adequate to meet its financial needs.  The State Corporation
Commission may bring an action to enjoin or rescind payment of any dividend or
distribution that would cause the insurance company's statutory surplus to be
unreasonable or inadequate.  On January 7, 2000, the State Corporation
Commission approved Trigon Insurance's request to effect an extraordinary
dividend of $125 million to its parent, Trigon Healthcare, Inc., on February 1,
2000.  As a result of this dividend, any dividend distributions by Trigon
Insurance during 2000 will require the approval of the State Corporation
Commission.  During 1999, 1998 and 1997, Trigon Insurance paid dividends to its
parent, Trigon Healthcare, Inc., of $48.9 million, $227.5 million and $238.7
million, respectively.  The 1999 cash dividend was effected August 1, 1999.  The
1998 dividend was effected July 1, 1998 and included $200.0 million of cash and
$27.5 million of stock of a wholly-owned subsidiary.  The 1997 dividend was
effected July 31, 1997 and consisted of $188.7 million of stock of a wholly-
owned subsidiary and $50.0 million of cash.

North Carolina, Mid-South's domiciliary state, similarly restricts the payment
of dividends by their domiciliary insurance companies.

ASSESSMENTS AGAINST INSURERS.  Under insolvency or guaranty association laws in
most states, insurance companies can be assessed for amounts paid by guaranty
funds for policyholder losses incurred by insolvent insurance companies.  Most
state insolvency or guaranty association laws, including Virginia's, currently
provide for assessments based upon the amount of premiums received on insurance
underwritten within such state (with a minimum amount payable where Mid-South is
licensed even if no premium is received).  Substantially all of Trigon's
premiums are currently derived from insurance underwritten in Virginia.

Under the Virginia Life, Accident and Sickness Insurance Guaranty Association
(the "Association") Act, assessments against insurance companies which issue
policies of accident or sickness insurance, such as Trigon Insurance, are made
retrospectively and are based (up to prescribed limits) upon the ratio of (i)
the insurance company's premiums received in Virginia over the previous three
calendar years on accident and sickness insurance, to (ii) the aggregate amount
of premiums received by all assessed member insurance companies over such three
calendar years on accident and sickness insurance.  The guaranty fund
assessments made under the act are administered by the Association, which has
its own board of directors selected by member insurers with the approval of the
State Corporation Commission.  An assessment may be abated or deferred by the
Association if, in the opinion of the board, payment would endanger the ability
of the member to fulfill its contractual obligations, but the other member
insurers may be assessed for the amount of such abatement or deferral.  Any such
assessment paid by a member insurance company may be offset against its premium
tax liability to the Commonwealth of Virginia over the ten calendar years
following the year of the payment, in amounts equal to ten percent of the amount
paid. The amount and timing of any future assessments, however, cannot be
reasonably estimated and are beyond the control of the Company.

VIRGINIA'S OPEN ENROLLMENT PROGRAM.  The Commonwealth of Virginia has an open
enrollment program pursuant to which Trigon Insurance is required to offer
comprehensive accident and sickness insurance contracts to individuals without
imposition of certain underwriting criteria that would deny coverage on the
basis of medical condition, age or employment status.  As an incentive for
participating in the open enrollment program,

                                       9
<PAGE>

Trigon Insurance pays Virginia premium tax of three-fourths of one percent
(0.75%) on premiums received from individual accident and sickness insurance
rather than the general Virginia premium tax of two and one fourth percent
(2.25%). This general Virginia premium tax applies to accident and sickness
insurance premiums received by Trigon Insurance from group business. Prior to
January 1, 1998, policies issued to small employers were also part of the open
enrollment program. Subsequent to health care reform legislation in 1997, all
carriers offering coverage in the small group market are required to issue any
policy in its small group market portfolio to any small employer that wants to
purchase the product. To withdraw from the open enrollment program, Trigon
Insurance would be required to give 24 months advance notice of withdrawal to
the State Corporation Commission.

BANKRUPTCY AND INSOLVENCY.  In the event of default on any debt incurred by the
Company or the bankruptcy of the Company, the creditors and stockholders of the
Company would have no right to proceed against the assets of Trigon Insurance or
any other subsidiary of the Company.  If Trigon Insurance were subject to a
rehabilitation or liquidation proceeding, such proceeding would be brought by
the State Corporation Commission which would act as the receiver with respect to
such insurance company's property and business.  All creditors of Trigon
Insurance, including, without limitation, members and, if applicable, the
various state guaranty associations, would be entitled to payment in full from
such assets before the Company, as a stockholder, would be entitled to receive
any distributions therefrom.

THE BLUE CROSS BLUE SHIELD LICENSE

The Company and certain of its subsidiaries have the exclusive right to use
certain Blue Cross and Blue Shield service marks and tradenames for all of their
plans and products throughout Virginia other than a small portion of the
northern Virginia suburbs adjacent to Washington, D.C.  The license requires an
annual fee to be paid to BCBSA equal to total association expenses allocated to
members based upon enrollment and premium and subjects the Company to certain
other guidelines.  BCBSA is a national trade association of Blue Cross and Blue
Shield licensees, the primary function of which is to promote and preserve the
integrity of the Blue Cross and Blue Shield name and service marks as well as
provide certain coordination among plan and provider services.  Each BCBSA
licensee is an independent legal organization and is not responsible for
obligations of other BCBSA member organizations.  The Company has no right to
use the Blue Cross and Blue Shield service marks and tradenames outside of its
designated territory within the Commonwealth of Virginia.

Under the Company's license agreement with BCBSA, an institutional investor
(generally defined as an entity identified in Rule 13d-1(b) (1) (ii) of the
rules and regulations under the Securities Exchange Act of 1934 and which makes
certifications required by item 10 of SEC Schedule 13G) may own up to 10% of the
outstanding voting securities of the Company.  All other stockholders are
subject to a 5% ownership limitation.  Ownership by any stockholder of voting
securities in excess of such limits would subject the Company to automatic
termination of its license.

The Company's Articles of Incorporation contain certain provisions which are
intended to prevent any holder from acquiring shares in excess of the limits set
forth in the Company's license agreement.  However, there can be no assurance
that a court would enforce these provisions or that if these provisions were not
enforced that the Company would retain the license from BCBSA.  If the BCBSA
license were to be terminated, there would be a material adverse effect on the
Company's business and operations, which the Company does not believe it can
meaningfully quantify.

The license agreements between BCBSA and its licensees prohibit a licensee from
entering into certain transactions which would result in an unlicensed entity
obtaining control of the licensee or acquiring a substantial portion of the
licensee's assets related to services provided under the Blue Cross or Blue
Shield service marks.  The license agreements also require that a licensee pay
to BCBSA a specific amount upon termination of the license agreement, subject to
certain limited exceptions.  The amount payable upon termination of the license
agreement is equal to $25 multiplied by the number of the licensee's members
receiving products or services sold or administered under the Blue Cross or Blue
Shield service marks, subject to reduction to the extent the payment of such fee
would cause such licensee to fall below certain capital requirements established
by the BCBSA.

                                       10
<PAGE>

RATING

Trigon Insurance, HealthKeepers and PHC are each presently assigned a rating of
"A" (Excellent) by A.M. Best Company.  Trigon Health and Life and Priority are
each presently assigned an A.M. Best rating of "A-" (Excellent).  Mid-South is
presently assigned an A.M. Best rating of "B+" (Very Good).  A.M. Best's ratings
are divided into two broad categories - Secure and Vulnerable.  All of the
ratings assigned to the Company's subsidiaries are classified as Secure.  The
ratings of "A" and "A-" are assigned to companies which have, on balance,
excellent financial strength, operating performance and market profile when
compared to the standards established by the A.M. Best Company.  It is the
opinion of A.M. Best Company that such companies have a strong ability to meet
their ongoing obligations.  A "B+" rated company is considered to have a good
ability to meet its ongoing obligations.  Such ratings are not directed to the
protection of investors and are subject to review and change over time.  In
March 2000, Trigon Insurance received both a counterparty credit rating and an
insurer financial strength rating of  "AA-" (Very Strong) from Standard &
Poor's.  The counterparty credit rating is an opinion of the company's overall
creditworthiness and financial capacity to pay its financial obligations.  This
rating indicated the company has a strong capacity to meet its financial
commitments.  The insurer financial strength rating is a current opinion that
the financial security characteristics of the company are very strong with
respect to its ability to pay under its insurance contracts in accordance with
the contract terms.

EMPLOYEES

As of December 31, 1999, the Company had 3,711 full-time and 108 part-time
employees.  The employees are primarily located in Virginia, with the majority
of the Virginia employees in the cities of Richmond and Roanoke.  Employees are
also located in Georgia, Illinois, Maryland, New Jersey, North Carolina,
Oklahoma, Pennsylvania, South Carolina, Washington D.C. and West Virginia.  The
Company believes that its relationship with its employees is good.  No employees
are subject to collective bargaining agreements.

EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
                                            Age as of
                Name                    December 31, 1999                        Position
------------------------------------  ----------------------  ----------------------------------------------
<S>                                   <C>                     <C>
Norwood H. Davis, Jr.                            59           Chairman of the Board

Thomas G. Snead, Jr.                             46           President and Chief Executive Officer

William P. Bracciodieta, M.D.                    54           Senior Vice President and Chief Medical
                                                              Officer

Ralph T. Bullock, Jr.                            50           Senior Vice President and Chief Information
                                                              Officer

Thomas R. Byrd                                   42           Senior Vice President and Chief Financial
                                                              Officer

James W. Copley, Jr.                             47           Senior Vice President and Chief Investment
                                                              Officer

Kathy Ashby Merry                                37           Senior Vice President, Operations

Ronald M. Nash                                   62           Senior Vice President, Corporate Services

Paul F. Nezi                                     52           Senior Vice President, Virginia Group Business

Timothy P. Nolan                                 38           Senior Vice President, Marketing and
                                                              Corporate Development

</TABLE>

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                            Age as of
                Name                    December 31, 1999                        Position
------------------------------------  ----------------------  ----------------------------------------------
<S>                                   <C>                     <C>
Thomas A. Payne                                  55           Senior Vice President, Corporate Audit

Peter L. Perkins                                 42           Senior Vice President and Chief Actuary

David P. Wade                                    43           Senior Vice President, Government and
                                                              Individual Business

J. Christopher Wiltshire                         45           Senior Vice President, General Counsel and
                                                              Corporate Secretary
</TABLE>


For a listing of the positions held with the Company by each executive officer
and other information, refer to "Officers," on page 58 of Trigon Healthcare
Inc.'s 1999 Annual Report to Shareholders, which is incorporated herein by
reference.

SERVICE MARKS

The Company has registered and maintains several service marks, trademarks and
tradenames at the federal level, in the Commonwealth of Virginia and in certain
other states.  "Trigon," "Keycare" and "HealthKeepers" are included among these
marks.  Although the Company considers its registered service marks, trademarks
and tradenames important in the operation of its business, the business of the
Company is not dependent on any individual service mark, trademark or tradename.
For a discussion of the Company's license to use certain Blue Cross and Blue
Shield service marks and tradenames, see "The Blue Cross Blue Shield License."

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements, so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the document.  The Company desires to
take advantage of these safe harbor provisions.  Certain information contained
in this Form 10-K is forward-looking within the meaning of the Act or Securities
and Exchange Commission rules.  Words such as expects, anticipates, intends,
plans, believes, seeks or estimates, or variations of such words and similar
expressions are also intended to identify forward-looking statements.  Such
forward-looking statements are subject to inherent risks and uncertainties, many
of which are beyond the control of the Company.  Set forth below are certain
important factors that, in addition to general economic conditions and other
factors, some of which are discussed elsewhere in this Form 10-K, may affect
these forward-looking statements and the Company's business generally.

ESCALATING HEALTH CARE COSTS AND THE HEALTH CARE INDUSTRY.  The Company's
profitability depends in large part on accurately predicting and effectively
managing health care costs.  Predicting medical costs is difficult partially due
to the variability of medical inflation.  Trigon continually reviews and adjusts
its premium and benefit structure to reflect its underlying claims experience
and revised actuarial data; however, several factors could adversely affect the
medical loss ratios.  Certain of these factors, which include changes in health
care practices, inflation, new technologies, major epidemics, natural disasters
and malpractice litigation, are beyond any health plan's control and could
adversely affect the Company's ability to accurately predict and effectively
control health care costs.

Competitive price pressures in the health insurance and managed care industry,
which generally result from the entry and exit of health care companies in the
marketplace, historically have resulted in, or contributed to, pricing and
profitability cycles.  The extent to which recent structural changes in the
managed health care and health insurance industry have altered cyclical patterns
is uncertain.  There can be no assurance, however, that a continuation of the
typical cyclical pattern will not adversely affect the profitability of the
Company in the next few years.

COMPETITION.  The health care industry is highly competitive both in Virginia
and in other states in the southeastern and mid-Atlantic United States into
which the Company principally intends to expand.  See

                                       12
<PAGE>

"Competition." There is no assurance that the overall increased competition will
not exert strong pressures upon Trigon's profitability, its ability to increase
enrollment, or its ability to successfully pursue growth in areas both within
and outside of Virginia.

GOVERNMENT REGULATION.  The Company and its subsidiaries are subject to federal
and state regulation.  See "Regulation."  Regulatory initiatives may be
undertaken in the future, either at the federal or state level, to engage in
structural reform of the health care industry in order to reduce the escalation
in health care costs or to make health care more accessible.  Such reform, if it
occurs, could adversely affect Trigon's results of operations or financial
condition.

POTENTIAL RISKS ASSOCIATED WITH GROWTH THROUGH ACQUISITIONS.  As a result of the
expansion of managed care companies into Virginia and the southeastern and mid-
Atlantic regions of the United States, the competition to purchase health care
companies has intensified, which in many instances has resulted in significant
increases in the costs of acquiring such companies, and which could affect the
availability of attractive acquisition opportunities.  In addition, the Company
has no significant experience in expanding its managed health care business
outside Virginia.  There can be no assurance that the Company will successfully
identify or complete acquisitions or that any acquisitions, if completed, will
perform as expected or will contribute significant revenues or profits to the
Company.  The Company's ability to expand successfully outside of Virginia
through acquisitions or otherwise may be adversely affected by its inability to
use the Blue Cross and Blue Shield service marks and trademarks outside of the
Company's licensed territory in Virginia, by the Company's lack of substantial
market share or established provider networks outside of Virginia and by the
presence of competitors with strong market positions in these areas.

CONCENTRATION OF BUSINESS IN VIRGINIA.  While the Company's growth strategy
includes expansion outside Virginia, for the foreseeable future a significant
portion of the Company's revenues may be subject to economic factors specific to
Virginia.  Therefore, there can be no assurance that a downturn in the Virginia
economy would not adversely affect the Company.

POTENTIAL LOSS OF BLUE CROSS AND BLUE SHIELD SERVICE MARKS AND TRADENAMES.
Trigon and the BCBSA are parties to a license agreement pursuant to which the
Company and certain of its subsidiaries have the exclusive right to use certain
Blue Cross and Blue Shield service marks and tradenames for their products
throughout Virginia other than certain northern Virginia suburbs adjacent to
Washington, D.C.  See "The Blue Cross Blue Shield License."  If the BCBSA
license were to be terminated, there would be a material adverse effect on the
Company's business and operations, which the Company does not believe it can
meaningfully quantify.  To the extent that the Company continues to use the Blue
Cross and Blue Shield service marks and tradenames in marketing its managed care
products, there can be no assurance that any negative publicity concerning BCBSA
and other BCBSA licenses will not adversely affect the sales of the Company's
managed care products and the Company's operations.

Item 2.  Properties

The Company is headquartered in Richmond, Virginia, where it owns a four-story
building with 265,000 square feet.  The Company also owns an office facility and
warehouse in Roanoke, Virginia with 200,900 square feet and an office facility
in Fayetteville, North Carolina with 70,800 square feet.  The Company leases an
additional 427,300 square feet at various other locations in Richmond, Virginia.
The Company also leases space at two other facilities in Roanoke, Virginia
comprising 65,000 square feet.  These properties are primarily used by the
health insurance segment for operations and for corporate administration.

The Company leases 72,500 square feet for regional offices throughout Virginia
and 12,000 square feet for office space in Maryland, North Carolina,
Pennsylvania and South Carolina.

Square footage utilized by segment as of December 31, 1999 was as follows:
health insurance, 896,300; government programs, 64,100; investments, 3,900; and
other reportable segments, 39,800.  The remaining 109,400 square feet was used
for corporate administration.

                                       13
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

The Company and certain of its subsidiaries are involved in various legal
actions occurring in the normal course of their business.  While the ultimate
outcome of such litigation cannot be predicted with certainty, in the opinion of
Company management, after consultation with counsel responsible for such
litigation, the outcome of those actions is not expected to have a material
adverse effect on the financial condition and results of operations of the
Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Refer to page 28, "Market Prices of Common Stock and Dividend Data," of Trigon
Healthcare Inc.'s 1999 Annual Report to Shareholders, which is incorporated
herein by reference.

Refer to "Part 1 - Business -- Regulation -- Insurance Holding Company
Regulation" and "Part 1 - Business -- Regulation -- Restrictions on Dividends"
for discussion of insurance holding company regulations and dividend
restrictions.  In addition, under the terms of the Company's $300 million
revolving credit agreement and Amendment No. 1, the Company may not pay
dividends on the Company's common stock unless the aggregate of all dividends
paid by the Company plus payments to purchase, redeem or otherwise acquire
capital stock of the Company (other than the Commonwealth Payment and purchases
of Company capital stock made on or after December 1, 1999 in an aggregate
amount not to exceed $150 million) does not exceed the sum of (i) $10,000,000
plus (ii) 50% of the consolidated net income (or minus 100% of consolidated net
loss) of the Company for the period from the effectiveness of the
Demutualization through the end of the most recently completed fiscal quarter,
plus (iii) an amount (not to exceed $50,000,000) equal to 50% of the cumulative
cash dividends paid out of income of certain subsidiaries of the Company earned
prior to January 1, 1997 and received by the Company after the date of the
revolving credit agreement and before December 31, 1997.

ITEM 6.  SELECTED FINANCIAL DATA

Refer to pages 18 through 19, "Selected Consolidated Financial and Operating
Data," of Trigon Healthcare Inc.'s 1999 Annual Report to Shareholders, which are
incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Refer to pages 20 through 27, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of Trigon Healthcare Inc.'s 1999 Annual
Report to Shareholders, which are incorporated herein by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to page 28, "Quantitative And Qualitative Disclosures About Market Risk,"
of Trigon Healthcare Inc.'s 1999 Annual Report to Shareholders, which is
incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Refer to pages 29 through 55, the Consolidated Financial Statements, page 56,
"Independent Auditors' Report," and page 17,  "Quarterly Financial Information,"
of Trigon Healthcare Inc.'s 1999 Annual Report to Shareholders, which are
incorporated herein by reference.

                                       14
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Refer to pages 1 through 2, "Election of Directors," and page 5, "Section 16(a)
Beneficial Ownership Reporting Compliance," of the Company's definitive Proxy
Statement dated March 24, 2000, which are incorporated herein by reference
solely as they relate to the Directors of the Company.

Pursuant to General Instruction G(3) to Form 10-K, information as to executive
officers of the Company is set forth in Part I of this Form 10-K.  See "Item 1 -
Business -- Executive Officers."

ITEM 11.  EXECUTIVE COMPENSATION

Refer to pages 6 through 11, "Compensation of Executive Officers," of the
Company's definitive Proxy Statement dated March 24, 2000, which are
incorporated herein by reference solely as they relate to this item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Refer to pages 3 and 4, "Beneficial Ownership of Securities," of the Company's
definitive Proxy Statement dated March 24, 2000, which are incorporated herein
by reference solely as they relate to this item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

R. Gordon Smith, a director of the Company, is a partner of McGuire, Woods,
Battle & Boothe, LLP, a law firm which serves as counsel to the Company and its
subsidiaries.

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
  1.  Consolidated Financial Statements from Trigon Healthcare Inc.'s 1999
      Annual Report to Shareholders are incorporated herein by reference in
      Item 8:
      -- Consolidated Balance Sheets as of December 31, 1999 and 1998 (page 29)
      -- Consolidated Statements of Operations for the years ended December 31,
         1999, 1998 and 1997 (page 30)
      -- Consolidated Statements of Changes in Shareholders' Equity and
         Comprehensive Income for the years ended December 31, 1999, 1998 and
         1997 (page 31)
      -- Consolidated Statements of Cash Flows for the years ended December 31,
         1999, 1998 and 1997 (page 32)
      -- Notes to Consolidated Financial Statements (pages 33 through 55)
      -- Independent Auditors' Report (page 56)

   2.  Financial statement schedules

     Independent Auditors' Report.....................(filed herein on page S-1)
     Schedule I - Condensed Financial
       Information of Registrant
       (parent only) as of
       December 31, 1999 and 1998 and for
       the years ended December 31, 1999
       and 1998 and for the period
       February 5, 1997 through
       December 31, 1997.......................(filed herein on pages S-2 - S-7)

                                       15
<PAGE>

   3.   Exhibits.  The following is a list of exhibits to this Form 10-K.

Exhibit
Number      Description
------      -----------

     2  -- Amended and Restated Plan of Demutualization.  (1)

   3.1  -- Amended and Restated Articles of Incorporation of Trigon Healthcare,
           Inc.  (1)

   3.2  -- Amended and Restated Bylaws of Trigon Healthcare, Inc. dated April
           28, 1999.  (9)

   3.3  -- Articles of Amendment to Amended and Restated Articles of
           Incorporation setting forth the designation, preferences and rights
           of Series A Junior Participating Preferred Stock of Trigon
           Healthcare, Inc. dated July 16, 1997. (4)

     4  -- Form of Stock Certificate (other Instruments Defining the Rights of
           Security-Holders).  (1)

   4.1  -- Rights Agreement dated as of July 16, 1997 between Trigon Healthcare,
           Inc. and First Chicago Trust Company of New York, as Rights Agent.
           (4)

   4.2  -- Form of Rights Certificate.  (4)

  10.1  -- License Agreement by and between the Blue Cross and Blue Shield
           Association and the Company.  (2)
               (a) Blue Cross license
               (b) Blue Shield license

  10.2  -- Limited Fixed Return Plan for Certain Officers and Directors of
           Trigon Insurance Company.  (1) *

  10.4  -- Non-Contributory Retirement Program for Certain Employees of Trigon
           Insurance Company.  (1) *

  10.5  -- Amended and Restated Supplemental Executive Retirement Program for
           Certain Employees of Trigon Insurance Company dated as of October 1,
           1998.  (8)*

  10.6  -- Salary Deferral Plan for Norwood H. Davis, Jr.  (1) *

  10.7  -- Amended and Restated Employment Agreement dated September 16, 1998
           by and between Trigon Insurance Company and Norwood H. Davis, Jr.
           (7) *

  10.9  -- Amended and Restated Employees' Thrift Plan of Trigon Insurance
           Company dated as of October 1, 1998.  (8)*

  10.10 -- Amended and Restated Trigon Insurance Company 401(k) Restoration
           Plan dated as of October 1, 1998.  (8)*

  10.12 -- Form of Employment Agreement dated as of December 12, 1990 by and
           between Trigon Insurance Company and John C. Berry and certain other
           executive officers.  (1) *

  10.14 -- Credit Agreement dated as of February 5, 1997 among Trigon
           Healthcare, Inc., the banks party thereto and Morgan Guaranty Trust
           Company of New York, as Agent.  (2)

  10.15 -- 1997 Stock Incentive Plan.  (6) *

  10.16 -- Employee Stock Purchase Plan.  (6) *

  10.17 -- Non-Employee Directors Stock Incentive Plan.  (6) *

  10.18 -- Amendment to the License Agreement by and between the Blue Cross
           and Blue Shield Association and the Company.  (5)

  10.19 -- Amendment to the Non-Contributory Retirement Program for Certain
           Employees of Trigon Insurance Company.  (3) *

  10.20 -- Form of Executive Continuity Agreement dated as of September 16,
           1998 between Trigon Insurance Company and Thomas G. Snead, Jr. and
           certain other executive officers.  (7) *

  10.21 -- Form of Executive Continuity Agreement dated as of September 16,
           1998 between Trigon Insurance Company and John C. Berry and certain
           other executive officers.  (7) *

  10.22 -- Amendment to the Non-Contributory Retirement Program for Certain
           Employees of Trigon Insurance Company (now to be known as) The Trigon
           Insurance Company Retirement Program dated as of October 1, 1998.
           (8) *

  10.23 -- Clarifying Amendment to the Non-Contributory Retirement Program for
           Certain Employees of Trigon Insurance Company (now to be known as)
           The Trigon Insurance Company Retirement Program dated as of October
           1, 1998. (8) *

  10.24 -- Thomas G. Snead Employment Agreement dated May 19, 1999.  (10) *

  10.25 -- Amendment No. 1 to Executive Continuity Agreement Between Trigon
           Insurance Company and Thomas G. Snead, Jr. dated May 19, 1999. (10) *

  10.26 -- Clarifying Amendment No. 2 to the Non-Contributory Retirement
           Program for Certain Employees of Trigon Insurance Company (now to be
           known as) The Trigon Insurance Company Retirement Program.  *

                                       16
<PAGE>

  10.27 -- Clarifying Amendment No. 3 to the Non-Contributory Retirement
           Program for Certain Employees of Trigon Insurance Company (now to be
           known as) The Trigon Insurance Company Retirement Program.  *

  10.28 -- Clarifying Amendment No. 4 to The Trigon Insurance Company
           Retirement Program .  *

  10.29 -- Amendment No. 1 dated December 14, 1999 to the Credit Agreement
           dated as of February 5, 1997 among Trigon Healthcare, Inc., the banks
           party thereto and Morgan Guaranty Trust Company of New York, as
           Agent.

     11 -- Computation of per share earnings.  Refer to Note 15, "Net Income and
           Pro Forma Net Income Per Share," on page 49 of Trigon Healthcare
           Inc.'s 1999 Annual Report to Shareholders, which is incorporated
           herein by reference.

     13 -- Excerpts from the Company's Annual Report to Shareholders for the
           year ended December 31, 1999.

     21 -- Subsidiaries of the Registrant.

   23.1 -- Consent of Independent Auditors.

     27 -- Financial Data Schedule.

 (1) Incorporated by reference to exhibits filed with the Company's Registration
     Statement on Form S-1 (registration number 333-09773).

 (2) Incorporated by reference to exhibits filed with the Company's Form 10-K
     for the year ended December 31, 1996.

 (3) Incorporated by reference to exhibits filed with the Company's Form 10-K
     for the year ended December 31, 1997.

 (4) Incorporated by reference to exhibits filed with the Company's Form 8-A/A
     filed on July 16, 1997.

 (5) Incorporated by reference to exhibits filed with the Company's Form 10-Q
     for the period ended September 30, 1997.

 (6) Incorporated by reference to exhibits filed with the Company's Proxy
     Statement dated March 13, 1997.

 (7) Incorporated by reference to exhibits filed with the Company's Form 10-Q
     for the period ended September 30, 1998.

 (8) Incorporated by reference to exhibits filed with the Company's Form 10-K
     for the year ended December 31, 1998.

 (9) Incorporated by reference to exhibits filed with the Company's Form 10-Q
     for the period ended March 31, 1999.

(10) Incorporated by reference to exhibits filed with the Company's Form 10-Q
     for the period ended June 30, 1999.

  *  Management contract or compensatory plan or arrangement required to be
     filed as an exhibit to this Form 10-K pursuant to Item 14(c) of this Form
     10-K.

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

                                       17
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                     TRIGON HEALTHCARE, INC.
                                          Registrant


                                       By:  /s/ THOMAS R. BYRD
                                            -----------------------
                                                THOMAS R. BYRD

                                       Title:  SENIOR VICE PRESIDENT AND
                                               CHIEF FINANCIAL OFFICER

Date:  March 29, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.





<TABLE>
<CAPTION>
       SIGNATURE                                  TITLE                              DATE
       ---------                                  -----                              ----
<S>                                <C>                                             <C>

/s/ THOMAS G. SNEAD, JR.           President and Chief Executive Officer           March 23, 2000
---------------------------        (Principal Executive Officer)
  THOMAS G. SNEAD, JR



/s/ THOMAS R. BYRD                 Senior Vice President and Chief                 March 29, 2000
---------------------------        Financial Officer  (Principal Financial
THOMAS R. BYRD                     and Accounting Officer)



/s/ NORWOOD H. DAVIS, JR.          Chairman of the Board                           March 22, 2000
---------------------------
NORWOOD H. DAVIS, JR.



/s/ HUNTER B. ANDREWS              Director                                        March 22, 2000
---------------------------
HUNTER B. ANDREWS, ESQ.



/s/ LENOX D. BAKER, JR.            Director                                        March 23, 2000
---------------------------
LENOX D. BAKER, JR., M.D.



/s/ JAMES K. CANDLER               Director                                        March 22, 2000
---------------------------
JAMES K. CANDLER

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
       SIGNATURE                                  TITLE                              DATE
       ---------                                  -----                              ----
<S>                                <C>                                             <C>

/s/ ROBERT M. FREEMAN                   Director                                   March 22, 2000
-------------------------------
ROBERT M. FREEMAN



/s/ WILLIAM R. HARVEY                   Director                                   March 23, 2000
-------------------------------
WILLIAM R. HARVEY, Ph.D.



/s/ GARY A. JOBSON                      Director                                   March 25, 2000
-------------------------------
GARY A. JOBSON



/s/ WILLIAM N. POWELL                   Director                                   March 21, 2000
-------------------------------
WILLIAM N. POWELL



/s/ J. CARSON QUARLES                   Director                                   March 22, 2000
-------------------------------
J. CARSON QUARLES



/s/ R. GORDON SMITH                     Director                                   March 24, 2000
-------------------------------
R. GORDON SMITH, ESQ.



/s/ HUBERT R. STALLARD                  Director                                   March 28, 2000
-------------------------------
HUBERT R. STALLARD



/s/ JACKIE M. WARD                       Director                                  March 21, 2000
-------------------------------
JACKIE M. WARD



/s/ STIRLING L. WILLIAMSON, JR.         Director                                   March 22, 2000
-------------------------------
STIRLING L. WILLIAMSON, JR.


</TABLE>


<PAGE>

                     Independent Auditors' Report



The Board of Directors
Trigon Healthcare, Inc.:

Under date of February 11, 2000, we reported on the consolidated balance sheets
of Trigon Healthcare, Inc. and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of operations, changes in shareholders'
equity and comprehensive income and cash flows for each of the years in the
three-year period ended December 31, 1999. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
financial statement schedule included in this annual report on Form 10-K. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.



/s/ KPMG LLP


Richmond, Virginia
February 11, 2000

                                      S-1
<PAGE>

                                                                      SCHEDULE I

                    TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
         CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                                 Balance Sheets
                           December 31, 1999 and 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                               1999                1998
                                                                        ---------------      ---------------
ASSETS
<S>                                                                    <C>                   <C>
Current assets
    Cash                                                                $            --                   12
    Investment securities, at estimated fair value                              319,705              259,514
    Other receivables                                                             5,084                3,873
    Other                                                                            43                   29
                                                                        ---------------      ---------------

Total current assets                                                            324,832              263,428
                                                                        ---------------      ---------------

Investment in subsidiaries                                                      871,121              895,690
Deferred income taxes                                                               947                1,240
Other assets                                                                        428                  126
                                                                        ---------------      ---------------

Total assets                                                            $     1,197,328            1,160,484
                                                                        ===============      ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                               $         3,667                1,296
    Deferred income taxes                                                         3,615                  512
    Income taxes payable                                                          5,099                1,701
    Payable for investment securities                                             2,990                  672
    Payable to affiliates                                                            --                   79
                                                                        ---------------      ---------------

Total current liabilities                                                        15,371                4,260
                                                                        ---------------      ---------------

Long-term debt                                                                  245,000               85,000
                                                                        ---------------      ---------------

Total liabilities                                                               260,371               89,260
                                                                        ---------------      ---------------

SHAREHOLDERS' EQUITY

    Common stock, $0.01 par; shares issued and outstanding
        38,200, 1999; 42,300, 1998                                                  382                  423
    Capital in excess of par                                                    816,517              839,187
    Retained earnings                                                           112,896              202,554
    Unearned compensation -- restricted stock                                    (1,926)                  --
    Accumulated other comprehensive income                                        9,088               29,060
                                                                        ---------------      ---------------

Total shareholders' equity                                                      936,957            1,071,224

Commitments and contingencies
                                                                        ---------------      ---------------

Total liabilities and shareholders' equity                              $     1,197,328            1,160,484
                                                                        ===============      ===============

</TABLE>

See accompanying independent auditors' report and notes to condensed financial
information.


                                      S-2
<PAGE>

                                                                      SCHEDULE I

                   TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
   CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY), CONTINUED

                            Statements of Operations
 For the years ended December 31, 1999 and 1998 and for the period
                  February 5, 1997 through December 31, 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                       1999                  1998                 1997
                                                                ----------------      ---------------      ---------------
<S>                                                          <C>                      <C>                  <C>
REVENUES
    Investment income                                           $         19,157               12,590                4,358
    Net realized gains (losses)                                           (8,051)                 614                 (105)
    Cash dividends from subsidiaries                                      48,900              200,000               50,000
                                                                ----------------      ---------------      ---------------

Total revenues                                                            60,006              213,204               54,253

EXPENSES
    Selling, general and administrative expenses                           2,095                2,359                1,742
    Interest expense                                                       8,359                5,291                4,601
                                                                ----------------      ---------------      ---------------

Total expenses                                                            10,454                7,650                6,343
                                                                ----------------      ---------------      ---------------

Income before income taxes and equity in undistributed net
 income of subsidiaries                                                   49,552              205,554               47,910


Income tax expenses (benefit)                                                106                  941                 (868)
                                                                ----------------      ---------------      ---------------

Income before equity in undistributed net income of
 subsidiaries                                                             49,446              204,613               48,778


Equity in undistributed net income of subsidiaries                       (28,983)             (81,041)              30,204
                                                                ----------------      ---------------      ---------------

Net income                                                      $         20,463              123,572               78,982
                                                                ================      ===============      ===============
</TABLE>

See accompanying independent auditors' report and notes to condensed financial
information.
                                      S-3
<PAGE>

                                                                      SCHEDULE I

                    TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
   CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY), CONTINUED

     Statements of Changes in Shareholders' Equity and Comprehensive Income
 For the years ended December 31, 1999 and 1998 and for the period
                  February 5, 1997 through December 31, 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                                 Accumulated
                                                      Capital                                       Other
                                           Common    in Excess     Retained       Unearned      Comprehensive
                                           Stock       of Par      Earnings     Compensation        Income          Total
                                          -------   -----------    --------     ------------    -------------      -------
 <S>                                     <C>        <C>           <C>          <C>             <C>                 <C>
Balance at January 1, 1997              $      --           --           --           --                 --              --
Net income after Demutualization               --           --        78,982          --                 --          78,982
Net unrealized gains on investment
 securities, net of income taxes               --           --            --          --              3,776           3,776
                                                                                                                 ----------
Comprehensive income                                                                                                 82,758

Undistributed earnings of
 subsidiaries before Demutualization           --           --       722,330          --             33,521         755,851
 and IPO

Issuance of 24,475 shares to eligible
 policyholders in the Demutualization
 and cash payments to eligible
 policyholders in lieu of shares of
 common stock                                 245      630,941     (722,330)          --                 --         (91,144)

Issuance of 17,825 shares in the
 Initial Public Offering, net of              178      215,027           --           --                 --         215,205
 expenses

Purchase and reissuance of common
 stock under stock option and other
 employee benefit plans, including
 tax benefits                                  --         (144)          --           --                 --            (144)

Common stock held by consolidated
 grantor trusts                                --       (3,789)          --           --                 --          (3,789)
                                            -----      -------      -------         ----            -------    ------------
Balance at December 31, 1997                  423      842,035       78,982           --             37,297         958,737

Net income                                     --           --      123,572           --                 --         123,572
Minimum pension liability adjustment,
 net of income taxes                           --           --           --           --             (1,149)         (1,149)

Net unrealized losses on investment
 securities, net of income taxes               --           --           --           --             (7,088)         (7,088)
                                                                                                                 ----------
Comprehensive income                                                                                                115,335

Adjustment to cash payments to
 eligible policyholders in lieu of
 shares of common stock in the
 Demutualization                               --         (690)          --           --                 --            (690)

Purchase and reissuance of common
 stock under stock option and other
 employee benefit plans, including
 tax benefits                                  --       (1,307)          --           --                 --          (1,307)

Change in common stock held by
 consolidated grantor trusts                   --         (851)          --           --                 --            (851)
                                            -----      -------      -------         ----            -------       ----------
Balance at December 31, 1998                  423      839,187      202,554           --             29,060       1,071,224
</TABLE>

                                      S-4
<PAGE>

                                                                      SCHEDULE I

                    TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
   CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY), CONTINUED

               Statements of Changes in Shareholders' Equity and
                        Comprehensive Income, Continued
 For the years ended December 31, 1999 and 1998 and for the period
                  February 5, 1997 through December 31, 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                       Capital                                        Other
                                           Common     in Excess     Retained       Unearned       Comprehensive
                                            Stock       of Par      Earnings     Compensation         Income          Total
-----------------------------------------------------------------------------------------------------------------------------

<S>                                     <C>           <C>           <C>          <C>              <C>               <C>
Balance at December 31, 1998                  423       839,187      202,554               --            29,060     1,071,224

Net income                                     --            --       20,463               --                 -        20,463
Change in minimum pension liability,
 net of income taxes                           --            --           --               --               834           834

Net unrealized losses on investment
 securities, net of income taxes               --            --           --               --           (20,806)      (20,806)

                                                                                                                   ----------
Comprehensive income                                                                                                      491

Repurchase and retirement of common
 stock                                        (41)      (20,500)    (110,121)              --                --      (130,662)

Purchase and reissuance of common
 stock under stock option and other
 employee benefit plans, including
 tax benefits and net of amortization          --          (767)          --           (1,926)               --        (2,693)



Change in common stock held by
 consolidated grantor trusts                   --        (1,403)          --               --                --        (1,403)
                                         ------------------------------------------------------------------------------------
Balance at December 31, 1999             $    382       816,517      112,896           (1,926)            9,088       936,957
                                         ====================================================================================
</TABLE>

See accompanying independent auditors' report and notes to condensed financial
information.

                                      S-5
<PAGE>

                                                                      SCHEDULE I

                    TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
   CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY), CONTINUED

                            Statements of Cash Flows
 For the years ended December 31, 1999 and 1998 and for the period February 5,
                         1997 through December 31, 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                       1999                 1998                 1997
                                                                ---------------      ---------------      ---------------

<S>                                                          <C>                       <C>                  <C>
Net income                                                      $        20,463              123,572               78,982
Adjustments to reconcile net income to net cash provided
 by (used in) operating activities
     Accretion of discounts and amortization of premiums,                (1,930)                (845)                (129)
      net
     Amortization of unearned compensation                                1,031                   --                   --
     Undistributed net income of subsidiaries                            28,983               81,041              (30,204)
     Increase in other receivables                                       (1,205)              (1,254)              (2,569)
     (Increase) decrease in other assets                                   (316)                  11                 (166)
     Increase in accounts payable and accrued expenses                    2,353                  734                  562
     Increase in income taxes payable                                     3,398                1,701                   --
     Change in deferred income taxes                                        294               (1,293)                  53
     Decrease in obligation for Commonwealth Payment                         --                   --             (175,000)
     Increase (decrease) in payable to affiliates                           (79)                 (10)                  89
     Realized investment (gains) losses, net                              8,051                 (614)                 105
                                                                ---------------      ---------------      ---------------

 Net cash provided by (used in) operating activities                     61,043              203,043             (128,277)
                                                                ---------------      ---------------      ---------------

Cash flows from investing activities
     Investment securities purchased                                   (972,506)            (492,562)            (214,562)
     Proceeds from investment securities sold                           693,938              227,515               77,002
     Maturities of fixed income securities                              223,340               89,481               57,180
     Investments in subsidiaries                                        (31,000)             (25,000)                  --
                                                                ---------------      ---------------      ---------------

Net cash used in investing activities                                   (86,228)            (200,566)             (80,380)
                                                                ---------------      ---------------      ---------------

Cash flows from financing activities
     Proceeds from long-term debt                                       160,000                   --               85,000
     Payments to members in lieu of common stock pursuant
      to Plan of Demutualization                                             --                 (690)             (91,144)

     Net proceeds from issuance of common stock                              --                   --              215,205
     Purchase and reissuance of common stock under
      employee benefit and stock option plans                            (3,694)              (1,307)                (144)

     Common stock purchased by grantor trusts                              (489)                (469)                (259)
     Purchase and retirement of common stock                           (130,662)                  --                   --
     Change in outstanding checks in excess of bank balance                  18                   --                   --
                                                                ---------------      ---------------      ---------------

Net cash provided by (used in) financing activities                      25,173               (2,466)             208,658
                                                                ---------------      ---------------      ---------------

Increase (decrease) in cash                                                 (12)                  11                    1
Cash -- beginning of year                                                    12                    1                   --
                                                                ---------------      ---------------      ---------------

Cash -- end of year                                             $            --                   12                    1
                                                                ===============      ===============      ===============

Cash paid during the year for
     Interest                                                   $         7,545                5,006                4,344
                                                                ===============      ===============      ===============
     Income taxes                                                            --                  525                   --
                                                                ===============      ===============      ===============
</TABLE>
See accompanying independent auditors' report and notes to condensed financial
information.

                                      S-6
<PAGE>

                                                                      SCHEDULE I

                    TRIGON HEALTHCARE, INC. AND SUBSIDIARIES
     CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT ONLY), CONTINUED

      Notes to Condensed Financial Information of Registrant (Parent Only)

The condensed financial information provided should be read in conjunction with
the Consolidated Financial Statements of Trigon Healthcare, Inc. ("Registrant")
incorporated by reference in Part II, Section 8 of this Form 10-K and the
following notes:

(a)  Basis of Presentation

  The accompanying condensed financial information reflects the financial
  position as of December 31, 1999 and 1998 and the results of operations,
  changes in shareholders' equity and comprehensive income and cash flows for
  the years ended December 31, 1999 and 1998 and for the period after the
  Demutualization and Initial Public Offering, February 5, 1997 through December
  31, 1997.  The Registrant had no operations prior to February 5, 1997, the
  date it became the holding company.  Refer to note 2 to the consolidated
  financial statements of the Registrant for details regarding the
  Demutualization and Initial Public Offering.

(b)  Investment in Subsidiary

  The Registrant made a $31 million and $25 million capital contribution to its
  subsidiary, Monticello Service Agency, Inc. (MSA) during 1999 and 1998,
  respectively.  MSA immediately made a $20 million and $25 million capital
  contribution to its subsidiary, Trigon Health and Life Insurance Company, in
  1999 and 1998, respectively, and entered into Certificates of Contribution
  (also known as surplus notes) totaling $11 million with its subsidiary, Mid-
  South Insurance Company, in 1999.

(c)  Long-Term Debt

  The information about long-term debt contained in note 12 of the notes to the
  consolidated financial statements of the Registrant is incorporated herein by
  reference.

(d)   Capital Stock

  The information about capital stock contained in note 14 of the notes to the
  consolidated financial statements of the Registrant is incorporated herein by
  reference.

(e)   Cash and Stock Dividends

  During 1999, 1998 and 1997, a subsidiary of the Registrant, Trigon Insurance
  Company (Trigon Insurance), paid dividends to the Registrant of $48.9 million,
  $227.5 million and $238.7 million, respectively.  The 1999 cash dividend was
  effected August 1, 1999.  The 1998 dividend was effected July 1, 1998 and
  included $200.0 million of cash and $27.5 million of stock of a wholly-owned
  subsidiary.  The 1997 dividend was effected July 31, 1997 and consisted of
  $188.7 million of stock of a wholly-owned subsidiary and $50.0 million of
  cash.  The 1998 and 1997 dividends required prior approval from the
  Commonwealth of Virginia, Bureau of Insurance ("Bureau of Insurance").

  On January 7, 2000, the Bureau of Insurance approved Trigon Insurance's
  request to effect a cash dividend of $125 million to the Registrant on
  February 1, 2000.  As a result of this dividend, any dividend distributions by
  Trigon Insurance during 2000 will require the prior approval of the Bureau of
  Insurance.

(f)   Comprehensive Income

  The information about comprehensive income contained in note 16 of the
  notes to the consolidated financial statements of the Registrant is
  incorporated herein by reference.


                                      S-7
<PAGE>

EXHIBIT INDEX


Exhibit
Number            Description
------            -----------

 10.26  -- Clarifying Amendment No. 2 to the Non-Contributory Retirement Program
            for Certain Employees of Trigon Insurance Company (now to be known
            as) The Trigon Insurance Company Retirement Program.

 10.27  -- Clarifying Amendment No. 3 to the Non-Contributory Retirement Program
            for Certain Employees of Trigon Insurance Company (now to be known
            as) The Trigon Insurance Company Retirement Program.

 10.28  -- Clarifying Amendment No. 4 to The Trigon Insurance Company Retirement
            Program

 10.29  -- Amendment No. 1 dated December 14, 1999 to the Credit Agreement dated
            as of February 5, 1997 among Trigon Healthcare, Inc., the banks
            party thereto and Morgan Guaranty Trust Company of New York, as
            Agent.

    13  -- Excerpts from the Company's Annual Report to Shareholders for the
            year ended December 31, 1999.

    21  -- Subsidiaries of the Registrant.

   23.1 -- Consent of Independent Auditors.

    27  -- Financial Data Schedule.