Exhibit 99.1

                       TRIGON HEALTHCARE, INC.
                    EMPLOYEE STOCK PURCHASE PLAN

                        Financial Statements

                     December 31, 1998 and 1997

             (With Independent Auditors' Report Thereon)

<PAGE>

                       TRIGON HEALTHCARE, INC.
                    EMPLOYEE STOCK PURCHASE PLAN


                          Table of Contents

                                                             Page

Independent Auditors' Report                                   1

Statements of Financial Condition                              2

Statements of Income and Changes in Plan Equity                3

Notes to Financial Statements                                  4



<PAGE>
                Independent Auditors' Report


The Human Resources, Compensation and Employee
    Benefits Committee of the Board of Directors
Trigon Healthcare, Inc.:


We have audited the accompanying statements of financial condition of the Trigon
Healthcare, Inc. Employee Stock Purchase Plan (Plan) as of December 31, 1998 and
1997, and the related statements of income and changes in plan equity for the
year ended December 31, 1998 and the period May 1, 1997 (inception) through
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of December 31,
1998 and 1997 and the income and changes in plan equity for the year ended
December 31, 1998 and the period May 1, 1997 (inception) through December 31,
1997, in conformity with generally accepted accounting principles.


/s/ KPMG LLP

Richmond, Virginia
April 23, 1999

<PAGE>

                     TRIGON HEALTHCARE, INC.
                  EMPLOYEE STOCK PURCHASE PLAN

                Statements of Financial Condition

                    December 31, 1998 and 1997

<TABLE>
<CAPTION>


                                                                           1998          1997
                                                                       -------------  -----------
<S>                                                                         <C>           <C>
Assets:
     Investments, at estimated fair value - Trigon Healthcare,       $    2,967,244      585,523
        Inc. Class A common stock (cost, $1,860,570 and
        $479,487, respectively)
     Contributions receivable:
        Employee                                                            259,215      318,506
        Employer                                                             45,745       56,207
                                                                       -------------  -----------

              Total assets                                           $    3,272,204      960,236
                                                                       =============  ===========

Plan equity                                                          $    3,272,204      960,236
                                                                       =============  ===========

</TABLE>

See accompanying notes to financial statements.

                                            2
<PAGE>



                                       TRIGON HEALTHCARE, INC.
                                    EMPLOYEE STOCK PURCHASE PLAN

                           Statements of Income and Changes in Plan Equity

                                  Year ended December 31, 1998 and
                           Period May 1, 1997 through December 31, 1997

<TABLE>
<CAPTION>


                                                                                        May 1, 1997
                                                                                          through
                                                                                        December 31,
                                                                           1998            1997
                                                                       ------------   -----------------
<S>                                                                           <C>              <C>
Income:
     Net unrealized appreciation in fair value of investments        $    1,000,638           106,036
     Contributions:
        Employee                                                          1,318,963           748,958
        Employer                                                            232,758           132,169
                                                                     --------------         ---------
              Total contributions                                         1,551,721           881,127
                                                                     --------------         ---------
              Total income                                                2,552,359           987,163
                                                                     --------------         ---------
Distributions to employees                                                  240,391            26,927
                                                                     --------------         ---------
              Net increase in plan equity                                 2,311,968           960,236

Plan equity, beginning of period                                            960,236                --
                                                                     --------------         ---------
Plan equity, end of period                                           $    3,272,204           960,236
                                                                     ==============         =========
</TABLE>

See accompanying notes to financial statements.

                                        3
<PAGE>

                           TRIGON HEALTHCARE, INC.
                        EMPLOYEE STOCK PURCHASE PLAN

                        Notes to Financial Statements

                         December 31, 1998 and 1997


(1)   Summary of Significant Accounting Policies

      (a)  Organization

           The Trigon Healthcare, Inc. Employee Stock Purchase Plan (Plan) was
           adopted by the Board of Directors and approved by the shareholders of
           Trigon Healthcare, Inc. (Company) in April 1997 for the purpose of
           providing a means by which the employees (Participant) of the Company
           and its subsidiaries can be given an opportunity to acquire the
           Company's Class A common stock (Common Stock) through payroll
           deductions.

           The following are the significant accounting policies followed by the
           Plan:

      (b)  Basis of Accounting

           The financial statements of the Plan are prepared under the accrual
           method of accounting. Accordingly, employee contributions to the Plan
           are recorded as of the date the contributions are withheld from the
           Participants' compensation. Employer contributions are recorded as of
           the last day of each calendar quarter and represent the fifteen
           percent discount given to Participants under the Plan's provisions.
           Distributions to Participants are accounted for at the average
           historical cost of the Common Stock distributed, plus cash paid in
           lieu of fractional shares, where applicable. Cash paid by the Company
           in lieu of fractional shares is accounted for at the fair market
           value of the shares at the time of the distribution. The Company will
           also separately refund to any withdrawing Participant employee
           contributions which have been withheld but have not been forwarded to
           the Plan for the purchase of Common Stock.

      (c)  Investment Valuation

           The investments in Common Stock are stated at estimated fair value,
           based on the closing price on the New York Stock Exchange on the last
           trading day of the period. Investment transactions are recorded on a
           trade date basis.

      (d)  Administrative Expenses

           The Company pays all administrative expenses of the Plan.
           Administrative expenses paid by the Company during 1998 and 1997 were
           $10,317 and $7,967, respectively.

      (e)  Use of Estimates

           The preparation of financial statements in conformity with generally
           accepted accounting principles requires management to make estimates
           and assumptions that affect the amounts reported in the financial
           statements and accompanying notes, including disclosure of contingent
           assets and liabilities. Actual results could differ from those
           estimates.


(2)   Summary of Significant Provisions of the Plan

      The Plan is an employee stock purchase plan and is intended to qualify
      under Internal Revenue Code (Code) Section 423. The Plan is administered
      by the Human Resources, Compensation and Employee Benefits Committee of
      the Company's Board of Directors (Committee). The Common Stock owned by

                                      4                           (Continued)
<PAGE>

      Participants prior to withdrawal from the Plan are held in individual
      participant accounts in a custodian account with The Bank of New York
      (Custodian). Prior to October 1998, the custodian was First Chicago Trust
      Company of New York. Participants should refer to the plan agreement and
      prospectus for a more complete description of the Plan's provisions.

      The Company has reserved for issuance and purchase by Participants under
      the Plan an aggregate of one million shares of Common Stock. These shares
      are authorized but unissued. Shares needed to satisfy the requirements of
      the Plan may be newly issued by the Company or acquired by purchases at
      the expense of the Company on the open market or in private transactions.
      During 1998 and 1997, all shares needed to satisfy the requirements of the
      Plan were purchased on the open market. The Company paid the difference
      between the purchase price in the open market, including brokerage fees,
      and the amount provided by the employee and employer contributions.

      Any person who is employed by the Company (or by any eligible subsidiary
      of the Company) is eligible to participate in the Plan on the first day of
      any payroll period following the employee's commencement of employment. A
      Participant may make voluntary contributions to the Plan in whole
      percentage amounts ranging from one to fifteen percent of compensation for
      the year. Under Code section 423(b)(8), a Participant is limited to
      purchases of no more than $25,000 of Common Stock, at fair value, in any
      calendar year. The Plan had 743 and 599 Participants as of December 31,
      1998 and 1997, respectively.

      Payroll deductions are accumulated by the Company during each calendar
      quarter and transferred to the Plan at the end of each calendar quarter to
      be applied towards the purchase of full and partial shares of Common
      Stock. The purchase price per share at which Common Stock shares are
      acquired by Participants equals the lower of (a) eighty-five percent of
      the fair market value of a share of Common Stock on the first trading day
      of each calendar quarter (Grant Date), or (b) eighty-five percent of the
      fair market value of a share of Common Stock on the last trading day of
      each calendar quarter (Investment Date). The Plan defines fair market
      value to be the closing trading price of the Common Stock on the New York
      Stock Exchange as reported in the Wall Street Journal. During 1997, the
      first Grant Date was May 1, 1997, the first payroll period after the Plan
      was approved. The first Investment Date was June 30, 1997. All subsequent
      purchase periods followed the calendar quarter schedule as defined in the
      Plan's provisions. Participants are fully vested in their individual
      participant accounts at all times and have the right at any time to obtain
      certificates for full shares of Common Stock in these accounts.

      Participants may cease participation in or withdraw shares from the Plan
      at any time, but may not begin payroll deductions again for six months. A
      Participant may change the payroll deduction percentage up to four times
      per year. Participation in the Plan is automatically terminated upon
      retirement, termination of active employment or death.

                                             5                       (Continued)

<PAGE>



(3)   Investment in Common Stock

      The net unrealized appreciation in fair value of investment in Common
      Stock as of December 31, 1998 and 1997 and the change in such amount
      during the period were as follows:
<TABLE>
<CAPTION>

                                                                                              Net
                                                                Fair                      unrealized
                                                                value         Cost       appreciation
                                                             ------------  ------------  --------------
<S>                                                                <C>         <C>           <C>

Balance, May 1, 1997                                       $          --            --              --
Change for the period ended December 31, 1997                    585,523       479,487         106,036
                                                             ------------  ------------  --------------

Balance, December 31, 1997                                       585,523       479,487         106,036
Change for the year ended December 31, 1998                    2,381,721     1,381,083       1,000,638
                                                             ------------  ------------  --------------

Balance, December 31, 1998                                 $   2,967,244     1,860,570       1,106,674
                                                             ============  ============  ==============

</TABLE>

      The Plan held 79,524 and 22,412 shares of Common Stock on December 31,
      1998 and 1997, respectively. In addition, 12,136 shares were pending
      purchase on December 31, 1998.


 (4)  Tax Status

      The Plan is intended to qualify under the provisions of Code Section 423.
      Under these provisions, Participants are taxed on amounts withheld for the
      purchase of Common Stock when such amounts are actually withheld. Other
      than this tax, no income is taxable to a Participant until disposition of
      the Common Stock acquired. The method of taxation, as ordinary income or
      as capital gains, will depend upon the holding period of the purchased
      shares.

      There are no federal income tax consequences to the Company by reason of
      the grant or exercise of rights under the Plan. The Company is generally
      entitled to a deduction to the extent the amounts are taxed as ordinary
      income to a Participant.


(5)   Plan Termination

      Although it has not expressed any intent to do so, the Company has the
      right under the Plan to terminate the Plan. In the event of a plan
      termination, Participants will be refunded the amounts of any employee
      contributions which have not yet been applied to the purchase of Common
      Stock and the Common Stock shares in their individual participant
      accounts.


(6)     Year 2000 Readiness Disclosure

      The Company has a unified Year 2000 plan for the Company and its
      subsidiaries. As part of the Plan, the Company monitors the Year 2000
      efforts of the vendors performing critical outsourced functions for the
      Plan through the use of surveys. The information provided by the vendors
      has been confirmed by phone but has not been independently verified. The
      Plan's recordkeeper and custodian, The Bank of New York, has reported that
      renovation and testing of its mission-critical systems were substantially

                                         6                       (Continued)
<PAGE>

      completed by December 31, 1998 in compliance with the requirements set
      forth by the Federal Financial Institutions Examination Council. In
      addition, The Bank of New York has indicated that its business continuity
      plans are being reviewed and upgraded in an effort to mitigate potential
      risks.

      The Bank of New York in turn uses third-party vendors to support its
      activities for the Plan. Examples include security brokers, banks and
      stock exchanges. It is not within the Company's ability to determine the
      Year 2000 status of these companies. The Company must rely on the efforts
      of the vendors it has selected for outsourced functions to ensure that
      these vendors can conduct their business on and after January 1, 2000.

      The Company will continue to monitor all critical vendors' progress, as
      appropriate, in order to assess and address the potential business
      exposure for the Plan if these parties fail to achieve compliance.
      Depending on the volume and duration, the Plan could experience
      intermittent disruptions or be significantly impacted by incomplete or
      untimely resolution of the problem by the parties involved. Specifically,
      without limitation, (i) a Participant's ability to make contributions,
      request distributions and request account balances; and (ii) the Plan's
      ability to purchase and sell or distribute Common Stock could be affected.
      Although the Company is developing contingency plans designed to address
      the aforementioned risks if the vendors are unable to achieve Year 2000
      readiness, there can be no assurances that all potential problems will be
      mitigated by these procedures.

                                          7