EXHIBIT 99.1




TRIGON HEALTHCARE, INC.
EMPLOYEE STOCK PURCHASE PLAN

Table of Contents

December 31, 1997

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                                                                                                           Page

Independent Auditors' Report.................................................................................1

Financial Statements:

      Statement of Financial Condition - December 31, 1997...................................................2

      Statement of Income and Changes in Plan Equity - Period May 1, 1997
         through December 31, 1997...........................................................................3

Notes to Financial Statements..............................................................................4-7


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Independent Auditors' Report


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


We have audited the accompanying statement of financial condition of the Trigon
Healthcare, Inc. Employee Stock Purchase Plan (Plan) as of December 31, 1997,
and the related statement of income and changes in plan equity for 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 audit.

We conducted our audit 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 audit provides 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,
1997 and the income and changes in plan equity for the period May 1, 1997
(inception) through December 31, 1997 in conformity with generally accepted
accounting principles.




/s/ KPMG Peat Marwick LLP

Richmond, Virginia
April 24, 1998



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TRIGON HEALTHCARE, INC.
EMPLOYEE STOCK PURCHASE PLAN

Statement of Financial Condition

December 31, 1997

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Assets
  Investments, at estimated fair value
      Trigon Healthcare, Inc. Class A common stock (cost, $479,487)     $585,523
  Contributions receivable
      Employee                                                           318,506
      Employer                                                            56,207
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Total assets                                                            $960,236
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Plan equity                                                             $960,236
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See accompanying notes to financial statements.

                                       2

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TRIGON HEALTHCARE, INC.
EMPLOYEE STOCK PURCHASE PLAN

Statement of Income and Changes in Plan Equity

Period May 1, 1997 through December 31, 1997

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Income
     Net unrealized appreciation in fair value of investments        $ 106,036
     Contributions
         Employee                                                      748,958
         Employer                                                      132,169
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     Total contributions                                               881,127
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Total income                                                           987,163
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Distributions to employees                                              26,927
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Net increase in plan equity                                            960,236

Plan equity, beginning of period                                             -
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Plan equity, end of period                                           $ 960,236
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See accompanying notes to financial statements.


                                       3
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TRIGON HEALTHCARE, INC.
EMPLOYEE STOCK PURCHASE PLAN

Notes to Financial Statements



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   (1)   Summary of Significant Accounting Policies

         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  of the  Company  and its
         subsidiaries  (Participant)  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:

         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 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  purpose  of  Common
         Stock.

         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.

         Administrative Expenses

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


                                                                    (Continued)

                                       4


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   (1) Summary of Significant Accounting Policies, Continued

         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 Participants  prior to withdrawal from the Plan are held
         in individual  participant  accounts in a custodian  account with First
         Chicago  Trust  Company of New York  (Custodian).  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
         needs 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 1997,  all shares  needed to satisfy the
         needs 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  with the Company.  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 599 Participants as of December 31, 1997.



                                                                    (Continued)


                                       5


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   (2)   Summary of Significant Provisions of the Plan, Continued

         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  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.


   (3)   Investment in Common Stock

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

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                                                                                      Net
                                                           Fair                unrealized
                                                          value       Cost   appreciation
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         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
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         The Plan held 22,412  shares of Common Stock on December  31, 1997.  In
         addition, 15,026 shares were pending purchase on December 31, 1997.


                                                                    (Continued)


                                       6


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   (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.

                                         7

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