<PAGE>

                                                                    Exhibit 99.2







                           TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                              Financial Statements

                           December 31, 2000 and 1999

                  (With Independent Auditors' Report Thereon)
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN


                               Table of Contents

<TABLE>
<CAPTION>
                                                                                      Page
<S>                                                                                   <C>
Independent Auditors' Report                                                             1

Statement of Financial Condition, with Fund Information - December 31, 2000              2

Statement of Financial Condition, with Fund Information - December 31, 1999              3

Statement of Income and Changes in Plan Equity, with Fund Information - Year ended
 December 31, 2000                                                                       4

Statement of Income and Changes in Plan Equity, with Fund Information - Year ended
 December 31, 1999                                                                       5

Statement of Income and Changes in Plan Equity, with Fund Information - Year ended
 December 31, 1998                                                                       6

Notes to Financial Statements                                                            7
</TABLE>
<PAGE>

                          Independent Auditors' Report


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


We have audited the accompanying statements of financial condition, with fund
information, of the Trigon Insurance Company 401(k) Restoration Plan (Plan) as
of December 31, 2000 and 1999, and the related statement of income and changes
in plan equity, with fund information, for each of the years in the three-year
period ended December 31, 2000.  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 auditing standards generally accepted
in the United States of America.  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,
2000 and 1999 and the income and changes in plan equity for each of the years in
the three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The fund information in the statements
of financial condition and income and changes in plan equity is presented for
purposes of additional analysis rather than to present the financial condition
and income and changes in plan equity of each fund.  The fund information has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


/s/ KPMG LLP

Richmond, Virginia
April 20, 2001

                                       1
<PAGE>

                           TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

            Statement of Financial Condition, with Fund Information

                               December 31, 2000

<TABLE>
<CAPTION>
                                                     Fund Information
                  -----------------------------------------------------------------------------------------------------
                                                                                                                Non-
                                                                                                             participant
                                                   Participant Directed                                       Directed
                  ------------------------------------------------------------------------------------------  ---------

                   Treasury Short-term          S&P 500                      Interna-    Domestic
                     Money     Fixed            Equity   Domestic   Global    tional    Aggressive   Trigon    Trigon
                    Market    Income     Bond   Index     Equity    Equity    Equity      Growth      Stock     Stock
                     Fund      Fund      Fund    Fund      Fund      Fund      Fund        Fund       Fund      Fund    Total
                   -------- ---------- ------- --------  --------  --------  ---------- ----------  --------  --------  ------
<S>               <C>       <C>        <C>     <C>       <C>       <C>       <C>        <C>        <C>         <C>       <C>
Assets -
  contributions
  receivable -
  employer
   (note 4)       $ 153,159   229,913   71,080  587,495   760,674    38,729    444,555    787,733   2,402,900   411,962   5,888,200
                   ======== =========  ======= ========  ========  ========  =========  =========  ==========  ========  ==========

Plan equity       $ 153,159   229,913   71,080  587,495   760,674    38,729    444,555    787,733   2,402,900   411,962   5,888,200
                   ======== =========  ======= ========  ========  ========  =========  =========  ==========  ========  ==========
</TABLE>

See accompanying notes to financial statements.

                                       2
<PAGE>

                           TIRGOM INSURANCE COMPANY
                            401(k) RESTORATION PLAN


            Statement of Financial Condition, with Fund Information

                               December 31, 1999

<TABLE>
<CAPTION>
                                                                              Fund Information
                            --------------------------------------------------------------------------------------------------------


                                                                            Participant Directed
                            --------------------------------------------------------------------------------------------------------

                             Treasury     Short-term                S&P 500                                               Domestic
                              Money         Fixed                    Equity      Domestic     Global     International   Aggressive
                              Market       Income        Bond        Index        Equity      Equity        Equity         Growth
                               Fund         Fund         Fund         Fund         Fund        Fund          Fund           Fund
                            ---------    ----------    --------    ----------    --------    --------    -------------   -----------
<S>                         <C>          <C>           <C>         <C>           <C>         <C>         <C>             <C>
Assets - contributions
 receivable - employer
 (note 4)                   $  18,988       30,316       43,261       355,175     325,700      40,265          461,359       756,224
                            =========    =========     ========    ==========    ========    ========    =============   ===========
Plan equity                 $  18,988       30,316       43,261       355,175     325,700      40,265          461,359       756,224
                            =========    =========     ========    ==========    ========    ========    =============   ===========

<CAPTION>
                               -----------------------
                                              Non-
                                           participant
                                            Directed
                               ----------  -----------

                                  Trigon      Trigon
                                  Stock       Stock
                                  Fund        Fund         Total
                               ----------  -----------  -----------
<S>                            <C>         <C>          <C>
Assets - contributions
 receivable - employer
 (note 4)                       1,598,387       33,758    3,663,433
                               ==========  ===========  ===========
Plan equity                     1,598,387       33,758    3,663,433
                               ==========  ===========  ===========
</TABLE>

See accompanying notes to financial statements.

                                       3
<PAGE>

                           TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

     Statement of Income and Changes in Plan Equity, with Fund Information

                         Year ended December 31, 2000


<TABLE>
<CAPTION>
                                                                           Fund Information
                                       ---------------------------------------------------------------------------------------------
                                                                          Participant Directed
                                       ---------------------------------------------------------------------------------------------

                                       Treasury     Short-term                  S&P 500
                                        Money         Fixed                     Equity       Domestic      Global      International
                                        Market        Income        Bond        Index         Equity       Equity         Equity
                                         Fund          Fund         Fund        Fund           Fund         Fund           Fund
                                       -----------------------   ----------   ----------    ----------   -----------   -------------
<S>                                    <C>          <C>          <C>          <C>           <C>          <C>           <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments      $    1,477        3,770        6,049      (55,043)      188,975       (8,843)       (128,261)
   Net realized gains on investments        1,751        2,084        9,686        6,547         9,987        2,844          23,238
   Contributions:
     Employee                               9,612       24,587       22,780      211,987       155,430       66,278         221,185
     Employer                                 544        2,481        4,273       36,824        25,226       27,174          54,262
                                       ----------   ----------   ----------   ----------    ----------   ----------      ----------
         Total income                      13,384       32,922       42,788      200,315       379,618       87,453         170,424
                                       ----------   ----------   ----------   ----------    ----------   ----------      ----------
Expenses - distributions and
   withdrawals                             34,960       34,738       35,322      179,501        35,571       97,276         142,584
Transfers between funds, net              155,747      201,413       20,353      211,506        90,927        8,287         (44,644)
                                       ----------   ----------   ----------   ----------    ----------   ----------      ----------
       Net increase (decrease)
         in plan equity                   134,171      199,597       27,819      232,320       434,974       (1,536)        (16,804)
Plan equity, beginning of year             18,988       30,316       43,261      355,175       325,700       40,265         461,359
                                       ----------   ----------   ----------   ----------    ----------   ----------      ----------
Plan equity, end of year               $  153,159      229,913       71,080      587,495       760,674       38,729         444,555
                                       ==========   ==========   ==========   ==========    ==========   ==========      ==========

<CAPTION>


                                                         Fund Information
                                       --------------------------------------------------
                                                                               Non-
                                                                            Participant
                                           Participant Directed              Directed
                                       ----------------------------       ---------------

                                         Domestic
                                         Aggressive      Trigon                 Trigon
                                          Growth         Stock                   Stock
                                           Fund          Fund                    Fund          Total
                                       ------------      ----------          ----------      ----------
<S>                                    <C>               <C>                 <C>             <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments           (334,938)     1,338,312             240,106       1,251,604
   Net realized gains on investments          41,209        575,044              15,067         687,457
   Contributions:
     Employee                                248,606        280,731                  --       1,241,196
     Employer                                 39,488         45,611             213,492         449,375
                                          ----------     ----------          ----------      ----------
         Total income                         (5,635)     2,239,698             468,665       3,629,632
                                          ----------     ----------          ----------      ----------
Expenses - distributions and
   withdrawals                                88,549        665,903              90,461       1,404,865
Transfers between funds, net                 125,693       (769,282)                 --              --
                                          ----------     ----------          ----------      ----------
       Net increase (decrease)
         in plan equity                       31,509        804,513             378,204       2,224,767
Plan equity, beginning of year               756,224      1,598,387              33,758       3,663,433
                                          ----------     ----------          ----------      ----------
Plan equity, end of year                     787,733      2,402,900             411,962       5,888,200
                                          ==========     ==========          ==========      ==========
</TABLE>

See accompanying notes to financial statements.

                                       4

<PAGE>

                           TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

     Statement of Income and Changes in Plan Equity, with Fund Information

                         Year ended December 31, 1999

<TABLE>
<CAPTION>
                                                                               Fund Information
                                           -----------------------------------------------------------------------------------
                                                                             Participant Directed
                                           -----------------------------------------------------------------------------------
                                              Treasury   Short-term                    S&P 500
                                               Money       Fixed                       Equity        Domestic         Global
                                               Market      Income          Bond        Index          Equity          Equity
                                                Fund        Fund           Fund         Fund           Fund           Funds
                                           -------------------------   -----------  ------------  ---------------  -----------
<S>                                        <C>           <C>           <C>          <C>           <C>              <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments          $      325       (1,174)       (1,244)       33,319       (23,628)        7,356
   Net realized gains on investments             --          3,351         1,020        23,242        23,143         3,010
   Contributions:
     Employee                                   4,419       22,076        22,496       165,018       136,065        17,922
     Employer                                     241        2,247         5,493        30,864        30,611         7,932
                                           ----------   ----------    ----------    ----------    ----------    ----------
         Total income                           4,985       26,500        27,765       252,443       166,191        36,220
                                           ----------   ----------    ----------    ----------    ----------    ----------

Expenses - distributions and
   withdrawals                                   --            607           869        24,131         2,200          --

Transfers between funds, net                   14,003      (49,885)      (31,702)      (86,174)     (169,705)          (57)
                                           ----------   ----------    ----------    ----------    ----------    ----------

       Net increase (decrease)
         in plan equity                        18,988      (23,992)       (4,806)      142,138        (5,714)       36,163

Plan equity, beginning of year                   --         54,308        48,067       213,037       331,414         4,102
                                           ----------   ----------    ----------    ----------    ----------    ----------
Plan equity, end of year                   $   18,988       30,316        43,261       355,175       325,700        40,265
                                           ==========   ==========    ==========    ==========    ==========    ==========

<CAPTION>

                                                                         Fund Information
                                                    --------------------------------------------------------------------------
                                                                                                      Non-
                                                                                                    participant
                                                               Participant Directed                  Directed
                                                    -------------------------------------------   ---------------
                                                                         Domestic
                                                       International    Aggressive       Trigon        Trigon
                                                          Equity          Growth          Stock         Stock
                                                           Fund            Fund           Fund          Fund         Total
                                                     ---------------     ---------      ----------     --------    ----------
<S>                                                  <C>                 <C>            <C>            <C>         <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments                       147,352            329,895      (326,357)       (4,277)      161,567
   Net realized gains on investment                      22,599             32,080         1,229           194       109,868
   Contributions:
     Employee                                           100,195            164,263       383,451          --       1,015,905
     Employer                                            25,119             29,372        85,537        39,625       257,041
                                                     ----------         ----------    ----------    ----------    ----------
         Total income                                   295,265            555,610       143,860        35,542     1,544,381
                                                     ----------         ----------    ----------    ----------    ----------

Expenses - distributions and
   withdrawals                                              720              4,902        11,793         1,784        47,006

Transfers between funds, net                             31,573           (113,787)      405,734            --            --
                                                     ----------         ----------    ----------    ----------    ----------

       Net increase (decrease)
         in plan equity                                 326,118            436,921       537,801        33,758     1,497,375

Plan equity, beginning of year                          135,241            319,303     1,060,586          --       2,166,058
                                                     ----------         ----------    ----------    ----------    ----------
Plan equity, end of year                                461,359            756,224     1,598,387        33,758     3,663,433
                                                     ==========         ==========    ==========    ==========    ==========
</TABLE>

See accompanying notes to financial statements

                                       5
<PAGE>

                           TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

     Statement of Income and Changes in Plan Equity, with Fund Information

                         Year ended December 31, 1998

<TABLE>
<CAPTION>
                                                                               Fund Information
                                         -----------------------------------------------------------------------------------------
                                                                             Participant Directed
                                         -----------------------------------------------------------------------------------------
                                           Short-term                     S&P 500
                                             Fixed                        Equity       Domestic        Global       International
                                             Income        Bond           Index        Equity          Equity           Equity
                                              Fund         Fund           Fund          Fund            Fund             Fund
                                         -------------   --------       ----------   ------------     ----------    --------------
<S>                                      <C>             <C>          <C>            <C>             <C>            <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments           $  (6,138)         650        31,216         25,853            608            17,207
   Net realized gains (losses) on
     investments                                9,423        1,607         7,515         15,617           (256)            2,570
   Contributions:
     Employee                                  28,625       18,791        96,771         87,854            937            41,014
     Employer, before reduction
       for forfeitures                          3,018        4,802        20,610         18,621            277             9,547
                                           ----------   ----------     ---------      ---------      ---------       -----------

         Total income                          34,928       25,850       156,112        147,945          1,566            70,338
                                           ----------   ----------     ---------      ---------      ---------       -----------

Expenses:
   Distributions and withdrawals              115,681        9,454            --         18,784             --             9,669
   Forfeitures                                     47           --            --             --             --                --
                                           ----------   ----------     ---------      ---------      ---------       -----------

         Total expenses                       115,728        9,454            --         18,784             --             9,669
                                           ----------   ----------     ---------      ---------      ---------       -----------

Transfers between funds, net                    3,324       (2,759)      (33,660)        72,584           (996)           19,830
                                           ----------   ----------     ---------      ---------      ---------       -----------

         Net increase (decrease)
            in plan equity                    (77,476)      13,637       122,452        201,745            570            80,499

Plan equity, beginning of year                131,784       34,430        90,585        129,669          3,532            54,742
                                           ----------   ----------     ---------      ---------      ---------       -----------

Plan equity, end of year                    $  54,308       48,067       213,037        331,414          4,102           135,241
                                           ==========   ==========     =========      =========      =========       ===========

<CAPTION>
                                         --------------------------------------------------------------

                                                    Domestic        International
                                                    Aggressive        Aggressive              Trigon
                                                      Growth            Growth                 Stock
                                                       Fund              Fund                  Fund              Total
                                                  --------------     --------------         -----------        -----------
<S>                                               <C>                <C>                    <C>                <C>
Income:
   Net appreciation (depreciation)
     in fair value of investments                       (2,379)              1,072             243,966              312,055
   Net realized gains (losses) on
     investments                                        31,388              (5,221)             13,041               75,684
   Contributions:
     Employee                                          148,412              24,086             270,245              716,735
     Employer, before reduction
       for forfeitures                                  35,469               3,624              67,124              163,092
                                          --------------------        ------------     ---------------      ---------------

         Total income                                  212,890              23,561             594,376            1,267,566
                                          --------------------        ------------     ---------------      ---------------

Expenses:
   Distributions and withdrawals                        62,746                 110              69,282              285,726
   Forfeitures                                              --                  --                  --                   47
                                          --------------------        ------------     ---------------      ---------------

         Total expenses                                 62,746                 110              69,282              285,773
                                          --------------------        ------------     ---------------      ---------------

Transfers between funds, net                          (130,139)            (44,315)            116,131                   --
                                          --------------------        ------------     ---------------      ---------------

         Net increase (decrease)
            in plan equity                              20,005             (20,864)            641,225              981,793

Plan equity, beginning of year                         299,298              20,864             419,361            1,184,265
                                          --------------------        ------------     ---------------      ---------------

Plan equity, end of year                               319,303                  --           1,060,586            2,166,058
                                          ====================        ============     ===============      ===============
</TABLE>

See accompanying notes to financial statements.

                                       6
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999


(1) Summary of Significant Accounting Policies

    (a)  Organization

         The Trigon Insurance Company 401(k) Restoration Plan (Plan), formerly
         known as the Trigon Blue Cross Blue Shield 401(k) Restoration Plan, was
         amended and restated effective October 1, 1998. It was originally
         adopted effective January 1, 1995 by the Board of Directors of Trigon
         Insurance Company (d/b/a Trigon Blue Cross Blue Shield), formerly, Blue
         Cross and Blue Shield of Virginia. The purpose of the Plan is to permit
         a select group of management or highly compensated employees
         (Participants) of Trigon Insurance Company and any subsidiary or
         affiliate, including its parent, Trigon Healthcare, Inc.,
         (collectively, Company) who are selected for participation in the Plan
         to defer compensation without regard to the limits imposed by the
         Internal Revenue Code on the Company's tax-qualified plan, the
         Employees' Thrift Plan of Trigon Insurance Company (Qualified Plan).
         The Qualified Plan is a defined contribution plan of the Company
         subject to the provisions of ERISA. The Plan constitutes an unfunded
         "top hat" arrangement under Title I of the Employee Retirement Income
         Security Act of 1974, as amended (ERISA). Accordingly, the Plan does
         not require the Company to segregate assets or establish trusts for any
         amounts to be paid to Participants under the Plan. In addition,
         Participants do not have any right, title or interest in or to any
         specific funds or property of the Company, and their interest,
         including vested amounts, is that of a general creditor.

         Under the provisions of the Plan, the Plan's assets and changes in the
         Plan's assets are calculated based on the corresponding Qualified Plan
         investment funds' asset value and adjustments of unit value,
         respectively. Since the Plan is unfunded, a receivable from the Company
         equivalent to the Plan's deemed investment balance as of year-end has
         been recorded in the accompanying statements of financial condition.
         The Company has recorded a corresponding liability to the Plan is its
         consolidated financial statements.

         The following are the significant accounting policies of the Qualified
         Plan and are followed by the Plan:

   (b)   Basis of Accounting

         The financial statements of the Plan are prepared under the accrual
         method of accounting. Accordingly, employee and employer contributions
         to the Plan are recorded as of the date the employees' contributions
         are withheld from the Participants' compensation. Net realized gains
         (losses) on investments and net appreciation (depreciation) of fair
         value of investments are recognized as they occur. Distributions and
         withdrawals are recorded when paid and are accounted for at the fair
         market value of the unit value of the Participant's account.
         Forfeitures are accounted for at the fair market value of the unit
         value forfeited.

   (c)   Investment Valuation and Income Recognition

         The Plan's contribution receivable - employer related to deemed
         investments is stated at fair value based on quoted market prices as of
         year-end. Purchases and sales of investments are recorded on a trade
         date basis.

                                       7
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999

        The Plan uses unit accounting to account for investment activity. Net
        realized gains (losses) on investments are computed on an average-cost
        basis. Net appreciation (depreciation) in fair value of investments is
        calculated daily based on the change in the market value and net
        investment earnings of the investments and participant activity.

   (d)  Administrative Expenses

        The Company pays all administrative expenses of the Plan. Administrative
        expenses incurred by the Company during 2000, 1999, and 1998 were
        $22,968, $24,374 and $23,594, respectively.

   (e)  Use of Estimates

        The preparation of financial statements in conformity with accounting
        principles generally accepted in the United States of America 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 administered by the Human Resources, Compensation and Employee
    Benefits Committee of the Company's Board of Directors (Committee). The
    recordkeeper is Administrative Solutions Group, an ADP/Mercer Alliance,
    Deerfield, Illinois.

    Plan participants should refer to the plan agreement or summary plan
    description for a more complete description of the Plan's provisions.

    (a) Eligibility

        Officers of the Company who are Vice Presidents or above are eligible
        for participation in the Plan unless otherwise determined at the
        discretion of the Committee. All Participants must be a member of a
        select group of management or highly-compensated employees and must be
        an eligible participant in the Qualified Plan.

    (b) Participant Accounts

        Individual accounts are maintained by the Plan for the Participant to
        reflect the Participant's contributions and related employer matching
        contribution, as well as the Participant's share of the Plan's income,
        including net realized gains and losses, and related administrative
        expenses.

                                       8
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999

   (c)  Contributions

        Participants may elect to make voluntary contributions to the Plan in
        whole percentage amounts ranging from two to sixteen percent of their
        compensation for the year, offset by amounts actually deferred in the
        Qualified Plan. The Company is obligated under the matching provision of
        the Plan to contribute each pay period an amount equal to the difference
        between (a) fifty percent of the sum of the contributions of each
        Participant in both the Plan and the Qualified Plan which do not exceed
        six percent of each Participant's compensation for such pay period and
        (b) the amount equal to the Company's actual matching contribution to
        the Qualified Plan for such pay period.

        In October 1998, the Plan was amended to permit the Company to
        contribute an additional discretionary profit sharing matching
        contribution to each Participant's account through the Trigon Stock
        Fund. The discretionary contribution is a nonparticipant-directed
        contribution and must remain in the Trigon Stock Fund. The discretionary
        contribution is calculated using a Plan-prescribed formula derived from
        Participant data from the Qualified Plan as of the most recent Qualified
        plan year. The Company made a discretionary contribution of $213,492 and
        $39,625 during 2000 and 1999, respectively, and no discretionary
        contribution to the Plan during 1998.

   (d)  Investment Options

        Each Participant's contributions are deemed to be invested in the
        various funds in the same proportion as each Participant's investment
        election in the Qualified Plan. No separate investment election by the
        Participant in the Plan is permitted or required. Investment options of
        the Qualified Plan consist of nine investment funds, including
        investment in the Trigon Stock Fund. A registration statement on Form S-
        8 has been filed with the Securities and Exchange Commission to register
        the shares of Trigon Healthcare, Inc. Class A Common Stock (Common
        Stock) included as an investment option in the Plan. A description of
        each investment option follows:

              Treasury Money Market Fund - This fund was added to the Plan
              effective October 1, 1998.  The aim of this fund is to provide
              current income while maintaining a stable net asset value.  This
              fund may invest solely in securities backed by the full faith and
              credit of the U.S. government.  At least 80% of the assets will be
              in U.S. Treasury securities.  The remainder may include securities
              issued by other government agencies.  This fund offers the lowest
              risk of any of the funds.

              Short-Term Fixed Income Fund - The aim of this fund is to provide
              steady investment returns with relatively stable principal value.
              This fund may invest in short-term treasury, government agency,
              and corporate bonds, money market instruments, guaranteed
              investment contracts issued by life insurance companies, which
              offer a fixed interest rate, or a pooled fund investing in similar
              contracts.

                                       9
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999

              Bond Fund - The objective of this fund is to maximize current
              interest income with moderate principal risk.  This fund may
              invest in treasury, government agency and corporate bonds,
              mortgages, U.S. and foreign currency-denominated securities, money
              market investments and mutual funds that invest in such
              investments.

              S&P 500 Equity Index Fund - This fund invests in the common stocks
              of those companies that comprise the S&P 500 index, or a mutual
              fund or commingled fund that invests in those companies. The
              objective of this fund is to provide long-term growth of capital,
              with growth of income as a secondary objective.

              Domestic Equity Fund - This fund primarily invests in securities
              that have long-term capital appreciation possibilities.  The fund
              will emphasize common stock, convertible corporate debt and
              convertible preferred stock and will periodically hold fixed
              income securities.  The portfolio is concentrated generally in 15
              to 35 stocks that generally are traded on a national exchange or
              market.  The objective of this fund is to provide long-term
              capital growth from stock prices and some current income from
              dividends.

              Global Equity Fund - This fund primarily invests in common stocks
              and bonds of companies based throughout the world, including the
              U.S.  The objective of this fund is to provide long-term growth of
              capital and income.

              International Equity Fund - This fund is like the Domestic Equity
              Fund except that it primarily invests in common stocks and bonds
              of non-U.S. corporations instead of domestic corporations.  This
              fund's objective is to provide long-term growth of both capital
              and income.

              Domestic Aggressive Growth Fund - The objective of this fund is
              capital growth.  This fund invests primarily in the common stocks
              of small, rapidly growing domestic companies.  It is not expected
              that these companies will pay cash dividends.

              International Aggressive Growth Fund - The International
              Aggressive Growth Fund is similar to the Domestic Aggressive
              Growth Fund, except that it invests primarily in stocks of small,
              rapidly growing foreign companies, or mutual or collective funds
              that invest in such stocks.  Pursuit of long-term capital growth
              is this fund's primary objective. Effective October 1, 1998, this
              fund was no longer offered as an investment selection.  All
              Participant balances were automatically transferred to the
              International Equity Fund along with any investment elections
              designated to this fund.

                                       10
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999


              Trigon Stock Fund - This fund invests in Common Stock which is
              listed on the New York Stock Exchange, and cash for liquidity
              purposes. The objective of this fund is to provide participants
              the opportunity to invest in the common stock of the Company's
              parent.  This fund offers the highest risk of any of the funds
              because it invests in the stock of only one company.

       Each Qualified Plan investment fund is divided into units of
       participation which are calculated daily by the recordkeeper.  The daily
       value of each unit is determined by dividing the total fair market value
       of all assets in each fund by the total number of units in that fund.
       The Plan is an unfunded plan.  Accordingly, under the provisions of the
       Plan, net realized gains (losses) on investments and net appreciation
       (depreciation) of fair value of investments are credited to each
       Participant's account based on the adjustment of the unit values in the
       Qualified Plan.  The payment of administrative expenses for assets of the
       Qualified Plan is reflected in the calculation of plan unit value.

  (e)  Vesting

       Participants are fully vested in their contributions and the earnings
       thereon at all times.  Participants are vested in employer matching
       contributions and the earnings thereon upon death, disability or
       retirement or after 36 months of service with the Company and any of its
       affiliates or any other Blue Cross and/or Blue Shield organization.
       Forfeitures reduce the Employer's contributions to the Plan.

  (f)  Distributions

       Plan distributions are recorded when paid and are made in cash or,
       effective October 1, 1998, Common Stock for the portion of a
       Participant's account invested in the Trigon Stock Fund in accordance
       with a Participant's election.  The Plan allows Participants to withdraw
       balances in a lump sum or in specified annual installments upon
       retirement, death or disability based upon elections made at the
       commencement of participation in the Plan.  Withdrawals prior to
       retirement are distributed in a lump sum.  In the event of a plan-defined
       change in control of the Company, all amounts in a Participant's account
       will be distributed in a lump sum unless an irrevocable election was
       previously made to defer such an amount to the retirement of termination
       date of the Participant.

                                       11
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999


  (g)  Number of Participants

       There were 44 and 39 Participants in the Plan as of December 31, 2000 and
       1999, respectively. The number of Participants investing in each of the
       Plan's funds as of those dates were as follows:


              Investment Fund /(1)/                      2000             1999
              ---------------------                    --------         --------

       Treasury Money Market Fund                          2                2
       Short-term Fixed Income Fund                        9                8
       Bond Fund                                           9                8
       S&P 500 Equity Index Fund                          25               19
       Domestic Equity Fund                               27               23
       Global Equity Fund                                  8                5
       International Equity Fund                          26               19
       Domestic Aggressive Growth Fund                    33               25
       Trigon Stock Fund                                  38               34

       /(1)/ Participants may hold investments in more than one fund;
             accordingly, the total participation by individual funds may exceed
             the total number of Participants.

(3)  Units and Unit Values

     Each fund in the Plan is valued daily on a unitized basis by the
     recordkeeper. The number of units and unit values of net assets, carried to
     the second decimal place, as of December 31, 2000 were:

                                                                       Unit
            Investment Fund                              Units        Values
            ---------------                              -----        ------

       Treasury Money Market Fund                        13,723      $ 11.16
       Short-term Fixed Income Fund                      15,618        14.72
       Bond Fund                                          4,469        15.91
       S&P 500 Equity Index Fund                         26,970        21.78
       Domestic Equity Fund                              21,395        35.55
       Global Equity Fund                                 2,558        15.14
       International Equity Fund                         21,666        20.52
       Domestic Aggressive Growth Fund                   28,012        28.12
       Trigon Stock Fund                                 74,035        38.02

                                       12
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999


(4)  Plan Funding

     As discussed in note 1, the Plan is an unfunded plan under Title 1 of ERISA
     and the Plan has recorded a receivable from the Company equivalent to the
     Plan's deemed investment balance as of year-end in the accompanying
     statements of financial condition. The Company has recorded a corresponding
     liability to the Plan in its consolidated financial statements. In order to
     set aside funds for the purpose of assisting the Company in meeting its
     liabilities to the Plan, the Company, through its subsidiary Trigon
     Insurance Company, established the Trigon Healthcare, Inc. Grantor Trust,
     formerly known as the Trigon Blue Cross Blue Shield Grantor Trust (Trust).
     Wachovia Corporate Services, Inc. (Wachovia), Winston-Salem, North
     Carolina, is the custodian of the assets of the Trust. Under the Trust, the
     assets contributed and income earned on such assets must remain in the
     Trust until liabilities under the Plan have been satisfied. However, the
     assets held in the Trust are considered to be assets of the Company and are
     subject to the claims of the Company's creditors in the event of the
     Company's insolvency. The Trust does not change the unfunded status of the
     Plan. The Participants have no preferred claim on, or any beneficial
     interest in, any assets of the Trust. If the balance of the Trust is not
     sufficient to make payments in accordance with the terms of the Plan, the
     Company must fund the difference using general corporate assets. Once all
     payments under the Plan have been made and the Plan is terminated, any
     excess assets remaining in the Trust revert back to the Company. In the
     event of a change in control of the Company, the Company will make an
     irrevocable contribution to the Trust to fully fund all Participants'
     account balances as determined by the Plan.

     The estimated fair value and cost of investment securities in the Trust as
     of December 31, 2000 and 1999 were as follows:


                                                    2000
                        -------------------------------------------------------
                                                                      Net
                                                                  unrealized
                              Fair                               appreciation
                              value              Cost           (depreciation)
                        ---------------    ---------------    -----------------
Mutual funds                  3,255,065          3,468,047             (212,982)
Common stock                  2,839,923          1,171,967            1,667,956
                         ---------------    ---------------    -----------------

                              6,094,988          4,640,014            1,454,974
                        ===============    ===============    =================

                                                      1999
                        -------------------------------------------------------
                                                                      Net
                                                                  unrealized
                              Fair                               appreciation
                              value              Cost           (depreciation)
                        ---------------    ---------------    -----------------
Mutual funds                  1,901,738          1,439,726              462,012
Common stock                  1,601,201          1,670,131              (68,930)
                        ---------------    ---------------    -----------------

                              3,502,939          3,109,857              393,082
                        ===============    ===============    =================

                                       13
<PAGE>

                            TRIGON INSURANCE COMPANY
                            401(k) RESTORATION PLAN

                         Notes to Financial Statements

                          December 31, 2000 and 1999

     The Trust held 36,497 and 54,278 shares of Common Stock as of December 31,
     2000 and 1999, respectively.

     The net appreciation (depreciation) in fair value of the investments in the
     Trust as of December 31, 2000, 1999 and 1998 and the change in such amounts
     during each year were as follows:

<TABLE>
<CAPTION>
                                                                                                                    Net
                                                                                                                 unrealized
                                                                          Fair                                  appreciation
                                                                          value                Cost            (depreciation)
                                                                    -----------------    -----------------    -----------------
     <S>                                                    <C>                    <C>                  <C>
     Balance, January 1, 1998                                 $       1,163,487            1,173,192               (9,705)

     Change for the year ended December 31, 1998                        953,180              634,165              319,015
                                                                ---------------        -------------      ---------------

     Balance, December 31, 1998                                       2,116,667            1,807,357              309,310

     Change for the year ended December 31, 1999                      1,386,272            1,302,500               83,772
                                                                ---------------        -------------      ---------------

     Balance, December 31, 1999                                       3,502,939            3,109,857              393,082

     Change for the year ended December 31, 2000                      2,592,049            1,530,157            1,061,892
                                                                ---------------        -------------      ---------------

     Balance, December 31, 2000                               $       6,094,988            4,640,014            1,454,974
                                                                ===============        =============      ===============
</TABLE>

(5)  Tax Status

     The Committee believes that the Plan has operated in accordance with the
     terms of the plan document and current tax law. Because the Plan is
     unfunded, no provision for income taxes has been included in the Plan's
     financial statements.

     Under present Federal income tax laws and regulations, employee and
     employer contributions and investment earnings thereon are not taxable to
     Participants until distributed or otherwise made available to Participants.
     Earnings on assets held in the Trust are taxable to the Company under
     ordinary tax rules on an annual basis.

(6)  Plan Termination

     Although it has not expressed any intent to do so, the Company's Board of
     Directors has the right under the Plan to terminate the Plan. In the event
     of a plan termination, Participants will become fully vested in their
     accounts.

                                       14