Regina Nethery - VP, IR Michael B. McCallister - President and CEO James H. Bloem - Sr. VP and CFO James E. Murray - Sr. VP and COO

Matthew Borsch - Goldman Sachs Joshua Raskin - Lehman Brothers Charles Boorady - Citigroup Investment Research William Georges - JP Morgan Christine Arnold - Morgan Stanley Gregory Nersessian - Credit Suisse Scott Fidel - Deutsche Bank Justin Lake - UBS Carl McDonald - CIBC World Markets Peter Costa - FTN Midwest Securities Matthew Perry - Wachovia Capital Markets

Good morning. My name is Marry and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2007 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Ms. Regina Nethery, Vice President of Investor Relations, you may begin your call now. Regina Nethery - Vice President, Investor Relations: Thank you. Good morning and thank you for joining us. In this morning's call, Mike McCallister, Humana's President and Chief Executive Officer; and Jim Bloem, Senior Vice President and Chief Financial Officer, will briefly discuss highlights from our third quarter as well as comment on our earnings outlook for the remainder of 2007 and full year 2008. Following these prepared remarks, we will open up the lines for a question-and-answer session with industry analysts. Joining Mike and Jim for the Q&A session will be Jim Murray, our Chief Operating Officer; and Art Hipwell, Senior Vice President; and Kathy Pellegrino, Vice President and Acting General Counsel. We encourage the investing public and media to listen in to both management's prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes. That replay will be available on Humana's website www.humana.com later today. This call is also being simulcast via the internet along with the virtual slide presentation. For those of you have Company firewall issues and cannot access the live presentation, an Adobe version of the slides has been posted to the investor relations section of Humana's website. Before we begin our discussion, I need to remind each of you of our cautionary statement. Certain of the matters discussed in this conference call are forward-looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our most recent filings with the Securities and Exchange Commission. All of our SEC filings are available via the investor relations page of Humana's website, as well as on the SEC's website. Additionally, investors are advised to read the Humana third quarter 2007 earnings press release issued this morning October 29, 2007. This press release and other historical financial news releases are also available on our website. Any references to earnings per share or EPS made in this morning's call refer to diluted earnings per common share. Finally, today’s press release and a PowerPoint presentation of conference call, include extensive discussion of 2008 guidance. Since Humana have an Investor Day only every other, we have allocated more time for the prepared remarks this morning, but we will still allow ample time for your questions. With that, I will turn the call over to Mike McCallister. Michael B. McCallister - President and Chief Executive Officer: Good morning, everyone and thank you for joining us. As we announced in our new release this morning, for the third quarter, Humana, again, posted favorable results $1.78 per diluted share, significantly above our previous guidance for the quarter of $1.45 to a $1.50. EPS includes $0.25 per share associated with certain positive developments specifically related to 2006, which are not expected to return future periods. In additional $0.05 per share, above our expectations was due to better than anticipated ongoing operational results in both our commercial operations and our standalone Medicare Prescription Drug Plans or PDPs. These later developments are forecast to positively reflect fourth quarter 2007 and full year of 2008 results. Excluding the $0.25 per share that is unique to 2006, our third quarter earnings per share are up 61% over the $0.95 per share we earned in the third quarter of the prior year, with much of that increase coming from higher average Medicare membership year-over-year and continued growth in our commercial segment earnings. In addition to these favorable financial results, we achieved the number of milestones since our last earnings call. In late September, we received approval; from centers of Medicare and Medicaid Services, CMS, to resume marketing of our individual private fee-for-service plans in late September. We remain on track to achieve our 2007 membership targets and are well position for 2008. During the quarter, we signed a definitive agreement to acquire KMG America, a group in voluntary insurance benefits and third party administration company, with more than 1 million members. This acquisition broadens and diversifies our commercial portfolio and is forecast to be slightly accretive in 2008. Additionally, we recently closed on our acquisition of CompBenefits, an Atlanta base company with 2.3 million dental and 2.5 million vision members nationwide. It is also expected to be accretive in 2008. In early October, we received pharmacy benefit management accreditation from URAC, the gold standard for independent expert validation to the Company’s pharmacy management organization meets rigorous quality standards for consumer protection and empowerment. Overseas London based Humana Europe was chosen by the United Kingdom’s Department of Health to implement strategies at local level to enhance station experience and proved clinical outcomes and reduced costs. Finally, also in early October, Humana’s new veterans health unit was awarded the Department of Veterans Affairs first ever specialty network demonstration contract known as Project HERO for healthcare effectiveness to resource optimization. Our selection, over six competitors has strategic significance for 2008 and beyond. It positions Humana is the sole contractors that can offer TRICARE network discounts to the VA and these test geographies. 12 year validates the 11 years success of our Military line of business and suggests that as the VA returns increasingly to the private sectors to meet veterans long-term help needs, Humana will be active partner. Let me show you the VA demonstration in more depth. The four circle numbers on this slide represent the areas that makeup the initial Project HERO demonstration areas. Humana was successful in being awarded all four of these regions. As you can see two of them, 8 and 16 have obvious synergies with our existing TRICARE South region. The VA like Medicare represents a growing market in health benefits. To give you some sense of the scale of VA spending, the VA has requested $27 billion for medical services in its proposed budget for the upcoming fiscal year. While, it is difficult to say what portion of the spending might ultimately be contracted to the private sector, Humana’s well positioned to serve our nations veterans. Leveraging our existing government and commercial provider networks to bring Humana's proven techniques for lower cost and superior health plan experience to hundreds of thousands of individuals. Now, let’s look to the future. We are, again, at difficult time for our industry, facing multiple calls to increase wellness, reduce crushing healthcare costs, and find ways to solve the needs of the uninsured. Recent high profile union negotiations highlight just how difficult the issue of funding health benefits is. But our efforts over the past 12 months have brought greater clarity on a variety of important topics, including more future growth in the industry will come from and further validation of the power of the consumer to approve wellness and reduce expenses. Thus, I would like to spend a few moments discussing why we are convinced Humana’s one of the best-positioned companies to succeed in health benefits in 2008 and beyond. In Medicare, we are forecasting net Medicare Advantage membership growth of approximately 20% for 2008. We will continue our evolution from the concentrated membership gains we achieved in 2006 and 2007, to more regular month in, month out growth, through age-ins, group Medicare, and special needs plans. CMS has approved new plans in market expansions in many states, and all of our multiple distribution channels, web, telephonic, company agent, independent agent, and alliance partners are well prepared for the beginning of the 2008 enrollment season on November 15, something I will discuss in more depth in a few moments. In our commercial segment, we foresee continued pricing discipline and further expansion of our pretax margin. Our portfolio migration strategy has been successful and our book of business will approach its desired balance in 2008. ASO, small group, individual, and consumer plans continue to be our areas of strategic focus. Next year, we will also see expanded contributions from KMG and CompBenefits product offerings. The specialty company acquisitions are expected to increase our commercial margins over time as well as enhance our ability to appeal to broad and diverse sector customers. In TRICARE, while we still await the Department of Defense’s release of a request for proposal for the next contract period, we anticipate success in maintaining our South region business. Bidding along undoubtedly be keen, but with our history of excellent service delivery and our knowledge of military families’ health needs, we believe we are very well positioned to win. TRICARE continues to be a good operational performer for the military community in the south region has solid financial performer for our Company. 2008, we will also see the start of the Project HERO demonstration contract on January 1st. We expect that the slowly ramp-up throughout the year with some earnings accretion as the year progresses. We believe each of the components of the operational momentum I have just described will result in continue progress in our 2008 earnings. Earnings per share for 2008 forecast to be in a range of $5.30 to $5.50, up 10% to 16% when compared to 2007 EPS, or 16% to 22% excluding the 25% share… $0.25 per share in the third quarter, items we do not anticipate to recur in future periods. I will now take a closer look on our Medicare and commercial business segments. Turning in more detail, first the Medicare, three points stand out. First, giving the aging in the baby boomers, Medicare continues to show that it is the best near-term opportunity for significant growth in our industry. Through our Medicare leaders in 1980’s and the 1990’s and we are standing our leadership, we only, what I can tell there is 21st century Medicare. Our more sophisticated and organized programs that drives better results and value. Second, we continue to see Medicare’s as solid example of how the insurance industry can work with government to improve consumers’ health outcomes while reducing their expenses. Moreover, surveys continue to shows senior’s satisfaction with Medicare Advantage and PDP offerings in the neighborhood of 90%. And finally, our increased market penetration due to Medicare expansion is open doors and enhancing our commercial provider networks, supplementing the advantages we gained in intensive operational discipline in that segment as well. Medicare was not just a near-term growth opportunity, it will be a growth opportunity for many years to come. That opportunity stems from a number of long-term cost drivers that show no sign of slowing. Coupling these factors with one at the top of the list, an aging population, increases the opportunities for those companies they can present and execute on the solution for the Medicare Trust Fund. We believe and MedPAC is taking similar view and its report to Congress, but the current methodology for funding Medicare today is not sustainable, but over time. Not only our baby boomers aging into a Medicare program, people are living longer as well. There is simply no parallel phenomena and anywhere else in the health benefits universe today. As this chart shows, the pace of aging instructor accelerate dramatically in a few years. As I said earlier, Medicare is an area that as time goes on bodes well for companies like Humana that have a strong head start and a wide variety of product offerings. Seniors are knowledgeable consumers and varying needs from the healthiest and most agile to most vulnerable. Companies with have over time carefully researched and deeply understood Medicare beneficiaries’ needs are the ones emerging as leaders, placing every greater distance between themselves and late entrance competitors. We have always rejected that the one size fits all notion of Medicare market, which is an important element of our long-term Medicare success. Moreover initial outcomes research indicates the tools and techniques that we have successfully developed for our commercial membership base to their positive implications from Medicare. To understand why, it’s important for us to recognize that Medicare is in the state of evolution. From its creation in 1965 to the MMA in 2003, Medicare only paid claims and policed fraud. Over time is the preponderance of episodic diseases gave away through breakthrough surgical and pharmaceutical advances, to today’s prevalence of far more costly long-term chronic conditions, the program has been forced to adjust, 20% through Medicare to their private sectors emphasis on wellbeing and chronic disease management rather than episodic sickness includes a number of tools and techniques that have already shown their effectiveness in lowering costs and advancing wellness for employers and employees. These include care coordination, effective network contracting, catastrophic case management, health improvement and prevention programs and data mining to understand and anticipate Medicare member needs. Our overall strategy for success in the evolution of Medicare is simple, but long-term in its implementation. After the passage of the 2003 Medicare Modernization Act, we set up to rapidly expand our Medicare membership by establishing relationships with Medicare beneficiaries before most of the competitions. Our members are entrusting us with the significant aspect they realize. We want to nurture and sustain those relationships long into the future, through continuing the provide tools and techniques to help lower costs through exemplary service and through member who share their experience with others. We also note that the delivered real customer value, we need to support Medicare members and managing their health and wellbeing, which includes guiding them on using care wisely and pointing out ways they can save money. We continue to build an infrastructure around our guidance proposition, which is distinct… that distinguishes support our members received versus original Medicare. I have already referenced our focus on provider relationships and we continue our successful product development through our network base products. This strategy is designed to follow up our initial enrollment success with a strong focus and commitment to where we believe the future market exists. Let me take you little deeper and how we support our members desired to improve their health status what we will call they are wellbeing. This slide illustrates care coordination as of one example the multiple ways consumer focus techniques work for Medicare members. Humana’s Medicare clinical team deploys an affective combination of high-tech, high-touch report to keep people healthier while producing better outcomes in cost savings for members and for society. When adjusted for severity and demographics, 2006 data shows Humana private fee-for-service members experienced the 6% decrease in hospital visits and a 21% decrease in emergency room visits compared with original Medicare. A highlight private fee-for-service statistics in part, because private fee-for-service sometimes characterizes as a non-managed product. It’s important to know the Humana private fee-for-service members benefit the vast majority of our programs to enhance wellbeing just as PPO and HMO members do. This is an aspect that we make part of the value proposition for all Medicare Advantage offerings. Let’s look at how we are performing with respect of achieving the goal of having Medicare beneficiaries use care more effectively. The recent study summarize on this slide based on the latest available data, indicates our Medicare Advantage plans are shown the shift in healthcare utilization toward more preventive and home care, which reduces cost for the average Humana Medicare Advantage member. It’s clear that people appreciate this help. Members in our medical advantage plans have the right to vote with their feet, yet, they choose to stay. Less than 1% of members who leave our Medicare Advantage plan and go back to original Medicare. As for Medicare Advantages as a whole the survey by America’s health insurance plans earlier this year reported the satisfaction rate of 90% for Medicare Advantage members nationwide. When we look at all this programs impact chronically ill patients the results are even more impressive. Wellness dramatically improves, visits to the doctor or to the hospital decreased, and the cost of the system is significantly reduced. Note in particular the rise in home health visits. Again, our goal is to play closer attention to the member by investing in the appropriate infrastructure needed to allow all of our members to access the clinical guidance tools and technique, ensuring individual get the best results both clinically and financially from the program. As we prepare for the influx of age 65 Medicare beneficiary who are familiar with network based products from their working lines, we began expanding our contractual relationships with hospital, doctors, and other health care service providers. We are well positioned to serve members using these products and we will continue to expand our geographic reach to serve more of them in the future. We have been committed to the broad availability of PPO products and quickly established an expansive regional PPO network when net product was created as the part of the MMA. In fact, 80 % of our private fee-for-service members within areas where they have easy access to our PPO networks. In terms of sales, we expect Medicare Advantage gross sales to rise significantly in 2008, increasingly driven age-ins, employer group retiree sales, members choosing to upgrade and not least our own growing understanding of how best to succeed in this retail environment. We are pleased with the fast start we had in 2006. As other plans began to enter the market fully in 2007, it brought competition around more aggressive plans benefits and premiums. We evaluate our competitive position for 2008 and believe we are now in it environment of greater stability. This together with our attractive 2008 benefit offerings is expected to lead a higher gross sales and lower membership attrition. Turning to the membership growth. Medicare Advantage membership for 2008 is expected to experience net growth of approximately 200,000 to 250,000 almost double the member last year. This will be driven by a mix of market expansion, product expansion, and improve benefit design. For example, in our HMO business, we have opened new markets in Denver Salt Lake City, Tucson, Dallas, and Alexandria, Louisiana. In our, PPO product, additional membership and experience developed over the past year, gave us the data we needed to validate a change in the benefit design to more closely match that offered in our private pay-for-service products. As you can see from the chart, over time, our membership in PPO plans is projected to increase as the number of age-ins continue to grow as our new plan benefits find traction in the market. In our standalone PDP offerings, we anticipate maintaining the leading membership position even with the projected net decline in membership of about 300,000 from the current total of 3.5 million. It’s worth noting that we may benefit greatly this year from reconfiguration of the Medicare.gov website where millions of seniors turns guidance on plan selection. While in the last two years, the plans were ranked according to premium cost, for 2008, the ranking is based on total projected out of pocket expenses where Humana compares quite favorably with the competition. In my frequent visits on the Capital Hill over the past few months, a number of important aspects on Medicare debate have become clear. First, the Medicare Advantage funding cuts past in the house version of the CHAMP Bill are not in sync with the benefits of Medicare beneficiaries. They do not want there benefits cut, they like having options, particularly for rural minority and low income beneficiaries and their voices are getting through the members of Congress. Over the next few months, I am confident that Congress will listen to its constituents' voices. Second, Humana continues to concentrate its effort on operational excellence to ensure we deliver value and improve services to members. Third, mounting evidence indicates that Medicare Advantage with its inherent cost saving attributes, represents part of a long-term solution to Medicare’s projected budgetary dilemma. Without some formal rationalization, the Medicare program is headed for bankruptcy. And finally, coordinated care programs will have an increasingly favorable impact on the Trust Fund's solvency as they reduce unnecessary utilization and produce better health outcomes for seniors as preliminary data shows. I will now turn now to our commercial segment. As our Medicare footprint has grown, we have expanded our commercial operations as well. Today, the commercial segment actively sells in more than 17 states in Puerto Rico. Recent expansion into Utah, Mississippi, Tennessee, Georgia, and Colorado, and other areas have leveraged our nation-wide Medicare footprint to open new and attractive commercial opportunities. In some instances, Medicare has been directly responsible for these opportunities. In others, we have been able to undertake Greenfield commercial expansions. We also began negotiating with hospital systems in major non-Humana cities with a differentiated approach to entering new markets. In the course of these discussions, we have heard many systems say they derive no real benefit from offering different rates to different carriers, and are seeking win-win alternative. As a result, we are moving the discussion from contentious haggling over prices, the traditional commodity bases for negotiations to explore a non-commodity partnerships based on value added administrative services that Humana can now offer. This represents some innovative approach to breaking down historical barriers to entry and ending anti-consumer most favored nation discounting. We will keep you informed of the effort as it goes forward. For 2008, we foresee continued pricing discipline, further expansion of our pretax margin, and more progress in our ongoing effort to migrate our book of business to a balanced and consumer oriented membership portfolio. ASO, small group, individual, and consumer plans continued to be our area of strategic focus. Over the past five years, our ASO block has grown from 22% of our commercial membership to comprise nearly half of our membership today. We believe the ASO business offers greater earnings consistency than large account fully insured business as well as driving important volumes through the provider network. Consumer planned membership has grown from a negligible percentage of our block in 2002 to more than 18% today. Consumer plans remain a differentiator for Humana in the marketplace with proven savings results for our group and individual customers. On October 1, we closed the acquisition of CompBenefits. The addition of CompBenefits creates a combined specialty products business with more than $700 million in annual revenue and more than 6 million covered members. The acquisition expansion had a specialty product continuum by adding dental HMO product options in addition to an established vision product line. Since our specialty offerings are becoming a major strategic direction for us. I will take a few moments to outline the significant of our KMG acquisition. The market trends box shows that voluntary benefits are our growth industry. Both quantitatively in terms of our forecasted 5% to 7% annual growth rate over the next few years, and qualitatively, based on employers increasing willingness to offer these benefits. They are generally paid for by consumers, not employers, and as such did well with our larger consumer strategy. They were an extension of our core health benefits portfolio and create deeper relationships with our members. Finally, KMG brings Humana management team with expertise in product design, pricing, underwriting, and marketing voluntary and supplemental products. I would like to close with some thoughts I would shared with you at our Investor Day in New York last fall. Our success over the last 12 months has already confirmed our commitment to the principles we shared then, which might be described as a roadmap for health benefits leadership in the 21st century. These elements of the successful strategy all revolve around the ideal of thinking differently and embracing the difference. For the sake of time, I won’t read out each of these elements. They will set to win, they was in the slide. And although, we would argue that Humana’s passion for the consumer and our zest for maximizing the power of data are, but two of the many elements that are winning health benefits Company our associates book us on daily. This is something else you have seen before but also worth revisiting. In a way everything I discuss with you today goes back to this diagram. Humana's commitment to consumerism first set forth seven years ago remains unchanged. The only thing that’s changed is that for the four integrated circles above Humana is far more populated with tool, capabilities, and programs and they were at the start. We are thoroughly convinced and growing body of evidence bears it up that given actually more information consumers are just as able to seek and find value in healthcare as they are in the rest of their purchasing lives. By offering guidance at all points of the choose finance and use equation, Humana empowers consumers to maximize their power as drivers of two-thirds of the U.S. economy and make confident successful healthcare decisions for themselves and their families. In summary, as we look at 2008 and beyond, we believe Humana’s poised to continuous industry growth leadership strong execution based on keen understanding of consumers and a long-term strategy to meet the health cost and quality of life challenges our nation faces today are the key to our continued success. We view government has an essential element in a multifaceted solution to the country’s healthcare problems. While political debate often creates ways on Wall Street, our strategic commitment to comprehensive consumerism and the ability that gives us to respond effectively to new circumstances position us well for ongoing success in today's changing environment. With that, I will turn the call over to Jim Bloem. James H. Bloem - Senior Vice President and Chief Financial Officer: Thanks, Mike and good morning everyone. Today, I will review our third quarter performance, provide color around our 2008 financial guidance, and comment on potential 2008 sources and uses of operating cash flows. Let's begin with a brief review of our third quarter performance. If we start with the $1.48 midpoint on the third quarter EPS guidance issued at the time of our last earnings release, our non-GAAP earnings per share for his quarter was $0.05 per share or $13.5 million prior higher than that midpoint, primarily due to slightly better commercial and standalone PDP performance. We expect both these improvements to trend forward and have adjusted our 2007 EPS guidance accordingly. Also as Mike indicated, our third quarter EPS with $1.78 included two items totaling $0.25 per share or $68.5 million, which related to prior years. These items are not expected to reoccur in future periods. The first and largest of these items arose from 2006 Medicare Party D settlement. It was $0.20 per share of $54 million. Approximately half of this amount primarily was due to lower state-to-plan claims than originally were indicated by CMS at the end of 2006. The other half primarily resulted from the higher percentage of state-to-plan and plan-to-plan claims ultimately being attributable to lower income cost subsidies and reinsurance layers than originally was estimated. Because both these amounts relate to 2006 which was the initially year the Part D Medicare benefit, we do not anticipate these amounts to reoccur in 2007 and beyond. The second third quarter item related to prior years arose from a settlement for 2004 through 2006 for a favorable development relative to the claims paying accuracy guarantee provision of TRICARE contract. This component was $0.05 per share or $14.9 million. Turning next to an update of our quarterly overall Medicare Medical expense ratio, we are pleased to report that excluding the 2007 Part D settlement that I just described, our overall Medicare MER is continuing to track inline with our previous projections of both the last 90 and 180 days. Now, let’s go onto 2008. Looking first at our consolidated revenues, we are projecting 2008 revenues to be approximately 16% higher than those for 2007. This is based on our guidance midpoints. This anticipated growth primarily was driven by increase… by continued increases in our Medicare membership. We anticipate that overall 2008 Medicare MER will edge up slightly due in part to the impact of the favorable 2006 Part D settlement. Additionally, as we have described many times in the past, we design our Medicare benefits to ensure that anticipated savings in our government segment SG&A ratio are in turn passed directly to our Medicare members in the form of enhanced benefit designs. This enables us to consistently target in operating margin of approximately 5% for our Medicare business in total. Our commercial segment is also anticipated to perform well in 2008, with pretax… the commercial pretax earnings expected to increase by a mid to upper teens percentage. We also are pleased to know that we have increased our 2007 commercial segment pretax income guidance for the third time this year. Turning next to our consolidated selling, general, and administrative expenses, we are pleased that beginning between… beginning of our fourth quarter of 2006 and the end of the third quarter of 2007, our total dollar SG&A quarterly spend increased only 1.5%. Despite normal CPI levels of expense inflation including salaries and wages and benefits, this near constancy in total dollars each quarter was achieved through the significant productivity gains for Human associates. In turn, this productivity together with increases in premiums ASO fees and revenues drove down our consolidated SG&A ratio by a 140 basis points over the same four quarter period from 14.7% to 13.3%. Now, moving to the fourth quarter of 2007 and all of 2008, we expect the quarterly total SG&A dollar spend to increase versus the last four quarters for the following three reasons. First, higher 2008 Medicare marketing and advertising expenditures correlate the higher anticipated 2008 sales in that the percentage increased in the marketing expense corresponds to projected increase in Medicare Advantage gross sales. Second, as our RightSource mail order pharmacy continues to expand, we expect increases in both related revenues and corresponding administrative spend. RightSource typically run the higher SG&A expense ratio, which is similar to that of our ASO products. Third, we expect to have a full or nearly a full year of operations for both KMG America and CompBenefits. Specialty products can also tend to have a higher as SG&A expense ratio. We expect the RightSource expansion and the specialty business acquisitions, which again offer higher SG&A ratios than our medical businesses to negatively impact our 2008 consolidated SG&A ratio by about 40 basis points. This will mask our continuing productivity gains. So, consequently, we are anticipating a 2008 SG&A expense ratio to be in the same range as it is for 2007, that is 13.5% to 14%. Next, we turn to the key variables affecting our 2008 quarterly earnings. This slide shows how Medicare Advantage, the standalone PDPs, Medicare marketing expenses, TRICARE, and our commercial results are expected to impact each quarter’s earnings. To illustrate these impacts, we have used arrows to indicate a given variable's impact on a particular quarter’s earnings. While we are not forecasting our specific 2008 quarterly earnings today, preferring to wait until the fourth quarter and January sales projections for a month, this slide gives our current thinking kind the degree to which each variable will affect next year’s quarterly earnings pattern. Turning finally to cash flows. our across the board operating performance continues to enable us to project solid cash flows for 2007 and 2008. As our total revenues have grown to about 2.5 times, the 2001 level, we have continually enjoyed an average ratio of operating cash flow to net income of approximately 2 times. The entire ratio of operating cash flow to net income results from the higher growth rate we have experienced during this period and the major of the working capital attributes of our business, mainly the upfront collection of cash revenues and the concurrent estimation and accrual medical expense claims. As the green portion of the accompanying slide indicate operating cash flows are expected to remain at 2 times net income in 2008 after giving effect to the CMS risk share payables and other timing issues. Our 2007 cash flows from operations include the benefit of approximately 280… 2007 cash flow, operating cash flows include a benefit of approximately $275 [ph] million associated with working capital timing issues. The two biggest factors driving the 2007 timing benefit are claims payment cutoffs and HMO risk share capitation accruals, which we earn in 2007and are expected to be repaid in 2008. These capitation amounts have grown over the last few years commensurate with the growth in the related businesses. While it’s possible that our 2008 cash flows could similarly benefit from working capital timing issues or the accrual of Part D risk share payable in 2008, we don’t foresee that at this point. Plus we have not assumed any timing benefit in our 2008 cash flow benefit projections. In terms of how the $1.5 billion to $1.8 billion of anticipated operating cash flow is expected to be used in 2008, we offer the following three comments. First, capital expenditures are expected to be approximately $225 million and an amount similar to that is expected for 2007. Second, additional required capitalization of our operating subsidiaries due to the continuation of the growth of our business is initially expected to be $125 million. This amount compares with $275 million to $300 million in 2007 and $722 million in 2006. With respect to the remaining expected 2008 cash flows from operations, we will continue as always to review and analyze additional possible acquisitions and potential share repurchase programs in light of our desire to continue to raise the value of Humana, while maintaining our debt to total book capitalization ratio in the range of 25% to 30%. In summary then as this slide shows, we are well positioned for continued earnings growth in 2008 and beyond. With I will open up the phone lines for questions. We ask that you limit your questions to facilitate us getting through as many questions as possible today. Operator, would you please introduce the first caller? Question and Answer

Yes, sir. The first question comes from Matthew Borsch from Goldman Sachs. Sir, you have the floor. Matthew Borsch - Goldman Sachs: Thank you. Good morning. Actually, Jim, if I could begin just on the last subject you were talking about in terms of the cash position in the cash flow. Would it be possible to sort of just walk through the sources and uses of projected cash for 2008? I am trying to understand what you are unregulated cash position is going to be… think at the beginning of the year, how much deployable cash you will generate during the year-end, essentially how much you could potentially stand towards acquisitions or even share repurchase if you chose to go that route. James H. Bloem - Senior Vice President and Chief Financial Officer: Well, first of all, a couple of things are into that variable that we talked about generally between the two of us. The acquisition of KMG America and CompBenefits will occur in the fourth quarter. So, we had fairly substantial cash balance in the parent company at the end of the third quarter. We will end up the year that way. Let us move to 2008, generally speaking, we are saying, we are looking for increase in income and those working capital items, which I mentioned in my presentation. So, if you start with, let’s say $1.5 billion to $1.8 billion of operating cash flow and you subtract out the two items I mentioned. Matthew Borsch - Goldman Sachs: Right. James H. Bloem - Senior Vice President and Chief Financial Officer: Then you will sort of down around maybe $1.250 billion to $1.3 billion, and as the year progresses, we will get to see how that all works out. We will have… at the end of this year, we will be at the very top of that debt to total capitalization ratio that I mentioned. We would like to keep between 27.7 and 30… between 25 and 30, we have 25.7 at the end of the third, we will probably go up to around 29 as we complete those acquisitions. So, that as we get into the year and discuss things with the DOI, we will be in a better position to answer your question with more precision, but suffice it to say, when you compare 2006, 2007, what 2008 looks like, you should be in much better position to have free cash and ability do to additional acquisitions or look at share repurchase et cetera. Matthew Borsch - Goldman Sachs: Great. Thank you. And if I can just one follow-up here, on the different topic. On the expected growth in your PPO product next year, can you talk to how the benefits compare PPO versus private fee-for-service? And how you think you are going to execute to get the kind of growth you are projecting on that product perhaps for next year? And it sounds like that’s kind of where you want to go beyond next year? And just related to that if you could just tell us I know it’s not about network discounts, but are you generally getting PPO rates that are conferrable to Medicare fee schedule? James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray. The benefit design for PPO versus private fee-for-service, in a lot of states that were doing business are exactly the same we tried to replicate the private fee-for-service with the PPO. In other states, we are doing business, we actually have a little bit better benefits primarily in the maximum out of pocket. The sales force is educated on the beneficial effects of the product differences, very well versed in the value preposition. And so, we feel pretty comfortable that the growth in the PPO that we were demonstrating will play itself out this year. Into the future, we think that the beneficial effect of the PPO with… how we are going to network with the high performance networks that we talked with many of you on in the past, will drive lower premiums and higher benefits relative to private fee-for-service. Over time we… as we have said many times in the past, we anticipate the PPO membership starting to accelerate into 2008 and 2009 and then beyond. I don’t… I think that’s most of… Matthew Borsch - Goldman Sachs: Well, yes, and actually, sorry, just one point there. You mentioned locations where the benefit is exactly the same as the private fee-for-service, I guess, I am try to understanding those locations why would a senior want to chose the PPO product which have some element of restrictiveness versus private fee-for-service in those situations. James E. Murray - Senior Vice President and Chief Operating Officer: We have done a lot of research and we feel… because of some the things that we study that the seniors are very comfortable with the PPO offering and to the extent you will see the sales force has an opportunity to discuss value preposition being very similar, we think our discussion with our senior that suggest that into the future they are likely to continue to get better benefits from the PPO relative to private fee-for-service and trying to discuss with the seniors the long-term beneficial effect of that offering. We think we will make good sense for them. And again, the research that we have done tell us that the seniors because of the time that they spent in their working life with a PPO kind of offering has made them very comfortable and they are not afraid of the PPOs some of you may think. Matthew Borsch - Goldman Sachs: Okay. I will leave with that. James E. Murray - Senior Vice President and Chief Operating Officer: Okay.

The next question comes from Josh Raskin from Lehman Brothers. Sir, you have the floor. Joshua Raskin - Lehman Brothers: Thank you. Good morning. Question relates to the margin, a little bit in ’08 and more I think longer term, first, just sort of technical question, the Medicare MLR increased in ’08. Is that mix shift issues towards more PPO and private fee-for-service or is there sort of an inherent overall increase that you guys are looking for? And then longer term, if you think about your margin expectations and, Mike, you talked about this consistent 5% government business margin over the long haul. It looks like TRICARE is coming in a little bit next year and commercial still going to be sort of slightly lower than 4% of sales. So, you back into a Medicare MLR, certainly over that 5% for ’08. I am just curious if that sought is a sustainable level or if you think there is maybe potentially pressure in ‘09 and beyond? James E. Murray - Senior Vice President and Chief Operating Officer: Sounded like… this is Jim Murray. It sound like there were a lot of questions and I have been writing seriously. So, let me just start and see where that takes us. Joshua Raskin - Lehman Brothers: Okay. James E. Murray - Senior Vice President and Chief Operating Officer: I think the guidance that we have come out with for this year’s MER for… Medicare is around 83%, and for next year, we are saying for 83% to 84%. I think that if we look for what we have reported this year there was a beneficial fact related to a PDP item. So, there is a little bit of noise there. This year has a favorable impact for that. There is a lot of things that obviously go into MER estimation. There is something that the actual risk called the durational impact. You have seen from our membership guidance this year that we are going to grow quite a bit, so that will improve our MERs going forward for the book of business that we write this year. We have got a book of business that we bring into the year where the durational impact would likely make the MERs go up a tad. And then there is a lot of other things that we were Mike talked about in terms of infrastructure and the lot of the other things that we are doing with the nurses and all the systems and procedures that would likely bring the MERs down. I am not trying to confuse there are lot of variables that go into the MER. So, I think in the final analysis, we are trying to be comfortable and conservative in our guidance for next year, and since this year is in the 83% range, the next year is 83% to 84% I think that you could… there is a lot of variables in that ultimately plays itself out. Joshua Raskin - Lehman Brothers: Maybe more [Technical Difficulty]. James E. Murray - Senior Vice President and Chief Operating Officer: Josh, let me add to that. When I talk about 5%, we are targeting 5%. And that’s for the overall Medicare business. I only wish we could we could get it exactly right, every single year. If any other progress relative utilization management and credit coordination all things we talk about, we could end up in one direction. We might something go the other way. The end of the day, the basic principal has been that if we get more productivity out of SG&A and other things, we intend to put it back into benefits because I think the long-term health of our relationship with our government is going to require that we do not expand margins beyond something concerned reasonable as I walk around Capital Hill, I never had any body push back and say 5% is ripping off the tax payers. So, it’s like the spot I like to be in. There is a huge growth opportunity without margin expansion here and that’s the way we think about it. So, as these parts move around, we are always going to target a 5% overall margin… over the long-term and is it going to be exactly 5%, probably not. Joshua Raskin - Lehman Brothers: That’s helpful. I guess maybe just a quick easier simpler question, I guess for Jim. Apple-to-apples, if you look at your product for ’07 versus ’08 on the Medicare Advantage side. Are you anticipating MER increases or is… and I know there was a whole bunch of moving parts there and if we exclude even the favorable development that you saw? I am just trying to get a sense of… in terms of your benefit designs for ’08 are you… are they more generous or less generous vis-à-vis the premium you expect? James H. Bloem - Senior Vice President and Chief Financial Officer: All the other things that I laid out there put to the side are benefits that we are putting out this year are richer than they were this past year by a few basis point… less than a basis point and this is what the actuaries tell me. But there are richer benefits. But then you have to think about all those other things that I walked you through and that’s why there was the range of 83% to 84% that I think that we put out there. Joshua Raskin - Lehman Brothers: And then I just need one quick one in the accretion from KMG and from CompBenefits, are you guys… are you going to quantify any updated expectation there? James H. Bloem - Senior Vice President and Chief Financial Officer: What we did in this guidance was continue to incorporate the guidance that when we announced each acquisition. So, in KMG is case, it was 4% to 5% and in the case of CompBenefits, it was 5% to 8%. So, it’s 9% to 13% overall. Joshua Raskin - Lehman Brothers: Okay. But no change from those previous expectations? James H. Bloem - Senior Vice President and Chief Financial Officer: Correct. Joshua Raskin - Lehman Brothers: Perfect. Okay. Thanks. James H. Bloem - Senior Vice President and Chief Financial Officer: Just coming back to your commercial part two, if we got to that 4%, again, that would be another year of improved commercial MER and also you have to remember on the TRICARE part of your question that you asked Jim. We also had a little special there that was as favorable piece. Joshua Raskin - Lehman Brothers: Sure.

The next question comes from Charles Boorady from Citigroup Investment Research. Sir, you have the floor. Charles Boorady - Citigroup Investment Research: Thanks. Good morning. Jim, a follow-up on that cash flow question. Your operating cash flow $1.5 billion to $1.8 billion next year, your adjusted enterprise value is only about 8 times that even though your growth rates been quite high. And I think there’s a little bit of clarity lacking on what exactly is free… of your cash flow, but you mentioned some of the moving parts, including acquisitions et cetera. But given that you have built your RBC up now from the ramp up in enrollment growth, what do you think of as a sort of run rate of free cash flow excluding any discretionary CapEx? So, that we can think of valuation more free cash flow standpoint? James H. Bloem - Senior Vice President and Chief Financial Officer: Well, first of all, if you look at the 8 times as you say obviously what Mike just talked about on the political environment, all those things affect that multiple, but in looking at the specifics, again, we will go through it as we go through the years we always do. The way we look at the available cash is, once we satisfied CapEx because we think that’s really what’s necessary generally speaking to serve of our customers and we continue. We do some investing in CapEx that are sort of beyond that to get us to the next level of performance. But once we take that out of there and once we take the subsidiary thing, which I mentioned when it’s going to be much, much less than that it was before, we will be looking at substantial amounts to look at for acquisitions. Again, until we go to the DOIs and until we go to the credit rating agencies, with our full year performance and it’s particularly in the state… in each of the state that we do business in, it’s very hard to give up quantification other than to give the kind of range we gave for operating cash flow. The one thing we want you to takeaway is that we are in a much more liquid position in terms of that can have been in anytime in the last three years. Charles Boorady - Citigroup Investment Research: Okay. We will leave it at this substantial, but if you can quantify that at some point it would be great. My other questions on Medicare Advantage, I just wanted to understand what bases you have to build into your budgets of 20%. Enrollment growth, which is an acceleration from ’07. And so, you can talk about what the key drivers are? What’s gross versus net compared with ‘07 you expect better retention? What’s up selling from PDPs any big group retries that you expect, how much for Jan 1 versus the rest of the year et cetera, just so we have more to hang our head on there. James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray, again. And I will give you some thing to think about. For a number of years, we have talked about how we create relationships with all of the members that we serve and we really focused on enhancing the experience that folks that had with us. So, this year we anticipate that we are going to have about 100,000 folks who will convert from a PDP offering to MAPD offering, because we have talked through the value to them for that kind of an offering and they have been given the choice and they have liked that choice. We think that there will be about 75,000 members that we have gained from the group what we generally call the group area. There is three pieces of that. There is the commercial group with businesses, and we are seeing a uptick in interest in VAT whereas the government business, the states and cities that have group retirees that are part of there employment force and were seeing an uptick in that and much of that will play itself out during the course of 2008, whereas the first one I talked about is primarily a January issue. And then there’s another area that’s pretty interesting for us. There’s a lot of pockets of retirees and we would call that more like a Taft-Hartley kinds of opportunities. So, there’s three pieces that we are pursuing in that regard, and we are seeing some nice uptick in each of those that looks like they will play out at different times during the course of the year. My early reference to the age-ins and there’s increasingly a lot of processes that we are developing the focus on the age-ins. We think we will get about 130 new sales from those folks this coming year. And then the advertising that we do that brings in folks to our call centers and we have the opportunity to set appointments with them and go out and talk to them about the value, that’s about another 145,000. So, there is a lot of sources to the 450,000 net new sales that we are going to have this coming year. So, we feel very good about that. We also feel good that we are going to retain a lot of members. Last year, we warned that some of the folks that competed against us came out with some benefit designs that we actually… had us scratching our head and we don’t see as many of those this year, and so, we think we will retain more members than we have in the past. So, when you add all of that up, you come to the 200,000 to 250,000 net that Mike talked about. We feel pretty comfortable about that guidance. Charles Boorady - Citigroup Investment Research: Thank you.

Your next question comes from Bill Georges from JP Morgan. You have the floor. William Georges - JP Morgan: Thanks. Good morning. You mentioned in the prepared remarks a much, much better utilization statistics as measured by Humana versus what you call original Medicare. I am wondering if you could address what the drivers are there. And specifically, do you see a difference in utilization patterns between new members and the members that you had on your books for a period of time? Michael B. McCallister - President and Chief Executive Officer: This is Mike. Let me give you an example and Jim can add to it. I was meeting this Congressman not too many days ago and we talked about some of these things. There is… it’s a combination of more sophisticated approaches and CRM, sort of management of the population across a number of things, but some of the gifts down are really basic blocking and tackling. One of the things that we have learned over the years is that seniors get readmitted to hospitals pretty frequently when they get discharged, and remarkably, the things that pushes them back in the hospital are not what they were there in for originally. They fail to follow doctors’ order after discharge. Their social setting at home is weak, and they don’t have people to help them. And so, you find real basic reasons why they end up bouncing back in hospitals. And so, we put an infrastructure that reaches out to people who are discharged and you get a hold of them, you talk to them, you help them through, what you are supposed to be doing post discharge from hospitals, and you have a remarkable impact on return to hospital rates which is direct way to have a pretty significant impact, and there’s a number of things like this. So, some of it’s pretty basic, some of it’s more sophistic. We have predicted modeling and capability around predicting when people are likely to have an episode of some sort. That’s attributed to an army of nurses out there, who are prepared to reach out and try to get ahead of things. So, again, it is a combination of basic things as well as some pretty interesting sophisticated things that have come out of our commercial business development over the last six or seven years. Do you want to add to that? James E. Murray - Senior Vice President and Chief Operating Officer: You did a good job. The only thing I would add is the… Mike talked about the predictive model and the fact that we have drug benefits in our product. Different than some of our competitors, and when people are using the drugs, we are identifying the illnesses that they may have. And so, we are proactively going out and reaching out to those folks and trying to do some things around care coordination. We also have the disease management programs which are highlighted because of our studying of the data that Mike referenced earlier and then one other thing that we do is we try to identify high utilizers to try to understand what's causing them to use the system so much and how we might be a part of their care coordination so again its just a lot of blocking and tackling as Mike said. Michael B. McCallister - President and Chief Executive Officer: Our data systems will tell us when people are splitting pills. We don’t want them splitting pills. We want them complying with the medications in the way that they were designed and things like that so. Again, I think that… and that really goes back to the basic point. The old Medicare program is completely uncontrolled. It’s a check writing machine. So, to think that that’s going to be effective is just silly. And so, the whole premise is real straightforward. You get organized, you look at this thing, and you basically try to use the best value you can in actual clinical applications, so that you end up with people using a system when they need it only, and they clearly not bouncing in and out in an inappropriate fashion, which everybody on this call has either family or parents that have used a healthcare system and just how discombobulated it is. So, it’s really disorganization. William Georges - JP Morgan: And do you see any differences between utilization among new members and members that you had on your books for a period of time? Michael B. McCallister - President and Chief Executive Officer: Yes. That’s… I may have confused it earlier that’s the… what the actuaries tell me is called the durational impact. At first, when we get individuals into the program, they don’t use it as much as they are more comfortable or are familiar with, how the whole system works. They will use more also they are obviously age-ins. And so, there is some increased utilization as time goes on, but nothing significant. The other thing that I would throw out real quickly is that when we first started our growth of the private fee-for-service offering, there was a group of folks who had some real illnesses that joined right away and so we had a sell-through that for some of the disabled that we got it at the beginning, but those folks are now a very small percentage of the total membership. William Georges - JP Morgan: Okay. If I could ask just one last quick one. At a very high level, what do you see as a sort of a long-term penetration for Medicare Advantage, if assuming we are at about 8% of the total market right now? I am sorry, 20% if one remembers. Michael B. McCallister - President and Chief Executive Officer: Well, it’s hard to say. I mean if everything stays the way things are today, and the industry as well as Humana continues to rollout these offerings and these capabilities throughout the country, I think that penetration can be very, very high, because this is just frankly a better deal for virtually everyone. But again, we are introducing new product to people and communities where they haven’t seen them before. They have to get… and singers as we talked about many times tend to be pretty sticky with where they are. So, it’s hard to predict as you look across the entire country and you think about rural communities, suburban versus urban all those sort of things. It’s hard to predict with great accuracy where that might go. But if it’s based on just value proposition, it’s going to be very, very high. William Georges - JP Morgan: Great. Thank you.

The next question comes from Christine Arnold from Morgan Stanley. Miss Arnold, you have the floor. Christine Arnold - Morgan Stanley: Thank you. Good morning. As we think about Medicare Advantage, how much are you able to better assess the health status of members, and therefore, get better risk premiums in year two versus year one for private fee-for-service member? James H. Bloem - Senior Vice President and Chief Financial Officer: I am not sure I am following your question, Christine. This is Jim. About risk adjustment? Christine Arnold - Morgan Stanley: Yes, a better coding for members. My understanding is that year two you have been trying to get 2% added to the rate because you are better able to identify the health status of the member and document, they have this thing, that thing, the other thing going on. James H. Bloem - Senior Vice President and Chief Financial Officer: We don’t… I don’t know any facts or figures as respects to that. All we attempt to do is to identify an individual’s illness and to the extent that the information that we get from the federal government tells us one thing as respects their illness versus what we see by looking in medical records. We pass that information along, but we don’t have any targets or… Michael B. McCallister - President and Chief Executive Officer: There is no correlation that we have ever seen that says that that’s what too in subsequent year. Christine Arnold - Morgan Stanley: Okay. As I think about the Medi… you are not going with this so I am thinking you guys are going to get like a 4% increase kind of statutes. You can get a percent or two from better coding for health status which is going to get us up to 5% or 6%. The non-urban docs are going to get zero and so are the non-urban hospitals. So, on Medicare, can you enhance benefits by less than a percent so that rollover mapping, it seems to me that the Medicare Advantage MLR is poised to improve next year. Is the logic wrong somewhere? James E. Murray - Senior Vice President and Chief Operating Officer: No, again, I read it and I probably confused a lot of folks who were in here, their eyes were rolling in their head but there are so many variables that each year going to the MER. There’s the new business, there’s the durational impact of the business that you brought into the year, there is the beneficial effect of the integration or the investment spending that we are doing on the utilization tools. There’s all kinds of things that go in to the MER. And so, I am reluctant to tell you with any precision exactly what the MERs are going to do next year. I think we are more in the ballpark and that’s built into our guidance. Christine Arnold - Morgan Stanley: Okay. Final question. Mike, it sounds like in your comments on Washington that you are less concerned about what’s going to happen there and rate cuts given seniors mobilizing. Can you just expand on that a bit? Michael B. McCallister - President and Chief Executive Officer: Well they are mobilizing and there has been a number of cases up there where they really have spoken out and got involved. I mean, looks you can’t have this many million satisfied folks with tax on programs and I have no response. So, yes. They are mobilized, they are actually not that difficult to mobilize, they do care, we are interested. I said I think several months ago here, the grass roots capability of the industry and our Company are way beyond where they were a decade ago when this last big debate happened, so, yes, politically it’s a powerful group, ready to go and they can be mobilized and they are willing to be mobilized. So, some ways where without… while they doesn’t generate a pretty decent conversation at the end of the day because there are some real fundamental problems out there. Doctors are facing pay outs on January 1. I will guarantee it will get thrown back in the scrum as people start talking about I paid for all that. So, we are always going to… we sort of adopted the idea that given how big Medicare is and how fast it is growing, everything else I have said about it, it is two things. It is an incredible business opportunity, but it always makes us a target for people that are looking to make changes in budget that’s up there. And so, that’s why over time, the actual value proposition and our ability to help with the budget problem becomes very, very important. But in the mean, it’s important that this program have enough time to run its course through infrastructure development, application of all these tools. So, this debate goes from occasionally ludicrous up there around I am just trying to figure out I am going to fund something next year to some pretty interesting conversations about how to solve the trust fund problem and we are in the middle of all that, but I would suggest that we will if… the headline in Washington says that we are going to Medicare Advantage bothers you, you are probably new on stock because it’s something that we live with the rest of our time here and I think at this point, all I can tell you is we are important here, we have been adding good value, that people that we are serving are very focused and very interested in this. And I think the political conversation hopefully can be brought to a level where people are actually looking a little further out around whether the value they bring in here is useful to the program, we think it is. In the meantime, you can get two kinds of combinations. The sophisticated, legitimate argument around what’s good and what’s bad. Then you have just the pure political conversation of how often the phones are going to ring if changes are made. Christine Arnold - Morgan Stanley: Okay. Thank you.

The next question comes from Mr. Greg Nersessian from Credit Suisse. Sir, you have the floor. Gregory Nersessian - Credit Suisse: Thank you. Good morning. My first question was on the commercial business actually the… you continue to see very strong individual market growth, not something necessarily specific to Humana. Some your competitors are going to see that as well. Just wondering if you could talk about that. Just first generally what’s changed in the individual market that’s made that more attractive and where that penetration is coming from and it is specific to Humana, what do you view as your change in your value proposition that has made that business somewhat… not able to grow so much faster than it has in the past. James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray. We are not growing very nicely in the individual space and as we have shared with you at Investor conferences in the past that is the line of business in our commercial portfolio that’s the most profitable, so that’s obviously a good thing. We also shared with you in the past that there is a lot of members that were in the Blue Cross, family of companies for lack of a better way to say it and that was an area that we thought we could provide a better and different value proposition than some of the Blues in states that we are competing against. We are coming out with a lot of really neat consumer offerings and a lot of products that are focusing on particular segments in the population and I don’t think the Blues in some of the states that we do business have been as innovative as we have been. Some of our competitors are doing a pretty good job as well. We have just come out with a new suite of products at Humana that are going nicely. And in addition to all of that background, there’s obviously some likelihood that the group business is shedding some members as the companies down size and decide to get out of the insurance business and some employees are buying some of the individual products. I think it is a pretty neat area of business for us to focus on and that’s one of the reasons that the KMG acquisition was attractive to us, because it is an individual sale. So, we are very focused on that particular area of business… a direct sale to an individual. Gregory Nersessian - Credit Suisse: Okay. Great. Those very helpful. My second question was for Jim Bloem. I guess my reading of what you were saying was that the seasonality in the EPS next year was as it pretence to the government sector, should be relatively consistent with 2007. I guess you would have thought with the widening of the risk quarters that would have impacted the seasonality a little more is that not right or what’s offsetting that impact? James H. Bloem - Senior Vice President and Chief Financial Officer: Actually your first proposition was right. Basically we expect 2008 to be a lot closer to 2007 and 2007 was obviously was less to ‘06. So that's the main take away there. That's to do obviously with the timing of enrolling and all the things that happened in ‘06. So ‘07 has set a pattern that we think is going to be much more returned back going forward. James E. Murray - Senior Vice President and Chief Operating Officer: Well maybe I would just jump in and say that, as we have data that helps us estimate claims going forward, we wouldn’t anticipate that there would be a much of a risk payment to or from Federal Government. And it’s more closely aligned to our bid models. James H. Bloem - Senior Vice President and Chief Financial Officer: Well that’s one of the things but I think what Greg’s talking about is the slide that’s got the 5 key factors and how the quarter over that our cover built. Gregory Nersessian - Credit Suisse: No that's helpful, its just ok. So your experience allows you to predict the cost better, which would eliminate the needs for the risk share, you are not going to break through those quarters as much anyway? James H. Bloem - Senior Vice President and Chief Financial Officer: That’s correct. Gregory Nersessian - Credit Suisse: Okay and then just a last quick question, I guess your exposure in Florida both on Medicare and medicate. Has there been any elevation in the level of interaction with local government agencies or regulatory over side that you can speak to that I guess might suggest that recent events there are anything but specific to you know the company involved or reflect a broader regulatory, heightened regulatory environment in that state? Michael B. McCallister - President and Chief Executive Officer: Yes, Mike, I don't know what the issues are relative to that the answer that you are talking about at this point. I will tell you that when you are in this business both in the state prospective and federal prospective its very crucial that you have a great infrastructure around compliance, and good discipline about how you settle the market place and we put a lot of energy into that. We want to be in this line for a long time and so our investment is training, education, ethics’ programs, compliance across the entire company is pretty significant and it helps that we have been at it for 20 some years. And I think I’ve said to some of you as you visited here often on last couple of years, one of my biggest concerns is that we had so many entrants into the business that, I was a little worried about what was going to happen for regulatory prospective as we got into this. And so I don't know what’s going on there and wouldn’t comment on it other than we, you may have it, are doing everything we can to make sure we dot all the Is and cross all the Ts in all these issues. It’s not an issue for us. Gregory Nersessian - Credit Suisse: Okay. Fair enough. Thank you.

The next question comes Scott Fidel form Deutsche Bank. Sir you have the floor. Scott Fidel - Deutsche Bank: Thanks and good morning. First question just relative to your commercial and enrolment guidance to add up 50 to 75 thousand lives maybe a bit more detail on how you expect that to break out between group, and then individual and then between ASO and risk? James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray again, I would guess that the, 75%, 50% to 75% of the 50 to 75 thousand I’m sorry, would likely be in the individual space with the other 25% coming from group business. I would guess that the split between self funded or ASO business and fully ensured would probably be about the same for that remaining 25%. I don't think that there’s going to be significant variation or growth in fully insured versus self funded. I think it will stay pretty similar to what it currently is today. But most of the 50 to 75 thousand member growth would come from the individual space really doing some neat things there. Scott Fidel - Deutsche Bank: Okay and then just on part D, your thoughts around margins and PMPM revenues directionally relative to this year. And maybe how you expect enrolment relative to the guidance to break down between the three primary product lines? Will there be any big movement in one of them like we saw will complete in 2007? James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim again, that was probably the toughest call that I would have, that any of the questions that you all would ask. That one’s the toughest for me to figure out. As you know we had some problems with the costs related to the duel eligibles that we serve in the standard plans and there were a number of states where we went above the benchmarks and will lose the duels. I think that the loss of the duels is just about equal to the membership loss that we’ve given guidance on. Mike did reference earlier in his remarks that the, when you go to the Medicare.gov website, that on an overall value basis, not just looking at premium but looking at total, out of pocket costs to the seniors that we look really, really good which I’m encouraged about because that says that the, products that we are putting out there for the seniors bring them real value. We are not trying to be real skinny on the formulary and the amount that the seniors have to pay when they go into the drug store so I feel very good about that and its not all about premiums. So we are cautiously optimistic that the volatilities that we are wooing to, or that what we have coming into the year, we are going to hold as we go into the next part of the year. As the respects, the different standards versus enhanced versus complete, I think we’ll loss the 200,000 or 300,000 duals, which are in the standard. Some, we might loss some complete members because we’re done some things there, in terms of the product and the benefit design, but I wouldn’t expect a significant amount. The only thing that I would suggest is that over the next couple of months or perhaps year what we’ve got to do with CMS is to try to figure out how the companies like us are compensated for the duals so that we do not have this merry go around, that the seniors are on where a company has the duels for a couple of years and then has to give them up, because their medical costs aren't in line with the reimbursement for the government. That's something that we all ought to focus on so that we can make the experience with the seniors a lot better than its going to be this year when they have to move to different plans. Scott Fidel - Deutsche Bank: Okay and if could just slip another quick one in. Just relative to KMG, any guidance you could give us on when that comes on board in 4Q? How that will hit the enrolment schedule in terms of some of the specialty line? And then also just on the $200 million in revs from that, what the break down would be between premiums and fees? James H. Bloem - Senior Vice President and Chief Financial Officer: We are targeting trying to get that transaction done hopefully by the end of November, but it might slip into Decemberish or towards the end of the year. They have a book of business that has a lot of voluntary and supplemental products. They also have a book of business that is stop loss they like to lead with; they like to be as they say at the medical table so that they can sell some of their voluntary offerings. And so a lot of their premiums come from stock loss but also from some of the group life and group LPD and voluntary life and voluntary LPD in critical illness policies as well. As I sit here right now I frankly don’t know this split on the fee based versus premium based revenues. I guess Regina can get you that after the call how does that work. Regina Nethery - Vice President, Investor Relations: Scott I will just have to follow back with you based on the publicly available information. Scott Fidel - Deutsche Bank: Yes that’s fine. Regina Nethery - Vice President, Investor Relations: That's where I would go to get it. Scott Fidel - Deutsche Bank: Okay thanks.

The next question comes from Justin Lake of UBS. Sir you have the floor. Justin Lake - UBS: Thanks good morning, two questions, one around the member ship, expectations for next year. Can you give us an idea what you are expecting for the total growth of Medicare advantage? It looks like your, you are looking for your membership or your net adds be nearly 2x this year and when you look at the overall Medicare advantage, Mark it looks like its been relatively flat as far as the absolute number of ads ‘07 versus ‘06. Do you expect it to accelerate next year or you just looking for your share of the market growth to increase? And if so if you are looking for your market share to increase can you tell us what you expect those drivers to be, who’s going to be giving it up? James H. Bloem - Senior Vice President and Chief Financial Officer: Well, Justin what we are suggesting I think by the conversations we’ve had today is that we are looking for a real balanced approach. In the past years in 2006, basically everybody was new so we were trying to get everybody in the plans and then figure out what the appropriate choice for them is. As we’re worked through it now we’re got a real balanced way to get members and that's why the guidance for membership in MA is higher, because we have the opportunity to again to continue to show our existing voluntary PDP members, that there’s real value in the health care and the total health benefit proposition. Jim Murray went over the three different kinds of groups; several working with those are sort of multiple year’s sales. So you get bigger opportunity accumulative opportunity that opens up as time goes on. Then there’s of course always the A gyms [ph] and we continue to be more effective with finding them and looking for them and then again for new member. So what we think in terms of looking at that membership pro for say 200 or 250 versus the 130 we are saying this year that's the ability really of the cumulative work we have done in the program to get balanced. So places to go look for new members and show our value. Michael B. McCallister - President and Chief Executive Officer: Just to add I even go further than that, I would disconnect your thinking relative to the commercial business where it’s all just about market share moving around of them folks. This is a growing market place and you start thinking about employers, moving people into the Medicare branch new regions new locations being opened up. If we didn’t take a single member from a competitor we would have very good growth in this product over the next few years. Justin Lake - UBS: Okay maybe my last question would just be around we talk a little about the legislature environment. When I talk to people down at Washington I hear the word provider deeming a lot. And I’m a little bit uncertain about what that is and how it affects your business? Can you just give us a little bit of an over view as to especially I guess it relates to specifically to product people service. But can you talk about what provider deeming, is how important it is to your ability to offer plans and what you think the changes might be and how you would react to them? Thanks. Michael B. McCallister - President and Chief Executive Officer: Let me start by saying that is one aspect of a number of variables being discussed in terms of changes going forward. So I wouldn’t get too caught up in the moment because who knows what ultimately it would look like when it’s all is said and done. But I will explain it. We don't technically have deeming today in our private paper’s service and PPO products. It’s not technically there. What we have is the situation where we are able to sell into a community and the providers just agree to accept those people and we pay them through additional Medicare payment rates for doing so. But there’s no actual contract involved. So some are describing the current world as deeming, I would say that its not and we’ve had great success in virtually almost every market we had a couple of hot spots when we first started. We’re providers in the community we’re saying we didn’t want to take these patients even thought we were paying the same as the federal government, but that’s largely behind us at this point and providers and almost every place we are in today and long since got in past weather they are going to take people and be paid by us for services to those folks. So at the end of the day am not so sure how meaningful this is going to be one way or another. It could potentially slow down geographic expansions to the extent that we had to start contracting with folks for private paper service, that type of things. But at this point I don't think we are any where near that being the answer at this point. So, it’s not like a hard business. No matter what goes on I think relatively going forward, I don't think the existing business is going to be materially touched by this ideal even if it has some traction I think it’s too early to know whether it does. Regina Nethery – Investor Relations: And this is Regina. I just wanted to follow back on Scott Fidel’s question on the revenue, on the premium versus ASO fees split on KMG. Most of the revenues are associated; probably 80% to 90% are associated with premium revenues as opposed to ASO fees. Next question please

The next question comes from Carl McDonald Mr. McDonald from CIBC, you have the floor. Carl McDonald - CIBC World Markets: Great thank you, on the Medicare home and growth, just wanted to clarify how much you think is going to come in the first quarter, versus maybe some of the group stuff you know that's more back end waited? James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray again I would anticipate that probably 60% would come in the 11:15 to 03:31 time frame Carl McDonald - CIBC World Markets: Okay. And then second, pull back to the durational impact, how much of that is due to just differences in demographics? Do you have any data in terms of what your average age of a Medicare member is and your current population versus the average age of the new members that you signed up this year? James E. Murray - Senior Vice President and Chief Operating Officer: I don't have that at my finger tips. perhaps the next time we do a quarterly call we can give you that kind of back ground but frankly I don't know the different states that we do business how our different age plays out in those different space and. Carl McDonald - CIBC World Markets: It’s not specific just a sort of general sense of how much of it is sort of age related versus just people of any age just needing to get used to the benefits James E. Murray - Senior Vice President and Chief Operating Officer: I would have said it's the later rather then the former. A person gets a year older each year and as they get more comfortable with the benefits, they seem to you know use them a little bit more, I don't think it's a significant but its something that we focused on to make sure that we think about that when we are creating our benefits designs year after year. James H. Bloem - Senior Vice President and Chief Financial Officer: One thing that I find that people have a misconception about is that they think that there’s different age, let’s say 65-75, 75-85 and over 85 are different in the different plans. But we found that they are not. James E. Murray - Senior Vice President and Chief Operating Officer: Yes, the demographics related to the PPO versus the priority per services versus the HMO also increased similar for us. There is no age that goes to the private pay per service versus any of the other products. It all seems pretty fairly distributed. Carl McDonald - CIBC World Markets: Okay so you think there is no difference in demographics between the products but obviously very different, big difference is in terms of medical expenses between the different age groups. James E. Murray - Senior Vice President and Chief Operating Officer: As people get older they obviously spend more in terms of-- Carl McDonald - CIBC World Markets: Right Okay. Great thanks you.

Next question comes from Peter Costa from FTN Midwest Securities, you have the floor. Peter Costa - FTN Midwest Securities: Hi everybody. Just as I want to reconcile one thing, the difference between the gross and the net Medicare advantage ads for 2007 and 2008 seems fairly similar. So naturally we’re predicting fairly similar disenrolments, that being the difference. For both years, you just talked about fewer plans doing questionable things in 2008 versus 2007. Are you factoring in something more for somebody being more aggressive in there marketing or perhaps somebody’s brand being better, perhaps United coming back on being a little stronger in 2008, than they were in 2007. James H. Bloem - Senior Vice President and Chief Financial Officer: Well you’re looking at the gross number of terms as opposed to the percentage. We are obviously a lot bigger this year than we were last year. So I, as the function of the percentage of our existing block that’s going up for sale, I think we are doing better year-over-year. Peter Costa - FTN Midwest Securities: Okay. James H. Bloem - Senior Vice President and Chief Financial Officer: Okay. Peter Costa - FTN Midwest Securities: Thanks.

Your final question comes from Matt Perry from Wachovia Capital, sir you have the floor. Matthew Perry - Wachovia Capital Markets: Hi good morning. Just wanted to go back a little bit on the discussion of cash flow and I can understand it’s early, even a few months before we began ‘08. So the absolute, the detail around free cash available year-end ‘08 is a little bit lacking. But I would like to understand may be your philosophy on using that cash, because it seems like this will be the first time coming up in ‘08 in last several years you might have substantial cash that you could deploy? So should we think of, in the absence of M&A that some of that cash should be used for share buybacks? James H. Bloem - Senior Vice President and Chief Financial Officer: Again, that’s sort of the higher RP that we’ve always talked about and as I mentioned before, we haven’t really talked about it since 2004 because all the cash that we’ve generated is been used really to, either do acquisitions or further capitalize the operating subsidiaries or CapEx, and that sort of the rotation, first thing we make sure is everything is capitalized, then we look at what kind of CapEx we could spend and how that will raise the value of the firm. We are always looking at potential acquisitions. We have shown a lot of things, we have talked to you about couple of them today. In the specialty area, they are going to make a big difference in our Company for the years to come. So, we always look for things that can continue to raise the value of Humana. And then if those are exhausted, and we have that situation, let’s say in ’03 and early ’04 then we do share repurchase, that sort of the last new sub-cash or last priority. And we measure the other ones against that continuing as well. And so, we are always looking at really a ranking of the returns that we get from the different activities. Matthew Perry - Wachovia Capital Markets: Okay. That’s helpful. And then… I apologies if I miss this, and if I did, I can just catch it offline. But the TRICARE margin, looks like it expected to go down, a 100 basis points or more in ’08. Could you just talk about that? James E. Murray - Senior Vice President and Chief Operating Officer: This is Jim Murray, again. Remember that we had a non or a one-time item this past year, that we have described earlier today. We won’t have that next year. So, when you strip that out, I think, that’s probably most of the difference. Matthew Perry - Wachovia Capital Markets: Okay. I guess, I was just looking your initial guidance for ’07 was a 3% to 4% margin and now it’s down for ’08 to 2.5% to 3.5%. So, even kind of excluding that item, it looks like it might be going down. James E. Murray - Senior Vice President and Chief Operating Officer: It does include that item. And then there is also the issue that in option period four, the amount of base margin we expect to collect based on our targeted medical expense. It will little less than… it will be little bit less as we finish the option period four which will get done in really 2008, and it wasn’t in 2007. Matthew Perry - Wachovia Capital Markets: Okay. That’s helpful. All right. Thanks a lot. Michael B. McCallister - President and Chief Executive Officer: Now, let me close today by basically summarizing, I think, three bullets, what’s happen here. We had a very, very quarter. We are on target with everything we have told you for ’07. We are… our Medicare strategy, which is differentiated in this market and we are pleased with that. It is playing out as predicted. We are very excited about where ’08 is shaping up for us across all of our lines of business. I repeat it again, consumers in this business is relevant and he is the differentiator, and you can see he beginning to play out virtually across all our product lines. And with that I would like to thank all the associated who are on this call for the great work you done and makes all this possible. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.