Independence Blue Cross lost $78.7 million in 2008, as the region's largest health insurer's net income was laid low by massive losses in its investment portfolio.

"While Independence Blue Cross ended 2008 financially sound, our company was not immune to the impact of the historic stock market decline," chief executive Joseph A. Frick said in the annual report released this week.

Spokeswoman Elizabeth Williams said it was important for the 3.4 million people who are insured by the Philadelphia company to understand that it "remains financially stable and able to meet all of our financial obligations."

Total investment losses amounted to $238 million.

Independence Blue Cross wasn't the only health insurer to be walloped by the stock market in 2008.

Also experiencing significant drops in net income were Aetna Inc., the second-largest insurer in the local market; Cigna Corp., which has headquarters in Philadelphia but writes most of its business elsewhere; and Pittsburgh-based Highmark Inc., which tried but failed to merge with Independence Blue Cross.

All those firms, like Independence Blue Cross, had revenue increases that more than offset the rising cost of medical claims to pay doctors and hospitals.

Unlike Independence Blue Cross, however, none of them reported a net loss for 2008.

Insurers "hope to make money on the investment side," sometimes to offset losses from paying claims, said economics professor John Worrall of Rutgers University in Camden.

In the same report in which Independence Blue Cross boasts about its wellness initiatives and accomplishments in caring for the chronically ill, it lists $89 million in realized investment losses and a onetime $149 million write-down of investments that lost so much value, it was unlikely to be recouped.

The improving stock market will help other investments regain their value. But health insurers' revenues have yet to feel the full impact of tough changes in the employment market, as laid-off workers drop coverage.

Williams said Independence Blue Cross, like other insurers, saw membership begin to decline toward the end of last year.

Meanwhile, medical costs are rising.

"The pure insurance business is getting softer and softer as unemployment continues to rise," said Mark V. Pauly, professor of health-care management at the Wharton School at the University of Pennsylvania.

"Looking forward, it's hard to see much light in the tunnel," Pauly said.

"It's going to be tough for health insurers to continue to stay well-off financially," he said.