PRESS RELEASE

State Readies to Review Blue Cross Blue Shield Plan

Augusta, Maine: Maine officials expressed confidence that the State is fully prepared to review the plans of Blue Cross and Blue Shield of Maine to become a stock company and to review Anthem Insurance Companies, Inc. of Indiana's proposal to acquire the converted entity.

A news conference will be held at 10:30 a.m. Wednesday, July 14 in the Androscoggin Room at the Department of Professional and Financial Regulation, 122 Northern Avenue, Gardiner.

"We are fortunate that the Maine legislature had the foresight in 1997 to pass a law that dealt with the situation before us," remarked S. Catherine Longley, Commissioner of Professional & Financial Regulation. "The conversion of Blue Cross from non-profit to for-profit will undoubtedly have significant ramifications on health related policy and resources in Maine."

The law, 1997 Public Law Chapter 344, co-sponsored by Senate President Mark Lawrence (York) & Representative Michael Saxl (Portland), outlines the steps that must be taken before a proposed conversion can take place. Some of the steps include the establishment of a charitable trust and a plan of conversion. The insurance statutes also require Anthem to file an application for acquisition of the newly formed stock company for review by the Superintendent of Insurance, Alessandro A. Iuppa.

To convert from non-profit to for-profit status, Blue Cross must first file a charitable trust plan with the Attorney General. The purpose of the plan is to outline how Blue Cross' historic charitable mission will be fulfilled once the transaction takes place. This charitable trust plan is subject to Superior Court approval.

Additionally, Blue Cross is required to submit a plan of conversion to the Maine Bureau of Insurance which outlines the steps to be taken to convert from a non-profit organization to a stock insurer. Anthem must also file a formal plan outlining the steps to acquire the newly formed stock company. Both the conversion plan and Anthem's application for acquisition must be submitted to the Superintendent of Insurance for approval. Under Maine law, the Superintendent must hold a hearing on the conversion and acquisition plans to determine whether the plans are fair and equitable to Blue Cross subscribers. The plans must demonstrate that the resulting stock insurance company will be a financially safe and stable insurer.

"The Bureau of Insurance will review the proposals carefully to ensure that they are fair and equitable. It is important that policyholders and the public know that there are built-in safeguards and criteria that must be met before any change can take place," stated Superintendent Alessandro A. Iuppa. "These transactions are complex and our primary goals as regulators are to ensure the protection of the public and the soundness of the ongoing entity that is insuring Maine Citizens."

State officials emphasized that the public hearing will provide an opportunity for all interested parties to provide input and comment on the conversion plan. Scheduling of a hearing is contingent on when both companies make their filings with the Superintendent and when the Superior Court rules on the charitable trust plan.

For further information, consumers may call the Bureau of Insurance toll free (in state) at: (800) 300-5000 or (207) 624-8475 or they may visit the Bureau's Web-site at www.state.me.us/pfr/ins/inshome2.htm

The Bureau of Insurance is part of the Department of Professional and Financial Regulation which encourages sound ethical business practices through high quality, impartial and efficient regulation of insurers, financial institutions and numerous professions and occupations for the purpose of protecting the citizens of Maine.

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