STATE OF MAINE
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE
| IN RE: |
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| APPLICATION OF ASSOCIATED |
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| HOSPITAL SERVICE OF MAINE, |
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| d/b/a BLUE CROSS AND BLUE |
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| SHIELD OF MAINE, TO |
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| CONVERT TO A STOCK |
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| INSURER AND VOLUNTARILY |
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| LIQUIDATE AND DISSOLVE |
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SECOND PROTECTIVE ORDER |
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and |
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|
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| APPLICATION OF ANTHEM |
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| HEALTH PLAN OF MAINE, INC. |
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| TO ACQUIRE THE ASSETS OF |
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| ASSOCIATED HOSPITAL |
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| SERVICE OF MAINE, d/b/a |
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| BLUE CROSS AND BLUE |
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| SHIELD OF MAINE, AND |
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| RELATED TRANSACTIONS |
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| Cons. Docket No. INS 99-14 |
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The Applicants in the above-captioned proceeding have requested confidential treatment
for certain portions of the fair market valuation prepared by Houlihan, Lokey, Howard
& Zukin Financial Advisors. Upon consideration of the types of information for which
confidential treatment is requested and the interests of the general public, the portions
of the valuation listed below are accepted as confidential. Confidential treatment is
being afforded these portions of the valuation due to their proprietary nature and value
as a trade secret and are, therefore, exempt from the provisions of the Freedom of Access
Act as being within the scope of privilege against discovery. 1 M.R.S.A. § 402(3)(B).
Dissemination of the portions of the valuation listed below are governed by the terms of
the Protective Order issued October 18, 1999. Please note that reference in any discovery
response in this proceeding to a document that has been accepted as confidential does not
alter the confidential status of that document.
- Page 20 - recent Blue Cross trends that include cost projections.
- Page 21 - Blue Cross membership figures by segment.
- Page 25 - only the year 2000 enrollment projections.
- Page 26 - financial observations relative to Blue Cross and its cost management
strategies.
- Page 27 - estimated and projected representative earnings levels, reserves and total
assets of Blue Cross.
- Page 30 - comparative risk assessment by Houlihan, Lokey of comparable companies.
- Pages 31 and 32 - narrative supporting the comparative risk assessment appearing on page
30.
- Page 33 - control premium analysis by Houlihan, Lokey.
- Page 34 - application of comparative risk assessment and control premium analysis of
comparable companies to Blue Cross.
- Page 37 - comparative risk assessment utilizing merger and acquisition transactions.
- Page 38 - application of the merged and acquired evidence to Blue Cross.
- Pages 39, 40, 41, 42 - discounted cash flow approach including financial forecast
observations, discount rate determination, calculation of debt free cash flows,
determination of terminal value and application to Blue Cross.
- Schedule B - market multiple approach.
- Schedule C - market multiple approach using merger and acquisition analysis.
- Schedule D - discounted cash flow analysis.
- Exhibit 4 - the first three columns of numbers that contain projections are confidential
with the remainder public.
- Exhibit 5 - comparable company financial analysis.
- Exhibit 6 - market performance parameters for comparable companies.
- Exhibit 7 - operating performance parameters for comparable companies.
- Exhibit 8A - enrollment summary for comparable companies.
- Exhibit 8B - enterprise value to adjusted enrollment summary for small companies.
- Exhibit 8C - enterprise value to adjusted enrollment summary for large companies.
- Exhibit 9 - the last horizontal row on the page as well as the last three vertical
columns on the page, which contain projected numbers.
- Exhibit 10 - the last two horizontal rows on the page as well as the last six vertical
columns on the page, which contain projected numbers.
- Exhibit 11 - Houlihan, Lokey’s weighted average cost of capital analysis.
- Exhibit 12 - merged and acquired transaction evidence.
- Exhibit 13 - membership by segment except that the last horizontal row containing the
total enterprise is public.
The Applicants are Ordered to file a redacted version of the valuation report.
Appropriate descriptions shall be placed where information is deleted from the public
version of the report. The redacted version shall be filed with the Superintendent on or
before November 12, 1999.
PER ORDER OF THE SUPERINTENDENT OF INSURANCE
Dated: November 8, 1999 _________________________________________
ALESSANDRO
A. IUPPA
Superintendent
of Insurance
