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FORM A
STATEMENT REGARDING THE ACQUISITION OF
CONTROL OF DOMESTIC INSURERS
The Assets of Associated Hospital Service of Maine
(d/b/a/ Blue Cross and Blue Shield of Maine),
Maine Partners Health Plan, Inc., and
Central Maine Partners Health Plan, Inc.
(Name of Domestic Insurers) (the "Acquired Insurers")
by
Anthem Insurance Companies, Inc.,
through its subsidiary
Anthem Health Plan of Maine, Inc.
(d/b/a Anthem Blue Cross Blue Shield of Maine)
(Name of Acquiring Person) (the "Applicant")
Filed with the Maine Bureau of Insurance
Dated: September 15, 1999
Names, Titles, and Addresses of Individuals to Whom Notices and Correspondence Concerning this Statement Should be Addressed:
For the Applicant For the Acquired Insurers
David R. Frick, Esq.
Edward J. Kane, Esq.
Anthem Insurance Companies, Inc.
Blue Cross and Blue Shield of Maine
120 Monument Circle
2 Gannett Drive
Indianapolis, Indiana 46204-4903
South Portland, Maine 04106-6911
With a copy to:
James B. Zimpritch, Esq.
Pierce Atwood
One Monument Square
Portland, Maine 04101
With a copy to:
Robert S. Frank, Esq.
Harvey & Frank
Two City Center, Fourth Floor
Portland, Maine 04101
This Statement on Form A (the "Statement") seeks the approval of the Maine Bureau of Insurance (the "Bureau") of the proposed acquisition of the assets (the "Acquisition"), of Associated Hospital Service of Maine, d/b/a Blue Cross and Blue Shield of Maine, a Maine nonprofit corporation and nonprofit hospital and medical service organization ("BCBSME"). The assets to be acquired include the stock of, or ownership interests in, BCBSME's subsidiaries and affiliates, including the stock that BCBSME owns in the Maine Partners Health Plan, Inc., a Maine health maintenance organization ("Maine Partners"), and Central Maine Partners Health Plan, Inc., a Maine health maintenance organization ("Central Maine Partners") (referred to collectively, along with BCBSME, as the "Acquired Insurers", unless the context requires otherwise). The acquiring entity will be Anthem Health Plans of Maine, Inc. (d/b/a Anthem Blue Cross and Blue Shield of Maine), a Maine domestic health insurer ("Anthem BCBSME"). Anthem BCBSME is a wholly owned subsidiary of Anthem East, Inc., a Delaware stock corporation ("Anthem East"), which, in turn, is a wholly owned stock subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual insurance company ("Anthem") (Anthem and Anthem BCBSME are hereinafter referred to as the "Applicant", unless the context otherwise requires).
Item 1. Insurer and Method of Acquisition.
This Statement relates to the acquisition of control of Maine Partners, Central Maine Partners, and the purchase of substantially all of the assets and assumption of substantially all of the liabilities of BCBSME, as more particularly set forth in the Asset Purchase Agreement between BCBSME and Anthem, dated as of July 13, 1999 and attached hereto with all exhibits as Exhibit A (the "Asset Purchase Agreement").
The address of the principal office of BCBSME and Maine Partners is:
2 Gannett Drive
South Portland, ME 04106-6911The address of the principal office of Central Maine Partners is:
364 Maine Street
Lewiston, ME 04240BCBSME is a Maine nonprofit corporation formed pursuant to Title 24 of the Maine Revised Statutes and is a nonprofit hospital and medical service organization, as that term is defined in 5 M.R.S.A. § 194-A(1)(K). BCBSME has been a licensed Maine nonprofit hospital and medical service organization for sixty years and is the largest health insurer in Maine. As a nonprofit hospital and medical service organization, BCBSME is governed by 24 M.R.S.A. § 2301 (3-C).
Maine Partners and Central Maine Partners are both Maine health maintenance organizations formed in 1997. Each of these is organized as a stock corporation and BCBSME owns 50% of the stock of each. When Maine Partners and Central Maine Partners were formed in 1997, they were granted certificates of authority with certain conditions imposed by the Superintendent of Insurance ("Superintendent") designed to ensure that they would be operated in support of BCBSME's nonprofit purpose, including the following:
The Acquisition will comply with each of these conditions. First, this Statement seeks the Superintendent's approval for the sale of the stock of Maine Partners and Central Maine Partners to Anthem BCBSME.
Second, as required, the proposed transaction includes a "plan to guarantee that the charitable assets of BCBSME will continue to be used in their entirety for charitable purposes." The proposed transaction meets this requirement by including the establishment of a charitable trust to carry on the charitable and nonprofit mission of the Acquired Insurers. The trust will be funded by the net purchase price to be paid to BCBSME for its assets, including its ownership interests in Maine Partners and Central Maine Partners. Concurrent with the establishment of the trust and its assumption of the charitable and nonprofit mission of the Acquired Insurers, BCBSME will convert to a stock insurance company and the Articles of Incorporation of both Maine Partners and Central Maine Partners will be amended, with the approval of the Superintendent and consistent with 5 M.R.S.A. §194-A(7)(B)(3),to eliminate the nonprofit obligation in order that they may be operated as for-profit stock health maintenance organizations immediately following the Closing. This part of the transaction is discussed more fully below in Items 1(b)(i) and (ii).
Third, there are no compensation arrangements, direct or indirect, between the management of BCBSME, Maine Partners, or Central Maine Partners and the Applicant.
The Applicant proposes to acquire control of the Acquired Insurers pursuant to the Asset Purchase Agreement and the transactions contemplated therein. The Asset Purchase Agreement has been approved by the respective Boards of Directors of Anthem and BCBSME and was executed on behalf of both companies on July 13, 1999. The Asset Purchase Agreement will be implemented in conjunction with the Plan of Recapitalization and Conversion, dated September 15, 1999, and filed as part of the Initial Consolidated Filing.
Pursuant to 5 M.R.S.A. § 194-A(5) and 24 M.R.S.A. § 2301(9-D) and prior to the Closing of the Acquisition, BCBSME will convert to a stock insurer. Thereafter, at the Closing of the Acquisition, Anthem BCBSME will assume substantially all obligations and liabilities of BCBSME, including the assumption of all of BCBSME's insurance obligations and liabilities pursuant to a Bulk Reinsurance Agreement, Bill of Sale and Auumption of Liabilities between BCBSME and Anthem BCBSME, a copy of the proposed form of which has been filed as part of the Initial Consolidated Filing (the "Bulk Reinsurance Agreement"). As previously stated, the assets to be transferred to Anthem BCBSME include the ownership interests of BCBSME in its subsidiaries and affiliates, including 50% of the common voting stock of each of Maine Partners and Central Maine Partners. Immediately after the Closing, the policy and contract holders of BCBSME will become policy or contract holders of Anthem BCBSME, without any break in continuity of benefits and services. In addition, while BCBSME's ownership interest in Maine Partners and Central Maine Partners will transfer to Anthem BCBSME, the policy and contract holders of Maine Partners and Central Maine Partners will continue, without interruption of benefits or service, as policy and contract holders of those HMOs. At Closing, Anthem BCBSME will acquire BCBSME's (and, indirectly, Maine Partners' and Central Maine Partners') then-existing network of physicians and other providers who will continue to provide service to policy and contract holders.
The Acquisition does not include the purchase of Patriot Mutual Insurance Company, d/b/a Blue Alliance Mutual Insurance Company ("Patriot Mutual"), and its subsidiary, Patriot Life Insurance Company (together, "Patriot"). However, if requested by Patriot, Anthem BCBSME will continue to provide management and administrative support services to Patriot for at least two (2) years after the Closing under the existing agreements between Patriot and BCBSME. In addition, Anthem BCBSME will acquire from Patriot its 43% ownership interest in Machigonne, Inc., a Maine corporation, which, combined with BCBSME's existing 57% ownership interest, will result in Anthem BCBSME's ownership of all of Machigonne, Inc.
At the Closing, BCBSME intends to assign and Anthem BCBSME intends to assume substantially all of the assets and liabilities of BCBSME, including BCBSME's insurance obligations which will be transferred and assumed by Anthem BCBSME pursuant to the Bulk Reinsurance Agreement. The then-current BCBSME policy, contract and certificate holders will receive a certificate from Anthem BCBSME assuming, without modification or interruption, the health benefits in effect under the terms and conditions of their BCBSME policy or contract. Anthem BCBSME intends to continue the direct insurance, managed care, HMO, third party administration and other health care businesses conducted by BCBSME and its subsidiaries and affiliates prior to the Acquisition.
In connection with the business acquired in the Acquisition, Anthem and Anthem BCBSME, and its subsidiaries and affiliates, will operate in accordance with an Intercompany Services Agreement in the form attached hereto as Exhibit B. The Intercompany Services Agreement is a standard form of agreement among Anthem and its affiliates, pursuant to which each party may provide various services to and receive various services from each other and other Anthem affiliates.
Anthem's present intention is that the Maine operations will be coordinated by an enhanced Anthem East management organization. Anthem East will be responsible for all of Anthem's and its subsidiaries' health care financing, managed care and HMO business in New England. (Please see the discussion entitled Anthem's Current Operations in Item 2(b)). Anthem is open to additional partners joining its Anthem East region. Although additional transactions are a part of Anthem's New England strategy, neither the Acquisition nor the business plans and strategies expressed herein are subject to or conditioned upon the completion of any other transaction, including the pending combination with Blue Cross and Blue Shield of New Hampshire
Anthem operates with a management system that consists of Corporate, Shared Service, Regional and State level functions. The "Corporate" functions are generally performed in Indiana, and include activities such as payroll, treasury and compensation/benefits design. "Shared Service" functions refers to those activities which are delivered on a standardized basis under the direction of a single corporate executive (e.g. information systems and legal), but the employees are distributed throughout the Anthem services areas. "Regional" services are managed regionally and include claims and billing and enrollment. Finally, employees are organized at the "State level" to provide those services for which local decision making is important, such as sales, provider contracting and the medical management functions.
Consistent with this approach, Anthem intends that many of the administrative activities of Anthem's Maine business will be managed and conducted out of BCBSME's existing South Portland, Maine headquarters and that the day-to-day administrative activities to service Anthem's Maine business will be performed by persons who are currently employed by BCBSME with the guidance and assistance of Anthem. These local employees will be responsible for coordinating and overseeing enrollment activity, supervising educational activities, providing service to accounts, tracking customer satisfaction, and provider contracting and medical management and will serve as local contact centers for members, providers, employees and regulatory authorities. In addition, the marketing of health care coverage to Maine residents will be performed by local employees.
Consistent with its history of maintaining a strong local presence in the communities which it serves, Anthem anticipates a significant employment base in Maine after consummation of the Acquisition. As more particularly described in the Asset Purchase Agreement, Anthem has made certain commitments to
The goal of the Acquisition is to facilitate growth and further business expansion. Strong companies create jobs and new career opportunities. To the extent that the combined strength and focus of Anthem and BCBSME result in growth, more employment potential will be created (although, of course, non-Acquisition factors, such as the economic environment, new technology and health care reform, can substantially affect employment in the entire health care and health care financing industry).
Anthem anticipates continuing BCBSME's current product offerings. In order to achieve all of the advantages of a combined presence in New England, and to better serve customers with employees in multiple locations, some products may be converted to a standardized product portfolio over time. The standardized portfolio would be jointly designed by Anthem's New England plans to best meet the needs of its customers while maximizing service and efficiency. Any such new products would be implemented in accordance with Maine laws and regulations (including those regarding Bureau of Insurance approvals).
The current health care financing market has made it increasingly difficult for single state insurers like BCBSME to provide health care financing products at affordable and competitive prices. In order to be competitive in this market, companies need to have access to capital and have the ability to offer coverage across state lines to geographically diverse groups. This is a disadvantage for a single state insurer and often leaves it with only two options: affiliate with other insurers having the same corporate mission and remain in the market, or risk declining financial strength and ability to serve health care financing needs within its state.
BCBSME's focus throughout its evaluation of affiliation prospects in general and the Acquisition in particular has been on seeking arrangements that are in the best interests of its customers and the State of Maine. The Acquisition is an affiliation among Blue Cross Blue Shield companies that will enhance BCBSME's goal of providing affordable health care financing products to the people of Maine through a stable and strong Blue Cross Blue Shield company. Over time, the Acquisition should create positive results to be shared with customers in the form of lower cost health insurance (as compared to what would be the case without the Acquisition), enhanced service and the increased financial strength of their insurer.
The following will benefit BCBSME's policy and contract holders and the people of the State of Maine:
Contiued Blue Cross Blue Shield Tradition. The proposed Acquisition represents an affiliation among Blue Cross Blue Shield companies with common traditions and corporate purposes. The companies share a commitment to identify and pursue effective local options and to be responsive to local market needs. As an affiliation of two Blue Cross Blue Shield organizations, Anthem will continue to market current and new Blue Cross Blue Shield trademarked products throughout Maine.
Continued Blue Cross Blue Shield Benefits and Coverage. Current policy and contract holders of BCBSME will continue as policy or contract holders of Anthem BCBSME, without any break in continuity of then-existing benefits or coverage. Anthem BCBSME will assume the obligations of the existing policies and contracts pursuant to the Bulk Reinsurance Agreement. BCBSME's HMO line of business contracts will also be transferred to Anthem BCBSME, together with all agreements and operational functions necessary to support this line of business.
Anthem intends that BCBSME's current arrangements with Maine Medical Center and Central Maine Healthcare Corporation, co-owners of Maine Partners Health Plan, Inc. and Central Maine Partners Health, Inc., respectively, will continue after the Acquisition without interruption (although each of such partners have certain rights to exit or modify the arrangement upon consummation of the Acquisition). Anthem BCBSME will, in each instance, assume the obligations of BCBSME under the Shareholders and Management Services Agreements between BCBSME and each subsidiary HMO. There is no current plan or intention to change the BCBSME product offerings or product mix as a result of the proposed Acquisition (although, as noted elsewhere herein, over time there will be an integration of some management responsibilities and product offerings as a New England regional structure is implemented).
Business Strengthened by Anthem. Following the Acquisition, the Anthem BCBSME business will be an integral part of Anthem's New England region and will have access to Anthem's substantial resources.
Foundation Monies to Benefit Maine Citizens. In conjunction with the Acquisition, a Charitable Trust is being created that will administer considerable resources (estimated to be $90 - 100 million) to meet the unmet health care needs of the citizens of the Maine.
In keeping with its philosophy of responsiveness to the communities it serves, Anthem has also committed in the Asset Purchase Agreement to use its reasonable best efforts to cause one person designated by BCBSME's Board of Directors to be elected or appointed to Anthem's Board of Directors for a term of not less than two (2) years. Moreover, pursuant to the Asset Purchase Agreement, after Closing Anthem will establish a local advisory board consisting of Maine residents. The local advisory board will be comprised initially of up to nine (9) members who are either current members of the Board of BCBSME or designated by the current BCBSME Board, subject to Anthem's approval as described in the Asset Purchase Agreement.
In addition, if Anthem establishes a regional advisory or similar board that includes responsibility for Maine, in accordance with the Asset Purchase Agreement, Anthem will assure that the members of such board include Maine residents in approximate proportion to the number of Maine residents who are members of Anthem health plans as compared to the total number of Anthem BCBSME members in the region and, in any event, not less than one Maine resident.
Item 2. Identity and Background of the Applicant.
ANTHEM'S HISTORICAL BUSINESS OPERATIONS
Anthem is an Indiana domiciled mutual insurance company that was incorporated in 1944 under the name Mutual Hospital Insurance, Inc., commonly known as "Blue Cross of Indiana." In 1946, Mutual Medical Insurance, Inc., commonly known as "Blue Shield of Indiana," was incorporated as an Indiana mutual insurance company. These two companies combined their operations under the name "Blue Cross and Blue Shield of Indiana." In 1985, the two companies legally merged, with the surviving company bearing the new name "Associated Insurance Companies, Inc.," but continuing to provide Blue Cross and Blue Shield of Indiana coverage. In March 1996, Associated Insurance Companies, Inc. changed its name to Anthem Insurance Companies, Inc.
Starting in the mid-1980s, Anthem identified certain strategic risks, including a declining industrial population base in Indiana and deepening underwriting cycles in the health insurance business. To mitigate these risks, Anthem implemented a strategic plan to strengthen its core health care insurance business, to expand into markets outside Indiana and to diversify into other lines of business.
In the early 1990s, Anthem further observed the significant consolidation trend in the health insurance market and the resulting increase in size, strength and market presence of companies against which Blue Cross and Blue Shield companies, like Anthem, would have to compete. In response, Anthem refined its strategic plan to focus on bringing together individual Blue Cross and Blue Shield plans to form strong regional clusters. Working together, underwriting cycles can be better managed, consolidated financial strength can be used to develop better products for policyholders, vendor costs can be reduced, and fixed expenses (such as systems development and disease management costs) can be spread among a greater number of policyholders.
Consistent with Anthem's strategic business plan, in 1993, Southeastern Mutual Insurance Company, a Kentucky domiciled mutual insurance company which did business in Kentucky as "Blue Cross and Blue Shield of Kentucky," was merged into Anthem. The Community Mutual Insurance Company, an Ohio domiciled mutual insurance company which did business in Ohio as "Community Mutual Blue Cross and Blue Shield," was merged into Anthem in 1995. In 1997, Blue Cross & Blue Shield of Connecticut, Inc., a Connecticut domiciled mutual insurance company, was merged into Anthem. These companies were each mutual insurers, and their policyholders and members became policyholders and members of Anthem. As is intended with BCBSME, the Kentucky, Ohio and Connecticut transactions included the maintenance of sizable in-state operations to service the needs of each state's policyholders and members. These three consolidations added approximately three million covered lives to Anthem's membership, and furthered Anthem's objectives of expanding its geographic base of operations and strengthening its core business. As a result of the 1993, 1995 and 1997 consolidations, Anthem constitutes one of the larger health care management companies in the United States, and currently does business in Indiana, Kentucky, Connecticut and Ohio under the Blue Cross and Blue Shield trademarks and service marks.
As Anthem's core business was strengthened, it began to dispose of the various diversified subsidiaries and to focus on its core health care management business. That process was substantially completed in 1998.
ANTHEM'S CURRENT OPERATIONS
(Please see the Organizational Chart provided in response to Item 2(c) as Exhibit C.)
Anthem has divided its operations into the following divisions:
Health Care Financing - Anthem Midwest. This division is comprised of Anthem's Indiana, Ohio and Kentucky health care subsidiaries and operating units, which do business as Anthem Blue Cross and Blue Shield. These entities provide group and individual health insurance products, health maintenance organization products and other managed health care products. They also provide partially insured and Administrative Services Only products to the self-insured market.
Health Care Financing - Anthem East. At the present time, the operating entities in this division are Anthem Health Plans, Inc., which does business in Connecticut as Anthem Blue Cross and Blue Shield of Connecticut and Anthem Health & Life Insurance Company of New York. Like Anthem Midwest, it provides group and individual health insurance products, health maintenance organization products and other managed health care products, as well as partially insured and Administrative Services Only products to the self-insured market. The proposed combinations with Blue Cross and Blue Shield of New Hampshire ("BCBSNH"), which has been through the public hearing process and is awaiting regulatory approval, and with BCBSME are important steps in the plan to build a more significant presence in the New England region for Anthem. Although Anthem is enthusiastic about the prospect of including BCBSNH in the New England region, the Closing of the Acquisition of BCBSME is not conditioned on the completion of the combination with BCBSNH.
Government Program Administration. This division consists of AdminaStar Federal, Inc., and Anthem Alliance Health Insurance Company, which administer the Medicare Part A programs in Indiana, Ohio and Kentucky and the Medicare Part B programs in Indiana and Kentucky. Regional contracts for Medicare Durable Medical Equipment and for the Department of Defense's TRICARE Managed Care Support are also held by this division.
Ancillary Products. This division consists of Anthem Prescription Management, Inc., which provides pharmacy network management, pharmacy benefits, mail-order prescription benefits and disease management programs, and Anthem Life Insurance Company of Indiana, Inc., which provides group life insurance benefits to Anthem customers.
Since 1986, Anthem has grown from 2,800 employees serving about one million people in Indiana to a company of approximately 11,500 employees serving more than 4.9 million people in several states. During 1998, Anthem's revenues were $5.9 billion and net income was $172 million. Anthem's surplus reached an all-time high of $1.7 billion at the end of 1998. Anthem has developed into one of the largest and most financially strong Blue Cross Blue Shield organizations in the country.
STRATEGY
Anthem's principal strategy is to concentrate on its core health care businesses and limit its involvement in other products and services to those that complement its health businesses. Anthem's ultimate intent is to offer a range of products that include comprehensive wellness, preventive care and educational products, services and systems designed to improve the health of the people served.
Anthem believes that an important part of its core strategy is to establish multiple regional centers of focus having a significant share of the region's health insurance and managed care market. Its merger with Blue Cross and Blue Shield of Connecticut and its proposed purchase of the businesses of BCBSME and BCBSNH are steps toward building a strong New England region similar to Anthem's position in its Midwest region of Indiana, Ohio and Kentucky.
Business intended to be done by the applicant and its subsidiaries:
The capital position of BCBSME has been strained by, among other things, the need to maintain an infrastructure, develop information technology platforms, and fund new product and disease management programs with a relatively small customer base. Overlaying these stresses are competition for market share against well-capitalized regional and national managed care companies that are increasingly leveraging their economic scale advantages through aggressive pricing strategies.
The benefit to BCBSME members of a strong capital partner is clear. Anthem believes, however, that capital is only part of the solution. Sufficient scale in a region is also necessary to negotiate competitive provider contracts (including pharmacy, laboratory, mental health and other ancillary services), achieve optimum operating efficiencies and retain the best talent. Through its strong capital position, its significant market presence in Connecticut and its goal of a significant New England market presence, Anthem offers BCBSME the best solution to these challenges.
Anthem is a health management company with the mission of improving the health of the people it serves. It seeks to identify health risks and prevent illness, and to promote healthful lifestyles for its members and the communities it serves. Anthem's efforts to bring efficiency and management to the delivery of care also help lower health care costs. Anthem's vision is a world where people have the information, capability, and support to optimize their health throughout their lifetimes; to transcend the "sick care" system of the past and create a true health system.
Attached hereto as Exhibit C and incorporated herein by reference is an organizational chart presenting, as of August 31, 1999, the identities of and the interrelationships among Anthem and all of Anthem's subsidiaries and affiliates.
Item 3. Identities and Backgrounds of Individuals Associated with the Applicant.
Below is a list setting forth the names of the directors, executive officers, and owners of 10 percent or more of the voting securities of Anthem. Completed NAIC Biographical Affidavit forms ("Biographical Affidavits") executed by each individual appearing on such list are concurrently being filed separately as Exhibit D.
Each Biographical Affidavit sets forth, with respect to the individual for whom the Biographical Affidavit is submitted, the individual's
As a mutual insurance company, Anthem has no voting securities. There is no individual who owns, holds or controls 10% or more of the members' voting rights in Anthem, though many of Anthem's members have granted standing proxies to Anthem's Board of Directors.
To the best of the Applicant's knowledge, no person listed below has ever been convicted in a criminal proceeding (excluding minor traffic violations) during the last ten years.
Anthem's Board of Directors currently consists of the following 13 members:
Director Principal Occupation
Susan B. Bayh
Distinguished Visiting Professor at Butler University
Vincent A. Chiarucci
Retired President and Chief Operating Officer
Figgie International, Inc.
John F. Croweak
Retired Chairman and CEO of Blue Cross and Blue Shield of Connecticut, Inc.;
and current Chairman of the Board of Anthem East, Inc.
Frank B. Hower, Jr.
Retired Chairman
Liberty National Bank and Trust Company
Allan Brooks Hubbard
President, E&A Industries
Victor Stuart Liss
Vice Chairman and CEO
Trans-Lux Corporation
L. Ben Lytle
Chairman, President and CEO
Anthem Insurance Companies, Inc.
William G. Mays
President
Mays Chemical Company
James W. McDowell, Jr.
Retired
McDowell Associates
James A. Perkins
Retired International Representative
United Auto Workers, Region 3
George A. Schaefer, Jr.
President and Chief Executive Officer
Fifth Third Bancorp/Fifth Third Bank
Charles C. Smith, Jr., M.D.
Physician
Dennis J. Sullivan, Jr.
Executive Counselor
Dan Pinger Public Relations
The day-to-day affairs of Anthem are managed by the following executive officers of
Anthem:
Officer Title
L. Ben Lytle
Chief Executive Officer and Chairman
Larry C. Glasscock
President and Chief Operating Officer
David R. Frick Executive
Vice President and Chief Legal and Administrative Officer
Michael L. Smith Executive
Vice President and Chief Financial Officer
George D. Martin
Vice President and Treasurer
Nancy L. Purcell
Vice President and Corporate Secretary
Anthem BCBSME's Board of Directors and Officers will consist of the following
members:
Director Principal Occupation
Larry C. Glasscock
President and Chief Operating Officer,
Anthem Insurance Companies, Inc.
David R. Frick
Executive Vice President and Chief Legal and Administrative Officer
Anthem Insurance Companies, Inc.
Michael L. Smith Executive
Vice President and Chief Financial Officer
Anthem Insurance Companies, Inc.
Nancy L. Purcell
Vice President and Corporate Secretary
Anthem Insurance Companies, Inc.
Douglas R. Fauth
Vice President and Counsel
Anthem Insurance Companies, Inc.
George D. Martin
Vice President and Treasurer
Anthem Insurance Companies, Inc.
Robert F. Schneider
Vice President and Comptroller
Anthem Insurance Companies, Inc.
Officers:
President
[To be determined]
Treasurer
George D. Martin
Secretary
Nancy L. Purcell
Item 4. Nature, Source, and Amount of Consideration.
INTRODUCTION
Anthem is a company that derives directly from the Blue Cross and Blue Shield tradition. The company began as Blue Cross and Blue Shield of Indiana and now provides Blue Cross and Blue Shield health benefits to members in Indiana, Kentucky, Ohio, and Connecticut.
Anthem has successfully created a Midwest operating region in Indiana, Kentucky and Ohio. Its pending acquisitions of Blue Cross and Blue Shield of Maine and Blue Cross and Blue Shield of New Hampshire will help establish a New England operating region that builds upon Anthem's 1997 merger with Blue Cross and Blue Shield of Connecticut. A third operating region, Anthem West, will be formed through the pending acquisition of Blue Cross and Blue Shield of Colorado and Blue Cross and Blue Shield of Nevada.
With respect to a New England operating region, it has been widely reported that the Blue Cross and Blue Shield Plan in Rhode Island is also considering affiliation strategies. Anthem will seek to explore affiliation discussions with this Plan in order to form a more complete New England region, but it is unclear whether a transaction is feasible.
By necessity, the ultimate framework for an Anthem New England operating model has not been developed. More needs to be known about the size and scope of Anthem's New England operations, and managers from each of the component areas cannot fully share information and develop strategy until the transactions are completed. However, Anthem can describe, with some degree of confidence, its plans for the local Maine market.
The following will describe how Anthem intends to operate in Maine once it acquires Blue Cross and Blue Shield of Maine. This plan will reflect the local and regional emphasis that Anthem places on each of the markets in which it operates, and will describe the company's plans with respect to each of the following:
CORPORATE OPERATING STRUCTURE
The health insurance and managed care industry is undergoing significant consolidation, driven in large part by the opportunities to create cost savings and efficiencies that greater size and scale provide. Although greater size is increasingly important, Anthem recognizes the significant differences that exist among local health care markets and the need to recognize those differences. Simply put, most buyers of health benefits make their decisions on a local basis; provider contracting must, of necessity, be done on a local basis; and medical management, to be effective, must be performed locally. Anthem, while a growing company within an industry that is consolidating rapidly, is structured to respond effectively to local health care market conditions.
Anthem's structure is designed to recognize local and regional variations in markets. Its operating structure places significant decision making responsibilities in the hands of local and regional managers. This authority allows these managers to respond to local market conditions more effectively and quickly than otherwise is the case within a centralized organization.
In support of this operating philosophy, Anthem seeks to create multiple operating regions, each of which will have at least two million members and annual revenue of $3-$5 billion. This regional structure provides administrative and operational support to local health care operations. Regional operations of this size are also able to deliver significant economies of scale and operating efficiencies to local health care operations across a number of back office activities.
Anthem's organizational structure consists of four levels of activity. These are:
Exhibit C contains organizational information that delineates in chart form the allocation of responsibilities across the local, regional, shared service and corporate levels of Anthem. Each type of activity will be discussed in detail.
Local/State Operations
Generally, Anthem focuses the delivery of health care benefits and services through operating units called Health Service Areas (HSAs). HSA operating units are defined as geographic areas containing between 300,000-400,000 members, each of whom receive care from a similar universe of professional and institutional providers. HSAs are similar to, and often reflect the same geographic areas as Metropolitan Statistical Areas (MSAs) as defined by the U.S. Census Bureau. Anthem's Maine business will be conducted by Anthem BCBSME, a Maine domestic insurance company, which will operate as an HSA similar to the way Anthem's Midwestern HSAs operate.
Within Maine, local managers will be responsible for virtually all day-to-day management issues and decisions that relate to operating the Maine-based business. As will be discussed in subsequent sections, this includes Benefits Design, Sales and Marketing, Underwriting, Provider Contracting, Network Management, and Medical Management.
Regional Operations
Anthem seeks to establish strong regional market presences that support local health care operations. There are a number of reasons why this is important. Many medium and large employers have operations throughout a region. Serving these groups requires seamless administration across state lines. Second, many activities that do not directly impact the customer can be performed regionally, and in the process produce economies of scale and administrative efficiencies. A regional operation is also able to provide additional administrative, technical and managerial support to local operations. These resources allow local managers to more effectively deliver products and services to their members.
Regional managers have overall responsibility for Anthem's market performance within a region. Regional management is also charged with making sure that as much as possible, Anthem policies and procedures are consistent across the region. This allows Anthem to offer a seamless product to regional clients. Local or state HSA management will report to a regional Anthem executive who in turn reports directly to the President of Anthem.
As part of its goal to create seamless regional capacities, Anthem believes that certain "back office" activities of the company (i.e., claims, billing and enrollment) can be performed more cost effectively if managed regionally. For example, in its Midwest region, Anthem has consolidated a number of claims, billing and enrollment activities into regional facilities located in Indiana (1), Kentucky (1) and Ohio (2). Similarly, Anthem will work to improve administrative effectiveness and efficiency by bringing to bear regional management of these activities in New England.
Corporate Operations and Support
Anthem's corporate management is responsible for the following three areas:
- Corporate Strategy and Planning
- Oversight of Regional Operating Units
- Shared Services Support to Regional and State Operating Units
Corporate-wide strategic planning is performed at the corporate level with input from all levels of the organization. This process produces a roadmap for the Anthem organization and each of its operating units. The annual planning process establishes objectives for each Anthem operating unit, by which the performance of the local managers is measured. The planning cycle occurs annually, with strategic objectives updated every three years.
Another corporate function is oversight of the ongoing performance of each Anthem operating unit. Performance is evaluated against the current plan as well as against performance measures or benchmarks of the managed care industry peer group (such things as medical loss ratio, membership growth, administrative expense ratios, etc.).
The third major aspect of corporate activity is operations support. Many "staff" functions that support regional and local operating units are done on a "shared service" model. Under this model, certain support activities are performed within each region under the direction of a single corporate manager. This arrangement allows the company to achieve a unity of corporate direction and strategy in certain key areas and create additional operating efficiencies. Shared service functions include Human Resources, Finance, Information Technology, Legal and Public Affairs. While these activities are managed centrally, performance of these functions occurs locally.
BENEFITS DESIGN, MARKETING AND SALES
The Maine market and regulatory climate will ultimately determine Anthem BCBSME's product portfolio. As is universally the case, the value of the product is defined in the first instance by the scope of the network, the benefits covered and the price of the product in comparison to similar offerings by other plans. Identifying product opportunities that respond to the needs of local Maine purchasers will be the responsibility of Anthem BCBSME sales and marketing management.
Product Range
Anthem BCBSME expects to offer the same range of products after acquisition as those offered today by Blue Cross and Blue Shield of Maine. The target market for each of these products is outlined in Exhibit E.
No significant changes to Anthem BCBSME's product families - HMO, POS, Indemnity - are expected in the near future beyond those already identified by BCBSME management.
Market Area
Anthem BCBSME expects to continue offering products throughout the state. Central Maine Partners has sought approval for an expansion into Penobscot, Waldo, and Hancock counties to be completed in 2000.
Market Segments
Group Market
Anthem BCBSME intends to vigorously continue to pursue the small group and the large group markets. In the small group market, Anthem BCBSME intends to continue the efforts of BCBSME to develop this market. BCBSME is continuing to streamline its product portfolio while offering broader choice and dual options (employee choice of benefit plans) into the small group market (2-50). Three-tier pharmacy benefit options are being offered to help control rate increases in this market segment. Direct sales staff have been increased in this segment to increase service and interaction with employers. Additional availability of Partners Plans in more counties will also help BCBSME's competitiveness in this segment.
In the large group market Anthem intends to strengthen the market effort of BCBSME by emphasizing with the major consulting houses in New England the strength of Anthem's national presence in both managed care and indemnity products. BCBSME has begun offering its Blue Choice POS product into the large group segment (51+) as an additional option for accounts. Other products will continue to be streamlined while expanding the availability of the Partners Plans into additional counties and offering three-tier pharmacy options. Exploration of options to expand BCBSME's presence in the national account arena is underway.
Expanded communications and training with the producer community coupled with increasing standards for production have also been undertaken for all group segments.
Senior Market
BCBSME's Medicare supplemental programs offer six of the ten NAIC standardized programs to the nongroup market. (Plans A, B, C, E, F, and I.) The NAIC products are standardized within the industry and not subject to modification by specific individual insurers. These programs vary in their coverage, but are similar in that they are designed to pick up the cost of services that are not paid for by Medicare Part A and Medicare Part B. All include basic benefits, such as coverage for the Part A coinsurance and additional coverage for 365 days after Medicare benefits, coverage for Part B coinsurance (20% of Medicare-approved expenses), and coverage for the first three pints of blood each year.
Anthem BCBSME intends to continue offering Medicare Supplemental products to the Maine senior market. This decision is consistent with and supports Anthem's senior market presence in each of the other states in which it offers Blue Cross and Blue Shield coverage.
BCBSME does not offer a Medicare + Choice product. Anthem BCBSME may seek to do so in the future if further evaluation leads to a conclusion that it can do so successfully.
Federal Employees Program (FEP)The Blue Cross and Blue Shield Association contracts with the US Office of Personnel Management on behalf of the Blue Cross and Blue Shield Plans, including BCBSME, to provide health care benefits to federal employees and retirees who choose to enroll in Blue Cross and Blue Shield benefit plans.
Nationally, the Blue Cross and Blue Shield Benefit Plan is the largest privately underwritten health insurance contract in the world. The current enrollment represents over 45% of all federal employees and retirees enrolled in a federal health plan. In Maine, BCBSME provides coverage to approximately 31,070 members.
Anthem BCBSME intends to continue offering FEP products to the Maine federal employee market. This decision is consistent with and supports Anthem's FEP market presence in each of the other states in which it offers Blue Cross and Blue Shield coverage.
Under-65 Individual Market
Anthem BCBSME intends to continue offering health benefit plans to the Maine under-65 individual market, subject to future regulatory and market conditions. This decision is consistent with and supports Anthem's individual market presence in each of the other states in which it offers Blue Cross and Blue Shield coverage.
Funding Alternatives
BCBSME currently offers its products on fully insured and administrative services only bases. Anthem BCBSME intends to continue to offer those options to eligible employers.
Distribution and Sales
Within a fully developed region, the current Anthem organizational model identifies a single regional executive with responsibility for sales and marketing. Within this framework one or more sales mangers have responsibility for sales and distribution management within a state. Until an integrated New England region is established, the distribution and sales process will be under the direction of the Maine leadership.
UNDERWRITING
Within the Anthem operating model, the underwriting function has local and regional components. Regional oversight of this function is critical. This oversight produces consistent application of regional underwriting guidelines and allows Anthem to appropriately manage its portfolio of health care risk. Case-specific underwriting decisions will be made locally.
At the local HSA level, Anthem BCBSME underwriters will use traditional underwriting tools and guidelines (community assumptions, demographic data, health care cost data) to establish local premium rates for new and existing business. The extent to which some or all of these tools are utilized will be determined by the degree to which different rating methodologies are permissible under applicable state and/or federal regulations or statutes.
PROVIDER CONTRACTING
Anthem BCBSME's contracting philosophy will be to maintain the most cost-effective provider networks in the local marketplace through a combination of enhanced fixed price contracts with hospitals and ancillary providers, broad risk-sharing with physician groups, and continuous assessment and retooling of other arrangements. Although Anthem BCBSME expects to maintain contracts with most physicians and professionals as well as Maine's hospitals, there may be opportunities for selective contracting in specific target areas.
Current Network Status
BCBSME has managed care contracts with 988 primary care physicians, 1370 specialist physicians and 935 other health care professionals (optometrists, physical therapists, chiropractors, audiologists, etc). Contracts are in place with all Maine hospitals, as well as with skilled nursing facilities, home health agencies, imaging centers, and infusion providers. By contracting across the spectrum of health care providers, the Plan can meet the diverse health care needs of its members as cost-effectively as possible, while providing access to needed services.
In addition to the networks maintained directly by BCBSME, the Plan utilizes a network of 792 mental health clinicians developed through Green Spring. (This specialized mental health network is not available to other payors in the marketplace). The Plan also accesses a statewide network of 240 retail pharmacies through Merck Medco. Through this agreement, BCBSME secured lower ingredient and dispensing fees and operates a network-within-a-network with special pricing for chronic medications.
Contracting Platform
BCBSME utilizes a range of reimbursement models within its provider contracts. Primary care physicians are paid through capitation for primary care services (sick visits, hospital care, etc) and are paid on a RBRVS-based fee schedule for other services including preventive examinations. Specialist physicians and other professionals are paid according to RBRVS-based maximum allowances. Hospital contracts are transitioning from discounted charges to fixed pricing, and other ancillary contracts are now based on fixed pricing. Most primary care physicians participate in limited risk sharing, and the Plan is continuing to implement broad risk arrangements with physician groups and physician hospital organizations.
Short Term Contracting Initiatives
In 1999, BCBSME pursued a multi-dimensional cost management strategy including new hospital contracts built upon fixed pricing, broader risk-sharing arrangements, refined ancillary contracts, and pharmacy cost management. These initiatives position the Plan well for savings on a going forward basis, and will differentiate BCBSME from its competitors.
HEALTH CARE MANAGEMENT
Both Anthem and BCBSME have as their mission to improve the health status of their members. The similarities in the missions of the two organizations are reflected in their approach to health care management.
BCBSME and Anthem both recognize that a person is not simply healthy or ill; there are often various degrees of good or poor health, ranging from no or low risk of disease to active disease. Consequently, medical management at Anthem BCBSME will seek to help members move along the continuum from active disease toward greater health.
Medical Policy
Anthem BCBSME will utilize medical policies that are, in most respects, comparable to Anthem's existing medical policies. BCBSME's existing policies are drawn from the National Blue Cross Association reference documents and as such are generally consistent with Anthem's current medical policies. This measure of consistency is important for a number of reasons.
The development of Anthem's medical policy places great weight on adopting proven, efficacious approaches to treating illness and disease in the most appropriate setting. As the medical field continues to discover more effective approaches to the practice of medicine, Anthem will seek to incorporate these improvements into its medical policy. In addition, a consistent medical policy with few local variations is important as Anthem markets its benefit plans to regional and national purchasers.
Anthem BCBSME's operations will employ a local medical director. This individual will have day-to-day responsibility for making decisions regarding the local implementation of existing medical policy. In addition, the Anthem BCBSME medical director will become an integrated part of the Anthem BCBSME medical policy development and review effort.
Anthem and BCBSME both reference national norms established by such firms as Milliman & Robertson in developing medical policy, as well as relying on the Blue Cross Association's nationally recognized Technical Evaluation Committee for evaluating new technologies. In addition, Anthem establishes review panels consisting of Anthem medical directors, practicing physicians, medical consultants and others to review existing medical policies and recommend changes to or additions to existing policies. Medical policies are and will be reviewed periodically, consistent with scientific developments.
The BCBSME case management model integrates a number of clinical and utilization management tools and techniques to effectively manage the cost, quality, and accessibility of care to its members. These include: disease prevention and screening; utilization management; health risk management; clinical preventive and practice guidelines; high cost case management; clinical quality improvement; and provider panel and institutional reporting and improvement. Each of these techniques is also employed by Anthem to improve the quality, affordability, and accessibility of care provided to its members. Anthem BCBSME expects to continue to employ these techniques and, where warranted, modify or refine these programs on behalf of its members.
The following describes the current Health Management program now in place at BCBSME. As market and regulatory requirements, accrediting body standards and medical policy evolve, Anthem BCBSME will change or modify this plan to respond to these environmental factors.
Disease Prevention/Health Improvement
Anthem and BCBSME each offer a broad range of disease prevention and health improvement interventions designed to fulfill the shared mission commitments to improved health status. BCBSME's current program includes early risk identification; promotion of recommended screening and primary and secondary preventive services; member health education; disease-specific case management programs; work site/employer interventions; and a system of office practice tools and "reminders". Anthem BCBSME will continue its commitment to disease prevention and health improvement through a similar ongoing program of initiatives.
Demand and Health Risk Management
Demand management activities focus on delivering consumer-oriented education, motivation and decision support systems to plan members that allow them to make health care decisions based on knowledgeable and rational consideration of the benefits, risks and costs of the available options. The goals of the Anthem BCBSME's Demand Management program are (1) to improve health, thus reducing the need for services, and (2) to involve the patient in medical decision making, thus eliminating unnecessary demand for services.
Medical Management
Medical Management is the mechanism to permit communication and coordination among all members of the health care team, and involves the patient and family in the health care decision-making process. These activities minimize fragmentation in the delivery of care. Anthem's case management functions are performed locally, and, depending on the product involved, may include the following activities:
Network Management
BCBSME's network management incorporates rigorous credentialling and re-credentialling standards that are consistent with NCQA standards and marketplace demands, quality assurance requirements including full participation in utilization management activities, and access/services requirements (appointment time, availability, etc). BCBSME continuously educates participating providers on plan design, operational issues, and administrative requirements, and ensures provider acceptance through provider contracts and network management. The network is continuously monitored in the areas of utilization, referrals, cost and satisfaction (from a patient as well as provider perspective). Anthem's network management program is similar and no significant changes are anticipated as a result of the transaction.
Credentialling activities have been continuously refined to the point where BCBSME now credentials physicians in less than 45 days, compared to the marketplace average of 50-90 days. These operational enhancements have been implemented as NCQA expectations and marketplace demands regarding networks have increased.
Provider education and support have historically distinguished BCBSME from its competitors. The Plan continues to develop services to providers such as VRU capability that deliver real-time information, without increasing costs or staffing.
BCBSME believes that successful business relationships with providers are built upon information and collaboration. The Plan re-tooled the reports provided to risk-bearing groups in 1999 as well as the reporting packet regularly sent to primary care physicians. Pharmacy data are also provided to physicians, to support the Plan's objectives in controlling pharmacy costs. Contracting and medical management staff meet with key provider groups on a monthly basis to review reports and discuss cost management and utilization opportunities.
BCBSME is responsible for overseeing the activities of the entities to which it delegates medical management responsibilities. The team collaborates with these entities to insure that the entities comply with BCBSME, NCQA and URAC Standards for Medical Management. BCBSME delegates specific quality improvement activities to Green Spring of Maine (utilization management, credentialling, quality improvement, member rights and responsibilities); York Health Care (credentialling, medical records); and Katahdin Case Management and Technologies (utilization management).
CUSTOMER SERVICE
Walk-in customer service is currently provided for all BCBSME members by Customer Service teams located in South Portland, Bangor, Augusta, and Presque Isle. Telephone service hours are offered from 7:30 a.m. to 5:00 p.m., Monday through Friday. Additionally, access to customer service representatives is provided through BCBSME's web site and interactive automated voice response, which provides 24-hour-per-day, 7-day-per-week telephone service.
Both Anthem and BCBSME seek to consistently exceed the expectations of their members. BCBSME Customer Service provides a single point of contact for any inquiry and is structured to provide fast response and, to the extent possible, complete information on first contact. Customer Service Representatives are trained on all aspects of coverage and plan operations through a comprehensive training program that ranges from six to eight weeks. In addition, Customer Service Representatives have access to a state-of-the-art integrated servicing system that allows representatives to view service-related information when assisting customers. The system provides on-line access to detailed information about members' plans including summary plan descriptions, claims, enrollment and referral information, enabling them to assist callers in an accurate and timely manner.
To further expand on the excellent service reputation of BCBSME, the Plan undertook a redesign of the customer service structure. As a result, a new service model for customer service, provider service, and research was introduced. The new team-based approach maximizes resources while providing a streamlined inquiry process for members.
Modifications to the customer service platform described above may be made by Anthem post-Closing, although no plans exist for doing so. Any changes would consider opportunities to integrate Anthem BCBSME customer service operations into a larger, regional framework. A similar framework exists throughout Anthem's Midwest region. Within this structure, customer service representatives located in each state service inquiries from those states. However, responsibility for management of the customer service function is placed in one regional manager. This individual is charged with establishing uniform customer service protocols and programs across each of Anthem's three midwestern states. Any decisions in this regard will hinge on Anthem's success in creating a larger New England region.
BACK OFFICE AND SHARED SERVICE ACTIVITIES
One of Anthem's operating objectives is to link local or state operations into a regional infrastructure. This is done in areas of Membership and Billing, Claims, Underwriting and Customer Service. The latter two areas are discussed above. In placing management of these activities under regional leadership, Anthem seeks to obtain a standardization of approach over a centralization of activity.
As the chart below indicates, there is a substantial presence of IT, customer service and claims processing employees located in each of Anthem's principal states.
Anthem is able to create administrative efficiencies and cost-savings by placing these activities under single regional management and implementing standard operating protocols and practices. Post-Closing, Anthem will identify opportunities for such savings in the New England region.
| LOCATION OF CRITICAL ACTIVITIES | |||
|
Information Technology |
Customer Service |
Claims Processing |
|
| Connecticut | 363 | 327 | 403 |
| Indiana | 396 | 180 | 982 |
| Kentucky | 190 | 175 | 622 |
| Ohio | 391 | 250 | 789 |
The shared service functions - Finance, Legal Human Resources, Information Technology and Public Affairs - will be integrated into the existing Anthem management structure that oversees these activities. Consistent with this model, local Anthem BCBSME employees will deliver these services locally.
FINANCIAL PROJECTIONS
Anthem BCBSME's financial projections for the three years following the Closing of the Acquisition will be filed separately as Exhibit F by the end of September, 1999.
Other than as described herein or in the Asset Purchase Agreement, the Applicant has no present plans or proposals to have the Acquired Insurers declare any extraordinary dividends, to liquidate the Acquired Insurers, to sell the Acquired Insurers' assets (other than such sales of assets as may be contemplated in the ordinary course of the Acquired Insurers' business) or to merge the Acquired Insurers with any person or persons or to make any other material change in the Acquired Insurers' business operations or corporate structure or management of the Acquired Insurers.
Item 6. Voting Securities to be Acquired.
Except for the acquisition rights with respect to
Item 7. Ownership of Voting Securities.
As stated in Item 6, pursuant to the Asset Purchase Agreement, Anthem BCBSME will acquire 50% of the voting common stock of each of Maine Partners and Central Maine Partners. In addition, the Asset Purchase Agreement contemplates that Anthem BCBSME will acquire from Patriot Mutual its 43% ownership interest in Machigonne, Inc., which, combined with BCBSME's existing 57% ownership interest, will result in Anthem BCBSME's ownership of 100% of the common stock of Machigonne, Inc.
Except for those interests, neither the Applicant nor any of its affiliates directly or beneficially own, or have the right to acquire beneficial ownership of, any voting securities of the Acquired Insurers.
Item 8. Contracts, Arrangements, or Understandings with Respect to Voting Securities of the Insurer.
As stated in Items 6 and 7, pursuant to Asset Purchase Agreement, Anthem BCBSME will acquire 50% of the voting common stock of each of Maine Partners and Central Maine Partners. In addition, the Asset Purchase Agreement and Stock Purchase Agreement contemplate that Anthem BCBSME will acquire from Patriot Mutual its 43% ownership interest in Machigonne, Inc., which, combined with BCBSME's existing 57% ownership interest, will result in Anthem BCBSME's ownership all of the common stock of Machigonne, Inc.
As a hospital and medical service organization, BCMSME has no voting securities. After the conversion of BCBSME to a stock insurer, its stock will be issued to the Trust, subject to an irrevocable directed proxy in favor of Anthem to vote the shares of stock of the converted insurer in favor of the Asset Purchase Agreement and the Plan of Liquidation.
Except for the foregoing, there are no contracts, arrangements or understandings with respect to any voting security of the Acquired Insurers in which the Applicant, its affiliates, or any person listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies.
Item 9. Recent Purchases of Voting Securities.
None of the Applicant, its affiliates, or any person listed in Item 3 has purchased any voting securities of the Acquired Insurers during the twelve (12) calendar months preceding the filing of this Statement.
Item 10. Recent Recommendations to Purchase.
To the best of the Applicant's knowledge, none of the Applicant, its affiliates, any person listed in Item 3 or anyone based upon interviews or at the suggestion of the Applicant, has made any recommendation to purchase any voting securities of the Acquired Insurers during the twelve (12) months preceding the filing of this Statement.
Item 11. Agreements with Broker-Dealers.
Although no agreement, contract, or understanding has been made by the Applicant or BCBSME with any broker-dealer as to solicitation of voting securities of the Acquired Insurers for tender, as noted in Item 4(b) BCBSME retained Salomon Smith Barney as its financial adviser in connection with this matter.
Item 12. Financial Statements and Exhibits.
a & b Financial Statements. The audited financial statements of Anthem for the preceding five fiscal years are attached as Exhibits G through K. The unaudited consolidated financial statement of Anthem for the quarters ended March 31, 1999 and June 30, 1999 are attached as Exhibits L and M, respectively.
c Other Information.
- Annual Reports. The Audited Financial Statements of Maine Partners and Central Maine Partners for 1998 are attached as Exhibits N and O, respectively. Because Maine Partners and Central Maine Partners commenced operations on January 1, 1998, there are no Annual Reports for 1997 for those entities. As a nonprofit hospital and medical service organization, BCBSME has no stockholders, but its Audited Financial Statements for the past two years are attached as Exhibits P and Q, respectively. As a mutual insurer, Anthem has no stockholders, but its Annual Reports for the last two fiscal years are attached as Exhibits R and S, respectively.
- Employment, Consultation, Advisory or Management Agreements Concerning the Acquired Insurers.
In connection with the business acquired in the Acquisition, Anthem and its affiliates will operate in accordance with an Intercompany Services Agreement in the form attached hereto as Exhibit B. The Intercompany Services Agreement is a standard form of agreement among Anthem and its affiliates, pursuant to which each party may provide various services to and receive various services from each other and other Anthem affiliates. Anthem has had no discussions with any officers, employees or directors of BCBSME regarding employment contracts following the Closing, but, as obligated under the Asset Purchase Agreement to assume certain liabilities of BCBSME, will assume all employment agreements existing at the Closing.
- Miscellaneous/Additional Information.There are no tender offers for, requests or invitations for tenders of, exchange offers for, or agreements to acquire or exchange any voting securities of the Acquired Insurers or soliciting material relating thereto, or any proposed employment, consultation, advisory or management contracts concerning the Acquired Insurers, to be used in connection with the Acquisition other than what has already been described in this Statement.
The following is a list of Exhibits and Financial Statements attached to this Statement and incorporated herein by reference:
Item 13. Signature and Certification.
SIGNATURE
Pursuant to the requirements of 24-A M.R.S.A. § 222 and Chapter 180, Anthem Insurance Companies, Inc. has caused this application to be duly signed on its behalf in the City of Indianapolis and State of Indiana on the day of September, 1999.
ANTHEM INSURANCE COMPANIES, INC.
[SEAL] By:
Name: David R. Frick
Title: Exec. Vice President and Chief
Legal and Administrative Officer
Attest:
Signature of Officer
Title
CERTIFICATION
The undersigned deposes and says that he has duly executed the attached application dated September , 1999, for and on behalf of Anthem Insurance Companies, Inc.; that he is the Executive Vice President and Chief Legal and Administrative Officer of such company and that he is authorized to execute and file such instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Name: David R. Frick