ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, August 2, 1996 TAG: 9608020021
SECTION: BUSINESS PAGE: A5 EDITION: METRO
DATELINE: RICHMOND
SOURCE: ASSOCIATED PRESS
TRIGON WILL CONVERT to a public company, if the State Corporation Commission agrees that the change is not unfair to the public and policyholders.
A state regulatory official has recommended approval of Trigon Blue Cross Blue Shield's plan to convert to a public stock company, distributing shares to policyholders and outside investors.
Under the plan, Trigon would give each policyholder a share of its current net worth.
The plan also calls for Trigon to pay the state $175 million as compensation for preferential tax treatment that the company received in the past for agreeing to insure any Virginian who applied for coverage.
Converting from a mutual insurer to a stock corporation would allow Trigon to sell additional shares to investors, a step its executives say would enable the company to raise funds to expand its business.
``We believe the plan may not be deemed unfair or unreasonable to policyholders or to the public interest,'' said Alfred W. Gross, who heads the insurance division in the State Corporation Commission.
The three-member commission will begin public hearings on the plan Sept. 9.
If the State Corporation Commission approves, Trigon will be able to proceed with the conversion.
Gross said Trigon agreed at commission staff members' insistence that top executives not receive any stock options or bonuses as a result of the conversion.
He said he did not believe the conversion would decrease competition or create a monopoly, as some consumer advocates fear.
The way the stock would be divided among different types of policyholders appears fair, he said.
Criticism of the conversion was filed with the State Corporation Commission by Gerald Haeckel, a Scottsville retiree whose complaints about a hospital bill led Trigon to refund more than $70 million to policyholders and pay a $5 million fine.
Haeckel said the way Trigon figured allocation of its proposed stock would favor policyholders, such as corporate customers, who now have lower premiums based on the actual claims paid for groups of people.
Those groups tend to be large employers, while many small businesses and individuals who own Trigon's insurer-of-last-resort policies have higher premiums.
LENGTH: Medium: 54 linesby CNB