ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, October 29, 1996 TAG: 9610290082
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
The State Corporation Commission on Monday approved Trigon Blue Cross Blue Shield's conversion from a mutual insurance company, owned by its policyholders, to a for-profit company owned by stockholders.
The commission said it found the plan "fair and equitable to the policyholders of Trigon," the state's largest health insurance company.
The Richmond-based company called the decision a milestone in its 61-year history. The conversion "will help us gain access to the resources needed to grow our business, to be innovative and to preserve a broad range of products and services at competitive prices to our 1.8 million customers," said Norwood Davis Jr., Trigon's chairman and CEO.
Policyholders approved the plan overwhelmingly in September, so the company is now free to put the change into effect. Davis said the company initially will offer 64 million shares of stock to policyholders.
The public offering of common stock in Trigon Healthcare Inc. is expected early next year.
Upon its conversion, Trigon will contribute about $175 million to the treasury of Virginia. That figure was set by the General Assembly when it approved the plan. It represents Trigon's surplus on Dec. 31, 1987 (the date the company's state premium tax exemption ended), plus $10 million.
In granting approval, the commission agreed to a requirement that policyholders must hold their stock six months before they can sell it. That lockup period is designed to help create an orderly market for the new stock.
The commission also restricted Trigon from granting any stock-based compensation to company executives until 90 days after the lockup period. The SCC said this would assure policyholders that management could not realize an advantage from any downward spike in the stock price.
Trigon insures about a third of all Virginians through 15,700 group and 184,000 individual policies. The company's regional office in Roanoke employs 815 people.
The conversion was opposed by the Virginia Citizens Consumer Council and some policyholders who believed it allows Trigon to slip out from under obligations to all Virginians. They also said the company's stock distribution plan is unfair. Officials of the consumer council were not available for comment Monday.
The Associated Press contributed to this report.
LENGTH: Short : 49 linesby CNB