Blue Cross and Blue Shield of South Carolina has won legal clearance to become a publicly traded company-something its officials previously said the Blues wasn't interested in doing.
A new state law signed last week allows the Blues and other mutual insurance companies to sell up to 49% of their stock to the public. The remainder must be held by policyholders.
South Carolina is home to about 10 mutual insurance companies, which are owned by policyholders and operated for their benefit. Most mutual insurers are for-profit companies, as is the Blues.
The bill would open the door to capital, fueling more growth for the already profitable South Carolina Blues. In 1997 the plan earned $35.3 million on $707.2 million in net premium revenues, said George Johnson, its government liaison.
The company has no estimate of how much it might raise in a public offering.
"We were having the same problems that all mutual insurance companies do," Johnson said. "We're owned by our policyholders, but without going to market to sell stock, we don't have an opportunity to raise capital."
The South Carolina Blues began talking with state legislators about drafting the bill last summer, Johnson said. That's just a few months after company spokeswoman Donna Thorne told MODERN HEALTHCARE that the for-profit plan wasn't interested in converting to a public company (April 21, 1997, p. 26). "That was before we heard about the mutual holding company concept," Johnson said.
The Blues pushed for the new law so it could go public without the possibility of a hostile takeover.
"We're a good company, a profitable company," Johnson said. "We're very convinced that the value is there, and we'd be snatched up by another company. We want to remain a South Carolina company."
The plan might choose not to exercise its option to go public. If it does decide to convert under the law, it will have to file for approval with the state Department of Insurance and subject itself to public hearings.