Anthem Blue Cross 2000 Annual Report Download - page 28

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Anthem Insurance Companies, Inc.
Notes to Consolidated Financial Statements (continued)
16. Statutory Information
Statutory policyholders’ surplus of Anthem amounted to $1,907.5 and $1,444.2 at December 31, 2000 and 1999,
respectively. Statutory net income of Anthem was $91.7, $201.7 and $80.6 for 2000, 1999 and 1998, respectively.
Surplus of insurance subsidiaries of Anthem is subject to regulatory restrictions with respect to amounts available for
dividends to Anthem.
In 1998, the National Association of Insurance Commissioners adopted codified statutory accounting principles
(“Codification”) which will be effective January 1, 2001. Codification will result in changes to certain accounting
practices that Anthem and it’ s insurance subsidiaries use to prepare statutory-basis financial statements. Management
believes the impact of these changes will not be significant.
17. Subsequent Events
On January 29, 2001 Anthem’ s board of directors appointed a special committee to work with management to
develop a plan for demutualization and conversion to a publicly traded stock company (the “Plan”) for the board’ s
further review. On June 18, 2001 the Plan was approved by Anthem’ s board of directors and management believes
that the demutualization process could be completed before the end of 2001. Anthem’ s members will see no
increase in premiums or changes to the terms of their health care benefits as a result of the demutualization.
On April 18, 2001, Anthem and its subsidiary, Anthem Alliance Health Insurance Company (“Alliance”), entered
into an Agreement and Plan of Merger to sell the TRICARE operations of Alliance to a subsidiary of Humana, Inc.
The transaction closed on May 31, 2001.
On May 30, 2001, Anthem and Blue Cross and Blue Shield of Kansas (“BCBS-KS”) signed a definitive agreement
pursuant to which BCBS-KS will become a wholly owned subsidiary of Anthem. Under the proposed transaction,
BCBS-KS will demutualize and convert to a stock insurance company. The agreement calls for Anthem to pay
$190.0 in exchange for all of the shares of BCBS-KS. Subject to the approval of BCBS-KS policyholders and the
approval of the Kansas Department of Insurance, the transaction is expected to close in late 2001.
On May 22, 2001, the Ohio Court of Appeals (Fifth District) affirmed the jury award of $1,350 (actual dollars) for
breach of contract against Community Insurance Company (“CIC”), a subsidiary of the Company, affirmed the
award of $2.5 compensatory damages for bad faith in claims handling and appeals processing against CIC, but
dismissed the claims and judgments against Anthem. The court also reversed the award of $49.0 in punitive
damages against both the Company and CIC, and remanded the question of punitive damages against CIC to the trial
court for a new trial. (See Note 14, fifth paragraph.)