Date: August 20, 1999
For more information contact: Eileen Mallow (608) 266-7843 or eileen.mallow@wisconsin.gov

Madison, WI--A three-member appraisal committee, charged to assist in examining the recently proposed conversion of Blue Cross & Blue Shield United of Wisconsin (BCBSUW), was appointed today by Commissioner of Insurance Connie L. O'Connell. The Office of the Commissioner of Insurance (OCI) also will issue a Request for Proposals to solicit the services of an investment banking firm that would provide technical expertise to the agency and the newly named committee.

"Because of the magnitude and unprecedented nature of this proposal, the appointment of an appraisal committee and use of an independent investment banking firm is necessary," O'Connell said. "An experienced appraisal committee, with the aid of an outside investment firm, will allow us to safeguard all parties as we consider the long-term effects of the Blue Cross plan on its policyholders and on the public."

The committee, with the aid of investment bankers, will perform an independent review of certain, well-defined aspects of the proposed transaction. BCBSUW filed a plan with OCI to convert from a non-profit service insurance corporation to a for-profit stock insurance corporation on June 14.

Wisconsin law stipulates that "the commissioner shall approve the plan of conversion unless he or she finds that the plan violates the law or is contrary to the interests of policyholders or the public."* Blue Cross' 935-page conversion plan is a public document, available for review through OCI.

The three appointees to the appraisal committee are as follows:

• Patricia Lipton is Executive Director of the Wisconsin Investment Board and is responsible for managing investment functions for more than $64 billion in state assets. Originally from Oxford, England, she did her undergraduate work in economics at UC-Berkeley and received her master's from UW-Madison. Lipton has been with the Investment Board for 17 years and in 1995 received the Bob Toigo Chief Investment Officer of the year award.

• Gary Strohm is a Certified Public Accountant and partner with the Madison office of McGladrey & Pullen, where he is National Insurance Industry Coordinator. He is licensed in 10 states, has 18 years of accounting experience and a Bachelor's of Business Administration in accounting from UW-Whitewater. Strohm served as chair of the Insurance Committee of the Wisconsin Institute of Certified Public Accountants and is a member of the Insurance Accounting and Systems Association.

• Randy Blumer has been Deputy Commissioner of Insurance for the State of Wisconsin since 1993, and in 1998 served as Acting Commissioner. He is chair of the state Patient's Compensation Fund, vice chair of the state Group Insurance Board, and is chair of the Financial Analysis Working Group of the National Association of Insurance Commissioners. Blumer has a B.S. degree from UW-Madison and has worked at OCI for 20 years.

The appraisal committee is expected to hold its first session no later than September 15, 1999, and will participate with OCI staff in the selection of an investment-banking firm to provide consultation and other services. The appraisal committee's report is expected by the end of October.

The investment banking firm will provide the OCI and the committee with technical support on certain financial aspects of the plan. Such expertise is necessary to ensure that proper protections are in place to meet requirements of the law. The agency must be satisfied that the conversion plan and its implementation will meet those requirements before approving the proposal.

OCI will notify the public well in advance of a hearing, mandated by Wisconsin law, to gather public comment on the proposal. The hearing date and site have not been set.

* Wisconsin Statutes 613.75 and 611.76(7).