Department of Insurance, Securities and Banking: Press Release

Washington, DC - The Department of Insurance and Securities Regulation (DISR) and the District of Columbia Office of the Corporation Counsel (OCC) released the Valuation Report on CareFirst, Inc., prepared by their independent valuation consultant, Cain Brothers & Company, LLC. The Report concludes that, as of January 23, 2003, the aggregate value of CareFirst, Inc. (including its subsidiaries in Delaware, the District of Columbia and Maryland) is within the range of $1.65 billion to $1.75 billion. In addition, Cain Brothers concluded that the value of Group Hospitalization and Medical Services, Inc. (GHMSI), the subsidiary of CareFirst that is domiciled in the District and covers the Washington Metropolitan area, is within the range of $915 million to $960 million.

The law requires that OCC, in reviewing the proposed conversion of CareFirst from non-profit to for-profit status and the proposed acquisition of Care First by WellPoint Health Networks Inc., determine whether the charitable assets of non-profit GHMSI will be adequately protected, if the conversion to for-profit status takes place. In doing so, OCC will determine whether GHMSI would receive reasonably fair value for its assets under the proposed transaction. Should the conversion and acquisition be approved by OCC and DISR, OCC must also ensure that the proceeds are placed in a charitable trust/foundation and used for purposes consistent with the purposes of the non-profit in the affected community. In addition to OCC's requirements, WellPoint and CareFirst need the approval of the insurance regulators of the District of Columbia, Maryland and Delaware of both the proposal to convert to for-profit status and the sale of CareFirst to WellPoint.

This summer, both OCC and DISR will conduct public hearings as a part of their reviews of the proposed transaction. OCC’s and DISR’s experts, including Cain Brothers, are expected to give oral presentations and present their findings at the public hearings.

Click here for a copy of the Valuation Report and other public documents in this matter.

The DC Department of Insurance and Securities Regulation (DISR) has two missions, (1) to provide fair, efficient and fast regulatory supervision of the insurance and securities businesses for the protection of the people of the District of Columbia, and (2) to create conditions that will retain and attract national and international insurance and other financial businesses to the District.

Cain Brothers is one of the nation’s leading health care investment banking firms and provides a full range of advisory and capital markets services to health care clients. Cain Brothers has experience in many transactions similar to the proposed CareFirst conversion and acquisition.