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Continuing its march to Wall Street, Anthem Insurance Cos. Inc. is mailing additional information about its demutualization and conversion to a stock insurance company to its estimated 1 million members. The plan of conversion still needs approval from the Indiana Department of Insurance and Anthem's members.

Proceeds from the sale would be used to pay demutualization costs, satisfy Anthem's obligation to pay the fair value of the company to its members, and for general corporate purposes.

The deadline for voting is Oct. 29, 2001.

Anthem filed plans on Aug. 16, 2001, with the Securities and Exchange Commission to hold an IPO of 29 million shares of common stock, which the company estimates could raise as much as $1 billion if the stock goes public within its target range of $33 to $37 per share.

The Indianapolis-based health insurer's board of directors had approved a conversion plan June 21, 2001. The plan must be approved by two-thirds of Anthem's 1 million voting members as well as the Indiana Department of Insurance, in which state Anthem is domiciled. Under Indiana law, the plan calls for payment of the company's fair value to eligible members in Connecticut, Indiana, and Kentucky. Payment would come in the form of common stock or cash. If all approvals are received, the demutualization process should be completed by the end of 2001.

Larry Glasscock, Anthem's president and CEO, says that going public would allow Anthem to have access to capital markets for growth and to continue to provide quality health care to its customers. "We believe that conversion to a stock company structure is in the best interests of our members and our associates," says Glasscock.

Anthem provides health care to more than 7 million customers. The insurer is the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Indiana, Kentucky, Maine, Nevada, New Hampshire, and Ohio. The insurer says that no policies would be affected by the demutualization.

More than 1 million members under health plans in Connecticut, Indiana, Kentucky, and Ohio are expected to be eligible for compensation in the form of stock or cash under the plan. Lauren Green-Caldwell, a spokesperson for Anthem, says those members are eligible to receive compensation because Anthem merged with Blue Cross Blue Shield HMOs in those states. The HMOs were mutual insurance companies, meaning members retained their ownership rights once they merged with Anthem.

Members in Colorado, Maine, Nevada, and New Hampshire are not eligible to receive compensation because Anthem purchased nonprofit HMOs to do business in those states. The proceeds from those sales were used to fund charitable foundations, thus no ownership rights were involved, according to Green-Caldwell.

Green-Caldwell says that not all members in Connecticut, Indiana, Kentucky, and Ohio will be eligible for compensation. It will depend on what kind of policy they have.

Ira Zuckerman, vice president of research at Nutmeg Securities in Westport, Conn., says that Anthem is going public for the same reason that many life insurance companies — including Prudential and Principal Financial Group — are: to raise capital to buy other companies rather than have to tap into reserves to do so. "It would give them currency to make acquisitions rather than using good old, ugly cash," he says.

Zuckerman says that more life insurers than health insurers have gone public because many life insurers that have done so are national companies, unlike HMOs, many of which are regional. With rising medical costs, several HMOs have become financially weaker than life insurance companies. "Health insurers to some degree have had a little tougher time," he says.

Still, Zuckerman says that people may still want to buy Anthem stock because it is one of the more financially strong health insurers. "I would think that people would still want to buy Anthem stock," he says. "But we'll see what the market is like by the time they go public."