Arkansas Blue Cross And Blue Shield And Blue Cross And Blue Shield Of Florida Sign Memorandum Of Understanding To Combine Their Affiliates’ Life Insurance And Specialty Product Business

JACKSONVILLE, Fla., June 23 /PRNewswire/ -- In a key strategic move that would result in an increasing array of products and services, Arkansas Blue Cross and Blue Shield (ABCBS) and Blue Cross and Blue Shield of Florida (BCBSF) announced the signing of a non-binding memorandum of understanding to combine their respective life and specialty product subsidiaries. A non- binding memorandum allows the two parties to negotiate the specifics of a combination without obligation.

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Under the proposed arrangement, the two parent companies would create, and have equal ownership in, a holding company that would oversee life insurance and specialty products currently managed through the Arkansas and Florida plans. The combination calls for BCBSF to consolidate its life insurance products into USAble Life, a subsidiary of ABCBS. In turn, specialty products such as dental, long-term care, workers' compensation and FSA/HRA administration would be consolidated to, and managed by, a BCBSF affiliate. The minority ownership positions in USAble Life currently held by Hawaii Medical Service Association (Blue Cross and Blue Shield of Hawaii), Blue Cross and Blue Shield of North Carolina, and Blue Cross and Blue Shield of Tennessee, Inc., and in Florida Combined Life Insurance Company, Inc. currently held by Companion Life Insurance Company (Blue Cross and Blue Shield of South Carolina) would remain unchanged.

According to officials of the two companies, customers should experience no disruption in service as the discussions progress, and can expect a broader offering of products and services once the transition is complete. The geographical location of the holding company has not yet been determined, but is expected to be finalized prior to the signing of a definitive agreement later this year.

"This initiative is designed to bring more competitive products to the marketplace, gain back-office economies of scale in both IT system development and administrative services, and promote the sharing of best practices and product innovation," said Mark White, executive vice president and chief financial officer of ABCBS. "We hope to form a major regional, and potentially national, entity to provide life insurance and specialty products. The result should be an organization with the requisite financial, human and technical resources to play a significant role in creating solutions for customers across a wider geographic area."

"As the health industry continues to change at an increasingly faster pace, our two companies must continually evaluate opportunities to fulfill our missions and visions," said Chris Doerr, senior vice president and chief financial officer for BCBSF. "A strategic evaluation process has convinced both parties that this combination is in the best interests of our customers. With our complementary products and services, we will be able to offer an ever-increasing array of specialty products designed to meet our customers' individual needs."

ABCBS is the largest health insurer in Arkansas. ABCBS and its affiliates have more than 2,400 employees and serve approximately one-third of Arkansans. Founded in 1948, ABCBS is an independent licensee of the Blue Cross and Blue Shield Association. For more information about ABCBS, please visit its Web site at http://www.arkansasbluecross.com/ .

Blue Cross and Blue Shield of Florida (BCBSF) is a leader in Florida's health industry. BCBSF and its subsidiaries serve more than 6 million Floridians. Celebrating its 60th anniversary this year, the company has been dedicated since 1944 to meeting the diverse needs of all those it serves by offering an array of choices. Headquartered in Jacksonville, Fla., BCBSF is an independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield companies. For more information concerning BCBSF, please see its Web site at http://www.bcbsfl.com/ .

CONTACT: Mark Wright of Blue Cross and Blue Shield of Florida,+1-904-905-6935, or cell, +1-904-233-3481; or Max Heuer of Arkansas Blue Crossand Blue Shield, +1-501-378-2131, or cell, +1-501-831-1415

Web site: http://www.bcbsfl.com/http://www.arkansasbluecross.com/