An Open Letter From Regence
OPINION – November 22, 2011 -- Recent articles and blog postings have indicated some questions and confusion regarding our structure and recent internal capital movement. I hope the following will help clarify.
For many years, Regence has been structured as a nonprofit holding company system. This means that none of our capital is paid out to shareholders, but instead stays within the holding company system to grow and improve the business and to provide value to our members and the communities we serve.
Regence is unusual in that it is a nonprofit entity but nonetheless is fully taxed. This is in contrast to many of our nonprofit competitors (Providence, ODS, PacificSource, and Kaiser, for example) who are nonprofit and are exempt from many taxes.
There was an internal distribution of capital from BlueCross BlueShield of Oregon to the Regence holding company late last year. This is called an “ordinary distribution” under Oregon law.
There are limitations on an insurer’s ability to make such distributions to ensure that the carrier is maintaining safe and adequate capital levels. Such internal distributions are not uncommon, as one commenter pointed out on your site, citing other Oregon nonprofit insurers who make such distributions.
This capital remains within our nonprofit holding company system. It did not “leave” the system and, consistent with our nonprofit structure, it did not go to shareholders or outside entities.
In fact, these funds will be invested to develop and grow new and different products and services that will serve our members. We remain committed to improving the health and healthcare of people throughout the communities we serve, and will continue to seek out new and innovative ways of doing so, recognizing that some of these, as we’ve already seen, will not entail traditional health insurance offerings.
We have always sought to invest wisely the assets of our company. We do this to provide financial stability and to be good stewards of our assets. As a nonprofit entity, we do not have ready access to external capital sources. Instead, we must generate capital internally for such investments. As always, we remain committed to the health and wellness of our members and communities over the long term.
Georganne Benjamin is the Regence Assistant Director of Strategic Communications.