LOS ANGELES -- California's insurance commissioner approved a $16.4 billion merger creating the nation's largest health insurance company yesterday, after saying he had wrung hundreds of millions of dollars out of the companies involved that would be used to improve healthcare in the state.
Insurance Commissioner John Garamendi had blocked the proposed merger between Indianapolis-based Anthem Inc. and WellPoint Health Networks Inc.'s California subsidiary Blue Cross Life & Health Insurance Co. for months, saying it would pull $400 million a year out of California in the form of dividends and that the buyout package it offered WellPoint's chief executive was excessive.
"Last week Anthem and WellPoint returned to my office and presented a revised offer of settlement. I demanded more and after long negotiations, Anthem has made additional concessions and contributions that will assure that California healthcare consumers will realize benefits from this transaction," Garamendi told reporters yesterday.
"We have worked diligently with Commissioner Garamendi to understand and address his concerns in order to demonstrate that this merger will truly benefit Californians," said Larry C. Glasscock, Anthem's chairman, president, and chief executive.
Shares of both companies surged on the news.
On the New York Stock Exchange, Anthem rose $5.10, or 6 percent, to close at $91.60, and WellPoint shares gained $9.25, or 9 percent, to close at $114.22.