Blues earn $37 million in quarter Sale of subsidiary boosts earnings

August 17, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

Blue Cross and Blue Shield of Maryland announced yesterday that it earned $37 million in the second quarter, a record high achieved largely because of a one-time event -- the sale of its Green Spring Mental Health Services Inc. subsidiary.

Without the sale in May for $37.2 million, the insurer's earnings would have dropped considerably over the same period last year. The company said it would have earned $9 million in the three months that ended June 30 compared with earnings of $20.7 million for the same period in 1992.

The company's basic insurance operation earned $6.6 million in the quarter, compared with $29.5 million for all of last year.

Blue Cross, the state's largest health insurer, also reported $5.1 million in profits from its health maintenance organizations in the same three-month period, up from $900,000 in the same period last year. Revenues from the managed care companies, however, dropped 4.3 percent to $91.8 million.

James R. Swenson, Blue Cross' senior vice president and chief financial officer, said the insurer was pleased with the financial results of its HMOs, despite a dip in revenues. Blue Cross insures or administers health insurance for 1.4 million people. Its financial health has been watched closely by health care providers and lawmakers since its reserves -- representing the money set aside to cover losses or unexpected claims -- was found to be based largely on exceptions to generally accepted accounting rules.

Yesterday, the Blues reported that its reserves had grown $30 million using a stricter interpretation of industry accounting rules. The increase brought the reserve to $60.4 million.

That's three times the minimum level the insurer was required to reach by Dec. 31 under a new state law.

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