State OKs For-Profit Blue Cross Subsidiary

State regulators last week approved nonprofit Blue Cross of California’s plan to spin off most of its parts into a for-profit subsidiary, clearing the way for the Woodland Hills-based insurer to raise as much as $414 million through an initial public offering, expected by next month.

Under the Knox-Keene Act, the California Department of Corporations issued a license to Blue Cross’ newly created subsidiary, WellPoint Health Networks. With the approval, WellPoint--which includes Blue Cross’s health maintenance organization and its 1.5-million-member preferred provider network--will be able to sell stock to the public and will now be regulated by the Department of Corporations.