July 26, 2006

In an unusual corporate expansion, Blue Cross and Blue Shield of Illinois will add 24 floors on the top of its headquarters on East Randolph Street to accommodate the health insurer's rapid growth.

At a cost of $270 million, Health Care Service Corp., parent of Blue Cross and Blue Shield of Illinois, said Tuesday that construction will begin early next year at 300 E. Randolph, the dual headquarters of the Illinois Blue Cross division and Health Care Service, pending approval of various permits.

The existing 33-story building already has 30 floors above ground on prime real estate located just east of Aon Center on the northern edge of Grant Park.

Health Care Service built it in 1997 at a cost of $233 million, engineering it so it would have the ability to add to the top if expansion warranted.

The building is now 466 feet high from its base and will rise to an estimated 796 feet.

The structure was originally designed by Chicago architect James Goettsch to accommodate 24 additional stories to meet an expected need for more office space, the insurer said. Thus, the skyscraper will reach its designed height of 57 stories upon completion in 2010.

"It is very unusual for a company to prepare for growth several years ahead of time," said Pauline Saliga, director of the Society of Architectural Historians in Chicago. "This is a very unusual thing to do and I cannot think of another case. It was pretty good planning on their part that they saw such growth in their future."

"They may alter an attic space or add a couple of stories but there is generally not an expansion like this in a major landmark building," Saliga said of the Blue Cross headquarters.

Saliga said most corporate expansions usually involve an annex near the main building or a tower erected nearby that allows one building to be connected to another through a bridge much like the famous Wrigley Building, she said.

Health Care Service, now the nation's fourth-largest health insurance company, has certainly made good on its intentions to grow. Since 1997 it has expanded rapidly, growing its membership organically as well as through mergers and acquisitions. The Health Care Service umbrella now includes Blue Cross and Blue Shield health insurance plans in Texas, New Mexico and Oklahoma.

"This project to complete our corporate and Illinois division headquarters building is a reflection of HCSC's tremendous growth from 3 million members in 1997 to 11 million members today, and a demonstration of our commitment to the city of Chicago," said Ray McCaskey, president and chief executive officer of HCSC.

The company expects to continue to grow and McCaskey has said in previous interviews that the company is open to adding more members through mergers and acquisitions. Unlike many of its major rivals in the health insurance industry that are publicly traded and owned by investors, Health Care Service is a mutual insurance company and therefore is owned by policyholders.

Health Care Service said the building expansion will allow for the number of people who work at 300 E. Randolph to double from about 4,200 to 8,000.

However, only about half of the additional workers will be Health Care Service employees, including an undisclosed number now in offices at various locations in Chicago.

Health Care Service officials estimate that about half of the new 24 floors will be leased to outside tenants not affiliated with the giant health insurance company.

"We are planning on leasing some of the space to other companies," said Jack Segal, vice president of public affairs for Blue Cross and Blue Shield of Illinois.

News of another corporate expansion in downtown Chicago was greeted with a warm reception at City Hall. United Airlines earlier this month announced that it will move its global headquarters to downtown Chicago.

"We are pleased that HCSC and Blue Cross and Blue Shield of Illinois will be expanding their headquarters here," Lori T. Healey, commissioner of the City Department of Planning and Development, said Tuesday. "In addition to keeping jobs in the city, this is yet another example of a major corporation committed to calling Chicago home."