Update: Virginia ends moratorium on Shenandoah Life policy payments
Virginia’s insurance regulators have taken control of Roanoke, Va.-based Shenandoah Life Insurance Co. as the company struggles with finances.
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Alfred W. Gross
On Thursday (Feb. 12), Virginia Insurance Commissioner Alfred W. Gross was appointed deputy receiver in an effort to rehabilitate the company.
The Virginia State Corporation Commission, which oversees the state’s bureau of insurance, cited Shenandoah’s recent financial difficulties, including a $50 million loss when the value of its equity position in Fannie Mae and Freddie Mac preferred stock was significantly diminished. Through three quarters of 2008, the insurer experienced capital losses of nearly $70 million.
Shenandoah Life, which has more than 230,000 policies in force, said in December 2008 that it planned to merge with Indianapolis-based OneAmerica as a subsidiary, but published reports say that deal is dead. Press releases announcing the proposed merger posted last year are now absent from both companies’ Web sites.
“A company must maintain financial health, and when the bureau is concerned, it takes steps toward receivership,” Ken Schrad, a spokesman for the SCC, told IFAwebnews.com. “I can’t say if this involved the status of the merger, but I suppose the merger may be likely related [to the financial issues].”
In December, Shenandoah Life spokeswoman Cynthia Light told IFAwebnews.com that the insurer was pleased to find a potential merger partner in OneAmerica. She said both companies share a mutual philosophy of insurance.
“In light of the current economic environment and our place in the industry as a mid-sized company, it looked like it could be a long road out of economic challenges so the merger was necessary to maintain our financial strength,” Light said. “As a mutual company, our policyholders come first, so meeting that obligation comes first.”
Shenandoah Life is a life and health insurer writing primarily life, annuities and dental insurance. The company is licensed to do business in 31 states and Washington, D.C.
A moratorium has been placed on the payment of claims and benefits, except for accident and health claims, death claims, and periodic annuity payments, until the deputy receiver completes his evaluation of Shenandoah Life’s financial condition, according to the SCC. The company currently will no longer issue new insurance policies.
Headquartered in Roanoke since its creation in 1914, the company has nearly 300 employees.
Calls for comments from Shenandoah Life and OneAmerica were not immediately returned to IFAwebnews.com.
Virginia insurance regulators take control of Shenandoah Life via IFAwebnews.com .
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