Virginia Regulators Announce Potential Sale of Shenandoah Life
July 5, 2010 by Sean Carr
July 02, 2010
Virginia insurance regulators announced a negotiating agreement for the potential sale of Shenandoah Life Insurance Co., which has been in receivership since February 2009, to Prosperity Life Insurance Group, LLC.
The exclusivity agreement provides a 90-day window to negotiate a definitive purchase agreement. The period may be extended. Any sale must be approved by the State Corporation Commission. A sale would allow Shenandoah Life to “remain an important presence in the regions it serves and to preserve jobs in Roanoke,” Insurance Commissioner Alfred W. Gross, who also serves as deputy receiver for Shenandoah Life, said in a statement.
“We are pleased to have the opportunity to further develop and refine our plan to recapitalize Shenandoah,” Jose Montemayor, president of Prosperity Life Insurance Group LLC said in a statement. “The recapitalization aims to restore Shenandoah’s financial strength to allow it to continue to serve policyholders as it has been doing since its founding in 1916.”
The company experienced financial difficulties because of impairments in its investment portfolio. It lost about $50 million when the value of its equity position in Fannie Mae and Freddie Mac preferred stock plunged (BestWire, Feb. 13, 2009). Before it ceased issuing new insurance policies, Shenandoah Life wrote life insurance, annuities and dental insurance and did business in 31 states and the District of Columbia.
On Feb. 12, 2009, A.M. Best Co. downgraded the financial strength rating to E (Under Supervision) from B++ (Good) and issuer credit rating to rs from bbb of Shenandoah Life (BestWire, Feb. 12, 2009). The ratings were placed under review on Nov. 19, 2008 with developing implications following the announcement of Shenandoah Life’s proposed merger with OneAmerica Financial Partners Inc. of Indianapolis. On Feb. 11, OneAmerica notified Shenandoah Life that it had terminated the letter of intent concerning the proposed merger.
(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)
