Shenandoah Life CEO: Post Receivership, Company Strives for Alternatives to Mainstream Products
June 24, 2013 by Fran Lysiak
Best’s News Service – June 21, 2013 10:01 AM
ROANOKE, Va. – After successfully exiting receivership a year ago, Shenandoah Life Insurance Co. has tapped a new president and chief executive officer who arrived from ING US. But Paul Mistretta said rather than traditional life products, the company is eyeing alternative ones for its middle-income target customer.
Mistretta succeeded Hans L. Carstensen III, who resigned as president and CEO. Mistretta also was named as president of Prosperity Life Insurance Group, Shenandoah’s parent company.
After a $60 million capital infusion, the Roanoke, Va.-based Shenandoah Life came back to life in May 2012 — successfully exiting receivership. The transaction, finalized by order of the Virginia State Corporation Commission, meant the company would resume normal operations (Best’s News Service, May 8, 2012).
Shenandoah Life had been in receivership since February 2009, and had experienced financial difficulties due to impairments in its investment portfolio. It got into trouble after it lost $50 million when the value of its Fannie Mae and Freddie Mac preferred stock plunged (Best’s News Service, Dec. 21, 2009). Before it stopped issuing new policies, in addition to term life insurance, Shenandoah wrote final-expense policies, annuities and dental insurance, and did business in 31 states and the District of Columbia.
Shenandoah Life has been working over the past year to rebuild infrastructure while still servicing its existing policyholders.
Mistretta told Best’s News Service he has an opportunity to work with a group of dedicated employees to find “alternative ways for growth” for the company. “We’re trying to find alternatives to mainstream products that will appeal to middle-income market consumers,” he said.
In the near term, it’s unlikely the products would be traditional life insurance products, he said. “We need to re-establish a degree of commercial momentum so that we can demonstrate capabilities and progress.” Mistretta has held various senior leadership positions in the insurance industry. Most recently, he was with ING U.S. for eight years in several leadership roles, including head of operations.
ING U.S., which plans to rebrand in 2014 as Voya Financial, raised about $1.3 billion in its initial public offering of stock on May 2. (Best’s News Service, May 3, 2013). ING U.S., the U.S.-based retirement, investment and insurance businesses of Netherlands-based ING Group N.V., opened for trading on the New York Stock Exchange under the ticker symbol “VOYA” after its IPO. The company is being spun off by its Dutch parent, and the IPO represents a milestone in the company’s evolution from a subsidiary to an independent U.S. company.
Shenandoah Life says it has $7.5 billion of insurance in force, about $1.3 billion in assets and more than 145,000 policies.
A company successfully exiting receivership is a rare occurrence in the industry, and something Carstensen, the new CEO in May 2012, at that time called a “remarkable achievement.” “I’ve been told I can count on one hand the number of life insurance companies that have gone into receivership and come out as a free-standing operating entity,” he told Best’s News Service last year. Most are liquidated or they become very small parts of much larger operating entities (Best’s News Service, May 8, 2012).
Prosperity is a life insurance holding company, and Shenandoah is its main operating subsidiary. Prosperity was formed in 2010 by investment funds managed by Reservoir Capital Group and Black Diamond Capital Partners.
Shenandoah Life is not rated by A.M. Best Co.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com) BN-NJ-06-21-2013 1002 ET #
