Update: Virginia ends moratorium on Shenandoah Life policy payments
The Virginia State Corporate Commission (SCC) approved a rehabilitation plan for Roanoke-based Shenandoah Life Insurance Co., which includes its acquisition by United Prosperity Life.
Upon the closing of the transaction and following policyholder approval for the demutualization, Shenandoah would become a wholly owned subsidiary of United Prosperity Life Insurance Co., according to the SCC.
United Prosperity will invest a minimum of $60 million in Shenandoah. If approved by more than two thirds of the votes cast by Shenandoah’s policyholders, the transaction is expected to close by the first quarter of next year.
“The sale of Shenandoah to United Prosperity is an important step in restoring the financial soundness of Shenandoah, which is an important Virginia institution with a rich history of nearly 100 years,” Virginia Insurance Commissioner Jacqueline K. Cunningham said in a statement in May. “Successfully completing this transaction will allow Shenandoah to emerge from receivership, which is in the best interest of all of Shenandoah’s policyholders, employees and creditors.”
United Prosperity has indicated that it plans to continue operating out of the Roanoke office.
The moratorium placed on policy loans, cash or surrender values, surrenders, fund transfers, lapses, cash outs and similar payments will remain in place and may be extended by United Prosperity into the first quarter of 2013, officials said.
Shenandoah, which wrote primarily life insurance, annuities and dental insurance in 31 states and Washington, D.C., will not resume the issuance of new insurance policies until after the acquisition is complete.
Shenandoah has been in receivership since February 2009. A receivership order was issued by the Circuit Court of the City of Richmond after the SCC and Shenandoah Life determined that entering receivership was necessary to protect the interests of Shenandoah’s policyholders and creditors.
In seeking control, the SCC, which oversees the state’s bureau of insurance, cited Shenandoah’s 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.
Virginia approves United Prosperity’s purchase of Shenandoah Life via IFAwebnews .