Shenandoah Life policyholders vote today on the proposed sale of the insurer to a Texas-based company. It is the next step required to take the insurer out of a state receivership that is now almost three years old. State Corporation Commission Receivership Manager Don Beatty strongly recommends approval:
Shenandoah Life was unable to continue on its own after suffering steep stock losses tied to falling home prices. The meeting begins at 10:00 at the Holiday Inn Tanglewood. Two-thirds approval is needed, and the final vote results are expected within ten days.
Here is the State Corporation Commission’s summary of the plan up for today’s vote:
SCC APPROVES ACQUISITION OF SHENANDOAH LIFE INSURANCE COMPANY; REHABILITATION PLAN IN BEST INTEREST OF POLICYHOLDERS
RICHMOND — The State Corporation Commission (SCC) has approved a rehabilitation plan, including a plan of conversion, for Shenandoah Life Insurance Company. The plan involves an acquisition of the Roanoke-based insurance company by United Prosperity Life.
In its final order approving the rehabilitation plan, the Commission said the plan of conversion of Shenandoah Life from a mutual company owned by policyholders and the acquisition by United Prosperity Life, a stock company, is “fair and equitable” to policyholders.
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.
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 Company. As part of the acquisition, 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 2012. 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. Additionally, Shenandoah will not resume the issuance of new insurance policies until after the acquisition by United Prosperity Life Insurance Company is complete.
