Insurer of Shore homes being liquidated in two weeks
Philadelphia Inquirer
By Benjamin Y. Lowe
August 09, 2006
We had a very likely buyer for a while, and then the more that was revealed, the less appealing [Vesta] became
The slow death of Shelby Casualty Insurance Co. has left thousands of Jersey Shore homeowners scrambling to find new policies before theirs are voided two weeks from tomorrow.
The Vesta Insurance Group Inc., Shelby's parent, is being liquidated by the Texas Department of Insurance and will not fulfill premiums after that date. The company, based in Birmingham, Ala., did not return phone calls seeking comment.
Shelby's liquidation has affected 15,000 New Jersey homeowners, including about 4,000 along the Shore, Jim Gardner, a spokesman for the New Jersey Department of Banking and Insurance, said today.
'We're scrambling to get replacement policies,' said Angela Atohi, the Seaville, N.J., branch manager for the McMahon Agency, of Ocean City. 'We're talking about some of the most high-risk Shore properties.'
Replacement insurance, she said, will cost homeowners double to triple what they paid Shelby and cannot be paid in installments. Atohi said her firm had 2,700 policyholders with Shelby Casualty.
Gardner said the New Jersey Property-Liability Insurance Guaranty Association - a state-managed insurer of last resort - would pay claims up to a maximum of $300,000, as well as pay for refunds on premiums. He also said the state had suspended requirements that property owners in high-risk areas solicit three private companies before turning to the state guaranty association.
Vesta's financial troubles, which began in 2003, were exacerbated by Hurricanes Katrina and Rita. It has had multiple symptoms of a troubled company since then.
The company changed auditors in December; its stock was delisted from the New York Stock Exchange in January; it hired a new chief executive officer in February; and its insurance ratings were reduced in March.
Jerry Hagins, a spokesman for the Texas Department of Insurance, said the agency tried to sell the company in June, before making a decision in July to liquidate it.
'We had a very likely buyer for a while, and then the more that was revealed, the less appealing [Vesta] became,' he said. Most companies, he added, had reserves to handle claims brought by Gulf Coast hurricane victims.
'In this case,' he said, 'their situation wasn't sound going into it.'
Kim DeAngelis, an insurance agent for Diller & Fischer in Stone Harbor and Avalon, said she did not expect too much difficulty transferring her 600 Shelby policyholders to a new company - as long as she was prepared to work 12-hour days for a while.
'It's just time-consuming,' she said. 'We were totally assured many times they had an investor and that their rating would go up. This has been a total blow, a total shock.'
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