I'm watching this one close... There may be a BIG buy-out, by a larger insurance co. >>>
State takes over insurer
by Houston Chronicle - Jul 04,2006
Vesta subsidiary still operating as Texas seeks buyer
Texas regulators have taken over the state's sixth-largest home insurance company and are looking for a buyer for it and many of its sister companies.
The Texas Select Lloyds, with 157,068 policyholders statewide, continues to issue and renew policies, pay agent commissions, and pay claims, according to state regulators.
Customers should continue making premium payments, regulators said.
A 'rehabilitator'
The Texas Department of Insurance said Monday a state district judge had granted an order appointing the state insurance commissioner as "rehabilitator," essentially giving the state power to take over the operations of the company, a subsidiary of Birmingham, Ala.-based Vesta Insurance Group.
Rating firm AM Best downgraded Vesta's property casualty subsidiaries' ratings to C , or marginal, from B, or fair, in March because of the company's higher than expected hurricane related losses.
In January, Vesta was delisted from the New York Stock Exchange.
"We've been watching them for a while," said Jim Hurley, a spokesman for the state Department of Insurance. "This was a pre-emptive move to make sure the policyholders are taken care of."
Parent's problems
Texas Select had actually been doing well in Texas, Hurley said, but was being affected by its parent company's inability to raise capital.
Texas Select posted a net income of $1.7 million in 2005, compared with a loss of $1.8 million in 2004, according to the state department. The company's surplus also climbed to $9.8 million in 2005, from $8.8 million in 2004, the department said.
Hurley said the department is negotiating with a prospective buyer for the Texas affiliate and other sister companies, but he declined to name it.
Regulators in Florida and Hawaii have also taken over Vesta subsidiaries.
Other Vesta subsidiaries in rehabilitation and under the control of Texas regulators include: Vesta Fire Insurance Corp., Vesta Insurance Corp., Shelby Insurance Co., Shelby Casualty Insurance Corp. and Select Insurance Services.
Vesta officials did not return calls for comment.
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