Texas Places Vesta Fire Insurance Corp. and Affiliates Into Rehabilitation

The Texas Department of Insurance (TDI) filed for and obtained an Agreed Order of Rehabilitation and Permanent Injunction from the 126th Judicial Court in Travis County on June 28, 2006, placing Vesta Fire Insurance Corporation into rehabilitation with its Texas-domiciled affiliates: Texas Select Lloyds Insurance Company; Vesta Insurance Corporation; Shelby Casualty Company; and the Shelby Insurance Company.

TDI said the Vesta companies in rehabilitation, including Texas Select Lloyds, continue to issue new and renewal policies, pay agent commissions, and pay claims.

TDI sought the rehabilitation after Vesta Insurance Group, the parent company of Vesta Fire Insurance Corporation was unable to complete its capital-raising initiatives. The Order gives the Texas Commissioner of Insurance, acting as Rehabilitator, and his appointed agents the ability to pursue and finalize a sale of Texas companies. The Rehabilitator is currently in active negotiations with a potential buyer that will recapitalize a number of the Vesta companies. TDI’s primary goal is to ensure that Texas policyholders do not experience disruption in their homeowners coverage.

In March 2006, Texas sought the redomestication of the Vesta companies from Illinois to Texas. Redomestication refers to shifting control from one state insurance department to another, allowing better coordination and control of regulatory actions and liquidation of certain assets. The action taken by TDI has been in concert with regulators in Florida and Hawaii, which also have Vesta companies domiciled in their states.

Source: TDI