Vesta subsidiaries to be liquidated

On July 18 the Texas Department of Insurance announced that Vesta Fire In-surance Company (Vesta Fire) and its Texas subsidiary insurance companies were being placed into liquidation. Notices were sent out to agents to cease writing new and renewal insurance business, in-cluding homeowners policies for Texas Select Lloyds customers. Absent a last minute solution, TDI said, all policies will be cancelled on Aug. 23.

Vesta Fire is a Texas-domiciled insurer and the parent company of four other Texas-domiciled insurers: Texas Select Lloyds Insurance Co., Vesta Insurance Corp., Shelby Casualty Co., and the Shelby Insurance Co.. Texas Select is the only one with active Texas policyholders.

Texas Insurance Commissioner Mike Geeslin ordered the Texas-domiciled companies into rehabilitation on June 28. Birmingham, Ala.-based Vesta Insurance Group, the parent company, is in default on loan agreements and regulators from Texas, Hawaii and Florida have taken over eight of the company’s 10 subsidiaries.

Geeslin, acting as Rehabilitator, appointed a Special Deputy Receiver. The SDR assumed control of Vesta Fire and its Texas subsidiaries and subsequently determined that the companies were unable to meet their current obligations. Geeslin had been in active negotiations with a potential buyer for certain Vesta insurers, including Texas Select, but the parties were unable to complete the transaction.

Geeslin noted that the action was in the long-term best interests of policyholders.

“My primary goal in this action is to ensure policyholders have insurance that is able to pay their claims should a loss occur,” Geeslin said. “We simply could not allow policyholders and ultimately Texas taxpayers to be at risk given the financial condition of these companies.”

Previously, Texas Select Lloyds was the only Vesta insurer domiciled in Texas. In May, four other Vesta insurers re-domesticated to Texas, including Vesta Fire.