Hawaii insurer’s parent
pounded on Wall St.
Vesta Group, which owns
From staff and wire reports
Hawaiian Insurance & Guaranty,
reports 'accounting irregularities'NEW YORK -- Vesta Insurance Group Inc., which owns a major Hawaii insurer, saw it shares plunge 47 percent today, a day after the parent company said "possible accounting irregularities" will force it to restate earnings for the last two quarters.
Vesta's president and chief executive officer, Robert Y. Huffman, also has resigned.
However, the company's Hawaii operation, Hawaiian Insurance & Guaranty Co., said it has not been affected by the changes at the Birmingham, Ala.-based parent.
"I expect no impact whatsoever on HIG's operations," said Pete Grimes, HIG general manager. HIG had been declared insolvent in 1992 after Hurricane Iniki losses. It was later rehabilitated by the state insurance division and was sold to Vesta in 1995 for $35 million.
Vesta's stock closed today at $27.75 on the New York Stock Exchange, down $24.94 from its Friday close of $52.69. The stock did not open for trading yesterday.
Vesta said a preliminary investigation indicates that it is likely to record a "net financial impact" on earnings for the fourth quarter of 1997 and the first quarter of 1998 of about $15.3 million.
For the first quarter ended March 31, Vesta reported net income of $14.5 million. For the fourth quarter ended Dec. 31, the company posted net income of $13.5 million.
Vesta is the holding company for the property and casualty insurance subsidiaries of Torchmark Corp., also based in Birmingham.
Torchmark, Vesta's largest shareholder with 28 percent of the company's outstanding shares as of Dec. 31, declined to comment.
Dow Jones News Service and Star-Bulletin reporter
Russ Lynch contributed to this report.
