Hawaiian Insurance & Guaranty's parent is in default
BIRMINGHAM, Ala. » Vesta Insurance Group is in default on loan agreements and officials say Texas regulators have taken over six of the Birmingham company's subsidiaries.
Regulators have also seized control of Vesta companies in Hawaii and Florida, which, according to the company's last annual report, would mean eight of the company's 10 subsidiaries have been seized.
Six insurers owned by Vesta will be operated by the Texas Commissioner of Insurance as part of a court-ordered rehabilitation, the company announced Monday. Such steps are usually taken when a company is losing customers at a rapid pace, suffered a disastrous loss or might not be able to pay claims.
Monday's court order puts Vesta in default on long-term debt securities, the Birmingham News reported in a story yesterday. Vesta's last annual report filed in 2004 showed the company had about $218 million of outstanding debt securities. Then Vesta said it would not be able to pay the entire amount if creditors demanded immediate repaying after a default.
Vesta was once one of the state's most valuable publicly traded companies, with stocks selling for about $53 in June 1998. The company's shares fell 4.5 cents to 4.5 cents Monday.
Texas has taken over Vesta Fire Insurance, Vesta Insurance Corp., Shelby Insurance, Shelby Casualty Insurance, Texas Select Lloyds Insurance, and Select Insurance Services.
Florida is operating Florida Select Insurance. Hawaii is operating Hawaiian Insurance & Guaranty.
Vesta, which lost $318 million from 2001 through 2004, hasn't filed Securities and Exchange Commission financial documents in two years. Its shares have been removed from the New York Stock Exchange.
The company's troubles began June 2, 1998 when the company began examining accounting irregularities. Chief Executive Robert Huffman resigned. The company erased $49 million of profit reported for 1993 to 1997. Vesta said $29 million of profit came from premiums improperly reported as income.