Shenandoah Life Sales Suspended

[Todd King]

I write a fair amount of annuities. I have becomed very concerned about the failure of many more companies. I can only wonder how many A+ rated companies might not be giving us the full truth about their true financial situation. I only know that during the Depression of the early 30`s insurance companies survived for the most part.

So what companies do you do annuities with? Do you do Fixed or Variable or both?

 

[Joe Moore]

Is Shenandoah still paying the agents?

If so, how long do you think this will last?

Mark,

I think if someone merges with them, acquires them, or they have an adequate infusion of capital, the commissions will be paid as long as the business is on the books. I am aware there are a lot of potential happenings to make this company solid again.

They announced this week that "single premium" business was to be paid commissions after the 30-day "free-look" period. This was with the agreement of the regulators, and I feel a very good sign.

The regulators have made the statement, "this company is salvageable". The regulators are very far from being dumb.

Per a top official at the company today, the veteran IMOs on the individual side have done nothing to try to "roll the business". On the individual side, they have not seen a outflow of business. The regulators are monitoring this issue.

I know how I have handled it, telling agents that if a client insists on replacing a policy, you have a responsibility to the client, and replace it with what you feel you have to do. But if the client insists, have the client sign a statement stating the agent did not instigate the replacement. Yesterday, I told an Alabama agent to call the Alabama Department of Insurance to get their opinion and guidance, and to document who told him what to do.

This is a dedicated bunch of IMO's, most of which I feel are my personal friends. When we helped develop the latest product, "The New Vista", Bob Clark, President of Shenandoah, pointed out that the average tenure of the IMOs in the room was 9.4 years, much more than the average in the industry.

I also feel a lot of the home office employees are my personal friends, and I would hate to see any of them lose their job. Just today I talked to some of our other companies for some of the employees of Shenandoah, just it case the situation gets worse.

My wife, my family and I have probably well over $1 million of life coverage at Shenandoah. We may have $80,000 of annuities. Am I worried? NO, not at the present time. Am I concerned? Damn right, I am. We are all still paying our premiums on our policies. Shenandoah is still paying their claims.

My 2 insurance agent sons and I probably have $120-150,000/year of renewals at stake. After around 11 years as an IMO with this company and being in the top IMOs in the nation for most of these years, renewals have built up very well.

As I said, I am very concerned. but I have yet to lose the first minute of sleep over the situation at Shenandoah. Some of the IMOs have their entire future at stake with this company. It was the only company they represented. Thirty years ago, I may have had a different opinion, but this is not my first (and hopefully not my last) rodeo.

Whatever happens, happens.

Whatever the outcome, I will be fine with it. Over the last 11 years I have made many friends with my Shenandoah experience. They will be my friends forever, whatever the final outcome.

 

[Russ]

Per a top official at the company today, the veteran IMOs on the individual side have done nothing to try to "roll the business". On the individual side, they have not seen a outflow of business. The regulators are monitoring this issue.

I know how I have handled it, telling agents that if a client insists on replacing a policy, you have a responsibility to the client, and replace it with what you feel you have to do. But if the client insists, have the client sign a statement stating the agent did not instigate the replacement. Yesterday, I told an Alabama agent to call the Alabama Department of Insurance to get their opinion and guidance, and to document who told him what to do.

They haven't seen an outflow of business because the policyholders haven't been made aware of what's going on. Have any of your clients or your sons clients received the letter from the Virginia dept. of insurance dated February 19th, 2009?

Article on Shenandoah Life being fined for underwriting decisions based on an applicants future travel plans....http://www.hoovers.com/free/co/news/detail.xhtml?ID=109190&ArticleID=200903031148BESTWIRENEWS_____ab8c00080b187551_BC&source_type[]=

 

[Joe Moore]

They haven't seen an outflow of business because the policyholders haven't been made aware of what's going on. Have any of your clients or your sons clients received the letter from the Virginia dept. of insurance dated February 19th, 2009?

No, they have not.

There would be a much different situation, mainly confusion and fear, if this document was in the hands of policyholders. As we are personally having calls or seeing our policyholders, we are informing them of the receivership, and to not be alarmed when they receive the document. I think this is the right thing to do.

This is just my thought, but they are possibly holding it until there is some possible good news to go along with the bad.

This is not the first time Commissioner Alfred Gross has had a Virginia insurer in this situation. In 1999, Settlers Life had a very similar, but smaller, problem of surplus loss: SCC Ends Receivership of Settlers Life; Fully Restores Ability to Conduct Business of Insurance. - Free Online Library
They were restored to health by being acquired by National Guardian, and are still viable today.

I would imagine Gross, and his staff, learned a lot with how to deal with this type of problem. My understanding was Settlers only lost around 10-12% of their policyholders in the 7 months that the state operated the company. This was significant, but not enough to wreck the company.

It seems insurance companies have learned very well how to operate at a profit. But, the need for a safe place to park their assets is what has happened to Shenandoah, and also to Settlers.

 

[Russ]

I think I have this figured out......

(1)If it's good news, insurance companies will rush to let you know.

(2)If it's bad news, the department of insurance won't let you know right away....IF ever.

(3)If it's good news to go with the bad news, the department of insurance will THEN let you know.


I'll say this..I'm glad I know how Shenandoah stands(receivership), and have informed my wife, if I die, that she may have a lengthy wait on receiving the proceeds of my policy. At least my family knows what 99.9% of the companies policyholders don't.

 

[jacobtn]

Yep expect a very long wait took about 2 months to pay a death claim to someone I know. Was paid today.

if it was in the contestable period that's not unusual.

 

[Russ]

Yep expect a very long wait took about 2 months to pay a death claim to someone I know. Was paid today.

Was it during the 2 year contestable period? I'm assuming it wasn't or you would have stated that it was.... pending that long for medical records. If it was contestable, jacobtn is correct....2 months is about normal.

 

[Russ]

no was not during the contestable period.

I thought you would have stated so. Thanks...that's what I've been telling folks...yes, I think the company will still pay your claims, but it could take awhile to settle. I can only imagine the wait on a significant term policy.

 

[stormtracker]

What do you get when you cross an insolvent insurance carrier with a budget poor government???

 

[Mark]

What do you get when you cross an insolvent insurance carrier with a budget poor government???

I will play along. What do you get?