Shenandoah Life Sales Suspended

[Russ]

Bailout being considered?

After AIG: Which Insurer Is Next in Line for a Federal Handout? -- Seeking Alpha

From the article...."
Statistics Show the Story
Several recent news stories have suggested that insurers, especially the life insurers, are the next group to implode"......

Which basically describes Shenandoah Life...a "life insurer". I've stated this earlier in this thread. I've written 95% of what I've written with Shenandoah in...life insurance. Healthy policyholders that are now not so healthy. Some may not be here much longer. I'll probably find out soon how good/fast they pay death claims.

I don't see why another company would take on blocks of Shenandoah, especially the life section. They do need a bailout.

 

[SportsNut]

I don't see why another company would take on blocks of Shenandoah, especially the life section. They do need a bailout.

The reason that a company or group of companies would take on Shen's obligations is to protect the integrity of the ins biz... If trust is lost in a small group of companies it can and will affect the trust and confidence in all ins cos. Notmuch different than if a handful of banks failed, and ppl lost money in them... how long would it be before folks are taking money out of perfectly good banks... that last phrase, perfectly good bank could be a new oxymoron, not sure).

 

[G.Gordon]

The reason that a company or group of companies would take on Shen's obligations is to protect the integrity of the ins biz... If trust is lost in a small group of companies it can and will affect the trust and confidence in all ins cos. Notmuch different than if a handful of banks failed, and ppl lost money in them... how long would it be before folks are taking money out of perfectly good banks... that last phrase, perfectly good bank could be a new oxymoron, not sure).

That and the fact that active policies are a huge asset to any company. That goes double for a company buying older active life policies where the first years expenses of commissions and underwriting have been taken care of.

I can gaurantee you that there are already bids being taken on the books of Shen.

 

[Russ]

The reason that a company or group of companies would take on Shen's obligations is to protect the integrity of the ins biz... If trust is lost in a small group of companies it can and will affect the trust and confidence in all ins cos. Notmuch different than if a handful of banks failed, and ppl lost money in them... how long would it be before folks are taking money out of perfectly good banks... that last phrase, perfectly good bank could be a new oxymoron, not sure).

I think AIG has put a dent in the insurance industry. And AIG...breakingviews: Help Wanted at AIG financial products - Mar. 26, 2009. It was on shaky ground with some before all of this happened, within the last year. I have had a small portion of those I've talked to over the 25 years I've been doing this that don't trust insurance companies for whatever reason...lousy agent, company didn't pay what they "thought" they should have, etc. Now it's worse.

I've seen companies go under before...some come back, a few are liquidated. Shenandoah only had about 250,000 policies...now less. I think they need a bailout and probably deserve it. They've acted more professionally then AIG....they canceled the company trip....haven't read of any million-dollar bonuses given out.

Maybe some company or companies will take their business. We'll see.

 

[SalemInsuranceGuy]

I have a hypothetical question.

Client is 70 1/2 years of age.

Client has a traditional IRA in an annuity with Shenandoah Life

Client is required to take Required Minimum Distribution RMD or face a 50% tax penalty on any RMD amount not taken.

Shenandoah Life is not releasing any of the money for RMDs.

Will the client still be subject to the 50% tax penalty?

 

[Newby]

I have a hypothetical question.

Client is 70 1/2 years of age.

Client has a traditional IRA in an annuity with Shenandoah Life

Client is required to take Required Minimum Distribution RMD or face a 50% tax penalty on any RMD amount not taken.

Shenandoah Life is not releasing any of the money for RMDs.

Will the client still be subject to the 50% tax penalty?

I believe he would but he can take it out of any other IRAs he has. He doesn't have to take it out of each one evenly. So the problem would only be there if he had ALL his IRA money in one company and if that's the case he had very bad advice or just made bad decisions on his own.

RMDs were waived for everyone this year so it's a non-issue.

 

[SalemInsuranceGuy]

The one Medicare Supplement I have replaced, I put on the Replacement Form Reason: "Client insisted on moving out of Shenandoah Life Medicare Supplement, due to receivership of Shenandoah Life".

Sometimes the agent is in a Catch 22 situation, and a C.Y.A. (Cover Your A**) is in order.

That's a great idea Joe. Do you think you may want to add something saying the action was client initiated and not agent initiated? Otherwise I worry that some attorney for the receivership could try to say the client insisted only after you talked them into it by calling them first.
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I wonder what that agents E&O ins would say about that issue...? I do not think that E&O is designed for such an event to cover insolvency of an ins carrier... and who is to say that it is the marketing agents job to alert a policy holder of when to cut and run... in fact doing so could bring much more liability to an agent, as opposed to doing nothing, IMO.

The insurance company knew long ago that they were in some deep trouble. It is a matter of who knew and when did they know. The fact is, if anyone wronged a policy holder it was the corp officers who had inside knowledge... sue them, you would have far better grounds, IMO... again.

Furthermore, I just looked at a couple of states limits on their ins guarantee fund, and they both limit death benefit claims to 300K, max. So why would any company be allowed to accept more than the guaranty fund would back...? Maybe an agent should not place more face amount of db of any one client, with any one insurer... Try explaining to the client who wants 1 mil in coverage that "John, you are going to need to take 4 paramed exams..." Crazy.

One can go buggy over trying to CYA...

You bring up a good point. In today's climate should we suggest multiple policies from different insurance companies to keep them within the 300k limits on death claims and also the 100k limits on cash for annuities? If we don't could they then sue us?

 

[stormtracker]

That's a great idea Joe. Do you think you may want to add something saying the action was client initiated and not agent initiated? Otherwise I worry that some attorney for the receivership could try to say the client insisted only after you talked them into it by calling them first.

It may be a decade before we realize all the ramifications and consequences of this bailout mania. I don't think the Obama administration had a clue what they were starting. I remember the famous weekend, in which we HAD to get the first bailout approved. "The country will fail" if we don't do this IMMEDIATELY!. What a farce...

 

[Joe Moore]

It may be a decade before we realize all the ramifications and consequences of this bailout mania. I don't think the Obama administration had a clue what they were starting. I remember the famous weekend, in which we HAD to get the first bailout approved. "The country will fail" if we don't do this IMMEDIATELY!. What a farce...

hmmm... seems I remember it was the Bush Administration that the bailouts started under.

Washington Times - EXCLUSIVE: RNC draft rips Bush's bailouts

In Sepember 2008, still during Bush, the Feds bailed out Fannie Mae and Freddie Mac. It had the net effect of making Shenandoah's and many others AA-Rated Preferred Stock worthless.

Also, the AIG bailout debacle, and many others, started under Bush (remember Obama and McCain rushing back from the Mississippi debate to vote on this):

AIG bailout upsets Republican lawmakers - CNN.com

The next 4 years we may be able to blame plenty on Obama, but he was still running for President when the bailouts started.

Here is a little more info on the "fallout" (besides Shenandoah) the government caused when they bailed Fannie and Freddie out:

Bailout Blues: Beware of the Unseen Fallout From the Fannie/Freddie "Rescue" Plan

 

[stormtracker]

Bush's bailouts don't count...