Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 31, 1992 TAG: 9203310124
SECTION: BUSINESS PAGE: A-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Hartford has agreed to assume and reinsure all Fidelity's annuities and insurance policies, said Steven T. Foster. Policyholders will not lose money, he said.
"It is a sale of the entire block of business," said State Corporation Commission spokesman Ken Schrad. Hartford will buy all of Fidelity's insurance assets, but Fidelity will continue to exist in name, Schrad said.
Richmond-based Fidelity Bankers was forced into receivership last May when the SCC feared it did not have enough money to cover accounts.
Foster alleged in a suit filed in Richmond Circuit Court in January that five former officers and directors cost Fidelity Bankers more than $100 million through fraud, conspiracy and negligence.
Lawyers for the defendants said the suit is invalid because Fidelity Bankers is not insolvent.
The insurance firm was heavily invested in high-risk "junk" bonds and suffered financial reversals when the market eroded.
Under the plan announced Monday, a moratorium on cash value payments could be lifted. The moratorium has prevented Fidelity Bankers customers from cashing in their policies.
Policyholders who opt out of the bailout plan would receive a cash payment estimated at 85 percent of the account value, Foster said.
The deal should be final by May, he said. The SCC must approve the plan.
Fidelity Bankers has approximately 184,000 policies in force with account values of about $4 billion. Fidelity Bankers is licensed in 49 states.
Hartford Life is a subsidiary of ITT-Hartford Insurance Group of Hartford, Conn. The company has more than $16 billion in assets and is the 19th largest insurance firm in the United States.
by CNB