United Prosperity Life Insurance Company -- a company backed in part by Black Diamond Management Group L.P. -- has signed a definitive agreement to acquire Shenandoah Life Insurance Company, Virginia officials say.
United Prosperity has agreed to invest a minimum of $60 million in Shenandoah Life, officials say.
The Virginia State Corporation Commission put Shenandoah Life, Roanoke, Va., into receivership in February 2009 and named the Virginia insurance commissioner to be the deputy receiver in charge of protecting the interests of the company's policyholders and creditors.
Virginia officials announced that they were in talks to transfer control of the company to Prosperity Life Insurance Group L.L.C., Austin, Texas, in June 2010.
United Prosperity is a subsidiary of Properity Life Insurance Group, which is, in turn, controlled by Black Diamond, Austin, and another private equity firm.
Jose Montemayor, a partner at Black Diamond, was the Texas insurance commissioner from 1992 and 2005. He is now on the leadership team at Prosperity Life Insurance Group.
"We're very excited to enter into into this deal," Montemayor said in an interview.
Black Diamond looks forward to helping recapitalize and restore Shenandoah Life, Montemayor said.
Shenandoah Life stopped selling new insurance when it entered receivership. Before it entered receivership, it was writing life insurance, annuities and dental insurance in 31 states and the District of Columbia.
Virginia Insurance Commissioner Jacqueline Cunningham notes in a statement that Shenandoah Life is about 100 years old.
Successfully completing the transaction with United Prosperity "will allow Shenandoah to emerge from receivership, which is in the best interest of all of Shenandoah's policyholders, employees and creditors," Cunningham says.
Virginia insurance regulators have placed a moratorium on Shenandoah Life paying claims and benefits, except for accident and health claims, death claims, periodic annuity payments and hardship claims.
The moratorium "will remain in place during the acquisition process," officials say.
The moratorium on sales of new policies will also stay in place until the United Prosperity deal is completed, officials say.