Tentative Deal Announced for First Capital Unit in Virginia
Insurance regulators said Monday that they have agreed tentatively to sell Fidelity Bankers Life Insurance Co., a subsidiary of troubled Beverly Hills-based First Capital Holdings Corp., to ITT Hartford Insurance Group.
Fidelity Bankers, which has $4 billion in assets and 184,000 policyholders nationwide, was seized by Virginia regulators last May after First Capital filed for Chapter 11 bankruptcy because of losses stemming from risky junk bond investments.
Virginia regulators say they will accept other bids for the company during the next 90 days. Those bids will be reviewed before regulators make a final recommendation to the Circuit Court of Richmond, which must approve the deal.
Fidelity’s sister company, First Capital Life Insurance of San Diego, was also seized by regulators last May. California regulators are considering selling First Capital Life to Shearson Lehman Bros. for $50 million. Other bids may be submitted until April 10.
Steven T. Foster, insurance commissioner for Virginia, said the proposed sale of Fidelity Bankers would assure policyholders who agree to stay with the company for five years a full return on their investment.
However, those who choose cash in their policies immediately will be forced to pay a penalty that’s now expected to equal 15% of account values. The deal would put an end to a 10-month ban on policy surrenders and withdrawals.
Joe Fazzino, a spokesman for Hartford Life, said Fidelity Bankers customers may also find some changes in the terms of their insurance contracts.
For instance, new premiums paid for universal life and interest-sensitive whole life policies will be subject to a 6% “load,” or upfront sales charge. Also, interest rates paid on insurance contracts and annuities will be adjusted to reflect market conditions at the time of the sale.
Hartford Life, a subsidiary of ITT-Hartford Insurance Group of Hartford, Conn., has more than $16 billion in assets and is the nation’s 19th-largest insurance firm.
