Vesta Hosts Road Show for Agents.
The mission is to outline Vesta's financial turnaround plan and commend agents for renewing 89% of Vesta's policies last year. But Gayle and Tait also are encouraging them to increase the number of new applications.
Vesta sees itself as a regional insurer, best suited to sell its products through independent agents. That role has become increasingly important as companies such as St. Paul Cos. sell off their home and automobile business and American International Group Inc. focuses on direct selling. Vesta's insurance companies sell their products through 3,800 agencies in 42 states.
Through 1999, agents did little to build their portfolios as the company made the transition from losing money to turning a profit. But the agents held on to most of their business, letting about $6 million to $7 million in renewals slip away. However, new applications dropped 60% from 1998.
Tait said the company expects to turn a $23 million profit in 1999 to overcome 1998's $141 million loss. In 1998, Vesta was unable to comply with some terms of its loan covenants as it faced $30 million in catastrophe losses in the third quarter, among other problems. Also, in June 1998, Vesta said it misstated its earnings and was investigating accounting irregularities. And, plans to form a strategic alliance with Alfa Insurance Group collapsed. Without the alliance, it became difficult for Vesta to renew its reinsurance contracts.
As a result of its problems, Vesta exited its commercial and reinsurance businesses, opting to become an automobile and homeowners insurer. The company also got a $25 million investment from Birmingham Investment Group, sold Vesta County Mutual for $11.2 million, repaid $35 million of its debt and opened a new $20 million credit facility at Banc Corp. in Alabama.
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|Comment:||Vesta Hosts Road Show for Agents.|
|Article Type:||Brief Article|
|Date:||Jan 1, 2000|
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