Pennsylvania Insurance Commissioner Diane Koken announced that the Commonwealth Court has approved the Plan of Rehabilitation for the Fidelity Mutual Life Insurance Company.
Koken characterized the reorganization of Fidelity as on of the most successful in the department’s history. The announcement noted that “Among the key successes, virtually all allowed creditor claims have been paid. Policyholders have been restored to their full contractual rights, without reductions of death benefits or cash values, and a moratorium on policy loans and surrenders was ended.”
” Policyholder dividends of $70 million were declared for 2001, followed by $65 million in policyholder dividends this year. Also, under the plan, policyholders will be receiving valuable stock in a reorganized stock insurance company.”
“This reflects an amazing comeback for a company that had a deficit of over $100 million at the time the department took control in November 1992,” Commissioner Koken stated. “During rehabilitation, we marshaled all available assets, reorganized the company’s financial structure and gradually rebuilt the company’s surplus. As of Dec. 31, 2001, Fidelity Mutual had a surplus of $115 million.”
Before going into rehabilitation Fidelity Mutual was the fifth largest life insurance company domiciled in Pennsylvania, with approximately 102,000 life insurance policies totaling $8.9 billion of insurance in force and around $1.2 billion in assets.
Under the third amended rehabilitation plan approved by the court Fidelity Mutual’s business and assets will be transferred to a stock company, common and preferred stock issued to policyholders, and 51 percent of the remaining common stock to be sold to an outside investor.
“Once an investor has been selected, there will be a final hearing to approve the investment and stock distribution to policyholders,” said the announcement.
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