Southern Title’s future uncertain

A local title company entangled in an embezzlement investigation is now under the control of the State Corporation Commission.

The Richmond Circuit Court on Wednesday appointed the SCC as receiver of Southern Title Insurance Corp., a downtown-based firm that at one time was doing business in more than 20 states.

Southern Title laid off its underwriting staff and stopped taking new claims in September after the company admitted that one of its employees in Texas embezzled funds that were to be held in escrow.

That embezzlement and the investigation that followed left the company below proper capital levels. The court appointed the SCC to take the reins and protect the interests of policyholders and creditors.

“The Bureau of Insurance is the receiver and in essence is running the company,” SCC spokesman Ken Schrad said.

The job of the receiver will now be to untangle the company’s finances and determine whether there is enough of a company left to salvage or whether it should be liquidated.

“You can attempt to rehabilitate the company if that’s possible or find someone to buy the book of business that remains,” Schrad said.

But it’s still too soon to tell what will happen.

“Until the bureau can get its hands around the true financial condition of the company, it’s hard to predict what happens next,” Schrad said.

While receivership is basically the equivalent of a bankruptcy, it is not necessarily the death knell for a company.

Schrad pointed to Roanoke-based Shenandoah Life Insurance Co. as a recent Virginia receivership success story.

The SCC took control of that company through receivership in February 2009 after it was found the company didn’t have a proper capital cushion.

But in October, the state approved a deal for Shenandoah to be acquired by an Arizona firm and brought back to life.

Southern Title is owned by Montana-based ALPS Corp. It acquired Southern Title in 2009.

When it initially stopped issuing new policies, Southern Title said it would continue to pay current and future claims. However, the SCC said Wednesday that a moratorium has been placed on the payment of claims while the receiver completes an evaluation of the company’s financial condition.

Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]

A local title company entangled in an embezzlement investigation is now under the control of the State Corporation Commission.

The Richmond Circuit Court on Wednesday appointed the SCC as receiver of Southern Title Insurance Corp., a downtown-based firm that at one time was doing business in more than 20 states.

Southern Title laid off its underwriting staff and stopped taking new claims in September after the company admitted that one of its employees in Texas embezzled funds that were to be held in escrow.

That embezzlement and the investigation that followed left the company below proper capital levels. The court appointed the SCC to take the reins and protect the interests of policyholders and creditors.

“The Bureau of Insurance is the receiver and in essence is running the company,” SCC spokesman Ken Schrad said.

The job of the receiver will now be to untangle the company’s finances and determine whether there is enough of a company left to salvage or whether it should be liquidated.

“You can attempt to rehabilitate the company if that’s possible or find someone to buy the book of business that remains,” Schrad said.

But it’s still too soon to tell what will happen.

“Until the bureau can get its hands around the true financial condition of the company, it’s hard to predict what happens next,” Schrad said.

While receivership is basically the equivalent of a bankruptcy, it is not necessarily the death knell for a company.

Schrad pointed to Roanoke-based Shenandoah Life Insurance Co. as a recent Virginia receivership success story.

The SCC took control of that company through receivership in February 2009 after it was found the company didn’t have a proper capital cushion.

But in October, the state approved a deal for Shenandoah to be acquired by an Arizona firm and brought back to life.

Southern Title is owned by Montana-based ALPS Corp. It acquired Southern Title in 2009.

When it initially stopped issuing new policies, Southern Title said it would continue to pay current and future claims. However, the SCC said Wednesday that a moratorium has been placed on the payment of claims while the receiver completes an evaluation of the company’s financial condition.

Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]

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