Wachovia’s failure hits Atlanta’s Delta Life

The plunge in shares of Wachovia has taken a multimillion-dollar bite out of an Atlanta-based life insurance company founded by businessman J. Mack Robinson.

About 43 percent of Delta Life Insurance Co.’s assets were invested in Wachovia common shares as of Dec. 31, according to state insurance officials. Wachovia shares have fallen from a 52-week high of $52.25 per share last October to close at $3.55 Wednesday.

But Hilton Howell, Delta Life’s executive vice president, said the insurer ”is as solid as the granite in Stone Mountain,” and that the Robinson family is voluntarily contributing $10 million in assets to the company.

“There is absolutely no risk to policyholders,” Howell said.

Delta Life, privately owned by the Robinson family, has about 70,000 policyholders, mostly Georgians. Its 2007 revenues were $20.9 million, according to state insurance officials.

The company owns about 890,000 shares in Wachovia. “We’ve lost tens of millions,” Howell said.

Georgia law states that no more than 10 percent of an insurance company’s assets should be invested in one company. But Howell said the original investment, made 50 years ago, fit under that statutory level. “It grew every year,” he said. Delta Life’s Wachovia investment was grandfathered in, said Glenn Allen, a spokesman for Georgia Insurance Commissioner John Oxendine.

Citigroup agreed Monday to buy Wachovia’s banking operations and other assets for $2.1 billion. Charlotte-based Wachovia had been rocked by loan losses from its 2006 purchase of Golden West Financial, a thrift that specialized in risky mortgages

Because of Delta Life’s large Wachovia holding, Oxendine is monitoring the insurance company. “At this time the company’s other assets, as well as the ongoing buyout of Wachovia’s banking operations, give us no reason to believe that Delta will be unable to meet all its financial obligations,” Oxendine said in a statement.

State insurance officials are evaluating solvency of insurers in Georgia amid the financial crisis, he said.

The Robinson family’s $10 million contribution to Delta Life, Howell said, “was to make sure [state insurance officials] knew we were taking steps to pro-actively assuage any concerns. It was not necessary, and not requested by the Insurance Department.”

Robinson, who founded Delta Life in 1954 and still serves as its president, was not available for comment Wednesday.

Until recently, Robinson was the largest individual shareholder in Wachovia, which in the 1980s bought First Atlanta, a company where he ranked as a major shareholder. Robinson is no longer the biggest Wachovia shareholder, but still has a substantial holding, said Howell, though he added he did not know the exact number of shares.

Robinson has owned dozens of companies, and now has major stakes in at least 10, Howell said. A philanthropist, Robinson in 1998 announced a $10 million gift to the Georgia State University business school.