Ahh, gentle readers. Y’all are so kind to me. Internal memo that goes something like this:
Sent: Tuesday, November 25, 2008 2:07 PM
Subject: 1031 Residential Customer Questions.pdf – Adobe Acrobat Standard
Our company is at a critical juncture, and you are on the front lines fighting for our survival. Thank you for that. I know you want answers, and I will do my best to describe where we are at this point in time.
When LandAmerica released third quarter 2008 results, we identified a â€žliquidityâ€° problem inside our 1031 operation. For years, we have invested 1031 exchange funds in a type of investment called “auction rate securities.” These are considered cash equivalents, and during the year, the issuers of these securities would hold an “auction” so that investors could buy or sell their securities. In February, the market for these securities evaporated, meaning no buyers existed for sellers like us.
We’ve pursued many options to find liquidity. We even worked a liquidity line of credit into the proposed transaction with Fidelity. We talked to the federal government about bailout money, and on November 12, Treasury Secretary Henry Paulson said only banks and automakers would be recipients. We did all we could, and our last resort was to close our 1031 operations.
That action, of course, sent customers Ë† and you, our valued employees Ë† into turmoil yesterday. One thing you can do is help customers understand that our underwriters remain financially solvent with over $300 million in combined statutory surplus and some of the industryâ€šs most stringent requirements for reserves in place to protect our policyholders. Over $1.1 billion in cash and investments back the claims reserves of our underwriters.
What are we doing in the meantime? Whatever option you may have considered, we are probably working on it. Every alternative we are pursuing requires intensive negotiations with a number of parties, which makes the process very fluid.
This is a hard time for all of us. Please know that your leadership is fighting for our customersâ€š business day and night at the highest levels, and the last chapter has yet to be written!
Don’t give up.
Sincerely, are you kidding me? Oh hell yeah. Check this out.
I’d say they’re in full scale damage control.Â I got three words Teddy.Â Horse.Â Barn.Â Gone.
Now all you have to do is find the leak.