NU Online News Service, Dec. 20, 10:21 a.m.EST

Missouri regulators say a judge has approved a proposal to allowMissouri Farm Bureau to assume the operations of three insurersmade insolvent by the May tornado in Joplin.

“This is a win for all involved,” says John M. Huff, director ofthe Missouri Department of Insurance (DOI), in a statement.“Policyholders' claims will be paid and Missouri taxpayers will nothave to foot the bill.”

According to the state Department of Insurance, FinancialInstitutions and Professional Registration, the three now-defunctinsurers—Barton Mutual Insurance Co., Gateway Mutual and CapeMutual—had combined premium sales of $29 million from 41,000homeowners and fire policies in 2010, but reported claims of $48million after the Joplin tornado.

The companies, known as “county mutuals” or “farm mutuals” thatserve rural residents, were part of the Barton County Mutual Group.They were put into receivership on Dec. 1.

A Barton County, Mo. judge approved the proposal by the DOI,allowing the three companies to merge into one managed by FarmBureau, which is the state's seventh-largest homeowners' insurancecompany and ninth-largest auto insurer.

“The Joplin tornado was a devastating event that resulted inproperty losses that were too much for the companies to handle,”says Blake Hurst, president of Missouri Farm Bureau, in astatement. “We will work to ensure that policyholder claims arepaid and all policyholders' coverage is continued.”

Under the plan, Farm Bureau will invest about $14 millionin surplus notes to restore the companies' surplus. The notes willbe backed by the Missouri Property and Casualty Insurance GuarantyAssoc. The new company must also buy adequate reinsurance,determined by the DOI.