A state regulator running struggling Shenandoah Life Insurance Co. of Roanoke said Tuesday he is proposing to sell the company's group insurance business.

Don Beatty, a senior attorney with the Virginia State Corporation Commission, has an interested buyer -- a Missouri-based insurance company.

The matter is now before commissioners.

Job fallout, if any, is still unknown.

The announcement represents the first news in months about the company, which the state seized Feb. 12 because of severe financial problems that nearly depleted reserves in 2008.

State regulators said at the time the receivership began that they hoped to help restore Shenandoah Life financially and shore up reserves. They said selling a part of the business was a possibility. Since then, the company has stopped writing new policies but has continued to pay claims.

On Monday, Assurant Employee Benefits, a Kansas City, Mo., insurance company, announced that it has agreed to a proposed transaction to acquire part of Shenandoah.

Under a plan Virginia regulators sent Friday to the commission for approval, Assurant would receive premium payments, reserves and claims-payment responsibility for designated group policies.

Shenandoah would continue to administer the policies, but Assurant would provide the insurance benefits.

To complete the transition, Assurant would offer affected policyholders replacement coverage with Assurant within a year.

Beatty said by e-mail the policy categories pegged for inclusion in the proposed sale are Shenandoah's group life, accidental death and dismemberment, dental, short-term disability and vision insurance businesses. A court document also lists long-term disability.

The lines on that list brought in $68.4 million, or 24 percent of Shenandoah's premium and annuity revenue in 2008, according to last year's financial report.

Certain group policies would not be covered by the deal. One category specifically excluded would be a set of Shenandoah's group life policies that relate to insurance for federal government retirees, court papers said.

Beatty's team told commissioners that such a deal would be in the best interests of Shenandoah, its policyholders and creditors because it reduces administrative and other costs.

"Additionally, given that the Group Business is already terminating on its own and being lured away by competitors, the proposed sale would be the best means of realizing the possible value in this block of business while some of that value still remains," the petition for approval said.

Assurant would pay up to $500,000 under the proposal. Beatty declined by e-mail to comment on the amount.

The written proposal said Assurant was chosen because it submitted the highest and most responsive bid of several offers Virginia regulators received. Assurant Employee Benefits is a subsidiary of Assurant Inc., a New York insurer with $24 billion in assets.

Assurant spokeswoman Angela Skinner confirmed key aspects of the deal, but cautioned it must first be approved by the Virginia State Corporation Commission. No closing date has been set.

"This agreement reflects our commitment to growing our business, and I hope it instills confidence in Shenandoah Life brokers and policyholders that we are backing their business," said John Roberts, president and CEO of Assurant Employee Benefits, in a news release.

"As a part of Assurant Inc., we offer the stability and financial strength of a Fortune 500 company."