Virginia regulators today placed Shenandoah Life Insurance Inc. in Roanoke in receivership, saying the action was needed to protect the interests of policyholders and creditors.

The action comes one day after a planned merger, announced in November, was called off.

The Virginia State Corporation Commission intervened with a receivership in “an effort to rehabilitate the company” after severe financial losses in the stock market last year, according to a statement by Virginia Commissioner of Insurance Alfred Gross.

Regulators said health, accident and death claims and annuity payments will be paid, but the state imposed immediate restrictions on the payment of other claim types.

No new insurance policies will be issued, a press release said.

The statement said Shenandoah Life agreed on the need for the receivership.

The company, with 280 employees as of November, made no immediate public statement.

Wednesday, Shenandoah Life announced that its deal to merge with a larger insurer as a means of coping with recent financial trouble had been cancelled.

“On Wednesday February 11, 2009, American United Mutual Insurance Holding Company notified Shenandoah Life Insurance Company that it terminated the Letter of Intent concerning a proposed merger transaction between the two entities. Further information will follow shortly,” reads a notice on the company’s Web site.

In November, Shenandoah Life announced the merger plan as it also announced a loss of $69.9 million during the first nine months of the year in the stock of secondary mortgage market entities Freddie Mac and Fannie Mae and an entity called Sigma Finance. Its finances weighed down by the heavy losses, Shenandoah Life posted a net loss of $61.5 million during the first nine months of 2008, compared with a net gain of $4.7 million for the same period of 2007.

Shenandoah Life, a Roanoke corporate citizen since 1914, announced no employment changes. It had said the deal had been expected to close in mid-2009.