A Missouri state judge has placed National States Insurance Co. into rehabilitation and turned it over to regulators at the Missouri Department of Insurance.

Insurance Department Director John M. Huff has been named receiver of National States, St. Louis, allowing the department to take over operations of the company.

Huff says National States is in perilous financial condition, and the action is necessary to protect Missouri consumers who have long term care, life and Medicare Supplement insurance policies with the company.

The company’s board of directors has consented to the rehabilitation order; according to an announcement from the state DOI.

Rehabilitation protects policyholders by preserving the company’s assets. As the rehabilitator, the DOI assumes management of the company, attempts to correct problems, continues operations, maintains policyholder accounting and develops a plan of rehabilitation or petitions the court to liquidate the company.

The department is currently overseeing 13 insurance companies in rehabilitation or receivership, according to the announcement.

National States is licensed to do business in 37 states, including Florida, where it has run into financial problems with its long term care policies, according to the DOIE. Huff says the company underpriced its products and as a result may be unable to pay future LTC claims filed by policyholders.

With rehabilitation, the department’s priority will be to process existing claims and find another insurance company willing to buy and assume the policies of National States.

Licensed insurers in Missouri are backed by the Missouri Insurance Guaranty Association.

“Putting National States into rehabilitation will allow our department to make sure the company’s assets are handled properly so that claims are paid as fully as possible,” said Huff. “The department and the guaranty associations in the states in which the company conducts business will work together on behalf of consumers, who have faithfully paid their premiums to this company for years.”

National States had $6.4 million in premium sales in Missouri in 2009.