Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, April 16, 1991                   TAG: 9104160274
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: The New York Times
DATELINE: LOS ANGELES                                LENGTH: Medium

CHIEF OF SEIZED INSURANCE FIRM WON'T GET PAY

The regulators had said earlier in the day that they would seek to block the payments, which were guaranteed to Carr by First Executive under an unusual arrangement earlier this year. In the arrangement, Carr's compensation would have been paid through a new subsidiary of First Executive not regulated by the California Insurance Department.

Calls Monday to Carr seeking comment were not returned.

California regulators last week seized control of First Executive's primary subsidiary, Executive Life Insurance Co., and today regulators in New York are expected to seize another unit, Executive Life Insurance Co. of New York.

The financial condition of both subsidiaries has been badly weakened by defaults and declining prices in their huge portfolios of "junk bonds."

Carr's agreement not to seek the compensation comes as California regulators scramble to get court authority to make payments to consumers who bought insurance policies and annuities from Executive Life.

The court order issued last week allowing the California Insurance Department to take control of Executive Life did not specifically permit the state to pay regular death benefits to holders of life insurance policies or to issue regular monthly checks to holders of annuities.

As a result, California has been unable to make such payments since seizing Executive Life on Thursday, said Tom Epstein, the state's deputy insurance commissioner.

Epstein said it was unclear how many customers had been affected or how much money was involved. He added that the insurance department was assembling the information it needed to go back to court today to seek a change in the order, permitting the payments to be made.

He said the department was optimistic that full payments could be processed beginning by the end of the week.

But the delay is certain to compound the fears of Executive Life customers across the country. Especially worried are those who bought individual Executive Life annuities as an investment for their retirement and those whose companies bought group annuities to finance their pension plans.

Annuities are investment contracts that pay out cash over an extended period, usually in return for a single cash payment up front. Insurance companies finance annuities by investing the up-front payments, often in securities.

First Executive and Executive Life invested primarily in junk bonds.

John Garamendi, California's insurance commissioner, said Monday that he was confident that California's new insurance guarantee fund would cover holders of policies and annuities sold by Executive Life.

Regulators had previously said it was unclear whether Executive Life's customers would be covered because the law on the establishment of the California fund specifically exempted from coverage customers of those companies that were financially impaired before Jan. 1.

But customers in California will not be completely covered. The California fund guarantees 80 percent of the value of an insurance policy or an annuity, up to a maximum of $250,000 for a life insurance policy and up to $100,000 in annuity benefits.

Many Executive Life customers live outside California and are covered by the guarantee funds in their states. The coverage varies, and several states, including New Jersey, have no guarantee funds.

First Executive has life insurance policies totaling $876 million in force in Virginia, according to the State Corporation Commission. State residents paid $9 million in premiums last year. Those figures do not cover annuities or other types of insurance written in Virginia, a SCC spokeswoman said.

In New York, regulators said they had had discussions with a number of leading insurance companies that expressed a willingness to provide management assistance in dealing with the troubles at Executive Life of New York.

But Kevin Foley, the deputy superintendent of the New York Insurance Department, said the discussions were general in nature and did not include negotiations for any of the companies to purchase parts of Executive Life of New York.