Executive Life

  • ELIC – Executive Life – California
  • ELNY – Executive Life of New York
  • Executive Life - Illinois
    • 1994 - SOA - Rehabilitation Fallout, Society of Actuaries - 20p
      • --  Robert Ewald, not a member of the Society, is Executive Director of Illinois Life and Health Guaranty in Chicago, Illinois.
      • In the Executive Life case in Illinois, the amount levied used up our capacity for 1991 and, as it turned out, it was a good thing we did because we had to use virtually all of our capacity again in 1992 because of additional insolvencies that hit Illinois harder than most other states -- Inter-American for one, AMS Life for another.
        • There was about $200 million involved in just those two cases in Illinois.
  • FRB - Federal Reserve - 
  • (p16) - Willis B. Howard, Jr., NOLHGA - National Organization of Life and Health Insurance Guaranty Associations:
    • I'd like to respond briefly to my honorable friend, Commissioner Bartlett.
    • Dwight, the guarantee association system works, and it works well.
  • Dwight K. Bartlett III, Maryland Insurance Commissioner:
    • Are you going to tell me, Bill, in all honesty that you really believe that the policyholders of Executive Life and Mutual Benefit Life have been well-served?
    • For example, with Mutual Benefit, if you opted out of that rehabilitation plan you get, as I recall, 55 cents on the dollar of your account value.
      • If you opt into the plan, you agreed to subject yourself to a moratorium period, which means you do not get full access to the cash values of your policy until the next century.
    • Are you going to say that's meaningful coverage for those policyholders?
    • ⇒  I think that's ridiculous.

1994 - SOA - Valuation Actuary - Symposium Proceedings - Session 1 - Introduction and Overview, Society of Actuaries - 110p

  • 2002 1010 - GOV (House) - The Collapse of Executive Life Insurance Co. and Its Impact on Policyholders
    • [PDF-277p, VIDEO-?] - R
    • (p28-29) - My name is Dru Ann Jacobson. I am here to represent my mother, Ann Dixon, and my sister, Darian Andes Merrick, who were policyholders with Executive Life Insurance Co.
      • My primary reason for being here today is to put to rest misstatements made by Credit Lyonnais representatives that Executive Life Insurance policyholders did not suffer any losses.
      • When my mother and I and others met with California Attorney General Bill Lockyer earlier this year, he confirmed to us that investigations showed that the real losses in benefits to policyholders were more than $4.5 billion.
  • 1991 - Book - The Fall of First Executive: The House That Fred Carr Built, by Gary Schulte 
  • 1992 - Book - Broken Promises: The Inside Story of the Failure of Executive Life, published by Pacific Insurance Press, Torrance, California, by Vic Modugno - <WishList>
    • 1992 - SOA - Book Reviews and Notices - Broken Promises: The Inside Story of the Failure of Executive Life, by Vic Modugno - Anthony B. Richter, Society of Actuaries - 16p
      • p67-68 - The author marvels at the intricacies of the EXL marketing system and the greed of anybody who had anything to with it:
        • The marketing was like a pyramid scheme or Amway distribution system. Each level of the marketing structure received an override commission based on what the level below it sold." 
      • But he saves his greatest contempt for state insurance departments and the people who work in them:
      • ?p - One final quote from the author accurately sums up his view of the whole situation:
        • "Had (EXL) played it completely straight, everything might have worked out. But they did all kinds of sneaky and dishonest things . . . as is true with the corporate raiders and the entrenched managers they sought to displace, it's hard to tell which group of scoundrels is worse." 
    • This is the inside story of the second largest insurance failure & worst financial disaster in U.S. Life Insurance History - an expose of regulatory incompetence & financial fraud on an unprecented scale, written by an actuary who worked at Executive Life from 1986-1990. It also looks at how financier Mike Milken used funds from Executive Life to restructure American Business & the ineffectiveness of state regulation. 
  • 2023 - Book - These Are the Plunderers: How Private Equity Runs—and Wrecks—America, by Gretchen Morgenson and Joshua Rosne
  • In May 1991, one month after seizing Executive Life, California regulators seized First Capital Life (FCLIC). Both insurers were Drexel clients with large junk bond holdings, and both had experienced ‘bank runs’. FCLIC’s run followed regulators’ televised comments that its poor condition necessitated a substantial cash infusion.

1995 - AP - Perceptions and the politics of finance: Junk bonds and the regulatory seizure of First Capital Life, by 
Harry DeAngelo, Linda DeAngelo, Stuart C. Gilson - 37p

  • 1992 - LC - Texas Commerce Bank v. Garamendi, Annotate this Case
    • [link-justia.com]
    • [Nos. B064437, B064620, B064871, Second Dist., Div. Four. Nov 30, 1992.]
    • TEXAS COMMERCE BANK et al., Plaintiffs and Respondents, v. JOHN GARAMENDI, as Insurance Commissioner, etc., et al., Defendants and Appellants; NATIONAL ORGANIZATION OF LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATIONS et al., Interveners and Appellants.
    • (Superior Court of Los Angeles County, Nos. BC028482, BC032786, BC032891, BC033201, BC033202, BC033211 and BC037933, Kurt J. Lewin, Judge.)
    • (Opinion by Woods (A. M.), P.J., with Epstein, J., and Taylor, J., fn. * concurring.)
    • Clyde J Crobaugh - In another treatise, Annuities and Their Uses, supra, 1933, Mr. Crobaugh discusses the extensive sales of annuities by insurance companies as a regulated aspect of insurance business. Under the heading "Annuities Sold By Life Insurance Companies" he writes: "As we have previously indicated, since the latter part of the eighteenth century the handling of annuities has been gradually assumed by life insurance companies. At the present time in the United States the annuity business is almost exclusively carried on by life insurance companies." (At p. 25.) "An annuity contemplates the surrender of a definite sum of money to guarantee a series of periodic payments of a certain amount during the life of the annuitant or for a certain period. ... In present-day practice annuities, as well as life insurance, come under the [11 Cal. App. 4th 478] control and supervision of state insurance departments." (At p. 26. italics added.) The text defines "Annuity-Certain" as follows: "Where the series of fixed payments are to be continued at regular periodic intervals only for a definite number of years, irrespective of any life contingency, the annuity is known as an annuity-certain." (At p. 32, italics added.) fn. 11
  • Enron is just one among a number of spectacular accounts of rating agencies’ lackluster performance in anticipating major debacles.

2004 01 - LR - Regulating the Rating Agencies, by Claire A. Hill - 53p

  • 1991-1, NAIC Proceedings - 10. Special Report on Executive Life Companies
    • Jim Schacht delivered a special report on the Executive Life Companies.
      • He reported that since January 1990 a special committee has been addressing the situation with regard to Executive Life Insurance Companies.
      • It was noted that the financial evidence reveals that the company is in no imminent financial danger but that precipitous action by any state could create serious problems.
      • After much discussion a resolution that recommends that no state take precipitous action and urges all states to continue to cooperate was drafted and unanimously adopted.
  • [Media - Executive Life]
    • 1991 0418 - UPI - Watchdog Group Blames Regulators for Executive Life Failure - [link]
    • 1991 0422 - NYT - Regulators Are Faulted in Problems of Big Insurer - [link]
    • 1991 0427 - Los Angeles Times - State Allegedly Knew Executive Life Was Insolvent in ’83, by Robert A. Rosenblatt - [link]
    • 1991 0731 - UPI - New Jersey role in Executive Life demise debated - [link]
    • 1991 0809 - NYT - Bid for Executive Life Seen As a Good One by Analysts, by Michael Lev - [link]
    • 1991 0829 - Washington Post / Roundup - California Insurance Regulators Said They Struck a deal That Would Fully Repay the Vast Majority of Policies Held by the Failed Executive Life Insurance - [link]
  • (p171) - Michael OXLEY (R-OH). - In my opening remarks, I referred to a New York Times article on June 24. And my question is based on that.
    • That article suggests that several shortcomings of the life insurance guaranty fund system, which first of all questioned the ability of the insurance guaranty fund system to handle the potential Executive Life and First Capital insolvencies.
    • Second, argued it would take years for the funds to raise enough money to pay consumers who want to cash in their policies immediately. 
    • Third, they questioned the non-uniformity of State guaranty fund coverage.
    • Four, suggests billions of dollars of pension money remains outside the guaranty system, essentially uninsured.
    • And, five, stated it would take the Hawaii Life Insurance Guaranty Fund up to 9 years to gather enough money to pay off Executive Life policyholders in this jurisdiction.
    • ⇒  I wonder if each of you could address those five criticisms and how you might propose a solution if, indeed, those are problems.
  • Eden SARFATY (NOLHGA) - I am aware of the article you refer to.
    • Let me say that it was really one of the worst pieces of journalism I have seen in a long time, and I was rather shocked to see it from the New York Times.
    • They got a lot of things wrong. They got — but I think, the Hawaii illustration is indicative.
    • In effect, they assumed the face amount of all the contracts had to be paid on a gross basis all at once.
    • Well, that is not how insurance works.
      • It never works that way, and that is certainly not how the guaranty system works and it never has.
    • In effect, they assumed everybody that had an insurance policy up and died instantly.
  • ⇒  1991 0624 - NYT - Life Insurer Failures Point Up Flaws in Safety Nets of States, by Eric N. Berg - [link]

1991 0227, 0507, 0509 and 0523 - GOV (House) - Insurance Company Solvency, (CSPAN) Insurance Company Insolvencies, Cardiss Collins (D-IL)  ---  [BonkNote]

  • The agreement with the National Organization of Life and Health Guaranty Associations would provide 100 percent of payments for more than 95 percent of Executive Life's policy and contract holders.

1991 0829 - Washington Post / Roundup - California Insurance Regulators Said They Struck a deal That Would Fully Repay the Vast Majority of Policies Held by the Failed Executive Life Insurance - [link]

  • 1990-2, NAIC Proceedings - Troubled Company Working Group of the Examination Oversight (EX4) Task Force
    • Chair - Norman Koefoed, Chair (Ill);
    • (p ) - The Chair notified the task force that a Non-Investment Bonds Working Group had been appointed to review companies with large holdings in non-investment grade bonds.
      • The group had met three times since being organized.
      • The initial concern has been with Executive Life Insurance Company of California.
      • <WishList-x2> -The group has received reports from both an independent actuarial firm and the company and is monitoring the situation.
      • The chair advised that no precipitous action should be necessary against the company.
      • In addition, the group has provided the California Department with a list of recommendations regarding needed information from the company.
      • The chair stated that information provided to the group indicates the company to be in a very liquid position, with surrenders declining as compared to January and February of this year.
      • Mr. Montgomery stated that the Actuarial Valuation Report from Milliman and Robertson should be completed by week end and copies would be available to states from the actuarial firm. - <Wishlist>
  • [Government Hearings]
    • [PDF-369p-GooglePlay, <No VIDEO-227/0507 and 0523> -  0509-VIDEO-CSPAN] ->Not on govinfo.gov - R
    • 1991 0509
      • Richard Minck (ACLI)
      • Eden Sarfaty (National Org. Life Health Ins. Guaranty-NOLGHA)
      • Donn Sigerson (Policyholder
      • Thomas Sutton (Pacific Life/ACLI)
  • Executive Life Insurance Failure - R
    • [PDF-145p-GooglePlay, VIDEO-CSPAN] ->Not on govinfo.gov
    • John Garamendi - California - Insurance Commissioner
    • Salvatori Curiale - New York - Superintendent Insurance
    • Dorgan, Stark
    • House - Committee on Ways and Means - Subcommittee on Select Revenue Measures 
  • 1991 0620 - GOV (Senate) - Retirees at Risk: The Executive Life Bankruptcy
    • [PDF-77p-GooglePlay, No Video] ->Not on govinfo.gov - R
    • Senate - Committee on Labor and Human Resources - Subcommittee and Labor
  • 1991 0717 and 0724 - GOV (House) - Life Insurance Solvency Issues
    • [PDF-217p-GooglePlay, <No Video-0717> 0724-VIDEO-CSPAN] ->Not on govinfo.gov  - R
    • 0724
      • Marcia Horton - ACLI / Lincoln National Life Insurance Company - Vice President - Government Relations
      • Bert McKasy -Commissioner- Minnesota
      • Olga Pegelow - Chicago, IL - Policyholder
      • Eden Sarfaty - President - National Org. Life Health Ins. Guaranty (NOLHGA)
      • House - Committee on Energy and Commerce - Subcommittee on Commerce
  • 1991 0731 - GOV (Senate) - NAIC oversight of the Executive Life Insurance Company
    • [PDF-163p-GooglePlay, No Video] ->Not on govinfo.gov - R
    • Senate - Committee on the Judiciary - Subcommittee on Antitrust, Monopolies and Business Rights  
  • 1992 12 - GAO - Weak Oversight Allowed Executive Life to Report Inflated Bond Values - GGD-93-35 - 44p
  • 1992 0129 - GOV (House) - Insurance Rating Companies - [PDF-205p-GooglePlay]
    • >Fred Carr, Executive Life
    • (p1) - Cardiss Collins, Chair (D-IL) - Today's hearing will examine the role of insurance rating companies.
      • As consumers become increasingly concerned about the solvency and financial stability of their insurance companies, the rating companies will play an even more important role.
        • Yet, questions have been raised about rating companies in the aftermath of the failures of Executive Life last spring and Mutual Benefit Life last summer.
        • Both life insurance companies were highly rated by rating companies until shortly before their collapse.
        • Today, we expect to learn the reasons why some of the rating companies were slow in pointing out the problems with Executive Life and Mutual Benefit Life and what they have done to improve their rating systems.
        • Ratings were a key feature in the enormous growth of Executive Life before its failure.
      • (p2) - Cardiss Collins - And on June 18, 1990, Fred Carr testified before Chairman Dingell's Oversight and Investigations Subcommittee, which was looking into the problems at Executive Life.  <Government Hearings - WishList>
  • 2002 1010 - GOV (House) - The Collapse of Executive Life Insurance Co. and Its Impact on Policyholders
    • [PDF-277p, Video?] - R
    • (p28-29) - My name is Dru Ann Jacobson. I am here to represent my mother, Ann Dixon, and my sister, Darian Andes Merrick, who were policyholders with Executive Life Insurance Co.
      • My primary reason for being here today is to put to rest misstatements made by Credit Lyonnais representatives that Executive Life Insurance policyholders did not suffer any losses.
      • When my mother and I and others met with California Attorney General Bill Lockyer earlier this year, he confirmed to us that investigations showed that the real losses in benefits to policyholders were more than $4.5 billion.
    • House - Committee on Government Reform
  • Recent Gov - Sean Duff Wisconsin Congressman
  • This is what is happening now with Executive Life of New York (ELNY).
    • The company was not insolvent when it was seized but became so in the clutch of the New York Liquidation Bureau over the years, and now industry is not only paying millions in the state guaranty fund, but many more millions toward voluntary funding mechanism for policyholders.
    • Even with all the heavily negotiated and painstakingly developed plans and stop-gap measures in the ELNY liquidation plan, some annuitants will be left incomplete, the ultimate black eye for the industry based upon promises and for insurance regulation designed to prevent such shortfalls for policyholders.

2013 0917- ThinkAdvisor - ACLI calls Lawsky's letter on reserves 'irresponsible', By Elizabeth D. Festa - [link]

  • 1986 1119 - NYT - Drexel-Boesky Tie For Some Investors, by Robert J. Cole - [link]  
    • Another investor is the Liberty Service Corporation of Beverly Hills, Calif., which is an arm of the Executive Life Insurance Company run by Fred Carr, whose companies have been frequent investors in Drexel-financed deals for corporate takeovers, according to sources.
      • A correction was made on Dec. 22, 1986 - Monday, Late City Final Edition and November 25, 1986, Tuesday, Late City Final Edition. Because of an editing error, an article in Business Day on Wednesday about investors in Ivan F. Boesky's limited partnership described one of them, the Liberty Service Corporation, incorrectly. It is not related to the Executive Life Insurance Company.
  • 1992 Summer - FRB - SPDAs and GICs: Like Money in the Bank? - Federal Reserve - [LINKtoPDF-18p]
    • (p3) - “In 1980 the life insurance industry was 150 years old. In 1990 . . . [it] was ten years old.”
      • This is how Gary Schulte (1991, p. 88), a Senior Vice President of Executive Life of California, summarized the impact on the life insurance industry of the growth in investment-oriented products in the 1980s.

  • 1991 - Book - The Fall of First Executive: The House That Fred Carr Built, by Gary Schulte

  • 1994 10 - GOV (House - Report) - Wishful Thinking: A World View of Insurance Solvency Regulation - John Dingell (D-MI)  ---  [BonkNote]  ---  [PDF-137p]
    • (p22-23) - Efforts by the NAIC to arrange a cooperative State response to the solvency problems posed by First Executive ended in acrimony.
      • The New Jersey Insurance Department sparked the simmering self-interests of each State by demanding in late 1990 that Executive Life post a $500 million deposit in order to continue doing business in that jurisdiction.
      • This demand irked the NAIC's working group and the lead regulators in California and New York, who were urging restraint by other States so that· their monitoring activities could permit Executive Life to recover financially for the benefit of all.
      • As the market situation grew worse and trust among State agencies diminished, the NAIC decided to defend Executive Life by aggressively attacking the New Jersey Department for losing faith in the joint wisdom of other State commissions. 
    • (p23) - At an extraordinary plenary session in December 1990, the NAIC unanimously passed a secret resolution castigating New Jersey for acting unilaterally to preserve the interests of its residents.
      • The resolution used strong language to cite "the expert opinion" of the NAIC's working group that "the Executive Life Companies are in no imminent financial danger ... "
      • It went on to call New Jerseys actions "unacceptable" to· the NAIC, and .requested that other States "not take unilateral action" and "not be influenced" by the New Jersey Insurance Department. The primary conclusion stated:
        • NOW, THEREFORE BE IT RESOLVED that the NAIC believes that the action taken by the New Jersey Insurance Department is irresponsible and contrary to the best interests of New Jersey policyholders and all policyholders of Executive Life Companies ...
      • The resolution was distributed to State insurance agencies with an attached confidential letter, dated December 27, 1990, to all commissioners from the NAIC's working group.
      • This letter reiterated the group's expert opinion that Executive Life was OK, provided supporting data, and reminded the commissioners that California, New York, and other States had "carefully monitored" the companies since January 1990.
      • Concluding that "the companies are capable of meeting all current and projected obligations," the letter warned that "unnecessary and precipitous regulatory action" could harm their long-term viability.
      • Four months later, Executive Life was ordered into State-controlled conservation by the new California commissioner, who assumed office in January 1991.
      • The subcommittee thereafter received copies of the secret resolution and accompanying working group letter from anonymous sources.
  • 1991 0418 - UPI - Watchdog Group Blames Regulators for Executive Life Failure - [link]
    • Watchdog group Voter Revolt released an internal memo Thursday showing insurance regulators investigating Executive Life Insurance Co. concluded there was no financial danger just four months before the firm was seized.
    • 'Just as in the savings and loan debacle, the insurance regulators who were supposed to protect the public from this kind of disaster failed to do so,' Harvey Rosenfield, chairman of Voter Revolt, said during a news conference.
  • 1992 - LC - Rose v. Cooney: No. 5:92-CV-208 (D. Conn.)
    • The firm, acting as lead counsel, obtained more than $29 million in cash and payment guarantees from Xerox Corporation to resolve claims of breach of fiduciary duty for plan investments in interest contracts issued by Executive Life Insurance Company.

2019 - Arkansas - Berger Montague PC’s Response to the State of Arkansas Office of State Procurement Request for Qualifications for Legal Services - SP-20-0012 - 175p