French to Buy Executive Life

LOS ANGELES - California Insurance Commissioner John Garamendi said a French consortium led by an affiliate of Credit Lyonnais has agreed to acquire First Executive Corp.'s Executive Life Insurance Co. unit.

The consortium, led by the French bank's Altus Finance affiliate, agreed to rehabilitate the failed insurance company with a cash infusion of up to $3 billion. Executive Life was placed in conservatorship April 11.

Under the agreement, the consortium would give policyholders about 81% of the value of their policies. The group would also offer about $300 million to capitalize a new insurance operating unit to be called Newco and would arrange financing to pay $2.7 billion in cash for most of Executive Life's junk bond portfolio, which has a book value of about $6.4 billion.

Deal Probably Legal

While the transaction would put a large foreign banking group in the U.S. insurance business, it probably would not run afoul of U.S. laws that bar a similar holding by a domestic bank. Affiliates of state-owned holding companies - Credit Lyonnais is one - have been permitted to own both banking and insurance operations in the United States.

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