A bank trustee for approximately $200 million of taxable municipal bonds backed by Executive Life Insurance of California has reached a settlement of its claim against the failed insurer, clearing the way for back interest payments to bondholders.

A memorandum of understanding was reached with the trustee, Texas Commerce Bank-Eel Paso, a unit of Chemical Banking Corp.; California Insurance Commissioner John Garamendi; and Aurora National Life Insurance Co., the proposed successor to Executive Life.

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