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Executive Life Insurance Company (ELIC) was once the largest life insurance company in California. Its financial problems and subsequent insolvency in April 1991 [1] shocked its policyholders and the financial world.

At the time, First Executive was the biggest insurer ever to fail, which resulted primarily from money-losing investments in junk bonds. First Executive through Fred Carr had a strong association with Mike Milken and the brokerage firm Drexel Burnham Lambert, whereby at the end of 1990 the company owned high-yield debt, much of it issued through Drexel, with a carrying value of $9 billion.[2] According to Robert Sobel, First Executive was involved in 90% of Drexel's underwritings, which accounted for about $40 billion in bonds from 1982 to 1987.

After the State of California took over Executive Life, it sold the company's junk-bond portfolio to Altus Finance, a unit of Crédit Lyonnais, in November 1991 for $3.25 billion. Because banks were prohibited under the Glass–Steagall Act from owning insurance companies, Crédit Lyonnais organized an investor group to buy the insurance company operations, with the new company named Aurora National Life Assurance Co. Majority control of Aurora National was sold to Groupe Artémis in 1994.[3] In July 1998, an anonymous French whistle-blower told the California Insurance Department that Crédit Lyonnais was the real buyer of the insurance company and controlled it through secret agreements. In early 1999, the California Insurance Department sued the bank and other parties, alleging fraud and seeking $2 billion in restitution.[4]

Notwithstanding that California law forbids a foreign-owned insurance company from owning insurers in California, despite court records and documents, Insurance Commissioner Garamendi says he was "unaware" a foreign government's bank was buying the bonds for pennies on the dollar.[citation needed]

In 2003, Crédit Lyonnais and others agreed to pay $771 million in settlements resulting from false statements to bank regulators in connection with the acquisition of junk bonds and the insurance business of the failed Executive Life Insurance Company of California.[5]

In 2001, Swiss Re took control of the Aurora National Life policies; Swiss Re fully acquired Aurora National Life in 2012.[6][7] In 2014, Aurora National Life was sold to Reinsurance Group of America[8]

A subsidiary, Executive Life Insurance Company of New York (ELNY), was seized by the state of New York, who sold the majority of the business to MetLife, retaining the structured settlement book of business. Due to mismanagement, ELNY was ordered to liquidate.[9] Guaranty Association Benefits Company took over the assets of ELNY in 2013.


  1. ^ Executive Life Insurance Company, Insolvencies and Impairments, NOLHGA website
  2. ^ Loomis, Carol J. (May 6, 1991). "What Fred Carr's Fall Means to You". Money (New York). 
  3. ^ "The French Connection - Forbes". Retrieved 2015-01-05. 
  4. ^ Rossant, John (July 29, 2001). "The Sword over Lyonnais". BusinessWeek (New York). 
  5. ^ "Credit Lyonnais and Others to Plead Guilty and Pay $771 Million in Executive Life Affair" (Press release). Washington, D.C.: United States Department of Justice. December 18, 2003. Retrieved 2013-11-24. 
  6. ^ "Swiss Re Affiliate Acquires Policies Of Executive Life Successor". LifeHealthPro. Retrieved 2015-01-05. 
  7. ^ "Aurora National Life deal closed in August". Retrieved 2015-01-05. 
  8. ^ "Reinsurance Group buying Aurora National Life : Business". Retrieved 2015-01-05. 
  9. ^ Coffin, Bill; Festa, Elizabeth; Hersch, Warren S.; Stanley, Michael; Moynihan, Shawn (November 2012). "The Complete ELNY Saga". National Underwriter Life & Health (Centennial, Colorado: Summit Business Media). Retrieved November 24, 2013. 

External links[edit]

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29 news items

San Fernando Valley Business Journal
Fri, 10 Jul 2015 11:45:00 -0700

“This settlement agreement closes the last chapter in the long dispute between the Department of Insurance and Artemis S.A., one of the purchasers of the Executive Life Insurance Company,” Jones said. “As a result…the total recovery in the Executive ...

Westlaw Insider (blog)

Westlaw Insider (blog)
Thu, 16 Jul 2015 13:26:15 -0700

On June 4, Judge Susan G. Braden said that under the terms of the family's wrongful-death settlement agreement the government did not guarantee the annuity it bought from nonparty Executive Life Insurance Company of New York. (Government Contract).

The Journal News | LoHud.com

The Journal News | LoHud.com
Mon, 01 Dec 2014 18:56:54 -0800

After the Executive Life Insurance Company of New York was declared insolvent in 2012, the fund was soon on track to soon be tapped out. The new law, which took effect immediately as Cuomo signed it, removes the cap altogether, putting New York's ...


Fri, 28 Nov 2014 07:56:15 -0800

And after the Executive Life Insurance Company of New York was declared insolvent in 2012, the fund was soon on track to soon be tapped out. The new law, which took effect immediately as Cuomo signed it, removes the cap altogether, putting New York's ...
Insurance Journal
Thu, 10 Jun 2004 08:59:56 -0700

By pleading guilty, Berloty admitted that he helped conceal a series of secret agreements that allowed Credit Lyonnais to take control of the Executive Life Insurance Company of California. The case against Berloty is part of a larger criminal and ...
Wall Street Journal
Mon, 16 Apr 2012 19:26:15 -0700

The order made Monday by Nassau County Supreme Court Justice John Galasso ends a 20-year attempt to salvage the Executive Life Insurance Company of New York (ELNY). The company was placed under the control of the independent New York ...

Legal Broadcast Network

Legal Broadcast Network
Thu, 18 Dec 2014 06:31:14 -0800

The demise of Executive Life Insurance Company of New York (ELNY) and subsequent related litigation provide several lessons, perhaps most importantly that plaintiffs in structured settlement transactions need to have their own brokers. That takeaway ...

NBC 6 South Florida

NBC 6 South Florida
Wed, 15 May 2013 21:51:43 -0700

Many people who were injured years ago gave huge amounts to ELNY – the Executive Life Insurance Company of New York – and were put into annuities that would provide monthly payments. Since ELNY was based in New York, the state's insurance ...

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