Close Close

Life Health > Life Insurance

Prosecutor Unveils Executive Life Agreements

Your article was successfully shared with the contacts you provided.

NU Online News Service, Dec. 18, 2003, 6:52 p.m. EST – Federal prosecutors in Los Angeles say they have made progress in settling the affairs of Executive Life Insurance Company, a California life insurer that failed in 1991.[@@]

U.S. Attorney Debra Yang announced today that her office has negotiated plea agreements with Mutuelle Assurance Artisanale de France Assurances, Chauray, France; MAAF Chairman Jean Claude Seys; Francois Pinault, a French investor who acquired Executive Life’s junk bond portfolio after the company failed; and Pinault’s holding company, Artemis S.A.

French officials reported earlier this week that they have agreed to a $770 million settlement.

A French government agency and Credit Lyonnais, a French bank that is now a unit of a competitor, Credit Agricole S.A., have agreed to pay $575 million in fines, U.S. officials say.

Seys, who has agreed to plead guilty to concealing information from U.S. regulators, must serve 5 years on probation and pay a $250,000 fine.

Pinault has agreed to help with further investigations, and Artemis has agreed to put $185 million in an escrow account that could end up making payments to Executive Life’s 325,000 former customers, officials say.

Federal and state officials say Credit Lyonnais, which was a government-owned bank in 1991, bought the assets of Executive Life and earned illegal profits on those assets around the time the insurer failed. Prosecutors got involved because state laws in effect at the time prohibited foreign governments from owning California life insurers, and federal laws prohibited banks from owning insurance companies.

Federal prosecutors and California insurance regulators say Credit Lyonnais used a variety of strategies to hide its involvement in the acquisition of Executive Life.

Officials also have accused a group of investors organized by a government-owned French company of using MAAF and other companies to help conceal the identity of Credit Lyonnais when Credit Lyonnais dealt with the California Department of Insurance after the collapse of Executive Life.

California Insurance Commissioner John Garamendi has inherited a lawsuit that was filed on behalf of consumers, insurance guaranty associations and his department against parties said to be involved in the Executive Life failure.

The federal actions and settlements “are extraordinarily helpful to us in our civil case,” Garamendi said during a press conference after Yang announced the plea agreements.

Garamendi said that his department’s case against the Executive Life defendants could go to trial in February 2005 and that he expects the department to win.

“If this goes to settlement, we’ll also succeed there,” Garamendi said.

The California department says the Executive Life failure cost customers more than $3 billion.

The California department has a thorough list of Executive Life’s 325,000 customers and used it within the past year to make a distribution from a trust set up to hold some of the insurer’s assets after the collapse, Garamendi said.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.