Maryland Insurance Commissioner John A. Donaho today announced that he has ordered Executive Life Insurance of Inglewood, Calif., and Executive Life Insurance of New York to stop selling or renewing policies in Maryland.
Both companies are subsidiaries of First Executive Corp. of Los Angeles. The insurance giant, which was Michael Milken's top "junk bond" customer, suffered huge losses when the junk bond market plunged.
The cease and desist order and the suspension of certificate of authority were issued on Tuesday and became effective the same day. However, the company must continue to serve current policies as the premiums are paid.
Executive Life of California was put under conservatorship by the California insurance commissioner on April 11. Its sister operation in New York was subsequently seized by New York regulators on April 16.
The California subsidiary had $731 million in life insurance policies in force in Maryland at the end of last year. During 1990 the company paid $12.8 million in claims and collected $7.1 million in life insurance premiums in Maryland, Donaho said. The insurance division did not know how many policy holders the company has in Maryland.
Policy holders are covered by the Life & Health Insurance Guaranty Corp., the Maryland fund that backs the policies of life and health insurance companies. The fund also covers fixed-rate annuities but not variable-rate annuities, Donaho said. Annuities are a form of contract sold by a life insurance company that guarantees a fixed or variable payment to a person at a future date.
Donaho said Maryland had postponed ordering First Executive to stop selling and renewing policies at the request of California regulators, who were trying to arrange a sale of the insurance company. However, that request was recently withdrawn, he said.
Insurance regulators in other states have also issued orders of suspension for the California company, Donaho said.