Garamendi debuts plan to revive Exec Life seeks IRS cooperation.Garamendi debuts plan to revive Exec Life, seeks IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. cooperation California Department of Insurance The California Department of Insurance (CDI), established in 1868, is the angency charged with overseeing the regulation of insurance regulations, enforcing statutes mandating consumer protections, educating consumers, and fostering the stability of insurance markets in the state Commissioner John Garamendi John Raymond Garamendi (born January 24, 1945) is a U.S. politician and a member of the Democratic Party. He became the 46th Lieutenant Governor of California on January 8 2007. fleshed out his plan to rehabilitate re·ha·bil·i·tate v. 1. To restore to good health or useful life, as through therapy and education. 2. To restore to good condition, operation, or capacity. Executive Life Insurance Co. last week and turned up the heat on what he termed the major barrier to the effort, the Internal Revenue Service. Garamendi issued a 17-page guideline for the rehabilitation rehabilitation: see physical therapy. which offered policyholders a clear choice: cash out their policies at a sharp discount, or commit to remaining with the successor company to Executive Life for a fixed period - likely three to five years - and receive possible additional benefits. Those benefits would come from a fund which would be fed by contributions from state guarantee funds, third party insurers and possible appreciation of the company's junk bond junk bond, a bond that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. assets. Executive Life, the largest subsidiary of bankrupt West Los Angeles
"This plan provides fair terms for potential bidders while assuring maximum protection for Executive Life customers," said Garamendi of the guidelines released last week. "We limit the buyers' liabilities to a manageable level and afford profit-sharing opportunities for policy and contract holders if the value of the assets increases." The plan cannot be implemented unless the IRS gives ground on its demand that Executive Life pay it $643 million in back taxes and penalties, Garamendi said. Last week Garamendi met with Treasury Department officials to request that the company allow policyholders' claims against the company to come before those of the IRS. Garamendi last week also released three basic criteria for suitors for the company, currently numbering four bidders. They include the ability to commit $300 million to $500 million to support the new company's contract obligations, plus resources to provide substantial additional financial guarantees; experience in operating a life insurance company; and demonstrated ability to manage the company's $6.4 billion junk bond portfolio. |
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