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PACIFIC MUTUAL ENHANCES PROPOSAL FOR FIRST CAPITAL TO FULLY PROTECT POLICYHOLDERS AND ANNUITANTS

 PACIFIC MUTUAL ENHANCES PROPOSAL FOR FIRST CAPITAL
 TO FULLY PROTECT POLICYHOLDERS AND ANNUITANTS
 NEWPORT BEACH, Calif., April 17 /PRNewswire/ -- Pacific Mutual Life Insurance Co., California's largest life and health insurer, today submitted a revised proposal to rehabilitate First Capital Life Insurance Co. that reinforces its previous proposal which fully protects the cash values of contracts held by First Capital policyholders over the next five years, credits interest to their accounts over that time and guarantees they will receive up to 75 percent of the company's future profits.
 Main features of the amended proposal, which was submitted to California State Insurance Commissioner John Garamendi late today, are designed to "emphasize and clarify our focus on policyholders, and the long-term commitment we are making to maximize the value of their contracts," said Thomas C. Sutton, chairman and chief executive officer of Pacific Mutual.
 "The structure of our revised proposal is similar to our original one because, frankly, we believe it is unique and offers by far the strongest and most favorable means of protecting policyholders."
 Sutton also stressed that Pacific Mutual's revised proposal "offers a permanent home for policyholders in the Pacific Mutual family of companies, removing the terrible uncertainty that has clouded their lives over the past year. It is also backed by a strongly-capitalized California company that has nearly 125 years of experience in the life insurance business." Sutton added that Pacific Mutual is willing to make a final commitment for First Capital as early as May 8.
 Under Pacific Mutual's proposal, three-quarters of the accumulated profits of the rehabilitated company after five years is set aside for distribution first to continuing policyholders. If these policyholders' account values are brought up to a 6.5 percent return over the rehabilitation period, excess profits would be shared with other parties. Pacific Mutual originally proposed to split this excess with 25 percent going to continuing policyholders, 25 percent to terminating policyholders and 50 percent to creditors. The revised proposal submitted today, emphasizes the value of keeping contracts in place during the plan period, by dividing the excess with 50 percent going to continuing policyholders and 50 percent to creditors.
 "Additional policy cancellations would only weaken the company and undermine the value of all First Capital policies. A stabilized company, however, is the best assurance that all policyholders will receive the maximum value from their policies," Sutton said.
 Under Pacific Mutual's proposal, policyholders and annuitants who chose not to remain with the company during the five-year rehabilitation period will, with the exception of hardship cases, be subject to penalties for early withdrawal.
 In addition, creditors of First Capital will share in a percentage of the company's accumulated profits only after continuing policyholders have been made whole. Creditors will receive profit sharing if the losses on First Capital's high-risk assets -- which include troubled junk bond and real estate portfolios -- are minimized over the next five years.
 Founded in 1868, Pacific Mutual Life Insurance Co. provides a variety of insurance and investment services for individuals and businesses, and offers guaranteed investment products to institutions and pension plans. Additionally, the company provides a variety of group employee benefit services, as well as investment management capabilities for institutional and high-net-worth individuals.
 Together with its subsidiaries, Pacific Mutual has nearly $50 billion in assets and funds under management and is ranked by Fortune as the nation's 29th largest life insurer. The company has more than $37 billion of individual and group life insurance in force and more than 4,000 employees and associates nationwide.
 -0- 4/17/92
 /CONTACT: Bill Acton, Hill and Knowlton, 213-937-7460/ CO: Pacific Mutual Life Insurance Co. ST: California IN: INS SU:


KJ-EH -- LA012 -- 9771 04/17/92 18:01 EDT
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Publication:PR Newswire
Date:Apr 17, 1992
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