Policyholder withdrawals, creditor claims lead to seizure of First Capital subsidiaries.Policyholder withdrawals, creditor claims lead to seizure of First Capital subsidiaries A wave of policyholder withdrawals and creditor claims against junk bond-laden First Capital Holdings Corp. led regulators in California and Virginia to seize the insurer's two subsidiaries last week. The move, which analysts had conceded was likely for the past two weeks, will freeze policyholder withdrawals and borrowings from their policies. The seized subsidiaries are San Diego-based First Capital Life Insurance Co. and Richmond, Va.-based Fidelity Bankers Life Insurance Co. At the San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. subsidiary, annuitants will continue to receive full payments on their policies, unlike policyholders of recently seized insurer Executive Life Insurance Co. where payments were limited to 70 cents on the dollar. Executive Life is a subsidiary of First Executive Corp. Also, unlike First Executive, Los Angeles-based First Capital Holdings and its subsidiaries had no guaranteed investment contracts Guaranteed investment contract (GIC) A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. , highly speculative contracts which are not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered. by California's life insurance guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. fund. The First Capital operations are generally regarded as healthier than First Executive because they have fewer junk bonds and a major equity investor, Shearson Lehman Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . Inc. First Capital Life Insurance has more than 250,000 customers, while Fidelity Bankers Life Insurance Co. has some 320,000 customers. Both subsidiaries has assets of about $4 billion. The California conservation action came as one of First Capital Holdings largest creditors, New York-based Citibank, attempted to force the holding company into bankruptcy, a move that could have complicated efforts to rehabilitate the subsidiary. Citicorp acted as agent for a $275 million syndicated credit agreement and claimed that $131.6 million is due to the group. On May 10, the week before California Insurance Commissioner California Insurance Commissioner is an elected executive office position in California who is in charge of the California Department of Insurance. The current Insurance Commissioner is Steve Poizner. 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. seized First Capital Life, he froze cash withdrawals (surrenders) from the company, which had soared after he had publicly decried the state of the company and unsuccessfully pressured Shearson Lehman to inject more capital into the company. First Capital Life's daily rate of surrenders increased 10-fold to 100,000 in the two weeks preceding Garamendi's May 10 order. |
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