QUACKENBUSH HAILS COURT'S ELIC DECISION AS VICTORY.

SAN FRANCISCO--(BUSINESS WIRE)--May 11, 1995-- Writing the latest chapter in the rehabilitation plan of the Executive Life Insurance Company, the California Supreme Court on Thursday delivered another major victory for the California Department of Insurance, declining to review a decision by the California Court of Appeal, announced Commissioner Chuck Quackenbush.

The Supreme Court denied several petitions for review that had asked it to overturn the Court of Appeals' Feb. 15 ruling upholding the ELIC rehabilitation plan, as well as the Commissioner's authority and discretion to administer insolvent insurance companies.

Quackenbush hailed the court's determination as "the right result, both in upholding the authority of the Department to redress the misfortune of a failed insurance company and in bringing to a close the years of wrangling over the Executive Life rehabilitation plan." Many ELIC policyholders have already received distributions under the plans, while others have chosen restructured insurance policies. However, some funds were held back from all of the policyholders pending the result of the appellate challenges. Today's action frees several hundred million dollars for distribution, which Quackenbush said will happen "just as quickly as possible."

The department took control of ELIC on April 11, 1991, because of losses in its multi-billion dollar junk bond portfolio had driven it to insolvency. The Court of Appeal disapproved an original rehabilitation plan in 1993. When a revised plan was approved in trial court, it was challenged by several of the same appellants who had opposed the original plan, led by a group of indenture trustees holding 1986 Municipal Guaranteed Invest Contracts (or 1986 Muni-GICs). The petitions for review, denied by the court today, included those of the Muni-GICs and certain other opponents of the revised plan.

Today's court decision left in place a Court of Appeal's decision which affirmed the rehabilitation plan covering 350,000 ELIC policyholders; the largest ever cash sale of junk bonds, totalling $3.25 billion, and most settlements reached with policyholders. It also rejected the Muni-GICs claims that the structure of the plan discriminatorily denied them tens of millions of dollars and challenges to an enhancement agreement by which numerous state insurance guaranty associations have agreed to put roughly $2 billion into the rehabilitation plan for the benefit of the policyholders.

The Supreme Court also let stand the one ruling by the Court of Appeal that the Commissioner had asked to review. The Commissioner had, in conjunction with a group of post-1988 Muni-GICs, petitioned the Supreme Court to reinstate a settlement that had allowed the group to share in the rehabilitation plan.

Quackenbush called the Supreme Court's denial of the review of that issue "unfortunate, because it unfairly excluded California municipal bond issuers who purchased Executive Life GICs from participating in the rehabilitation of Executive Life." Quackenbush also said that he will continue to support the claims of the post-1988 Muni-GICs for equal treatment in the Executive Life case.

CONTACT: California Department of Insurance

Gary Hernandez, 415/904-5412