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Tuesday, Feb 7, 2023

Executive Life Case Finally Closed

The final chapter appears to have closed in the quarter-century battle resulting from the collapse of Los Angeles insurance company Executive Life and an ensuing legal scuffle that stretched from Sacramento to Paris. On Thursday, state Insurance Commissioner Dave Jones announced that a French company, Artemis S.A., has agreed to pay $200 million to former Executive Life policyholders to settle the last legal case stemming from the collapse of Executive Life 24 years ago. “This settlement agreement closes the last chapter in the long dispute between the Department of Insurance and Artemis S.A., one of the purchasers of the Executive Life Insurance Company,” Jones said. “As a result…the total recovery in the Executive Life Insurance litigation against all defendants is over $930 million.” Executive Life, which had invested heavily in junk bonds, became insolvent in 1991, leaving thousands of policyholders in the lurch. John Garamendi, the state insurance commissioner back then, took over the company and put its assets out to bid. Garamendi, now a congressman, chose a consortium of French companies that later turned out to include Altus S.A., a subsidiary of Credit Lyonnais, which is owned by the French government. But California law prohibits a foreign government from owning a California insurance company. Once Garamendi became aware of Altus’ ownership role in 1999, he sued Altus, Credit Lyonnais and several other parties alleging a conspiracy to conceal Altus’ involvement in the deal. Garamendi contended that had he known, he would have chosen another bidding consortium. Credit Lyonnais, Altus and related parties all settled their cases for more than $620 million in 2005, with the proceeds being distributed to Executive Life policyholders or their heirs. Artemis S.A. also agreed to pay another $110 million to settle a separate case brought by the U.S. Attorney. But Artemis did not settle the case brought by Garamendi; that case went to trial in 2005 and a federal court ordered Artemis to pay $131 million to Executive Life policyholders. Artemis appealed that decision and a retrial was held in 2012. Both sides again appealed the decision that arose out of that trial. The appeals were pending when Artemis recently agreed to the $200 million settlement.

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