Ailing First Executive Corp. Hires Investment Banker

First Executive Corp., the troubled Los Angeles-based life insurance holding company, confirmed Monday that it has hired the investment banking firm First Boston Corp. to advise it on options for restructuring.

Sources close to the firm said the option most favored by Fred Carr, First Executive’s chairman and chief executive, would be to bring in a “strategic partner.” This would involve trying to find a large, healthy company willing to become a major investor in First Executive. The purpose would be to help resolve the crisis caused by the insurance concern’s heavy investment in junk bonds.

But people close to the company said First Boston also will advise First Executive on the possibility of selling one or more of its life insurance subsidiaries. The firm’s two biggest subsidiaries are Executive Life of California and Executive Life of New York.

In a telephone interview, Carr confirmed that First Boston had been hired. But he refused to disclose the details of its mission.

However, someone close to the discussions between the company and First Boston said the investment banking firm was hired “really to just help them look at what all the options are with regard to both the life companies and the holding company.”

Meanwhile, Kidder, Peabody & Co., which as reported has been looking for some time for a possible buyer for all or part of First Executive, confirmed Monday that it has found a company “that is interested in a transaction with First Executive.”

A Kidder spokeswoman refused to comment, however, on reports that the company in question is Kidder’s own parent company, General Electric Co. A spokeswoman for General Electric Financial Services, GE’s financial unit, said: “We look at a lot of different things, and we don’t comment on rumors.”

Kidder, which used to be one of First Executive’s main investment bankers, is said to be concerned about possible liability if First Executive’s problems worsen, in part because Kidder’s stockbrokers have sold a large number of First Executive annuities to customers. In addition, some First Executive shareholders have speculated that GE might be interested in purchasing junk bond portfolios at bargain-basement prices.

The GE spokeswoman, however, denied this. “We’re not looking to go out and buy big junk bond portfolios,” she said. “If we find pieces that make sense and fit into what we’re doing, we might consider it.”

In a separate development, sources close to First Executive confirmed that the firm’s five outside directors have hired legal counsel to represent them. Albert G. Handschumacher, one of the directors, said they recently hired the Los Angeles law firm of O’Melveny & Myers. Handschumacher declined to elaborate, but other sources said the directors are concerned about their possible personal liability in the many investor lawsuits pending against the firm.