First Executive May Halt Its Dividend Payments : Insurance: The troubled firm will pay on its preferred stock for this quarter. It might suspend payments later.

Directors of troubled First Executive Corp. voted Wednesday to pay dividends on the company’s preferred stock this quarter, but a public filing warned that the firm eventually may need to renegotiate its debt and to suspend its dividend payments.

After a board meeting Wednesday, the West Los Angeles-based life insurance holding company said it will pay its regular quarterly cash dividends for the second quarter on three issues of preferred stock. The company has four issues of preferred stock outstanding, but pays cash dividends only on three.

In a quarterly report to the Securities and Exchange Commission made available on Wednesday, however, First Executive said that recent losses and pressure from insurance regulators may mean that the company will have to suspend dividend payments. It said the company also may try to reduce or delay payment on about $275 million of debt.

In 1989, the company paid $44 million in cash dividends on preferred stock. First Executive’s common stock doesn’t pay dividends.

“First Executive believes that it will likely be necessary to reduce or eliminate its preferred stock dividend obligations and to reduce or defer payments under the debt obligation in the future, given present circumstances,” the company said in the SEC filing.

In an interview, William L. Sanders, First Executive’s chief financial officer, declined to speculate on whether the board will approve dividend payments for the third quarter, currently in progress.

“Every quarter we’ll decide,” Sanders said. “You never know what’s going to happen in the next quarter.”

First Executive earlier this week reported net income for the second quarter of $30.5 million, a 40% decline from the $51 million posted a year earlier.

The company attributed much of the decline in earnings to heavy losses on investments, mainly its large holdings of junk bonds, which were brought down by a collapse in that financial market last year.

In the SEC filing, the company also said state regulations and pressure from insurance regulators in California and New York may prevent it from boosting the profits passed on to the parent company by its main insurance subsidiaries, Executive Life of California and Executive Life of New York. First Executive noted that it had only very limited assets other than the insurance subsidiaries.

First Executive officials for some time have consulted with investment bankers on a possible overhaul of the company.

However, there wasn’t any indication Wednesday that the company was close to an announcement.

A suspension of dividend payments would anger investors, although sharp declines in the firm’s preferred stock in recent months reflected market fears that First Executive might take that action.