First Capital Lowers Profit Report; Chairman to Leave

First Capital Holdings Corp. said Friday that it is sharply restating its 1990 earnings, reflecting big problems in its portfolio of risky junk bonds.

Separately, the Los Angeles financial services firm said it is negotiating to sell its Universal Life Insurance unit to bolster its finances.

In addition, its longtime leader, Robert I. Weingarten, 49, is leaving as chairman and chief executive. Weingarten, who will serve as a consultant over the remaining 7 1/2 years of his contract, said in a statement that he wants to devote more time to personal interests and investments.

First Capital had reported a $41.9-million profit Feb. 12. But on Friday, the company said its profit would actually be $7.1 million after an additional $34.8-million reserve was taken for possible losses in its portfolio of high-yield, high-risk bonds.

First Capital was once a highly profitably operation specializing in life insurance and mutual funds. The firm, hurt by the rapid slide over the past year in junk bond values, enjoyed close ties to the collapsed Drexel Burnham Lambert investment bank, which Weingarten once credited in an interview as helping “put us on the map.”

Universal Life, which has $1.3 billion in assets, is part of its First Capital Life Insurance Co. subsidiary, which First Capital acquired for $300 million when it bought E. F. Hutton Insurance Group in 1987. Shearson Lehman Bros., which bought most of Hutton’s other operations, has been a major investor in First Capital, with a 28% stake.

Without disclosing the prospective buyer for Universal Life, First Capital said the sale price is expected to be about $150 million. The company plans to use the proceeds to cut debt and boost its financial cushion.

Weingarten entered the business in the early 1980s after running Macro Communications Inc., where he published such magazines as Financial World and Saturday Review. He has lately ranked as one of the state’s highest-paid executives. In a Times executive salary survey published last year, Weingarten ranked 54th with total compensation of $1.9 million.