Executive Life Unit Put Up for Sale : Insurance: The state has already received a $3-billion commitment for the Los Angeles firm from a French investment group, according to one official.

Calling it a “true fixer-upper,” state Insurance Commissioner John Garamendi said Tuesday that he is seeking to sell failed Los Angeles-based Executive Life Insurance Co. to the highest bidder.

Garamendi said that already he has received a $3-billion commitment from a French investment group led by Altus Finance to “rehabilitate” Executive Life. The company was seized by state regulators on April 11 as its losses mounted from bad investments and clients sought to cash in their policies.

Altus would buy some assets, make an equity investment and restructure Executive Life’s liabilities, he said. Altus is 60% owned by the French bank Credit Lyonnais. Other investors in the group include Compangnie de Navigation Mixte, Euris, Eurofinac and Cle Financier Alain Mallart.

Sounding like a salesman, Garamendi told reporters that Executive Life, is the “best investment opportunity available in America today. It is a true fixer upper with unlimited upside potential.” He set no deadline for bids, but said he wanted to complete the sale quickly.

With assets of $10.1 billion, Executive Life of California is the largest insurer to ever fail. Its sister unit, Executive Life of New York, also was taken over by regulators in that state but is said to be in better financial condition than the California unit.

Garamendi said the bidding process was launched to try to get policyholders to receive the most money possible.

But even with a sale, he said, it is unlikely that Executive Life customers will get all of the money due them. He said that it is probable that “contracts will be rewritten and that the value of them will be diminished.” He said he couldn’t estimate how much the values would drop.

Garamendi authorized the Blackstone Group, a Wall Street investment banker, to contact prospective buyers. He said that buyers must be willing to invest substantial capital, protect policyholders and provide strong management.

The announcement comes one day after Executive Life’s parent, First Executive Corp., filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. Led by Fred Carr, First Executive was one of the best customers in buying junk bonds from former Drexel Burnham Lambert Inc. financier Michael Milken. The company has lost $1.14 billion in the last two years, as its junk bond portfolio soured.

In its bankruptcy petition, First Executive lists $804 million in assets and $280 million in liabilities, $275 million of which is listed as secured. The $804 million in assets, however, represents their book value, which is considerably lower than the market value.

The petition also provides a list of people described as creditors but provides little additional information. Included in the list is Milken, who is now serving time in federal prison for violating securities laws, and Milken’s brother, Lowell.

Bates reported from Los Angeles and Weintraub from Sacramento.