Top Executives to Reinvest in Ailing Insurer

Two top officers of First Capital Life Insurance Co. agreed Wednesday to reinvest funds in the ailing insurer following a regulatory inquiry about whether they acted improperly by pulling roughly $140,000 out of the company shortly before it was seized by regulators.

State insurance regulators said First Capital President Fred Buck repaid a $100,000 loan against his insurance policy and Senior Vice President Julia Kelly withdrew a request to transfer her $40,000 annuity to another insurer.

Both actions were part of a settlement with California insurance officials, who continue a broader inquiry into actions by the company and its managers in the days and months prior to its regulatory seizure May 14. The failure is the second largest ever of a life insurer.

Buck and Kelly had withdrawn these funds “shortly before” insurance regulators placed a general ban on policy loans and surrenders at the San Diego-based company, Insurance Department spokesman Bill Schulz said.

Although the actions were not illegal, regulators contended that they were inappropriate and Insurance Commissioner John Garamendi requested that they be reversed.

Neither Buck nor Kelly could be reached for comment. However, regulators said they “willingly agreed” to Garamendi’s request.

Both executives will remain actively involved in the management of First Capital and will help formulate a rehabilitation plan for the company, regulators said.