Met Life to Spend Up to $70 Million to Buy N.Y. Unit of Executive Life : Insurance: The nation’s second-largest life insurer will acquire some assets, but not the subsidiary’s big junk bond portfolio.

Metropolitan Life Insurance Co. is expected to announce today that it will acquire much of the assets of Executive Life Insurance Co. of New York, the insurer that was seized by New York regulators last April.

Sources confirmed that Metropolitan Life has agreed to spend up to $70 million to acquire the company’s life insurance and annuity businesses--which have assets of about $1.4 billion--from the New York insurance department.

Executive Life of New York was a subsidiary of California-based Executive Life, which failed first and was taken over by California regulators. The New York unit, which was run as a separate entity, was seized after the failure of the California company prompted a run by New York policyholders.

Metropolitan, the nation’s second-largest life insurer, won’t acquire the New York unit’s big junk bond portfolio. It also won’t buy the unit’s pension and structured settlements businesses, but will manage these under contract for New York regulators.

The disposition of the New York unit, about a third the size of the California company, is expected to be smoother and simpler than California’s drawn-out project to rehabilitate the parent. The 100,000 policyholders of the New York unit are expected to get 100 cents on the dollar under the agreement, without the need for regulators to tap insurance industry guaranty funds.

After a complicated public auction, California Insurance Commissioner John Garamendi last year awarded the California company’s assets, including its hefty junk bond holdings, to a French investor group for $3.55 billion. California policyholders will be assured of getting 100 cents on the dollar only after nearly $2 billion is provided from insurance industry guaranty funds.

Industry experts have said the New York unit was in much better financial health than the parent, in part because New York regulators cracked down much earlier on its heavy junk bond investments.

The sharp downturn of the junk bond market two years ago brought about the failure of Executive Life.

Executive Life and the New York unit were both owned by Los Angeles-based First Executive Corp., established by insurance maverick Fred Carr. First Executive is in bankruptcy proceedings.

Metropolitan Life’s acquisition is due to be announced today at a press conference at the New York State Insurance Department’s headquarters in Manhattan.

The assets it will acquire represent just under half of the New York unit’s holdings, valued at about $3 billion.

Annuity and life insurance policyholders will receive Metropolitan policies in exchange for the Executive Life of New York policies. A key remaining question is how soon policyholders will have access to their funds, which have been frozen since the unit was seized.

Metropolitan declined to comment on why it won’t buy the pension and structured settlements business, or the large junk bond holdings. The junk bonds are valued at about $1.9 billion.

The junk bonds will remain in the hands of the New York regulators, who used them as assets to support the pension and structured settlement businesses. And sources said that proceeds from Metropolitan’s purchase of the life insurance and annuity businesses will be used to guaranty against any losses the pension and structured settlements businesses may suffer.