Three Groups Sweeten Bids for 1st Capital : * Buyout: Shearson Lehman Bros., Pacific Mutual Insurance and Transamerica Occidental Life made moderate revisions to their offers.

Three of the four groups bidding for control of failed First Capital Life Insurance Co. of San Diego amended their offers Friday, sweetening their buyout proposals just before the deadline for revisions set by California officials.

Shearson Lehman Bros., Pacific Mutual Insurance and Transamerica Occidental Life made moderate revisions to their bids for the insurance firm, which was seized by regulators last May after its parent company--junk bond-laden First Capital Holding Corp.--filed for bankruptcy.

The other bidder--a joint offer from Leucadia National Corp. and the Creditors Committee of First Capital Holdings--did not amend its offer.

Each of the four groups had already made separate $50-million bids for First Capital. All the bids guarantee that policyholders receive 100% of their original investment.

The Newport Beach-based Pacific Mutual on Friday offered to help maintain First Capital’s policy base by offering incentives to those who maintain their current policies. Under that proposal, after a five-year rehabilitation period, 50% of the accumulated profit in the restructured company would be set aside for continuing policyholders and 50% would go to creditors.

Pacific Mutual had originally proposed to split that profit with 25% going to continuing policyholders, 25% going to those who terminated their policies and 50% to creditors.

Los Angeles-based Transamerica’s revised offer included a provision designed to offer policyholders more security. After the five-year rehabilitation period, First Capital policies would be converted into Transamerica policies and given the same financial guarantees of the firm’s other policies.

Shearson Lehman changed its bid to reduce the surrender fees for those who cash in their policies before the end of the five-year term. Under the amended offer, policyholders would pay 10% of their account value to surrender during the first year of rehabilitation--instead of the 15% fee previously proposed.

Under the amended proposal, the surrender fee would remain the same in the second and third year and drop to 7% the fourth year and 4% the fifth year.

First Capital, which has $4.5 billion in assets and 252,000 policy and annuity holders, was the second-largest California life insurance company failure in history. Policyholders have been barred from surrendering or borrowing against their policies since its failure last May.

The offers and amendments were submitted to California Insurance Commissioner John Garamendi. The proposals will be considered at a hearing Tuesday in Los Angeles Superior Court, which ultimately will select one of the bids.