First Capital Policyholders Have New Company, Vow : Insurance: State rehabilitation plan promises refunds under Pacific Corinthian.

All of the more than 250,000 people who had policies with the failed First Capital Life Insurance Co. were guaranteed their money back--eventually--when the company was re-christened Pacific Corinthian Life Insurance Co. on Monday.

Under a state-approved rehabilitation plan, Pacific Corinthian customers will be able to collect 100% of the face value of their policies after five years, plus at least 4% annual interest, California Insurance Commissioner John Garamendi said.

Marilee Roller was appointed president and chief executive of Pacific Corinthian, which will operate as a subsidiary of Newport Beach-based Pacific Mutual Life Insurance Co. With $3.5 billion in assets, the new company is the largest insurer in California headed by a woman.

Garamendi’s office seized First Capital Life in May, 1991, and forced it into bankruptcy. The company had invested 40% of its assets in high-risk junk bonds whose value at the time was plummeting.

The rehabilitation plan approved by the state Department of Insurance calls for Pacific Mutual to make a $50-million investment in Pacific Corinthian, guarantee investors their policies’ full face value and reduce to 5% the amount of junk bonds in the new unit’s portfolio.

Once the $50-million investment is repaid to Pacific Mutual, the new unit’s policyholders will share in Pacific Corinthian’s profit and surpluses through two bonus provisions that could raise the interest credited to their policies to as much as 6.5%.

Nearly 90% of First Capital’s policyholders have decided to stick with the new management.

Pacific Mutual won control of First Capital after a bidding contest with Transamerica Occidental Life Insurance Co., Shearson Lehman Bros. Inc. and others. In July, a Superior Court judge in Los Angeles agreed that the bid by Pacific Mutual offered the highest dollar value and best guarantee of security for former First Capital policyholders.

Gene Grabowksi, a spokesman for the American Council of Life Insurance, said Pacific Corinthian’s five-year plan is sound.

“The taxpayer burden is much less than liquidating (the company) at today’s dollars,” he said. “The good news for policyholders and annuitants is that they will be made whole. The downside is they will have to be patient to be paid.”

Roller, 40, has been a Pacific Mutual executive for four years. Before that, she was a vice president and treasurer for E. F. Hutton Life Insurance Co. in San Diego--the company that became First Capital and now will be known as Pacific Corinthian.

Roller’s new job will put her back on familiar territory.

“I feel very privileged to be part of the process of restoring confidence to policyholders who have been living with uncertainty for quite a while,” she said. “While our work is just beginning, I pledge to the new policyholders of Pacific Corinthian that this company will be run prudently and yield good results for those who invest with us.”