Executive Life Successor Keeps 92% of Business : Insurance: Garamendi calls figure ‘a tremendous vote of confidence’--but some policyholders are less than happy.

A wide majority of policyholders of the failed Executive Life Insurance Co. have opted to remain with the insurer’s successor firm, a result that state Insurance Commissioner John Garamendi on Wednesday called “a tremendous vote of confidence” in his rehabilitation plan for Executive Life, which he seized as insolvent in April, 1991.

However, a number of policyholders are disgruntled with the way the plan treats them and say that Garamendi and officials of Aurora National Life Assurance Co.--Executive Life’s successor--continue to overstate the share of their original investments that they will ultimately recover.

Some also complain that Aurora failed to provide enough accurate and timely information to enable policyholders to make an informed decision about whether to “opt in” to the rehabilitation plan--that is, stick with Aurora--or “opt out” and accept a reduced but immediate cash settlement.

Executive Life’s 337,000 policyholders faced that choice during a two-month election period that ended Feb. 12.

Garamendi announced Wednesday that about 310,000 policyholders, or 92%, opted in. In dollar terms, accounts worth $4.52 billion, or 69% of the total, opted in, while $2.02 billion, or 31%, opted out.

The majority of the “opt-outs” represented $1.2 billion worth of guaranteed investment contracts whose trustees have battled Garamendi in court from the outset and still have legal appeals pending.

Executive Life was carrying a huge junk bond portfolio in a weak market when Garamendi seized it. He has been strenuously second-guessed for that decision, most recently in a Forbes magazine cover story this week.

Forbes said Garamendi erred by overreacting to the jumpy market and seizing Executive Life in the first place. He then compounded the error, the magazine said, by selling off the entire junk bond portfolio at a price--$3.25 billion--far below what could have been garnered had the bonds been sold gradually and in smaller lots.

Garamendi, a Democrat who is running for governor, has defended his actions as prudent.

Other complaints that surfaced during the opt-in/opt-out election concern the information Aurora provided its policyholders.

Bernie Weinberg, an Encino insurance broker who represents several hundred Executive Life policyholders, said Wednesday that Aurora gave him and other brokers misleading and incomplete information that led them to advise some customers to opt in.

When Aurora later provided accurate information, several customers realized they had made the wrong choice, Weinberg said. But when they tried to reverse their election choices before the Feb. 12 deadline, they were refused, he said.

Richard Baum, Garamendi’s chief deputy, said Wednesday that policyholders had been told that their decisions were irrevocable.