Commercial National Bank in Shreveport v. Superior Court
Opinion
Opinion
Epstein, J.
This is the second case to reach us as a result of the insolvency of Executive Life Insurance Company (ELIC). In the first, Texas Commerce Bank v. Garamendi (1992) 11 Cal.App.4th 460 [ 14 Cal.Rptr.2d 854 ], we held that municipal bond guarantee contracts (Muni-GIC’s) issued by ELIC in 1986 were annuities and hence “life insurance” within the meaning of Insurance Code section 101. Since these contracts qualify as annuities, we held that their owners are policyholders, entitled to class-5 priority status under section 1033.
We now consider the more basic question of the validity of the rehabilitation plan for the business of ELIC, as formulated by the Commissioner of Insurance (Commissioner) and approved by the respondent court.
The plan was developed in the course of insolvency proceedings instituted by the Commissioner on April 11, 1991. By that date ELIC had billions of dollars of insurance in force, but its financial condition had become so precarious as to require the Commissioner’s intervention in the public interest. ELIC’s insolvency was not due to problems with its considerable book of business, but to the condition of its investment portfolio.