ICH to Invest $180 Million in 1st Executive

ICH Corp. of Louisville, Ky., said Thursday that it has agreed to invest more than $180 million in new common stock to be issued by Los Angeles-based First Executive Corp. in a deal aimed at strengthening both life insurers.

The purchase will increase ICH’s holding in First Executive to about 21% of the shares outstanding from the 9.6% stake it bought last October.

Under terms of a five-year standstill agreement, ICH said it would buy additional First Executive shares in the national over-the-counter market to boost its stake to no more than 25%, but will maintain at least a 21% stake. Each company will also name a director to the other’s board.

The new capital will enable First Executive to expand its life insurance business, First Executive Vice President Allan L. Chapman said. For ICH, holding a stake exceeding 20% will entitle it, under the industry’s accounting principles, to add its share of First Executive’s earnings to its own income statement, Steven Bing, ICH’s vice president for corporate relations, said.

The two spoke in recent telephone interviews.

Viewed as Mavericks

Among its subsidiaries, ICH owns Bankers Life & Casualty, a Chicago-based purveyor of individual health insurance policies, as well as the Massachusetts General, Southern, Southwestern and Philadelphia life insurance companies. Its shares trade on the American Stock Exchange.

Both ICH and First Executive are regarded as mavericks in the generally staid world of life insurance. Both, for example, have shown no reluctance to invest in high-yielding bonds of less than investment grade--so-called junk bonds.

In its 24 years, ICH grew first by acquiring smaller regional insurance companies mainly for their existing business and with little regard for new sales, Bing said.

More recently, it has acquired major insurers with well-developed distribution systems--most recently the $1-billion insurance operations of Houston-based Tenneco in 1986--and managed to finance its moves either internally or by issuing its own corporate paper, which Bing acknowledged was of less than investment grade.

“We recognize that a junk bond can still be an awfully good piece of paper,� Bing said.

So, too, does First Executive, which has similarly distinguished itself by aggressive expansion.

It now has a national sales presence, though Chapman said the company plans to sell its New York subsidiary and withdraw from that market.