P.M. BRIEFING : First Executive Blames Junk Bonds for $776-Million Loss
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First Executive Corp. today reported $836 million in fourth-quarter losses and a $776-million loss for the year due to huge losses in its $6.5-billion investment in junk bonds.
The Los Angeles-based insurance holding company, whose subsidiaries include Executive Life Insurance Co. of Los Angeles, in January announced that it expected an after-tax charge of $515 million to 1989 earnings. Today it said the junk bond losses were so bad that it had added another $344 million.
First Executive became the second Southern California institution in as many days to be buried beneath an avalanche of junk bond losses. On Sunday, Columbia Savings & Loan Assn. reported losses of $575 million in a five-month period, rendering it insolvent and in danger of seizure by federal regulators.
For the fourth quarter, First Executive’s $836-million loss, the equivalent of $9.98 a share, compared to a profit of $48 million, or 42 cents a share, in 1988. Revenue plunged far into red ink: from $552 million in 1988 to a negative $541 million in 1989.
For the year, First Executive’s $776-million loss was the equivalent of $9.67 a share and came on revenue of $1.19 billion.
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