by John Darer CLU ChFC MSSC CeFT RSP CLTC
If you were running a business and a customer, who represented 20% of your last year’s sales, decided to no longer do business with you, don’t you think there would be an impact on your business?
- This is EXACTLY what happened to First Executive and it was MAINSTREAM business news.
- In August 1984, E.F. Hutton & Co., a prominent New Yor based financial services firm, announced its decision to stop selling a tax-advantaged insurance annuity offered by a unit of First Executive Corporation., located in Beverly Hills, California.
- E.F. Hutton also discontinued other annuities from certain insurance providers.
- The sales of this product, a single-premium deferred annuity, represented approximately 20% of First Executive Corporation’s total annuity sales in 1983.
- Following the announcement, a Wall Street analyst predicted that First Executive Corporation could face a $100 million annual loss in new sales. The Wall Street Journal’s “Heard on the Street” column first reported the news of E.F. Hutton’s decision.
According to the Journal, the tip came from short seller Jim Chanos (who later called the Enron collapse and previously had called the Baldwin United collapse in 1982) “less than 18 hours after a surprised First Executive was informed by Hutton. In an interview for the column, Hutton’s general counsel confirmed the details. He termed the action a “marketing decision” by Hutton’s insurance company. The price of First Executive stock, which traded over the counter as high as $14.75 a share in January 1984, hit a 52-week low of $7.875 the day the column ran.
What neither Mr. Chanos, nor E.F. Hutton said at the time , however, was that the decision was prompted partly by a critical evaluation of First Executive and its annuity by Mr. Chanos
“Only in a recent (1985) series of interviews did Mr. Chanos and Hutton officials disclose that several weeks prior to Hutton’s action, Mr.Chanos spent two days meeting with Hutton about First Executive. At the time, he was recommending selling short First Executive stock”. Source: Wall Street Journal
A Simple Yet Obvious Question
A question nags at me as I research ELNY and find this, a simple yet obvious question that I must ask. This comes at the expense of ruffling the feathers of some senior members of my industry. Or any other advisers who may have recommended, participated in, or agreed to the placement of all of an annuitant’s structure into a First Executive qualified assignment funded with ELNY. Didn’t ANYONE advising these folks read the frickin’ Wall Street Journal, or observe any of the many other signals?
First Executive, which later went bankrupt, was used as the qualified assignment company for a number of structured settlements funded in the 1980s with structured settlement annuites issued by Executive Life Insurance Company of New York (“ELNY”)
ELNY was eventually Liquidated in August 2013.
A number of claimants are due to suffer shortfalls under the current liquidation Plan. An appeal is in progress as well as a class action lawsuit against the New York Liquidation Bureau and others.
This post and the history behind it is intended to be a seed for industry and business school case study and discussion.
….1982 Baldwin United, 1983 Charter Security 1984 Storm Warnings on First Executive in mainstream print and TV network media… How many structured settlement annuities were recommended or placed with the First Executive assignee/ ELNY annuity issuer combination after 1984?
Last updated October 26, 2025
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