APPENDIX XV

AFFIDAVIT

STATE OF CALIFORNIA County of Los Angeles, ss:

Russell J. Lasher, being duly sworn, deposes and says:

First, that I make this Affidavit at the request of Robert Dunne, Assistant Counsel of the United States Senate Committee on Government Operations, Permanent Subcommittee on Investigations. Harry O. Miller, Esq., General Counsel of First Executive Corporation, Executive Life Insurance Company and Executive Life Insurance Company of New York, has been given the opportunity of reviewing this Affidavit prior to my signature of it. I understand that this Affidavit may be used in lieu of my testimony in an executive session or public hearing of the Subcommittee. I have been given a copy of the current rules and resolutions, I understand that the Subcommittee's inquiry is concerned with the propriety of the insurance aspects of labor/management severance plans involving Louis Ostrer.

Second, I am Financial Vice President and Treasurer of First Executive Corporation, a Delaware corporation, which is a holding company for several companies, two of which are Executive Life Insurance Company and Executive Life Insurance Company of New York. As Financial Vice President and Treasurer, I am responsible for accounting functions for Executive Life Insurance Company and Executive Life Insurance Company of New York.

Third, I have reviewed the attached photostatic copies of checks and the attached accountings, and state that to the best of my knowledge and belief the accountings contain all transactions involving the disbursement of funds to agents involved in writing insurance in connection with Local 295 severance programs of Executive Life Insurance Company and Executive Life Insurance Company of New York, and that the copies of checks attached hereto and described as follows are all of the checks by either company in connection with payments or loans to such agents.

Payee: Dina Gelman.—All checks drawn on Executive Life Insurance Company of New York Account Number 00132556, First National City Bank, New York, N.Y.

Payee. Cy Reeves Snyder.-All checks drawn on Executive Life Insurance Company of New York Account Number 005-75540-9, Marine Midland Grace Trust Company, New York, N. Y.

On August 30, 1972, before me, the undersigned, a Notary Public in and for said State, personally appeared Russell J. Lasher, known to me to be the person whose name is subscribed to the within Affidavit, and acknowledged to me that he executed the same.

Witness my hand and official seal.

My Commission Expires February 3, 1973.

FRANCES Moss, Notary Public California.

APPENDIX XVI

COUNTY OF NEW YORK,

State of New York,

I, Joseph J. Warren, President of The Trans World Life Insurance Company of New York (Trans World) 511 Fifth Avenue, New York, N. Y., having been advised of my rights, make the following statements voluntarily and freely to John Tschirhart and Michael Cesario who have identified themselves to me as investigators for the Permanent Subcommittee on Investigations of the United States Senate Government Operations Committee. I have not been coerced or intimidated in any way.

In September 1971, Mr. Seymour Greenfield, principal of Viscount Agency Inc. (Viscount) a general agent of Trans World, called for an appointment to see Mr. William Kaelin, a director of Trans World, and myself. The meeting was subsequently held, at which time Greenfield discussed the Local #295 Severance Fund. He explained that the first tier of the plan, beginning December 1, 1970, had been written by Executive Life Insurance Company of New York (Executive). He asked us whether we would be willing to write insurance for the second tier of the plan beginning December 1, 1971. This business was contingent on a series of advances totalling $100,000 to Viscount, against first-year commissions, prior to bringing in the case.

Greenfield estimated that 1,200-1,500 people would be included in the plan. He explained that Executive was not handling the second tier of the plan since it was preferable to spread the risk of the severance plan over several insurance companies, rather than have the entire risk borne by only one, and that the Trustees felt they would get better service if more than one company was involved. We ascertained that the claim experience of Executive for the first year was higher than normal (approximately $100,000 for the January-September 1971 period as against $65,000 expected from mortality tables). However, this claim experience was not so high as to materially affect our decision on this matter. A much larger concern of ours was advancing the $100,000 against first-year commissions since this was an appreciable amount for a relatively small insurance company like Trans World.

Management felt that resolution of the problem basically was an operating decision and, consequently, approval of the Board of Directors was not required. Nevertheless, because of the size of the advance requested by Viscount and the uncertainty as to whether the fringe benefit program itself would be permissible under forthcoming Phase II guidelines, we kept the Directors fully informed on this matter at informal meetings on September 15, 16 and 17, 1971.

The management of Trans World finally decided to accept Mr. Greenfield's offer regarding Local 295 in late September 1971. As additional security for the loan, Trans World had Seymour and Bertha Greenfield personally guarantee payment of the promissory notes of Viscount for the $100,000 in advances Mr. Greenfield had requested, and also had them pledge all the issued and outstanding stock of Viscount as collateral security. On September 22, 1971, the first advance check was given to Viscount.

As another condition to Trans World making the advances was some assurance that we actually would be selected by the Local as the insurance carrier of record for the second tier of the plan beginning December 1, 1971, if permitted by Phase II. On October 6, 1971, we received from Local 295 Severance Fund a $10,000 deposit premium and a letter evidencing the Local's intention of insuring with us. On November 29, 1971, we received an additional $30,000 which, together with the $10,000, represented approximately one month's premiums and would effectively put in force the second tier of the Local 295 Severance Fund on December 1, 1971.

Compensation to Viscount Agency

Trans World first began in June 1968 to write insurance for Severance Plans with Viscount, which was one of our general agents. We compensated Viscount at the same rate for this Severance Plan business as we had previously compensated it for other business. The first plan was The Severance Bonus Plan of Automotive Mechanics-Local 447 IAMAW District 15. Additional plans were brought to us by Viscount after 1968, including Local # 320, Production Sales and Service Employees Union; Local #110, Warehouse and Novelty Union; and the Industrial Production Employees Union. However, we foresaw that our surplus could be eroded it we continued to pay the high first-year commissions and allowances on large amounts of such business in the future. We sought an alternative that would allow us to continue writing new union severance business, while lessening the drain on surplus.

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