EXHIBIT 10.3
FINANCIAL SUPPORT AGREEMENT BETWEEN
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY AND
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AGREEMENT BETWEEN
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Whereas, First Great-West Life & Annuity Insurance Company ("First GWL&A") is
wholly owned by Great-West & Annuity Insurance Company ("Great-West"); and
Whereas, Great-West sells life insurance and annuity policies in all states
except New York, and has incorporated First GWL&A as the vehicle for selling
certain of those life insurance and annuity policies in New York (subject to New
York law, the First GWL&A life insurance and annuity policies will be identical
or similar to certain life insurance and annuity policies sold by Great-West in
the other states); and
Whereas, Great-West receives ratings from the following rating agencies: A.M.
Best Company, Duff & Xxxxxx, Xxxxx'x Investors Service and Standard & Poor's
Corporation ("the rating agencies"); and
Whereas, it is desirable that First GWL&A be in a position to market the
policies with ratings reflecting the financial support of its parent,
Great-West, and Great-West wishes to enhance and maintain the financial
condition of First GWL&A so that the rating agencies consider providing First
GWL&A with identical ratings as the current ratings given to Great-West; and
Whereas, it is in the interests of Great-West and First GWL&A that the aforesaid
ratings be obtained, and that Great-West confirm its financial support of First
GWL&A; and
Whereas, Great-West intends to maintain a majority ownership position in First
GWL&A;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Great-West undertakes to invest in shares of First GWL&A in order to
maintain the capital and surplus of First GWL&A at the greater of
$6,000,000 or the following percentage of the New York Insurance
Department's risk based minimum capital requirements on a statutory
basis; i) if First GWL&A's total assets are less than $3 billion--200%,
ii) if First GWL&A's total assets are $3 billion or more--175%. Any
investments in First GWL&A will be subject to applicable statutory and
regulatory restrictions.
2. Great-West undertakes to ensure that First GWL&A has adequate liquidity
to meet its obligations. If First GWL&A needs funds not otherwise
available to it to make timely payment of its obligations under the
policies or otherwise, Great-West shall provide such funds in cash on a
timely basis - provided that such payment shall be in accordance with
applicable law.
3. Great-West undertakes to assume by reinsurance all of the book of
business of First GWL&A if First GWL&A is sold, subject to applicable
law and mutually acceptable terms. Great-West undertakes to assume by
reinsurance up to all of the book of business of First GWL&A if
requested to do so by the Audit Committee of First GWL&A, subject to
applicable law and mutually acceptable terms.
4. Great-West may amend or terminate this Agreement by giving 90 days prior
written notice to First GWL&A and the rating agencies. Notwithstanding
the foregoing, Great-West shall not terminate this Agreement until:
(a) First GWL&A receives ratings from the rating agencies, without
consideration of the support described in this Agreement, which are not
more than one rating level below the ratings of First GWL&A as supported
by this Agreement; or
(b) substantially all of the book of business of First GWL&A is
transferred to another insurance company, by coinsurance or assumption
reinsurance, provided that the book of business is transferred to an
entity with ratings from each of the rating agencies which are not more
than one rating level below First GWL&A's then current rating or rating
as supported by this Agreement at the time of such transfer (it being
understood that, after such transfer, First GWL&A may then be sold
without restriction); or
(c) First GWL&A is transferred or sold, provided it is sold to an entity
with ratings from each of the rating agencies which are not more than
one rating level below First GWL&A's then current rating or rating as
supported by this Agreement at the time of such transfer or sale and
such entity provides First GWL&A with a capital support arrangement.
5. First GWL&A undertakes to pursue all remedies (as might be required in
the future) to legally enforce the terms and conditions of this
Agreement.
6. During the period that the financial support provided under this
Agreement is a material matter with respect to its financial condition,
First GWL&A undertakes to reference this Agreement in the footnotes to
any statement of its financial position.
7. This Agreement shall be governed by the laws of the State of New York.
Dated as of the 2nd day of September, 1997.
