Liquidation Plan
Exhibit 3.3-B
Medicare Supplement Pre-Standard Assumption Agreement
The Medicare Supplement Pre-Standard Assumption Agreement is
attached hereto and incorporated herein by reference.
PRE-STANDARD ASSUMPTION AGREEMENT AMENDMENT
I. RECITALS
A. This is an amendment ("Amendment") to that certain
"Assumption Reinsurance Agreement" dated March 12, 1999, between
Statesman National Life Insurance Company (referred to therein
and herein as "Statesman") and American Capitol Insurance Company
(referred to therein and herein as "American Capitol" and
"Reinsurer"), who are the parties to this Amendment, and who are
sometimes referred to herein collectively as the "Parties." The
effective date of this Amendment is June 1, 1999.
B. This Amendment is entered into in advance of the agreement
by the Parties on a plan regarding Statesman ("Liquidation Plan")
developed by the Parties along with Xxxx Xxxxxxxxxx, Commissioner
of Insurance, Texas Department of Insurance ("TDI") in his
capacity as Commissioner and as Receiver of Statesman
("Commissioner" and/or "Receiver" as appropriate), and Texas
Imperial Life Insurance Company ("Texas Imperial"), the National
Organization of Life and Health Insurance Guaranty Associations
("NOLHGA"), and the life and health insurance guaranty
associations affected by the insolvency and liquidation of
Statesman that elect to participate in the Liquidation Plan (the
"Participating Guaranty Associations"). References are sometimes
made herein to the Liquidation Plan for various purposes. The
recitals from the Liquidation Plan are incorporated herein.
C. The policies that are the subject of the Assumption
Reinsurance Agreement and this Amendment are the same policies
that are the subject of the Coinsurance Agreement which was
entered into between the Parties hereto effective October 31,
1998, and is also identified in the Liquidation Plan.
NOW, THEREFORE, in consideration of the foregoing premises, and
the covenants, promises
and agreements set forth in this Amendment, the Parties agree as
follows:
II. DEFINITIONS
Unless otherwise specifically provided or the context so
requires, the capitalized terms set forth in this Amendment
Agreement shall have the same meaning as set forth in Exhibit 2.1
to the Liquidation Plan and such definitions are incorporated by
reference as if fully set forth herein.
III. AMENDMENT
This Amendment amends the above identified "Assumption
Reinsurance Agreement" in the manner and to the extent set forth
herein. If the event any provision or provisions contained herein
is in conflict with, or is inconsistent with, any provision or
provisions contained in the Assumption Reinsurance Agreement, the
provision or provisions contained herein shall control, override,
and supersede such conflicting or inconsistent provision or
provisions contained in the Assumption Reinsurance Agreement.
IV. ASSUMPTION OF THE STATESMAN PRE-STANDARD MEDICARE
SUPPLEMENT POLICIES
A. Pre-Standard Medicare Supplement Policies
1. Statesman. Subject to the terms and conditions of this
Amendment, Statesman transfers, cedes and assigns to American
Capitol as of June 1, 1999, the Pre-Standard Medicare Supplement
Policies and all rights, privileges and prerogatives thereunder.
The Pre-Standard Medicare Supplement Policies are reflected in
Exhibit III.A.1. American Capitol shall have no liability for any
obligations of Statesman, other than the Pre-Standard Medicare
Supplement Policies.
2. Assuming Insurer. Subject to the terms and conditions of
this Amendment, American Capitol assumes as of 12:01 a.m. on June
1, 1999, the Pre-Standard Medicare Supplement Policies to the
same extent and with the same effect as if American Capitol had
issued the Pre-Standard Medicare Supplement Policies directly.
3. Assumption Certificate. As soon as possible after June 1,
1999, American Capitol shall deliver an assumption certificate to
policyholders of the Pre-Standard Medicare Supplement Policies
substantially in the form of Exhibit III.A.3. and subject to the
approval of the Commissioner and NOLHGA.
B. Same Terms and Conditions. All Pre-Standard Medicare
Supplement Policies assumed by American Capitol shall be subject
in all respects to the same terms and conditions of the subject
policies as issued by Statesman. Notwithstanding anything to the
contrary herein contained, American Capitol does not assume, and
shall not be liable for, any liabilities that are not based
solely on the terms and provisions of the Pre-Standard Medicare
Supplement Policies. American Capitol shall accept and assume the
Pre-Standard Medicare Supplement Policies subject to all
defenses, set-offs and counterclaims to which Statesman would be
entitled with respect to such Pre-Standard Medicare Supplement
Policies. It is expressly understood and agreed by the parties
that no such defenses, set-offs or counterclaims are waived by
the execution of the Assumption Reinsurance Agreement or this
Amendment, the Liquidation Plan or by the consummation of any
related transactions, and that on June 1, 1999, American Capitol
shall be fully subrogated to all such defenses, set-offs and
counterclaims (all of which defenses, set-offs and counterclaims
may also be asserted by Statesman with respect to any claims that
may be asserted against it).
C. Assignment of Rights. Statesman hereby assigns to American
Capitol all of its privileges and prerogatives contained within
or related to the Pre-Standard Medicare Supplement Policies,
including, but not limited to, all defenses, including
contestability based upon material misstatements in the
applications for such Pre-Standard Medicare Supplement Policies,
set-offs and counterclaims to which Statesman would be entitled
with respect to such Pre-Standard Medicare Supplement Policies.
D. Reinstatement. American Capitol agrees to reinstate any Pre-
Standard Medicare Supplement Policy which on June 1, 1999, by its
terms was entitled to reinstatement, provided that all
requirements necessary to procure reinstatement of such a policy
under its terms are fulfilled to the satisfaction of American
Capitol. Upon such reinstatement of any such lapsed policy, it
shall for all purposes be treated as if it has been in force from
the date on which it lapsed, except that it shall be subject to
all the terms and conditions of the Assumption Reinsurance
Agreement and this Amendment as may be pertinent to the class of
policy in which it was or should have been included.
E. Errors and Omissions. Inadvertent errors or omissions shall
not relieve any party from liability provided that the error or
omission is rectified as soon as practicable after discovery.
Upon discovery of an error or omission, the party discovering the
error or omission shall notify any other parties affected by the
error or omission. All parties agree to cooperate and work
together, in good faith, to resolve any problems or losses caused
by any such error or omission. Such good faith cooperation may
include, but is not limited to, assumption of Statesman policies,
transfer of assets and complete documentation of the error or
omission.
V. CLOSING.
The Closing Date of the Assumption Reinsurance Agreement and this
Amendment shall take place upon execution of this Amendment by
the parties hereto.
VI. DISPUTES
To the extent that disputes or disagreements exist regarding the
final accounting and/or audits thereof, and the parties are
unable to resolve those disputes, the disputes shall be resolved
by means of the Accounting Procedure as specified in the
Liquidation Plan.
VII. PREMIUMS AND OTHER RECEIPTS
A. The parties acknowledge that the settlements required to be
made by and between the parties to the Coinsurance Agreement have
been made through May, 1999, which fact is also reflected in the
"Settlement Agreement" to which American Capitol and Statesman
are parties as set forth in the Liquidation Plan.
B. All policyholder payments related to the Pre-Standard
Medicare Supplement Policies for periods on or after June 1,
1999, shall be the sole property of American Capitol. All
policyholder payments related to the Pre-Standard Medicare
Supplement Policies for periods before June 1, 1999, shall be the
sole property of Statesman.
C. All money, checks, drafts, money orders, postal notes, and
other instruments received on or after June 1, 1999, for premiums
on the Pre-Standard Medicare Supplement Policies which are the
sole property of American Capitol shall be forthwith transferred
and delivered to American Capitol and any such instruments, when
so delivered, shall bear all endorsements required to effect the
transfer of same to American Capitol. As of and following June
1, 1999, American Capitol shall have all the rights of Statesman
under outstanding bank draft authorizations from policyholders
which authorized Statesman to draw on the policyholder's account
to automatically withhold from policyholder's accounts and
transmit to Statesman funds to apply to premium on the Pre-
Standard Medicare Supplement Policies. So far as permitted by
the laws of the applicable states, American Capitol, as part of
the Assumption Reinsurance Agreement and this Amendment, American
Capitol assumes the guaranty obligations of Statesman, if any,
with respect to such bank drafts authorizations outstanding on
June 1, 1999. American Capitol shall have the right and
authority to collect for the account of American Capitol all
receivables and other items which shall be transferred by
Statesman to American Capitol and to endorse without recourse and
without warranties of any kind the name of Statesman on any
checks or the evidences of indebtedness received by American
Capitol on account of any such receivables or other items.
VIII.RECORDS
A. Statesman agrees to transfer, assign, deliver and convey to
American Capitol, subject to the terms set forth in the
Amendment, all files and records related to the Pre-Standard
Medicare Supplement Policies in its possession or under its
control. American Capitol agrees that after such delivery,
Statesman shall be entitled, at any reasonable time and at its
expense, to inspect, audit and copy any and all such records and
files of American Capitol and all other records and files of
American Capitol relating to the Pre-Standard Medicare Supplement
Policies.
B. Any and all correspondence, premiums, records or documents
coming into the possession of Statesman on or after June 1, 1999,
directly pertaining to any Pre-Standard Medicare Supplement
Policies shall be promptly delivered to American Capitol by
Statesman, without charge to American Capitol.
IX. RESERVES
The parties acknowledge that assets equal to the reserve
liability relating to the Pre-Standard Medicare Supplement
Policies have already been settled between the parties, and no
transfer of funds or assets are involved in the change of the
reinsurance from coinsurance pursuant to the Coinsurance
Agreement to the Assumption Reinsurance Agreement and this
Amendment.
X. JURISDITION AND ACCOUNTING PROCEDURE
The provisions and requirements related to jurisdiction and the
Accounting Procedure from the Liquidation Plan apply to this
Amendment and are incorporated herein by reference.
XI. NOTICE
The provisions and requirements related to notice from the
Liquidation Plan apply to this Amendment and are incorporated
herein by reference.
XII. GENERAL PROVISIONS
The general provisions from the Liquidation Plan apply to this
Amendment and are incorporated herein by reference. Specifically,
and without limitation of the foregoing, the obligations of the
Receiver regarding the Assumed Policies as set forth in Sections
4.4.3 and 4.4.4 of the Liquidation Plan shall apply as well to
the Pre-Standard Medicare Supplement Policies the same as if
"Assumed Policies" were to read "Assumed Policies and the Pre-
Standard Medicare Supplement Policies heretofore assumed by
American Capitol from Statesman."
IN WITNESS WHREOF, this Amendment has been executed on the day
and year subscribed.
AMERICAN CAPITOL INSURANCE COMPANY
By: /s/Xxxxxxx X. Guest Date: June 1, 1999
-------------------------------
Xxxxxxx X. Guest, Chairman
STATESMAN NATIONAL LIFE INSURANCE COMPANY
By: /s/Xxxx X. Xxxxxxx, President Date: June 1, 1999
-------------------------------
Xxxx X. Xxxxxxx, President
