GUARANTEE AGREEMENT
General American Life Insurance Company ("General American"), by resolution of
its Board of Directors, proposes to guarantee that Cova Financial Services Life
Insurance Company, Cova Financial Life Insurance Company, First Cova Life
Insurance Company, (the "Subsidiaries" or a "Subsidiary") will have sufficient
funds to meet all of their contractual obligations. In order to give full effect
to this guarantee the parties hereto agree as follows
1) The General American guarantee is a guarantee of payment. In the event a
policyholder of one of the Subsidiaries presents a legitimate claim for
payment under a Subsidiary insurance policy General American promises to
pay such a claim directly to the policyholder if the Subsidiary is unable
to make such payment.
2) General American guarantees payment of the Subsidiaries' contractual
obligations even if the reason a Subsidiary is not liable to pay them is
insolvency, bankruptcy, assignment for the benefit of creditors,
appointment of receiver, or any court order or legal process affecting the
Subsidiary's ability to honor its obligations to policyholders.
3) The General American guarantee is explicitly for the benefit of
Subsidiary policyholders and shall be directly enforceable by them without
a requirement, if a Subsidiary is unable to pay claims on its policies,
that the party seeking to enforce the guarantee first file a claim with the
Subsidiary or in an insolvency proceeding. If any payment of a Subsidiary
under an insurance policy must be returned by a policyholder as a
preference in bankruptcy or for any other reason, General American's
guarantee will take effect with respect to that policyholder. The
Subsidiaries shall be entitled to bring this guarantee to the attention of
all of their customers and potential customers, subject to applicable state
rules and regulations.
4) General American shall be entitled to adequate notice of any claim
before the obligation to make good on the guarantee shall take effect, but
any delay in presenting notice of a claim shall not affect General
American's obligations hereunder. General American does not waive, by
giving this guarantee, its right to investigate claims made against a
Subsidiary in the same manner and to the same extent that it investigates
claims made in the ordinary course of its own business. General American
reserves the right to assert conventional defenses to the payment of an
insurance claim.
5) The General American guarantee shall not be affected by amendments or
additions made by the Subsidiaries to their insurance policies, or by
waivers or extensions granted by the Subsidiaries except that General
American's guarantee shall not give the subsidiaries' policyholders rights
to a greater recovery than they would obtain under the terms of the policy
of insurance they have with the Subsidiary. General American waives its
right to assert defenses against payment of a claim arising from
illegality, unenforceabilliy, and failure to give notices or take other
formal steps which might at law otherwise be required of one seeking to
enforce the guarantee.
6) Any change in this Agreement shall have prospective effect only so that
contracts issued prior to the effective date of any change shall not be
affected by any subsequent modification of the guarantee unless the
modification is an enhancement of the guarantee or the policyholder
consents in writing to the new terms of the guarantee.
7) General American's guarantee of the Subsidiaries' contractual
obligations is given in consideration of General American's desire to see
the Subsidiaries grow and prosper without constraints caused by customer
concerns about their financial strength. The Subsidiaries' obligations as
the recipients of the guarantee are to operate as successful insurance
companies in their chosen areas of endeavor and to keep General American
informed of their financial situation and of any instance in which General
American might be called upon to honor its guarantee.
8) Upon payment of any claim General American shall be subrogated to the
rights of the Subsidiaries for that amount, and the Subsidiaries agree to
cooperate with General American to effect such subrogation rights against
third parties. General American and the Subsidiaries agree to hold any sums
they collect from third parties in trust for Subsidiary policyholders and
to pay claims from such sums as they become due. The Subsidiaries further
agree to repay General American any amounts due under this guarantee to
policyholders and not reimbursed by other parties.
9) This Agreement shall be governed by the law of Missouri. If any part of
this Agreement shall be held invalid, illegal, or unenforceable the
remaining parts of the Agreement shall not be affected and shall continue
in effect. This Agreement shall be binding upon any successor or assigner
of General American the Subsidiaries, provided however that General
American's obligations thereunder shall end if this guarantee is assigned
to an entity having ratings from each of A.M. Best, Duff and Xxxxxx,
Xxxxx'x or Standard and Poor's attesting to financial strength,
credit-worthiness, or claims-paying ability and equal to or better than
General American's rating.
IN WITNESS whereof the parties have signed this Guarantee Agreement this first
day of June 1995.
GENERAL AMERICAN LIFE INSURANCE COVA FINANCIAL SERVICES LIFE INSURANCE
COMPANY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxxxxx Xxxxxxx X. Xxxxx, Chairman
Executive Vice President
COVA FINANCIAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Chairman
FIRST COVA LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Chairman
