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We have not reviewed the group annuity contract proposed to be issued by The Prudential Insurance Company of America (“PICA”) for GM plan participants. However, we have been informed that the contract is a fixed annuity contract that will obligate PICA to pay annuity benefits directly to the participants under the contract, and that the participants will be able to directly enforce those obligations against PICA. We have been further advised that PICA will issue individual certificates to plan participants, further evidencing their individual rights under the contract.
Assuming the above is true, in the unlikely event that PICA becomes insolvent, the Virginia Guaranty Association, subject to and in accordance with the coverage and limitation provisions of its GA Act, would provide coverage to Virginia resident certificate holders for annuity benefits that PICA has guaranteed to pay certificate holders under the contract. The Virginia GA’s coverage limit for allocated annuity contracts is $250,000 in the present value of annuity benefits. As in all other cases, to the extent that the value of a certificate holder’s guaranteed annuity benefits are in excess of the GA’s coverage limits, the certificate holder would have a claim against the assets of the insolvent insurer’s estate
Please understand that Guaranty Association coverage can only be determined by applying the terms of the relevant insurance contract to the provisions of the applicable GA act in effect at the time of the insolvency of the company issuing the contract. Therefore, any discussion of possible GA coverage is necessarily preliminary and subject to our review of the contract terms and the application of our state’s guaranty association act, as in effect at the time of insolvency. |
