Exhibit 10.40


Exhibit 10.40



SEVENTH AMENDMENT TO
GUARANTY AGREEMENT 



        This
Seventh Amendment to Guaranty Agreement (the “Amendment”) is made as of this
27th day of January, 2003 by and among ASCENT ASSURANCE, INC. (the “Guarantor”),
and LASALLE BANK NATIONAL ASSOCIATION (the “Bank”). 




W I T N E S S E T H 



        WHEREAS,
the Guarantor delivered a Guaranty Agreement in favor of the Bank, dated as of June 6,
1997, as amended by that certain First Amendment to Guaranty Agreement, dated as of March
24, 1999, as further amended by that certain Second Amendment to Guaranty Agreement, dated
as of July 21, 1999, as further amended by that certain Third Amendment to Guaranty
Agreement, dated as of April 17, 2000, as further amended by that certain Fourth Amendment
to Guaranty Agreement dated as of August 10, 2000, as further amended by that certain
Fifth Amendment to Guaranty Agreement made as of November 30, 2000, to be effective as of
September 30, 2000, and as further amended by that certain Sixth Amendment to Guaranty
Agreement dated as of April 17, 2001 (collectively, the “Guaranty Agreement”); 



        WHEREAS,
the Guarantor delivered the Guaranty pursuant to that certain Credit Agreement, dated as
of June 6, 1997 between Ascent Funding, Inc. (formerly Westbridge Funding Corporation) and
the Bank (the “Credit Agreement”); and 



        WHEREAS,
the parties hereto desire to further amend the Guaranty, subject to the terms and
conditions contained herein. 



        NOW,
THEREFORE, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the adequacy of which is hereby acknowledged, and subject to the
terms and conditions hereof, the parties hereto agree as follows: 


        SECTION 1.    DEFINITIONS.  Unless otherwise defined herein, all capitalized terms shall have the meaning given to them
in the Guaranty.




        SECTION 2.    AMENDMENTS TO GUARANTY AGREEMENT.



          		    2.1 Effective as of December 31, 2002, Schedule 6.8 of the Guaranty Agreement is
               hereby deleted in its entirety and replaced by inserting the following in its
               stead: 



               




          
        “       Minimum Statutory
Surplus Requirements
                
                     
              (in Million $) 



                     ---------------------------    -------------------------------------
                       Insurance Subsidiary         Minimum Statutory Surplus
                                                                  Requirement
                     ---------------------------    -------------------------------------
                                NFL                                    $5.7
                     ---------------------------    -------------------------------------
                               NFIC                                    $1.4
                     ---------------------------    -------------------------------------
                               AICT                                    $1.4
                     ---------------------------    -------------------------------------
                               FLICA                                   $7.0
                     ---------------------------    -------------------------------------
                                                                                                                   "


        SECTION 3.    CONDITIONS  PRECEDENT.
The  effectiveness of this Amendment is expressly  conditioned upon  satisfaction of
the following conditions precedent:


 
          		    3.1
     The Bank shall have received copies of this Amendment duly executed by the Guarantor.



               



          		    3.2
The Bank shall have received copies of the Eighth Amendment to Credit Agreement, duly
executed by Ascent Funding, Inc. 



               



          		    3.3
The Bank shall have received such other documents, certificates and assurances as it shall
reasonably request, all of which shall have been delivered on or prior to the date hereof. 



               



        SECTION
4.    REAFFIRMATION OF THE GUARANTOR. The Guarantor hereby ratifies and
reaffirms that certain Guaranty Agreement and each of the terms and provisions contained
therein, including, without limitation, Section 7.2 thereof, and agrees that the Guaranty
Agreement continues in full force and effect following the execution and delivery of this
Amendment. The Guarantor represents and warrants to the Bank that the Guaranty Agreement
was, on the date of the execution and delivery thereof, and continues to be, the valid and
binding obligation of the Guarantor enforceable in accordance with its terms and that the
Guarantor has no claims or defenses to the enforcement of the rights and remedies of the
Bank under the Guaranty Agreement. 



        SECTION
5.    COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same document. 



        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year
specified above. 




	 	ASCENT ASSURANCE, INC. 
	 	By: /Patrick J. Mitchell/
	 	Name: Patrick J. Mitchell
	 	Title: CEO
	 
	 
	 	LASALLE BANK NATIONAL ASSOCIATION 
	 	By: /Bradley Kronland/
	 	Name: Bradley Kronland   
	 	Title: Assistant Vice President













ACKNOWLEDGMENT AND
AGREEMENT OF BORROWER 



        The
undersigned, ASCENT FUNDING, INC. hereby represents and warrants to the Bank that (i) the
warranties set forth in Article 5 of the Credit Agreement are true and correct on and as
of the date hereof, except to the extent (a) that any such warranties relate to a specific
date, or (b) changes thereto are a result of transactions for which the Bank has granted
its consent; (ii) the Borrower is on the date hereof in compliance with all the terms and
provisions set forth in the Credit Agreement; and (iii) upon execution hereof no Event of
Default has occurred and is continuing or has not previously or simultaneously with the
execution hereof been waived. 



        IN
WITNESS WHEREOF, this Acknowledgment and Agreement of Borrower has been duly authorized as
of this 27th day of January, 2003. 


	 	ASCENT ASSURANCE, INC. 
	 	By: /Patrick J. Mitchell/
	 	Name: Patrick J. Mitchell
	 	Title: President