THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FORCONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***] AMENDMENTNO. 2 TO THE AUTOMATIC REINSURANCE AGREEMENT EFFECTIVE DECEMBER 31, 2007 BETWEEN OM FINANCIALLIFE INSURANCE COMPANY AND WILTON REASSURANCE COMPANY

Contract Categories: Business Finance - Exchange Agreements
EX-10.22 6 d588103dex1022.htm EX-10.22 EX-10.22

Exhibit 10.22

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

AMENDMENT NO. 2

TO THE

AUTOMATIC REINSURANCE AGREEMENT

EFFECTIVE DECEMBER 31, 2007

BETWEEN

OM FINANCIAL LIFE INSURANCE COMPANY

AND

WILTON REASSURANCE COMPANY

THIS AMENDMENT NO. 2 (this “Amendment No. 2”) is made and entered into as of this 6th day of April, 2011, and amends and is made a part of the Automatic Reinsurance Agreement, originally effective December 31, 2007 (as amended, the “Reinsurance Agreement”), between OM Financial Life Insurance Company, a Maryland insurance company (the “Ceding Company”), and Wilton Reassurance Company, a Minnesota insurance company (the “Reinsurer”).

WHEREAS, pursuant to the Reinsurance Agreement, the Ceding Company automatically cedes to the Reinsurer the Quota Share (as defined in the Reinsurance Agreement) of the Ceding Company’s contractual liabilities arising out of the Reinsured Policies (as defined in the Reinsurance Agreement); and

WHEREAS, Harbinger OM, LLC, a Delaware limited liability company (“Harbinger”) will acquire or has acquired (the “Acquisition”) control and 100% ownership of all of the common stock of Old Mutual U.S. Life Holdings, Inc., a Delaware corporation and the parent company with respect to the Ceding Company; and

WHEREAS, in connection with the completion of the Acquisition and pursuant to the terms of the Commitment Agreement, dated as of January 26, 2011, by and between Harbinger and Wilton Re U.S. Holdings, Inc., a Delaware corporation (the “Commitment Agreement”), the Ceding Company and the Reinsurer desire to amend the Reinsurance Agreement in the manner set forth below to, among other things, include in the scope of the reinsurance provided thereunder risks and obligations with respect to certain additional blocks of insurance;

NOW, THEREFORE, in consideration of the covenants, agreements, representations and warranties contained herein and in the Reinsurance Agreement, the parties hereto agree as follows:

1. Definitions. Capitalized terms used but not defined in this Amendment No. 2 shall have the respective meanings given to such terms in the Reinsurance Agreement.

2. Additional Policies. Subject to the occurrence of the Second Amendment Closing Date in accordance with Section 3 hereof, effective as of April 1, 2011 (the “Second Amendment Effective Date”), the Ceding Company will automatically cede to the Reinsurer the Second Amendment Quota Share (as hereinafter defined) of the Ceding Company’s contractual liabilities arising out of the Second Amendment Additional Policies (as hereinafter defined). For purposes of this Amendment No. 2, (a) the term “Second Amendment Quota Share” means 100% and (b) the term “Second Amendment

 

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Additional Policies” means the (i) individual and non-discretionary group traditional life insurance policies and universal life insurance policies, together with related plans, benefits, policy loans, riders and endorsements but excluding all return of premium or similar benefits, whether or not reflected in policy riders, endorsements or base provisions, all as specified on Annex A-1 hereto and as were first issued by the Ceding Company on or before March 31, 2010 and remained in force and effect as of such date (the “Additional Direct Policies”) and (ii) individual life insurance policies (the “Additional Assumed Policies”) reinsured by the Ceding Company under the terms of that certain Yearly Renewable Term Retrocession Agreement, dated as of April 1, 2003 by and between the Ceding Company and Security Life of Denver Insurance Company (“SLD”) (the “ING Assumed Reinsurance Agreement”), provided, however, that, subject to Section 13 hereof, the Ceding Company represents and warrants as a condition of coverage of the Additional Direct Policies under the Reinsurance Agreement, that the representations and warranties set forth in clauses (a) through (c) of Section 2.3 of the Reinsurance Agreement shall apply to the Additional Direct Policies, except that (x) the condition set forth in Section B.1 on Exhibit B of the Reinsurance Agreement shall not apply and (y) with respect to clause (c)(ii) of Section 2.3 of the Reinsurance Agreement, the phrase “worksite marketing” shall be deleted for purposes of such representation and warranty as it relates to the Additional Direct Policies. For the avoidance of doubt, with respect to the Second Amendment Additional Policies identified in Annex A-1 as reinsured by “Raven & Wilton” the reinsurance hereunder shall be net of the quota share portion specified therein (the “Excluded Share”). It is expected that such Excluded Share will be reinsured under the Reinsurance Agreement, dated as of April 7, 2011 between the Ceding Company and Raven Reinsurance Company (“Raven Re”), and further, will be ceded to the Reinsurer in the future pursuant to Amendment No. 3 to the Reinsurance Agreement subject to the occurrence of the Third Amendment Closing Date (as such term is defined in such Amendment No. 3). For the avoidance of doubt, Reinsurer shall have no risk under this Amendment No. 2 with respect to the Excluded Share, including, without limitation, any risk of collectability of the cession with regards thereto. The schedule of plans, riders and benefits set forth in Annex A.1 shall remain subject to confirmation by the Reinsurer prior to the Second Amendment Closing Date (following completion of the validation review being conducted by the Reinsurer as of the date hereof); provided, however, that any material changes to such Annex A.1 shall be subject to mutual agreement by the parties. For the sake of clarity, this reinsurance shall not cover claims arising under the Second Amendment Additional Policies prior to the Second Amendment Effective Date and, as respects the Additional Direct Policies, excludes any return of premium or similar benefits or features, whether embodied in riders or endorsements or otherwise. Beginning on the Second Amendment Effective Date, all references in the Reinsurance Agreement to Reinsured Policies shall include the Second Amendment Additional Policies except (I) as otherwise set forth in this Amendment No. 2 or as referenced in the first sentence of Section 2.1 (General Conditions), Section 2.3 (Reinsured Policies) or the last sentence of Section 8.1 (Reserves) and (II) in respect of the Second Amendment Additional Policies, all references in the Reinsurance Agreement to “Effective Time” and “Closing Date” shall instead refer to “Second Amendment Effective Date” and “Second Amendment Closing Date,” respectively. In addition, the parties agree and acknowledge that the Ceding Company has not issued, and does not administer, the Additional Assumed Policies and, as a result, any provision of the Reinsurance Agreement that (A) requires the Ceding Company to take or refrain from taking any specific action with respect to the Additional Assumed Policies or (B) whereby the Ceding Company makes any representation or warranty in connection with the issuance or administration of the Additional Assumed Policies, including without limitation Article 5 (Reductions, Terminations and Changes), Article 7 (Claims), Section 4.6 (Premiums Payable by Direct Policyholders on Reinsured Policies), Section 11.6 (Compliance) and Section 11.8 (Business Continuity), shall not apply to the Additional Assumed Policies except to the extent that, as to the taking or refraining from taking any such actions from and after the Second Amendment Closing Date, the Ceding Company has a right under the

 

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THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

 

ING Assumed Reinsurance Agreement to cause such action to be taken or not taken or such conditions to exist or not exist. The parties also agree that, notwithstanding any exclusions or exceptions to the Reinsurer’s liabilities under the terms of the Reinsurance Agreement generally, the Reinsurer shall be liable to, and shall indemnify, the Ceding Company for the Second Amendment Quota Share of all of the Ceding Company’s liabilities for death claims occurring on or after the Second Amendment Effective Date and covered under the terms of the ING Assumed Reinsurance Agreement, including without limitation the Ceding Company’s obligations to fund increases to the balance of the funds withheld account maintained by SLD pursuant to the terms of the ING Assumed Reinsurance Agreement, other than the Ceding Company’s continuing obligations to fund increases solely as respects death claims occurring prior to the Second Amendment Effective Date. For purposes of this Amendment No. 2, fundings made by the Ceding Company to the funds withheld account maintained by SLD pursuant to the terms of the ING Assumed Reinsurance Agreement after the date hereof in order to fund increases solely as respects death claims occurring prior to the Second Amendment Effective Date are referred to as the “Excluded Balances.”

3. Second Amendment Closing Settlement Amount. In consideration for the reinsurance contemplated hereunder, the Ceding Company will transfer to the Reinsurer, in accordance with the provisions set forth below in this Section 3, cash and specified cash-equivalent or other securities approved in advance by the Reinsurer with an aggregate market value, including amounts of due and accrued investment income related thereto (the “Designated Value”), equal to the Second Amendment Quota Share of the following balances, each measured as of the Second Amendment Effective Date unless otherwise provided: (a) statutory-basis reserves held for the Second Amendment Additional Policies (excluding reserves for claims in the course of settlement and claims that have been incurred but not reported for the Second Amendment Additional Policies as of the Second Amendment Effective Date), minus (b) net premiums due or deferred with respect to the Second Amendment Additional Policies, minus (c) any policy loans outstanding on the Second Amendment Additional Policies, net of any unearned policy loan interest on such loans but including related amounts of interest due and accrued plus or minus, as the case may be, (d) balances as agreed mutually by the parties pertaining to Other Reinsurance that are not otherwise reflected in items (a), (b) or (c) above as to which risks are ceded hereunder, minus (e) the statutory book value on the books of SLD of amounts held by SLD on a funds withheld basis pursuant to the terms of the ING Assumed Reinsurance Agreement (items (a), (b), (c), (d) and (e) taken together, the “Ceded Reserves”), plus or minus (f) the amount of any balance of interest maintenance reserves associated with the Second Amendment Additional Policies, determined on a pre-tax basis and including any additional amounts of interest maintenance reserves required to be established or maintained in connection with the completion of the transactions contemplated by this Amendment No. 2 (“IMR”) (provided, that in the case of existing IMR, but not in the case of additional IMR required to be established or maintained in connection with the completion of the transactions contemplated by this Amendment No. 2, such amount shall not be less than zero), minus (g) a ceding allowance equal to $[***] (the “Second Amendment Ceding Allowance”) (such aggregate Designated Value being referred to as the “Second Amendment Closing Settlement Amount”). For purposes of this Amendment No. 2, the term “Second Amendment Closing Date” means, subject to the Termination Date, (A) the later to occur of (x) the second business day following the closing date of the Acquisition, (y) the first business day immediately following the completion of the recapture of the Second Amendment Additional Policies reinsured by Old Mutual Reassurance (Ireland) Limited, or (z) the third

 

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business day following the satisfaction or waiver of each of the Second Amendment Conditions Precedent, or (B) such other date as the parties may mutually agree. The parties agree and acknowledge that securities listed in Annex D hereto shall be deemed to satisfy the requirement hereunder and under Section 5(a) of the Commitment Agreement that securities used to fund the Second Amendment Closing Settlement Amount be approved in advance by the Reinsurer.

(a) Provisional Settlement. Subject to Sections 5(d) and 5(e) of the Commitment Agreement, on the Second Amendment Closing Date, the Ceding Company shall transfer to the Reinsurer cash and specified cash-equivalent or other securities approved in advance by the Reinsurer with an aggregate market value as of the business day immediately preceding the Second Amendment Closing Date, including amounts of due and accrued investment income related thereto, equal to the Second Amendment Closing Settlement Amount as determined in good faith by the Ceding Company; provided that such amount shall be determined as of December 31, 2010 based on the balances determined from the Ceding Company’s books and records and in accordance with statutory accounting principles prescribed generally by the State of Maryland consistently applied, as adjusted to the extent required under Section 5(d) of the Commitment Agreement (the “Estimated Settlement Payment”). For the avoidance of doubt, any securities transferred as required in this paragraph shall be valued as of the business day immediately preceding the Second Amendment Closing Date. The Estimated Settlement Payment shall be subject to adjustment as described below. The parties agree and acknowledge that the Settlement Notice delivered by the Ceding Company pursuant to Section 5(a) of the Commitment Agreement shall have been prepared as of December 31, 2010.

(b) Post-Closing Settlement. No later than forty five (45) days after the Second Amendment Closing Date, the Ceding Company shall deliver to the Reinsurer a settlement notice (the “Post-Closing Settlement Notice”), which sets forth the Ceding Company’s good faith estimate of (i) the actual Second Amendment Closing Settlement Amount as determined in good faith by the Ceding Company as of the Second Amendment Effective Date based on the balances determined from the Ceding Company’s books and records and in accordance with statutory accounting principles prescribed generally by the State of Maryland consistently applied; provided that such calculation shall not be reduced by the amount of the Second Amendment Ceding Allowance (the “Actual Second Amendment Closing Settlement Amount”) and (ii) the Second Amendment Ceding Allowance as adjusted in accordance with provisions of Annex E (the “Adjusted Ceding Allowance”).

The Post-Closing Settlement Notice shall become final, binding and conclusive upon the Reinsurer and the Ceding Company on the sixtieth (60th) day following the Reinsurer’s receipt of the Post-Closing Settlement Notice, unless prior to such sixtieth (60th) day the Reinsurer delivers to the Ceding Company a written notice (a “Dispute Notice”) stating that the Reinsurer believes the Post-Closing Settlement Notice is incorrect and specifying in reasonable detail the basis for such assertion (each item addressed in such Dispute Notice, a “Disputed Item”), the amount in dispute for each Disputed Item and the reasons supporting the Reinsurer’s positions. For the avoidance of doubt, the Reinsurer shall be afforded the access rights provided under Section 11.5 of the Reinsurance Agreement in connection with its review of the Post-Closing Settlement Notice pursuant to this Section 3(b).

If the Reinsurer delivers a Dispute Notice, then the Ceding Company and the Reinsurer shall seek in good faith to resolve the Disputed Items during the thirty (30)-day period beginning on the date the Ceding Company receives the Dispute Notice. If Ceding Company and the Reinsurer reach agreement with respect to any Disputed Items, the Ceding Company shall revise the Post-Closing Settlement Notice to reflect such agreement. In the event the Ceding Company and the Reinsurer cannot resolve any Disputed Item, the Ceding Company and the Reinsurer shall resolve any such disagreement in accordance with Article 17 (Arbitration) of the Reinsurance Agreement.

 

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THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

 

Within five (5) business days after the Post-Closing Settlement Notice becomes final pursuant to the provisions of this Section 3

(i) If (A) the final Actual Second Amendment Closing Settlement Amount less $[***] exceeds (B) the Estimated Settlement Payment, the Ceding Company shall pay to the Reinsurer an amount equal to such excess, and if (A) the final Actual Second Amendment Closing Settlement Amount less $[***] is less than (B) the Estimated Settlement Payment, the Reinsurer shall pay to the Ceding Company an amount equal to the shortfall; and

(ii) Without duplication in respect of the foregoing, if (A) the final Adjusted Ceding Allowance exceeds $[***], the Reinsurer shall pay to the Ceding Company an amount equal to such excess, and if (B) the final Adjusted Ceding Allowance is less than $[***], the Ceding Company shall pay to the Reinsurer an amount equal to the shortfall.

For the avoidance of doubt, in the event that both parties are required to make payments pursuant to clauses (i) and (ii) above, the amounts due to be paid to either party shall be payable on a net basis.

4. Commitment and Termination. Notwithstanding anything set forth in this Amendment No. 2 to the contrary, the reinsurance provided hereunder will not become effective or valid and binding on either party and the Second Amendment Closing Date shall not occur unless the Second Amendment Conditions Precedent have been satisfied or waived as required under the Commitment Agreement; provided, that without prejudice to any of its other rights or remedies, each of the Second Amendment Conditions Precedent may be waived in each case solely by the party that is the beneficiary of such Second Amendment Condition Precedent, in whole or in part in such party’s sole discretion. Any such waiver shall be without prejudice to any other rights of such party. For the purposes of this Amendment No. 2, “Second Amendment Conditions Precedent” means those Coinsurance Conditions, as such term is defined in the Commitment Agreement, that are conditions precedent to the occurrence of the Second Amendment Closing Date and that pertain to this Amendment No. 2. In the event that the Second Amendment Closing Date shall have not occurred within sixty (60) days from the date hereof (such date, the “Termination Date”), the Reinsurer shall have no obligation or right to reinsure, and the Ceding Company shall have no obligation or right to cede, the Second Amendment Additional Policies pursuant to this Amendment No. 2 and this Amendment No. 2 shall terminate and expire and no party shall have any further liability or obligation hereunder other than as respects Article 18 (Confidentiality) of the Reinsurance Agreement, which provision shall continue to apply as to information provided with respect to the Second Amendment Additional Policies as fully as if the reinsurance hereunder had been completed, provided, however, that any such termination or expiration shall not (a) release any party as respects any breach thereby of the terms of this Amendment No. 2 as shall have occurred prior to the Termination Date or (b) relieve such breaching party of liability for such breach. Notwithstanding the foregoing, to the extent that the sole reason that the Second Amendment Closing Date has not occurred on or before the Termination Date is that one or more Required Consents (as such term is defined in the Commitment Agreement) have not been obtained on or prior to such date, the Termination Date shall be extended for an additional thirty (30) days as necessary or appropriate to procure such Required Consents.

 

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5. Reinsurance Trust. If, as of the end of any calendar quarter following the Second Amendment Closing Date, the Reinsurer fails to maintain an RBC Ratio of at least 200% (or, if and to the extent that the Reinsurer grants to any of its other ceding companies a financial impairment trigger at an RBC Ratio higher than 200% (a “MFN Trigger”), if the Reinsurer fails to maintain an RBC Ratio of at least such higher percentage) (a “Security Event”), the Reinsurer shall provide additional security at its sole cost and expense for the performance of its obligations under this Amendment No. 2, and shall promptly establish and as provided below thereafter maintain a trust account (“Trust Account”) with a mutually-agreed trustee that is a qualified United States financial institution (as used in the Maryland insurance laws) and, subject to a mutually-agreed form of trust agreement which the Parties agree to negotiate in good faith (the “Trust Agreement”), secure the payment of amounts due the Ceding Company under this Amendment No. 2 in accordance with the provisions of this Section 5 and the terms of the Trust Agreement. The Reinsurer shall pay into, and shall thereafter maintain in the Trust Account during the pendency of such Security Event cash in United States currency and securities permitted under (a) the investment guidelines used by the Reinsurer for its general account investments and (b) applicable law in the Reinsurer’s state of domicile having an aggregate then-current statutory book value calculated in accordance with statutory accounting principles applicable to the Reinsurer, consistently applied, equal to no less than 102% of the then-current Ceded Reserves, which Trust Account balance the Reinsurer shall adjust on at least a quarterly basis. For purposes of the foregoing, the term “RBC Ratio” means as to any insurer the ratio, as of the date of determination, of an insurer’s “total adjusted capital” over its “authorized control level” of risk-based capital as such terms are defined and prescribed by requirements promulgated by the National Association of Insurance Commissioners and regulations adopted by the insurance regulatory authorities in the Reinsurer’s and the Ceding Company’s state of domicile which are in effect as of the date hereof, calculated as of the end of each calendar quarter, and using reserving methodologies and asset classifications that are in accordance with generally accepted statutory accounting principles and practices required or permitted by the National Association of Insurance Commissioners and the insurance regulatory authorities in the Reinsurer’s state of domicile, consistently applied throughout the specified period and in the immediately prior comparable period. The Reinsurer shall provide to the Ceding Company prompt written notice of any MFN Triggers or Security Event.

6. Non-Guaranteed Elements.

(a) “Non-Guaranteed Elements” means loads and expense charges, credited interest rates and dividends, if any, each as applicable under the Second Amendment Additional Policies.

(b) The Ceding Company has provided to the Reinsurer as part of the Risk Evaluation Materials full and complete copies of the following information and analyses related to the Additional Direct Policies, as applicable: (i) current and projected cost of reinsurance charges and other costs and charges for mortality and administration of the Additional Direct Policies; (ii) current and projected interest credited rates; (iii) current and projected dividend scales; and (iv) a description of the actuarial, financial and other policies, guidelines and methodologies used by the Ceding Company in determining over time the amounts in items (i), (ii) and (iii) above as well as any other of the Non-Guaranteed Elements, including without limitation financial or actuarial models used in determining the Non-Guaranteed Elements and a full description of all regulatory or other commitments made by or applicable to the Ceding Company in respect of the Non-Guaranteed Elements (together, the “Company Guidelines”). For the avoidance of doubt, notwithstanding anything in the Reinsurance Agreement to the contrary, including, without limitation, Section 11.3 of the Reinsurance Agreement, the Reinsurer shall be liable to, and shall indemnify, the Ceding Company for the Second Amendment Quota Share of all of the Ceding Company’s liabilities incurred on or after the Second Amendment Effective Date for dividends

 

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paid or payable under the Additional Direct Policies. Consistent with the Company Guidelines, the Ceding Company shall at least quarterly re-evaluate experience with respect to the Additional Direct Policies and, as warranted and subject to the other terms and provisions of this Amendment No. 2, shall, to the extent permissible under applicable law and the express terms of the Additional Direct Policies, adjust the Non-Guaranteed Elements consistent with the Company Guidelines and as necessary or appropriate to reasonably reflect the results of such evaluation. Reinsurance premiums payable to, and benefits payable by, the Reinsurer under this Amendment No. 2 attributable to Additional Direct Policies shall be no less or more (as applicable) than the amounts thereof as would be determined based on consistent application of the Company Guidelines with such changes thereto as may be required under applicable law and the express terms of such Additional Direct Policies, plus related fees, charges, renewal commission payments, reimbursements and similar amounts. Subject to the Reinsurer’s rights to approve in advance actions with respect to the ING Assumed Reinsurance Agreement set forth in Section 7 hereof, the covenants set forth in this Section 6 shall apply as well to the Additional Assumed Polices to the extent that the Ceding Company has the right under the ING Assumed Reinsurance Agreement to cause the adjustment of Non-Guaranteed Elements under such Additional Assumed Policies.

7. ING Assumed Reinsurance Agreement.

(a) The Ceding Company represents and warrants that a true, correct and complete copy of the ING Assumed Reinsurance Agreement has been provided to the Reinsurer in connection with the Reinsurer’s assessment of this reinsurance and that such agreement is in full force and effect and is enforceable against the Ceding Company, and to the Ceding Company’s knowledge, against SLD, in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The Reinsurer has been provided access to copies of all material correspondence that is in the possession of the Ceding Company concerning the ING Assumed Reinsurance Agreement, including without limitation correspondence with respect to (x) any review of the Ceding Company’s underwriting, claims or administrative practices or procedures, (y) disputed or contested claims (direct or reinsurance) with respect to the business ceded thereunder, and (z) settlement payments made or received with respect to the ING Assumed Reinsurance Agreement during the two years preceding the date hereof.

(b) As of the date hereof, except as disclosed to the Reinsurer in writing, there has been no actual or threatened material breach or default by the Ceding Company, or to the knowledge of the Ceding Company, by SLD, under the terms of the ING Assumed Reinsurance Agreement, or any claim of breach or default made by any party thereto, and, to the Ceding Company’s knowledge, no event has occurred which, with or without notice, the passage of time or both, would constitute a material default by the Ceding Company under any provision thereof or that would otherwise limit or preclude the payment of further amounts thereunder.

(c) Subject to clause (d) of this Section 7, the Ceding Company agrees that other than as provided expressly in this Amendment No. 2, it shall maintain in full force and effect the ING Assumed Reinsurance Agreement and shall perform fully each of its obligations thereunder. The Ceding Company shall promptly notify the Reinsurer of any assertion of breach by the Ceding Company of any of its obligations under the ING Assumed Reinsurance Agreement and shall promptly take any such steps as may be necessary or appropriate thereunder to cure any such breach.

 

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(d) The Ceding Company may not modify, amend or terminate the ING Assumed Reinsurance Agreement or waive any of its rights thereunder without the Reinsurer’s prior written consent and shall fully enforce all of its rights thereunder. At the Reinsurer’s instruction, the Ceding Company shall effect any such action with respect to the management or administration of the ING Assumed Reinsurance Agreement as the Reinsurer shall reasonably request as may be available under or with respect to the terms of such agreement; provided, however, that the Reinsurer shall indemnify the Ceding Company as respects its share of any loss and liability arising out of any such action so requested by the Reinsurer.

(e) The Ceding Company agrees that it shall pursue commercially reasonable management and collection efforts with respect to amounts owing under or with respect to the ING Assumed Reinsurance Agreement and, in general, will manage the ING Assumed Reinsurance Agreement in a manner which provides due care for the economic value reasonably anticipated by the Reinsurer with respect to the reinsurance provided hereby; provided, however, that the Reinsurer shall reimburse the Ceding Company for all reasonable out of pocket costs with respect thereto and shall have the right to approve in advance incurral of any such reimbursable cost or expense in excess of $15,000.

(f) The Ceding Company will notify the Reinsurer of any dispute, contest, compromise, litigation or arbitration of any matter involving the ING Assumed Reinsurance Agreement. Once notified, the Reinsurer may undertake management of such proceeding, at its own cost.

(g) Notwithstanding anything in this Amendment No. 2 to the contrary, including without limitation this Section 7, the Reinsurer agrees and acknowledges that SLD has certain rights of recapture under the ING Assumed Reinsurance Agreement, as described in Section 12 below.

(h) As between the Ceding Company and the Reinsurer, the Reinsurer shall be entitled to all rights and interests of the Ceding Company with respect to the funds withheld account maintained by SLD pursuant to the ING Assumed Reinsurance Agreement other than the Excluded Balances and any interest accrued thereon, and any such amounts released by SLD to the Ceding Company from or paid with respect to such funds withheld account as part of any net settlement thereunder, including but not limited to amounts released in connection with any recapture thereunder as described in Section 12 below, shall be paid over to the Reinsurer in connection with the periodic settlements under the Reinsurance Agreement.

8. Other Reinsurance. Unless specifically noted otherwise in this Amendment No. 2, the definition in the Reinsurance Agreement of “Other Reinsurance” shall, from and after the Second Amendment Effective Date, be revised to add reinsurance ceded with respect to the Second Amendment Additional Policies under the terms of the ceded reinsurance agreements specified on Annex A-2 hereto; provided, that the parties acknowledge and agree that there are no Net Retained Liabilities associated with the Second Amendment Additional Policies . For purposes of clarity, any cession to Old Mutual Reassurance (Ireland) Limited (“OM Re”) or Raven Re shall not constitute Other Reinsurance with respect to the Second Amendment Additional Policies and the Reinsurer undertakes and assumes no risks as respects the collectability of any amounts due from OM Re or Raven Re, as the case may be, or any other affiliate or former affiliate of the Ceding Company. The Ceding Company agrees and acknowledges that, pursuant to Section 11.4 of the Reinsurance Agreement, the Ceding Company shall notify the Reinsurer of any dispute, contest, compromise, litigation or arbitration of any matter involving Other Reinsurance, and that once notified, the Reinsurer may undertake management of such proceeding. In the event the Reinsurer undertakes management of any such proceeding, the Ceding Company agrees to cooperate with the Reinsurer in all reasonable respects in the Reinsurer’s efforts to obtain full economic performance of the Other Reinsurance.

 

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9. Rights to Certain Information Prior to Second Amendment Closing Date. During any period from and following the date hereof until the Second Amendment Closing Date, with respect to the Second Amendment Additional Policies, the Reinsurer shall be entitled to receive the information, reporting and access to records otherwise provided with respect to Reinsured Policies under the terms of the Reinsurance Agreement, including, without limitation, the provisions of Section 11.5 and Exhibit E thereof, all subject to the non-disclosure obligations set forth in Section 18 thereof.

10. Certain Reporting and Policy Administration Matters After Second Amendment Closing Date.

(a) The parties acknowledge and agree that substantial new periodic reporting mechanisms may be required to address the proper and timely management and administration of the reinsurance provided under this Amendment No. 2. More specifically, the parties acknowledge and agree that new monthly and quarterly reporting and analysis mechanisms and electronic interfaces will be created by the parties with respect to business ceded under the terms of the ING Assumed Reinsurance and, with particularity, as respects such business on and after the Experience Refund Commencement Date and as to the identification and funding of any Excluded Balances thereunder. The parties will use their respective commercially reasonable efforts to timely complete these additional reporting and analysis arrangements with the objective of full operational implementation within 180 days of the Second Amendment Closing Date and, further, shall promptly after the Second Amendment Closing Date implement reasonable interim reporting and information access measures pending such completion. Subject to the foregoing, the parties acknowledge the continuing effectiveness of the provisions of Exhibit E to the Reinsurance Agreement (Self-Administered Reporting) with respect to the Second Amendment Additional Policies. The expenses of the parties’ fulfillment of their obligations under this Section 10(a) will be shared equally between the parties.

(b) Without limitation of the foregoing, to the extent legally permissible, in order to enable the Reinsurer to comply with requirements applicable now or in the future to the Reinsurer with respect to maintaining, documenting, assessing and reporting of its internal controls over financial reporting (including administrative services, investment management, information technology and related processes), the Reinsurer shall have reasonable access to audit opinions and internal control and internal audit reports, including, where applicable, Statement on Auditing Standards (SAS) No. 70 reports (if produced), and reports produced by third-parties and others involved in the administration of the Second Amendment Additional Policies, in each case, only to the extent such opinions and reports relate directly to the Second Amendment Additional Policies, and shall be given reasonable access to auditors, Ceding Company personnel and third-party administrators relative thereto. The Reinsurer shall bear any third-party out-of-pocket incremental costs resulting from such access. The parties acknowledge and agree that subject to Section 11.5 of the Reinsurance Agreement, the Reinsurer shall have access to the periodic operating reports provided by the Ceding Company’s third party administrators and other service agents with respect to the Second Amendment Additional Policies, in each case, only to the extent such opinions and reports relate directly to the Second Amendment Additional Policies. Notwithstanding the foregoing, nothing contained herein shall require the Ceding Company, or any of its auditors, third party administrators, other service agents or representatives to disclose any information to the Reinsurer, or to take any other action that would (i) cause a violation of any contract to which the Ceding Company is a party, (ii) cause a risk of loss of legal privilege, or (iii) would constitute a violation of applicable law or obligations to policyholders; provided, however, that the Ceding Company shall use its commercially reasonable efforts to obtain any consents from third parties in order to provide such information to the Reinsurer without violating any contractual obligations. Any access provided hereunder shall be during normal business hours, subject to

 

9


reasonable prior notice and shall not unreasonably interfere with the business or operations of the Ceding Company. For the avoidance of doubt, any information disclosed herein shall be subject to the non-disclosure obligations set forth in Section 18 of the Reinsurance Agreement.

(c) The parties agree that at the Reinsurer’s reasonable request appropriate representatives of the Ceding Company and the Reinsurer and their respective representatives shall confer periodically to assess any material concerns of the Reinsurer with respect to the administration of the Second Amendment Additional Policies or the Other Reinsurance related thereto.

11. Certain Other Representations and Warranties.

(a) Subject to Section 8 and Section 2 hereof, as of each of the date hereof and the Second Amendment Closing Date, the Ceding Company hereby repeats and affirms the representations and warranties set forth in (i) the second paragraph of Section 2.4 of the Reinsurance Agreement beginning with the phrase “[t]he Ceding Company represents and warrants” and (ii) Section 11.4 of the Reinsurance Agreement (other than the second paragraph Section 11.4 thereof as respects solely the inception of this reinsurance) with respect to Other Reinsurance applicable to the Second Amendment Additional Policies. Notwithstanding the foregoing, and for the sake of clarity, the Reinsurer assumes the risk that reinsurance under the Other Reinsurance with respect to the Second Amendment Additional Policies is not collected.

(b) As of each of the date hereof and the Second Amendment Closing Date, the Ceding Company hereby repeats and affirms the representations and warranties set forth in (i) as respects solely the Additional Direct Policies, Section 11.6 and Section 11.9 of the Reinsurance Agreement, (ii) as respects the Second Amendment Additional Policies and this reinsurance generally, Section 11.7 (other than the penultimate paragraph thereof) of the Reinsurance Agreement, and (iii) Section 8.1 of the Reinsurance Agreement (other than the last sentence thereof).

(c) At the time of the issuance of each of the Additional Direct Policies, the Ceding Company had in full force and effect all material licenses and authorizations necessary for it to properly issue each Additional Direct Policy in accordance with applicable law and the Ceding Company was not at the time of issuance of any of the Additional Direct Policies or at the date hereof or the Second Amendment Closing Date (as applicable) operating under any formal or informal agreement or understanding with any Governmental or Regulatory Authority (as such term is defined in the Commitment Agreement) restricting its authority to do business or requiring the Ceding Company to take, or refrain from taking, any action inconsistent with the lawful issuance of the Additional Direct Policies.

(d) Except as set forth on Annex F hereto (as such Annex shall be updated prior to the date hereof) to reflect circumstances arising after the execution of the Commitment Agreement and excluding suits proceeding or arbitrations involving death benefits arising prior to the Second Amendment Effective Date, there is no material suit, proceeding or arbitration pending or, to the best knowledge of the Ceding Company, threatened in writing against or affecting the Ceding Company with respect to the Second Amendment Additional Policies nor is there any material judgment, decree, injunction or order of any governmental entity or arbitrator outstanding against the Ceding Company with respect thereto.

(e) The Ceding Company has furnished to the Reinsurer copies of the Ceding Company’s (i) Annual Statements as of December 31, 2009 and for the fiscal year then ended as filed with the Maryland Insurance Administration, and (ii) the quarterly statements as of March 31, 2010, June 30, 2010 and September 30, 2010 and for the quarterly periods then ended, as filed with the Maryland Insurance Administration (collectively, the “Amendment Historical Statutory Statements”). The

 

10


Amendment Historical Statutory Statements (including without limitation the provisions made therein for investments and the valuation thereof, reserves, policy and contract claims and statutory liabilities) have been prepared, in all material respects, in accordance with statutory accounting principles (except as may be reflected in the notes thereto and subject, with respect to the quarterly statements, to the absence of notes required by statutory accounting principles and to normal year-end adjustments), were in all material respects, in compliance with applicable requirements of law and regulation when filed and present fairly in all material respects the financial condition of the Ceding Company covered thereby as of the respective dates thereof and the results of operations, changes in capital and surplus and cash flows of the Ceding Company for the periods then ended. The Ceding Company makes no representations or warranties, express or implied, as to the future experience or profitability arising from the Second Amendment Additional Policies.

12. Recapture of Additional Assumed Policies. In the event of a direct or indirect recapture of risks ceded under the terms of the ING Assumed Reinsurance Agreement, a final settlement of amounts due between the parties hereto with respect to the recaptured Additional Assumed Policies for coverage in effect up to the effective time of such recapture will be determined by the Ceding Company and reported to the Reinsurer, which calculation will include amounts paid or payable from the Ceding Company to SLD under the terms of the ING Assumed Reinsurance Agreement as part of any final settlement thereunder to the extent attributable to losses covered hereunder, and related amounts received from SLD as part of any final settlement thereunder (including without limitation any assets released to the Ceding Company from the funds withheld account maintained by SLD pursuant to the ING Assumed Reinsurance Agreement as part of such net settlement, other than the Excluded Balances and any interest accrued thereon). The parties shall work in good faith to determine the amount and timing of the final settlement amount payment hereunder; failing such agreement the parties shall submit any dispute to the resolution procedures set forth in Article 16 of the Reinsurance Agreement.

13. Additional Amendments. The parties agree that the Reinsurance Agreement shall be further amended as follows:

(a) Clause (c) of Section 2.3 of the Reinsurance Agreement shall be amended to add the phrase “non-discretionary” before the phrase “group life,” as respects all Reinsured Policies.

(b) The first sentence of Section 7.1 of the Reinsurance Agreement shall be deleted in its entirety and replaced with the following: “Claims covered under this Agreement include contractual death claims, which are those due to the death of the insured on a Reinsured Policy, surrender benefits, policy loan and dividend obligations under the universal life and whole life insurance policies included in the Additional Direct Policies, in each case and any additional benefits specified hereby which are provided by the underlying policy and are reinsured under this Agreement.”

14. Continuing Allowances for Additional Direct Policies. With respect to the Additional Direct Policies, in lieu of the continuing ceding and expenses allowances set forth in Exhibit C-8 of the Reinsurance Agreement, for each calendar quarter commencing on or after the Second Amendment Effective Date and prior to any termination of the reinsurance hereunder in accordance with the terms hereof and the terms of the Reinsurance Agreement, the Reinsurer shall pay to the Ceding Company (a) a continuing ceding and expense allowance determined in accordance with Annex C hereto plus (b) the amounts necessary to pay renewal commissions with respect to the Additional Direct Policies for periods commencing after the Second Amendment Effective Date.

 

11


15. Continuing Premiums for Additional Assumed Policies. With respect to the Additional Assumed Policies reinsured hereunder, in lieu of the continuing premium set forth in Exhibit C of the Reinsurance Agreement, the Ceding Company shall pay to the Reinsurer the Second Amendment Quota Share of all amounts actually received by the Ceding Company from SLD under the Underlying ING Reinsurance Agreement in respect of claims arising on or after the Second Amendment Effective Date under such Additional Assumed Policies.

16. Experience Refunds. Within one hundred fifty (150) days following the end of each calendar quarter commencing on or after January 1, 2015 (the “Experience Refund Commencement Date”) (or following such later period as may be reasonably justified if required financial information is then unavailable), the Ceding Company will provide to the Reinsurer its specification of the amount of any Experience Refund due in respect of the Additional Assumed Policies with respect to such quarter, including therewith a specification of the material supporting computations and copies of related financial computations. Subject to Section 13.1 of the Reinsurance Agreement, the Reinsurer shall pay to the Ceding Company the amount of any Experience Refund in accordance with the settlement procedures set forth in the Reinsurance Agreement. For purposes of this Section 16, “Experience Refunds” shall mean the amounts determined in accordance with the provisions of Annex B.

17. Further Assurances. Each of the parties shall execute such documents and other instruments and perform such further acts as may be reasonably required to carry out the provisions hereof and the transactions contemplated hereby. Each party shall, on or prior to the Second Amendment Closing Date, use its commercially reasonable efforts to fulfill or obtain the fulfillment of the conditions precedent to the consummation of the transactions contemplated hereby, including the execution and delivery of any documents, certificates or other instruments that are reasonably required for the consummation of the transactions contemplated hereby; it being agreed that nothing contained in this sentence shall modify the terms of the indemnification required in order to excuse the failure of a Coinsurance Condition (as such term is defined under the Commitment Agreement) pursuant to the terms of Section 1(a) of the Commitment Agreement.

18. Reinsurance Agreement. Except as expressly stated herein, the terms of this Amendment No. 2 are subject to all other terms and conditions of the Reinsurance Agreement, all of which remain unchanged and in full force and effect. This Amendment No. 2 does not alter, amend or modify the Reinsurance Agreement except as expressly set forth herein.

19. Multiple Counterparts. This Amendment No. 2 may be signed in any number of counterparts which taken together shall constitute one and the same instrument.

[Balance of page left blank intentionally]

 

12


IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 as of the date first above written.

 

OM FINANCIAL LIFE INSURANCE COMPANY     WILTON REASSURANCE COMPANY
By:  

/s/ LEE LAUNER

    By:  

/s/ MICHAEL GREER

Title:   President and Chief Executive Officer     Title:   Senior Vice President

[Signature page to Amendment No. 2 to Automatic Reinsurance Agreement between OM Financial Life Insurance Company and Wilton Reassurance Company]


ANNEX A

REINSURED POLICIES; OTHER REINSURANCE

 

 

SCHEDULE OF PLANS, RIDERS AND BENEFITS    A.1

Subject to the other terms, conditions and limitations of Amendment No. 2, policies issued on plans shown below may qualify for reinsurance under the terms of Amendment No. 2:

 

SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

104001    Heritage Master    SIUAN1    3/29/2006   -   9/13/2006          Wilton
      SIULF1    9/7/2005   -   3/29/2007          Wilton
      SIULF2    8/3/2007   -   8/3/2007          Wilton
104011   

Other Fully

Underwritten

UL

   720403    12/19/1986   -   11/13/1989    OM       Wilton
      720404    1/13/1987   -   12/28/1991    OM       Wilton
      720405    2/19/1987   -   9/15/1987    OM       Wilton
      720406    7/10/1987   -   10/20/1988    OM       Wilton
      720407    8/4/1987   -   10/20/1988    OM       Wilton
      720408    9/23/1987   -   10/20/1988    OM       Wilton
      721403    2/2/1987   -   5/26/1987    OM       Wilton
      721404    6/15/1987   -   11/26/1990    OM       Wilton
      730400    7/17/1983   -   10/28/1988          Wilton
      730402    3/28/1985   -   8/5/1988          Wilton
      730410    12/20/1985   -   5/16/1988          Wilton
      730411    9/2/1985   -   11/1/1992          Wilton
      730412    1/15/1986   -   10/10/1987          Wilton
      730413    10/22/1985   -   4/15/1989          Wilton

 

1  Excluded Share percentages have been expressed without reflecting the special effects of additional third party reinsurance structured on a combination YRT/coinsurance basis, which effects are not expected to materially change the Excluded Share percentage shown in this Annex A-1. Products that are subject to YRT as well as coinsurance are identified in the “Product” column in this table.


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      730414    1/1/1986   -   2/1/1989          Wilton
      730415    3/14/1986   -   12/28/1988          Wilton
      730415    11/14/1988   -   11/14/1988          Wilton
      730416    5/28/1986   -   12/28/1988          Wilton
      730417    8/21/1986   -   12/28/1988          Wilton
      730417    12/11/1986   -   7/12/1988          Wilton
      730418    10/20/1986   -   12/28/1988          Wilton
      730419    2/1/1987   -   2/1/1988          Wilton
      730420    12/28/1988   -   6/1/1992          Wilton
      730421    10/1/1988   -   10/1/1992          Wilton
      730422    6/2/1988   -   8/28/1998    OM       Wilton
      730426    4/1/1986   -   9/1/2003          Wilton
      730427    3/3/1989   -   7/1/2004          Wilton
      730429    5/25/1987   -   7/1/2004          Wilton
      730430    7/12/1989   -   5/1/2004          Wilton
      730439    5/11/1990   -   1/22/1999    OM       Wilton
      730440    12/10/1991   -   8/1/1997          Wilton
      731400    12/22/1984   -   12/28/1988          Wilton
      731400    2/1/1985   -   8/4/1987          Wilton
      731422    12/16/1988   -   6/12/1992    OM       Wilton
      731439    6/26/1991   -   8/21/1997    OM       Wilton
      731440    7/1/1992   -   3/24/1997          Wilton
      732400    10/23/1985   -   12/8/1988          Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      732402    2/18/1986   -   8/8/1986          Wilton
      JFD1    9/15/1996   -   6/11/1999          Wilton
      JLD1    6/10/1996   -   9/2/1999          Wilton
      UL10G    5/5/1997   -   12/1/1999          Wilton
      UL7    1/25/1995   -   6/19/2000    OM       Wilton
      UL8    7/4/1996   -   6/2/2003          Wilton
      UL8NJ    5/7/1998   -   4/8/2003          Wilton
      UL8T    6/14/1996   -   9/13/2003          Wilton
      UL9G3    2/27/1997   -   4/28/2002          Wilton
      UL9P3    5/9/1997   -   8/15/1997          Wilton
      UL9R3    12/9/1996   -   3/8/2004          Wilton
104031    Secure Master    UL10R    7/15/1997   -   2/6/2009          Wilton
105001    Income Certain    15INCR    5/28/2006   -   8/16/2007          Wilton
      20INCR    6/13/2006   -   2/12/2007          Wilton
      25INCR    5/17/2006   -   8/1/2007          Wilton
      30INCR    4/28/2006   -   3/29/2007          Wilton
105011   

Home Certain

Issue months

2/15/05

through

3/31/05 include

third party YRT

as well as

coinsurance

   10MLE    10/18/2000   -   11/20/2008    OM    10%    Raven & Wilton
      10MLT    12/13/1999   -   12/31/2008    OM    10%    Raven & Wilton
      15MDT    6/10/1999   -   8/31/2007    OM    10%    Raven & Wilton
      15MDTR    5/28/2000   -   6/17/2007    OM    10%    Raven & Wilton
      15MLE    8/28/2000   -   12/23/2008    OM    10%    Raven & Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      15MLER    7/13/2000   -   12/8/2008    OM    10%    Raven & Wilton
      15MLT    10/28/1999   -   12/31/2008    OM    10%    Raven & Wilton
      15MLTR    8/9/1999   -   12/17/2008    OM    10%    Raven & Wilton
      20MDT    12/4/1999   -   9/11/2007    OM    10%    Raven & Wilton
      20MDTR    6/14/1999   -   8/8/2007    OM    10%    Raven & Wilton
      20MLE    9/28/2001   -   12/22/2008    OM    10%    Raven & Wilton
      20MLER    9/8/2000   -   11/7/2008    OM    10%    Raven & Wilton
      20MLT    10/7/1999   -   12/8/2008    OM    10%    Raven & Wilton
      20MLTR    6/10/1999   -   8/6/2007    OM    10%    Raven & Wilton
      25MDT    1/12/2005   -   8/10/2007    OM    10%    Raven & Wilton
      25MDTR    1/23/2001   -   8/2/2007    OM    10%    Raven & Wilton
      25MLE    5/1/2001   -   5/16/2008    OM    10%    Raven & Wilton
      25MLER    10/19/2000   -   12/23/2008    OM    10%    Raven & Wilton
      25MLT    8/28/1999   -   12/31/2008    OM    10%    Raven & Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      25MLTR    6/15/1999   -   6/4/2007    OM    10%    Raven & Wilton
      30MDT    1/4/2005   -   5/30/2007    OM    10%    Raven & Wilton
      30MDTR    10/24/2000   -   8/28/2007    OM    10%    Raven & Wilton
      30ML    8/5/1999   -   12/31/2008    OM    10%    Raven & Wilton
      30MLE    8/28/2000   -   12/31/2008    OM    10%    Raven & Wilton
      30MLER    6/21/2000   -   12/31/2008    OM    10%    Raven & Wilton
      30MLR    6/16/2000   -   12/2/2008    OM    10%    Raven & Wilton
   Your Term    10E    1/22/2009   -   5/12/2009          Wilton
      10T    1/21/2009   -   5/5/2009          Wilton
      15E    1/1/2009   -   6/3/2009          Wilton
      15ER    5/1/2009   -   5/1/2009          Wilton
      15T    1/20/2009   -   5/13/2009          Wilton
      20E    1/12/2009   -   5/14/2009          Wilton
      20ER    1/26/2009   -   5/12/2009          Wilton
      20T    2/5/2009   -   5/7/2009          Wilton
      20T5R    2/16/2009   -   4/6/2009          Wilton
      20TR    2/4/2009   -   2/4/2009          Wilton
      25E    1/19/2009   -   5/5/2009          Wilton
      25ER    1/22/2009   -   1/30/2009          Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      25T    2/2/2009   -   2/2/2009          Wilton
      30E    1/26/2009   -   5/19/2009          Wilton
      30E5R    2/19/2009   -   4/2/2009          Wilton
      30ER    1/14/2009   -   6/4/2009          Wilton
      30T    1/29/2009   -   5/18/2009          Wilton
      30T5R    2/16/2009   -   2/16/2009          Wilton
      30TR    2/20/2009   -   3/26/2009          Wilton
105021   

Other Fully

Underwritten

Term

   026    7/19/1973   -   9/17/1985    OM       Wilton
      043    8/19/1965   -   7/24/1981          Wilton
      044    12/28/1973   -   6/27/1988          Wilton
      045    11/20/1964   -   3/8/1988          Wilton
      053    9/19/1977   -   3/17/1981          Wilton
      054    10/8/1976   -   10/13/1980          Wilton
      055    7/28/1970   -   8/17/1976          Wilton
      058    5/19/1974   -   1/9/1995    OM       Wilton
      059    6/2/1988   -   1/9/1995    OM       Wilton
      074    6/15/1976   -   5/18/1977          Wilton
      100    7/11/2001   -   7/8/2003          Wilton
      100WA    8/2/2001   -   8/2/2001          Wilton
      101    7/22/2001   -   1/24/2004          Wilton
      101A    11/1/2001   -   1/24/2004          Wilton
      101AOR    9/12/2001   -   12/9/2003          Wilton
      101AWA    6/26/2001   -   6/26/2001          Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      101OR    9/12/2001   -   12/9/2003          Wilton
      101WA    6/26/2001   -   8/2/2001          Wilton
      102    11/12/2001   -   9/29/2003          Wilton
      102A    2/28/2002   -   7/24/2003          Wilton
      102OR    3/1/2002   -   4/29/2003          Wilton
      103    1/22/2002   -   9/8/2003          Wilton
      103OR    11/7/2002   -   11/7/2002          Wilton
      104    5/31/2002   -   12/9/2002          Wilton
      248    7/3/1985   -   5/17/1988          Wilton
      249    9/9/1982   -   7/1/1987          Wilton
      251    3/25/1983   -   3/25/1983          Wilton
      252    4/9/1984   -   5/5/1988          Wilton
      253    6/25/1985   -   1/9/1989          Wilton
      254    4/28/1981   -   6/9/1988          Wilton
      255    7/13/1980   -   1/10/1986          Wilton
      275    11/26/1980   -   7/28/1985          Wilton
      280    12/5/1990   -   7/17/1992          Wilton
      281    12/7/1990   -   9/25/1992          Wilton
      282    2/1/1991   -   10/14/1992          Wilton
      283    9/25/1990   -   2/17/1993          Wilton
      351    4/21/1983   -   3/7/1988          Wilton
      355    9/6/1977   -   5/19/1980          Wilton
      374    9/7/1977   -   1/28/1980          Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      375    9/13/1978   -   4/2/1980          Wilton
      376    2/13/1979   -   11/19/1985          Wilton
      380    10/7/1985   -   5/8/1997          Wilton
      382    8/23/1985   -   8/1/1997          Wilton
105031    Patriot Select    15PSL    6/8/2003   -   10/13/2005          Wilton
      15PSLR    9/5/2003   -   11/2/2005          Wilton
      20PSL    6/15/2003   -   1/24/2006          Wilton
      20PSLR    5/10/2003   -   11/16/2005          Wilton
      30PSL    6/6/2003   -   11/15/2005          Wilton
      30PSLR    7/21/2003   -   10/18/2005          Wilton
105041   

Other Simplified

Issue Whole Life

   WLG    10/13/1999   -   12/28/1999    OM       Wilton
      WLG    1/11/2000   -   11/4/2002    OM       Wilton
      WLGF    11/19/1999   -   11/19/1999    OM       Wilton
      WLGF    2/22/2000   -   10/9/2002    OM       Wilton
      WLL    3/1/1989   -   12/28/1999    OM       Wilton
      WLL    1/13/2000   -   1/14/2003    OM       Wilton
105051   

Savers Select

Limited

Guarantee

plans (plans

ending in E or

ER) for all issue

years include

third party YRT

as well as

coinsurance

   15SSE    3/27/2001   -   1/15/2009    OM    10%    Raven & Wilton
      15SSER    5/10/2001   -   9/8/2008    OM    10%    Raven & Wilton
      15SSX    4/2/2001   -   10/19/2008    OM    10%    Raven & Wilton
      15SSXR    4/17/2001   -   6/14/2007    OM    10%    Raven & Wilton
      20SSE    2/15/2001   -   1/15/2009    OM    10%    Raven & Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      20SSER    6/28/2001   -   2/17/2009    OM    10%    Raven & Wilton
      20SSX    3/6/2001   -   3/10/2008    OM    10%    Raven & Wilton
      20SSXR    2/21/2001   -   7/26/2007    OM    10%    Raven & Wilton
      30SSE    3/20/2001   -   12/19/2008    OM    10%    Raven & Wilton
      30SSER    3/12/2001   -   2/4/2009    OM    10%    Raven & Wilton
      30SSX    2/14/2001   -   7/10/2008    OM    10%    Raven & Wilton
      30SSXR    3/15/2001   -   12/18/2007    OM    10%    Raven & Wilton
105061    Term Trends    01RTM    2/4/1997   -   7/25/1997    OM       Wilton
      01RTSA    1/6/2000   -   7/21/2000    OM    10%    Raven & Wilton
      05RTG    12/16/1997   -   12/28/1999    OM       Wilton
      05RTG    2/18/2000   -   12/8/2005    OM    10%    Raven & Wilton
      05RTP    6/4/1997   -   6/4/1997    OM       Wilton
      05RTR    4/15/1997   -   11/3/1999    OM       Wilton
      05RTRJ    10/16/1998   -   12/28/1999    OM       Wilton
      05RTRJ    3/25/2000   -   9/26/2005    OM    10%    Raven & Wilton
      10RTG    3/3/1997   -   12/28/1999    OM       Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      10RTG    2/20/2000   -   11/15/2005    OM    10%    Raven & Wilton
      10RTM    11/22/1996   -   3/3/1997    OM       Wilton
      10RTP    2/25/1997   -   9/16/1997    OM       Wilton
      10RTR    4/14/1997   -   12/16/1999    OM       Wilton
      10RTR    1/6/2000   -   6/18/2002    OM    10%    Raven & Wilton
      10RTRJ    4/2/1998   -   12/28/1999    OM       Wilton
      10RTRJ    2/18/2000   -   10/10/2005    OM    10%    Raven & Wilton
      15RTG    3/10/1997   -   12/28/1999    OM       Wilton
      15RTG    1/12/2000   -   12/19/2005    OM    10%    Raven & Wilton
      15RTM    10/7/1996   -   4/2/1997    OM       Wilton
      15RTP    2/8/1997   -   8/28/1997    OM       Wilton
      15RTR    2/13/1997   -   12/28/1999    OM       Wilton
      15RTR    3/14/2000   -   11/5/2002    OM    10%    Raven & Wilton
      15RTRJ    3/11/1998   -   12/28/1999    OM       Wilton
      15RTRJ    2/4/2000   -   10/10/2005    OM    10%    Raven & Wilton
      15SST    4/16/1997   -   8/1/1997    OM       Wilton
      20RTG    3/4/1997   -   12/28/1999    OM       Wilton
      20RTG    1/5/2000   -   11/16/2005    OM    10%    Raven & Wilton
      20RTM    11/13/1996   -   4/10/1997    OM       Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      20RTP    1/28/1997   -   1/26/1998    OM       Wilton
      20RTR    1/27/1997   -   12/28/1999    OM       Wilton
      20RTRJ    3/11/1998   -   12/28/1999    OM       Wilton
      20RTRJ    2/18/2000   -   9/17/2005    OM    10%    Raven & Wilton
      20SST    5/2/1997   -   6/27/1997    OM       Wilton
      30ACA    5/9/1997   -   12/28/1999    OM       Wilton
                     
      30ACA    3/27/2000   -   5/20/2002    OM    10%    Raven & Wilton
      30ACB    6/3/1997   -   12/28/1999    OM       Wilton
      30ACB    2/25/2000   -   3/5/2001    OM    10%    Raven & Wilton
      30RTM    12/23/1996   -   9/2/1998    OM       Wilton
105071    Value Select    15VS2    11/18/2008   -   12/2/2008    OM    10%    Raven & Wilton
      15VSL    9/15/2003   -   2/15/2007          Wilton
      15VSLR    10/23/2003   -   2/15/2007          Wilton
      20VS2    10/24/2008   -   1/23/2009    OM    10%    Raven & Wilton
      20VSL    8/7/2003   -   6/7/2007          Wilton
      20VSLR    11/19/2003   -   2/15/2007          Wilton
      30VSL    12/22/2005   -   2/15/2007          Wilton
      30VSLR    7/10/2003   -   2/15/2007          Wilton
105081    Whole Life    000    1/19/1961   -   2/10/1989    OM       Wilton
      001    6/7/1961   -   11/4/1985    OM       Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      002    2/27/1962   -   1/18/1979    OM       Wilton
      003    2/25/1961   -   1/24/1986    OM       Wilton
      004    3/26/1964   -   10/9/1973    OM       Wilton
      005    8/28/1961   -   6/21/1976    OM       Wilton
      006    2/27/1971   -   4/8/1980    OM       Wilton
      007    11/3/1965   -   5/8/1980    OM       Wilton
      008    11/9/1960   -   12/1/1988    OM       Wilton
      015    1/25/1967   -   3/16/1977    OM       Wilton
      027    4/1/1964   -   4/1/1964    OM       Wilton
      029    10/20/1960   -   3/2/1985    OM       Wilton
      030    3/16/1961   -   10/22/1980    OM       Wilton
      031    11/28/1960   -   10/18/1982    OM       Wilton
      032    11/1/1960   -   9/11/1981    OM       Wilton
      033    9/1/1961   -   4/24/1981    OM       Wilton
      036    8/25/1961   -   1/15/1969    OM       Wilton
      037    1/6/1962   -   5/28/1984    OM       Wilton
      038    9/21/1967   -   11/15/1985    OM       Wilton
      039    2/23/1966   -   1/18/1977    OM       Wilton
      041    6/1/1963   -   7/1/1988    OM       Wilton
      056    9/15/1970   -   12/4/1985    OM       Wilton
      057    10/14/1970   -   8/26/1985    OM       Wilton
      060    10/2/1968   -   10/10/1980    OM       Wilton
      061    12/15/1972   -   10/1/1984    OM       Wilton


SLOB

  

Product

  

Plan Code

  

Time Period

  

OM Re

  

Excluded Share1

  

Reinsurer

      066    6/21/1969   -   2/24/1982    OM       Wilton
      072    10/19/1973   -   9/12/1984    OM       Wilton
      073    12/15/1972   -   8/3/1983    OM       Wilton
      200    3/1/1973   -   7/1/1982    OM       Wilton
      201    9/1/1973   -   8/1/1981    OM       Wilton
      204    7/1/1978   -   1/1/1983    OM       Wilton
      208    3/10/1974   -   7/1/1987    OM       Wilton
      217    6/7/1984   -   5/25/1988    OM       Wilton
      218    5/1/1983   -   12/18/1989    OM       Wilton
      300    10/1/1980   -   9/28/1981    OM       Wilton
      310    10/1/1982   -   1/4/1989    OM       Wilton
      360    6/22/1977   -   7/10/1981    OM       Wilton
      361    6/23/1981   -   3/1/1989    OM       Wilton
105091    Benefit Certain    20MLB    4/25/2005   -   6/21/2007          Wilton
      30MLB    6/3/2005   -   10/16/2007          Wilton
      30MLBR    4/25/2005   -   7/27/2007          Wilton


SCHEDULE OF OTHER REINSURANCE

   A.2

 

Products Covered

  

Treaty Identification

Home Certain   

Canada Life Assurance Company

 

Eff. – 4/15/2003

 

(per amendment, quota share percentage change effective 1/19/2005)

  

 

Household Life Insurance Company

 

Eff. – 4/1/2005

  

 

American Phoenix

 

Eff. – 6/1/1996

  

 

Transamerica Occidental Life Insurance Company

 

Eff. – 10/1/1999

  

 

Security Life of Denver

 

Eff. – 4/15/2003

  

 

Swiss Re

 

Eff. – 4/1/1999

  

 

Wilton Re

 

Eff. – 4/1/2005, Eff. – 12/31/20072

Savers Select   

Canada Life Assurance Company

 

Eff. – 1/19/2005

  

 

RGA Reinsurance Company

 

Eff. – 1/19/2005

  

 

Scottish Re (U.S.), Inc.

 

Eff. – 1/15/2001

  

 

Security Life of Denver

 

Eff. – 7/15/1996, Eff. – 4/15/2003

 

(two treaties)

  

 

Swiss Re

 

Eff. – 7/1/1983, Eff. – 1/15/2001

 

(two treaties)

 

2  This and other references in this Annex A-2 to the Wilton Re treaty effective 12/31/2007 refer to the Reinsurance Agreement. Coverage under the Reinsurance Agreement shall be deemed to be “Other Reinsurance” solely with respect to the Second Amendment Additional Policies reinsured under this Amendment No. 2 to the extent any such policies were also covered under the Reinsurance Agreement prior to the date hereof or are covered pursuant to the terms of any future amendment to the provisions of the Reinsurance Agreement. For the avoidance of doubt, (i) the Reinsurance Agreement shall not otherwise be deemed to be “Other Reinsurance” under the Reinsurance Agreement or under any amendment thereto (except as otherwise contemplated therein), and (ii) the foregoing shall have no effect on the parties’ rights or entitlements under the terms of the Reinsurance Agreement as effective without consideration to the effectiveness of this Amendment No. 2.


Products Covered

  

Treaty Identification

  

RGA Reinsurance Company (YRT)

 

Eff. – 1/19/2005

  

 

American Phoenix

 

Eff. – 6/1/1996

  

 

Wilton Re

 

Eff. – 12/31/2007

Your Term   

 

Swiss Re

 

Eff. – 12/22/2008

  

 

RGA Reinsurance Company

 

Eff. – 12/22/2008

  

 

Gen Re

 

Eff. – 12/22/2008

Value Select   

 

Canada Life Assurance Company

 

Eff. – 3/1/2003

  

 

Scottish Re (U.S.), Inc.

 

Eff. – 3/1/2003

  

 

Transamerica Occidental Life Insurance Company

 

Eff. – 7/21/2004

  

 

RGA Reinsurance Company

 

Eff. – 7/18/2008

  

 

Security Life of Denver

 

Eff. – 3/1/2003

  

 

Wilton Re

 

Eff. – 12/31/2007

Term Trends   

 

Crown Life Insurance Company

 

Eff. – 3/1/1998

  

 

Life Reassurance Corporation of America

Eff. – 3/1/1998

 

(per amendment, eff. Date was later changed to 6/8/1998)

  

 

Transamerica Occidental Life Insurance Company

 

Eff. – 10/1/1999

  

 

American Phoenix

 

Eff. – 6/1/1996

  

 

Swiss Re

 

Eff. – 6/8/1998

  

 

Security Life of Denver

 

Eff. – 6/1/1996


Products Covered

  

Treaty Identification

Term Trends 10 year term,

 

Term Trends 20 year term,

 

Term Trends 30 year term,

 

Term Trends 30 year term with 10 year guarantee,

 

additional insured rider

  

Employers Reassurance Corporation

 

Eff. – 5/1/2001

Term Trends 10 year term,

 

Term Trends 20 year term,

 

Term Trends 20 year term with 5 year guarantee,

 

Term Trends 30 year term,

 

Term Trends 30 year term with 10 year guarantee,

 

additional insured rider

  

Scottish Re (U.S.), Inc.

 

Eff. – 5/1/2001

Term Trends 20 year term,

 

Term Trends 30 year term,

 

Term Trends 30 year term with 10 year guarantee,

 

additional insured rider

  

Swiss Re Life and Health America, Inc.

 

Eff. – 5/1/2001

Patriot Select   

Canada Life Assurance Company

 

Eff. – 3/1/2003

  

 

Security Life of Denver

 

Eff. – 3/1/2003

  

 

Scottish Re (U.S.), Inc.

 

Eff. – 3/1/2003

UL 1 – 10   

CIGNA

 

Eff. – 7/1/1983

UL 1 – 6, 9 – 10   

Swiss Re (treaty number 2564-1)

 

Eff. – 7/1/1983

UL 1 – 5   

AUL (treaty number 0274.001)

 

Eff. – 7/1/1983

UL 6   

Frankona (treaty number AYN – SA 089)

 

Eff. – 7/1/1991

UL 9 – 10   

American Phoenix (treaty number 2336)

 

Eff. – 10/1/1996

  

 

Crown (treaty number QARYR1-9610)

 

Eff. – 10/1/1996

  

 

ALR/Wilton Re

 

Eff. – 10/1/1999

Secure Master   

Munich (YRT) (treaty number 2903)

 

Eff. – 9/6/2001 – 11/30/05

  

 

Swiss Re (YRT) (treaty number 7157-1)

 

Eff. – 9/6/2001 – 11/30/05


Products Covered

  

Treaty Identification

Other Fully Underwritten Term   

CIGNA

 

Eff. – 3/1/1974

  

 

AUL

 

Eff. – 3/1/1977

  

 

Swiss Re

 

Eff. – 8/1/1981

  

 

Phoenix

 

Eff. – 10/1/1986

  

 

Lincoln

 

Eff. – 1/1/1992

  

 

Frankona

 

Eff. – 1/1/1992

UL 5 – 6, 9 – 10

 

Pension UL

 

Single Premium Adjusted Life Plan

  

Conn Gen

 

Eff. – 1/1/1991


THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT

THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A

REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL

HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION: [***]

ANNEX B

EXPERIENCE REFUND

Section B-1. Experience Account.

(a) A notional experience account (the “Experience Account”) shall be created by the Reinsurer as of the Experience Refund Commencement Date and shall be maintained until all obligations of the Reinsurer in respect of the Additional Assumed Policies under the Reinsurance Agreement have been satisfied or discharged in full. As of the Experience Refund Commencement Date, the balance of the Experience Account (the “Experience Account Balance”) shall be zero.

(b) The Experience Account Balance as of any date shall be an amount calculated in accordance with Section B-2 hereof.

(c) With respect to each calendar quarter during the term of the Reinsurance Agreement which commences on or after the Experience Refund Commencement Date, and so long as Additional Assumed Policies are in force and reinsured by the Reinsurer under the Reinsurance Agreement, the Reinsurer shall pay to the Ceding Company the positive Experience Account Balance as of the end of such calendar quarter, if any (each such payment, an “Experience Refund”). The Experience Refund payable to the Ceding Company with respect to any period shall not exceed the Experience Account Balance as of the last day of such period, and no Experience Refund shall be payable to the Ceding Company if the Experience Account Balance as of the last day of such period shall be less than zero.

Section B-2. Experience Account Balance. The Experience Account Balance as of the end of any subject calendar quarter shall be determined as:

Experience Account Balance (ending prior period before payment of Experience Refund paid in current period with respect to such prior period) less

A. Experience Refund paid in the current period (for the prior period); plus

B. Continuing premiums paid or payable to the Reinsurer for the current period under Section 15 of Amendment No. 2 in respect of Additional Assumed Policies; plus

C. Investment Income; less

D. Benefits and continuing allowances paid or payable to the Ceding Company pursuant to Article 7 of the Reinsurance Agreement and Section 14 of Amendment No. 2 for the current period, each in respect of Additional Assumed Policies; less

E. Increase in YRT Reserve (as such term is used in the ING Assumed Reinsurance Agreement) in respect of Additional Assumed Policies, if any, for the current period; plus

F. Decrease in YRT Reserve (as such term is used in the ING Assumed Reinsurance Agreement) in respect of Additional Assumed Policies, if any, for the current period; less

G. Premium, excise or other taxes reimbursed or reimbursable by the Reinsurer for the current period with respect to the Additional Assumed Policies; less

H. Risk Charge

where “Risk Charge” for each accounting period within the current period equals [***]% times the any positive balance of (B+C-D-E+F-G) determined with respect to such period. For purposes of item C above, “Investment Income” shall mean, as to any applicable period, Investment Income as determined pursuant to Section 12 of the ING Assumed Reinsurance Agreement with respect to such period.


Upon any recapture in accordance with Section 12 of Amendment No. 2 hereof, the Experience Account Balance will be reduced by the amount of related payments to the Ceding Company.


THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

ANNEX C

CONTINUING CEDING ALLOWANCE

 

OM Life – Camden

Continuing Ceding Allowances (per policy per year)

Universal Life

  

Equity Index
Universal Life

 

Term Life

$[***]    $[***]   $[***]

The amount to be paid by the Reinsurer as a continuing policy allowance pursuant to Section 14(a) for any full quarterly period shall be equal to the sum of (a) the sum of the products, for each type of policy, of (i) the Second Amendment Quota Share, times (ii) one-quarter of applicable per policy, per year charge as reflected in the table above times (iii) the average number of Additional Direct Policies of the applicable type in force during the applicable quarterly period, plus (b) [***]% of direct ceded premiums applicable to such period; provided, that the amount in item (a)(ii) above shall be increased annually, commencing in calendar year 2012, by application of a 2% per annum inflation factor, compounded annually. For the avoidance of doubt, to the extent there is any overlap between the Additional Direct Policies to be reinsured hereunder and the Third Amendment Additional Policies to be reinsured under any of the other Proposed Amendments (as such term is defined in the Commitment Agreement), the continuing ceding allowance payable with respect to any such policy shall be payable under this Amendment No. 2 and not under any other Proposed Amendment.


ANNEX D

SCHEDULE OF ASSETS

Amounts as of February 28, 2011

 

Portfolio

     CUSIP     

Issuer

   Par Value
($)
     Book Value
($)
     Accrued
Interest ($)
     Market
Value ($)
     Maturity
Date
 
  903         00184AAF2       AOL Time Warner      893,000         914,696         20,465         950,617         5/1/2012   
  904         037735BZ9       Appalachian Power Co      2,000,000         1,996,333         35,039         2,012,080         5/15/2033   
  904         037735CG0       Appalachian Power Co      5,000,000         5,129,296         132,813         5,274,750         4/1/2036   
  903         172070CN2       Cincinnati Gas & Electric      500,000         499,964         13,142         534,969         9/15/2012   
  904         17248RAJ5       Cingular Wireless      10,000,000         11,551,302         150,417         11,857,900         12/15/2031   
  903         202795HE3       Commonwealth Edison      5,000,000         5,014,614         141,792         5,267,340         3/15/2012   
  903         233331AE7       DTE Energy Company      5,000,000         5,013,251         88,125         5,074,325         6/1/2011   
  904         237194AE5       Darden Restaurants      8,000,000         7,642,211         21,333         7,780,000         8/15/2035   
  903         257469AF3       Dominion Resources      5,000,000         5,159,214         129,833         5,346,960         9/17/2012   
  904         30239XAD9       FBG Finance LTD      15,000,000         14,896,407         186,042         14,760,270         6/15/2035   
  903         3137EACE7       Freddie Mac      10,780,000         10,856,820         101,811         11,032,403         9/21/2012   
  904         3137EACE7       Freddie Mac      3,220,000         3,242,946         30,411         3,295,393         9/21/2012   
  907         3137EACE7       Freddie Mac      5,152,000         5,188,500         48,658         5,272,629         9/21/2012   
  907         3137EACE7       Freddie Mac      17,248,000         17,370,196         162,898         17,651,845         9/21/2012   
  903         337738AF5       Fiserv Inc      10,000,000         9,998,222         171,840         10,755,070         11/20/2012   
  903         42307TAF5       HJ Heinz Finance      10,800,000         11,162,340         298,800         11,358,619         3/15/2012   
  904         465685AD7       ITC Holdings Corp      5,000,000         5,054,986         133,698         5,047,025         9/30/2036   
  904         465685AD7       ITC Holdings Corp      1,000,000         999,127         26,740         1,009,405         9/30/2036   
  904         465685AD7       ITC Holdings Corp      6,000,000         5,994,763         160,438         6,056,430         9/30/2036   
  904         465685AD7       ITC Holdings Corp      1,000,000         999,127         26,740         1,009,405         9/30/2036   
  903         50075NAH7       Kraft Foods Inc      893,000         915,532         13,953         949,036         6/1/2012   
  904         63534PAH0       National City Bank      4,575,000         4,172,152         7,189         4,133,883         6/7/2017   
  901         652478BB3       News American Holdings      1,500,000         1,446,592         29,625         1,692,036         12/1/2095   
  904         665772CA5       Northern States Power Co      5,000,000         4,991,127         33,542         5,020,220         7/15/2035   
  920         68233DAT4       Oncor Electric Delivery      2,500,000         2,814,930         58,333         2,892,940         5/1/2032   
  906         695114BZ0       Pacificorp      200,000         199,347         2,217         195,951         6/15/2035   
  906         695114BZ0       Pacificorp      50,000         49,837         554         48,988         6/15/2035   
  906         745332BU9       Puget Sound Energy Inc      1,000,000         1,000,000         13,708         971,579         6/1/2035   
  906         745332BU9       Puget Sound Energy Inc      1,000,000         1,000,000         13,708         971,579         6/1/2035   
  905         74834LAN0       Quest Diagnostic      5,000,000         5,394,186         57,917         5,347,255         7/1/2037   
  901         760759AC4       Republic Services Inc      4,000,000         3,998,537         12,000         4,093,080         8/15/2011   
  904         773903AC3       Rockwell Automation Inc      4,450,000         3,514,756         29,568         3,705,617         1/15/2098   
  904         797440BF0       San Diego Gas & Electric      7,000,000         6,992,453         110,269         7,094,710         5/15/2035   
  904         842400FA6       Southern Cal Ed      5,000,000         5,017,639         34,181         5,033,645         7/15/2035   
  906         842400FA6       Southern Cal Ed      4,000,000         3,998,391         27,344         4,026,916         7/15/2035   
  904         842400FF5       Southern Cal Ed      5,000,000         4,883,958         35,458         5,174,540         1/15/2037   
  904         889175BD6       Toledo Edison Company      7,750,000         7,810,472         140,340         8,005,983         5/15/2037   
  904         912810FP8       US Treasury Note      460,000         486,757         956         528,713         2/15/2031   
  903         9128277L0       US Treasury Note      58,000         57,742         109         60,542         2/15/2012   
  903         9128277L0       US Treasury Note      150,000         149,332         283         156,574         2/15/2012   
  904         912828AP5       US Treasury      150,000         149,617         1,757         158,807         11/15/2012   
  901         912828GK0       US Treasury      49,450         49,453         6         51,577         2/29/2012   
  903         912828GK0       US Treasury      165,550         165,558         21         172,670         2/29/2012   
  904         912828JG6       US Treasury      200,000         202,425         541         212,234         7/31/2013   


Portfolio

     CUSIP     

Issuer

   Par Value
($)
     Book Value
($)
     Accrued
Interest ($)
     Market
Value ($)
     Maturity
Date
 
  904         912828KP4       US Treasury      30,000,000         29,970,417         120,787         30,369,150         5/15/2012   
  904         912828KV1       US Treasury      1,667,000         1,678,251         9,377         1,717,922         5/31/2014   
  903         912828LM0       US Treasury      14,000,000         13,989,089         88,805         14,191,408         9/15/2012   
  903         912828LM0       US Treasury      66,000,000         65,944,609         418,653         66,902,352         9/15/2012   
  904         912828LZ1       US Treasury      20,200,000         20,057,116         107,313         20,627,674         11/30/2014   
  904         912828LZ1       US Treasury      11,700,000         11,611,707         62,156         11,947,712         11/30/2014   
  904         912828LZ1       US Treasury      19,800,000         19,657,567         105,188         20,219,206         11/30/2014   
  903         912828NS5       US Treasury      15,000,000         15,000,425         15,539         15,049,200         6/30/2012   
  904         912828NS5       US Treasury      15,000,000         15,000,425         15,539         15,049,200         6/30/2012   
  903         984121BS1       Xerox Corp      8,000,000         7,770,476         129,556         8,404,720         5/15/2012   


THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

ANNEX E

Allowance Adjustment

For purposes of the determination of the Adjusted Ceding Allowance as contemplated in Section 3 of Amendment No. 2, the parties agree that the Second Amendment Ceding Allowance shall be adjusted as follows:

i. Decreased for ongoing Net Reinsurance Premiums under Section 4.2 and 4.3 of the Reinsurance Agreement;

ii. Increased for ceded reinsurance benefits under Article 7 of the Reinsurance Agreement, net of recoveries thereon under the terms of any applicable Other Reinsurance;

iii. Increased for continuing allowances under Section 14 of Amendment No. 2;

iv. In lieu of investment income, the Second Amendment Ceding Allowance shall be decreased by an amount of interest on (x) the statutory reserves held for the Second Amendment Additional Policies as of December 31, 2010 less (y) the $[***] at an annual rate equal to [***]%; and

v. Increased for any increase in the statutory reserves held for the Second Amendment Additional Policies or decreased for any decrease in such statutory reserves.

The amounts in items (i) through (v) above shall be determined based on the Second Amendment Quota Share of such amounts for the period between January 1, 2011 and the Second Amendment Effective Date and shall be calculated as if Amendment No. 2 had been effective since January 1, 2011; provided that the amount in item (iv) above shall be determined for the period between January 1, 2011 and the Second Amendment Closing Date.

Notes

All amounts determined exclusive of Extracontractual Obligations.


THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT

THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A

REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL

HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION: [***]

 

ANNEX F

MATERIAL LITIGATION3

 

Case

   State    Attorney    Litigation
Type
   Contract
Type
   Alleged
Wrongful
Acts
   Policy
Limits
     Policy
Number
   Insured    Claimant    Date
Lawsuit/
Demand
Received
   Covered by
Amendment
2 or 3

[***]

   CA    [***]    Claim    Life    Dispute over
$300,000 rescinded
policy death benefit
   $ 300,000       [***]    [***]    [***]    7/2/2010    2 and 3

[***]

   LA    [***]    Non-Claim    Life    lawsuit alleges a
failure to properly
notify the
policyholder that his
policy would lapse.
   $ 350,000       [***]    [***]    [***]    4/16/2010    2

[***]

   MS    [***]    Claim    Life    Dispute over
entitlement to death
benefit.
   $ 500,000       [***]    [***]    [***]    9/12/2008    2 and 3

[***]

   OH    [***]    Claim -
Disability
Rider
   Life    Improper denial of
disability benefits
   $ 300,000       [***]    [***]    [***]    10/25/2010    2 and 3

 

3  Inclusion of policies on this Annex F is without prejudice to the determination of whether such policies are Second Amendment Additional Policies under this Amendment No. 2.