AMENDMENT
to
COINSURANCE AGREEMENT
Between
UNIVERSAL GUARANTY LIFE INSURANCE COMPANY
hereinafter referred to as "the Company"
and
FIRST INTERNATIONAL LIFE INSURANCE COMPANY
hereinafter referred to as "the Reinsurer"
WHEREAS, the Company and the Reinsurer have made
and entered into a Coinsurance Agreement dated as of
September 30, 1996 (the "Agreement"); and
WHEREAS, the Company and the Reinsurer wish to
amend certain provisions of the Agreement;
NOW, THEREFORE, in consideration of the mutual
agreements, promises and covenants provided herein, the
Company and the Reinsurer hereby agree to amend the
Agreement as follows:
SECTION 1.-DEFINITIONS
All terms used in this Amendment shall be subject
to the definitions provided in the Agreement.
The definition of Reinsured Policies in Article I
shall be replaced with the following:
""REINSURED POLICIES" means all paid-up
life insurance and, if attached thereto, annuity
policies, contracts, binders or certificates of
insurance, and all riders, endorsements and amendments
thereto, whether written or oral, issued or assumed by
the Company, that are in force on the Effective Date,
except those offered in settlement to so called "HIV"
policyholders and paid-up business associated with the
Company's Jr./Sr. Plan Single Premium Interest
Sensitive Whole Life policies, including, without
limitation, Policy Loans, all such Reinsured Policies
being set forth in Schedule G, attached hereto."
The definition of Closing Date in
Article I shall be replaced with the following:
""CLOSING DATE" shall be December 6,
1996, unless all of the conditions in Article XV
hereunder have not been satisfied prior to such date,
in which event it shall be that date ten (10) Business
Days following receipt of notice from the Company to
the Reinsurer that all of the conditions in Article XV
hereunder have been satisfied."
SECTION 2.-TABLE OF CONTENTS
Add to the Table of Contents "SCHEDULE G -
LIST OF REINSURED POLICIES" at page G-1.
SECTION 3.-SCHEDULE G
Add to the Agreement a new "SCHEDULE G" as
attached hereto.
SECTION 4.-INITIAL REINSURANCE CONSIDERATION
Section 4.01 of the Agreement is to be replaced with the
following:
"4.01. INITIAL REINSURANCE CONSIDERATION. On
the Closing Date, as consideration for the assumption
by the Reinsurer of the Reserves and Liabilities under
the Reinsured Policies, the Company shall transfer to
the Reinsurer cash in an amount equal to one hundred
percent (100%) of the Reserves and Liabilities, which
excludes all claim liabilities, as of the Effective
Date (the "Initial Reinsurance Premium"), less the
Expense Allowance described in Article V below (such
net amount being the "Initial Reinsurance
Consideration" as described in Schedule C attached
hereto). Such Initial Reinsurance Premium (shown on
Schedule C) shall be subject to further and final
adjustment as follows: (1) within ninety (90) days
after the Closing Date, the Reinsurer shall send a
notice to the Company advising the Company of the final
valuation of the Initial Reinsurance Premium, and (2)
the Company shall then have five (5) Business Days from
receipt of the aforementioned notice to make an
adjustment to the cash amount it transferred to the
Reinsurer on the Closing Date, in order to reflect the
final valuation of the Initial Reinsurance
Consideration pursuant to this Section 4.01."
SECTION 5.-DEATH BENEFITS AND OTHER PAYMENTS
Section 6.01 of the Agreement is to be
replaced with the following:
"6.01. DEATH, ANNUITY BENEFITS AND PAYMENTS
UNDER SETTLEMENT OPTIONS. The Reinsurer shall assume
liability for, subject to Section 2.03, all death
benefits, all annuity benefits, all periodic or lump
sum payments on settlement options or withdrawals from
Dividends on deposit, and all surrender and endorsement
payments to Policyholders with respect to Reinsured
Policies (such death benefits, annuity benefits and
other payments are referred to collectively as
"Benefits"), and shall indemnify the Company with
respect to any such Benefits paid by the Company
incurred after the Effective Date."
SECTION 6.-ARTICLE VII
Article VII of the Agreement is to be
replaced with the following:
"NON-GUARANTEED ELEMENTS
7.01. PARTICIPATION. The Reinsurer shall
participate in the excess interest credited, dividends
and coupon ("Dividends") scales in effect on the
Effective Date of this Agreement. Should the Company
desire to change said scales, it shall do so only upon
the consent of the Reinsurer, which shall not be
unreasonably withheld. The Reinsurer shall only
reimburse those Dividends that are incurred after the
Effective Date. The Reinsurer may also make
recommendations about a change in the Dividend scales.
Article 7.02. OPTIONS. The Reinsurer shall
participate in all Dividend options provided under the
Reinsured Policies."
SECTION 7.-SCHEDULE A
Substitute the term "Reinsured Policies" for the
term "Policies" in paragraphs E.1., E.2. and F.1. of
Schedule A.
SECTION 8.-SCHEDULE B
Substitute the Schedule B attached hereto as
Schedule B to the Agreement.
SECTION 9.-COUNTERPARTS
This Amendment to the Agreement may be executed in
several counterparts and each shall have the same force and
effect as an original.
SECTION 10.-REPLACEMENTS
Add a new Section 9.07 as follows:
"9.07. REPLACEMENTS. The replacement of any
Reinsured Contract, pursuant to any program of replacement
initiated by the Company or any Person acting on behalf or
in the place of the Company, including any receiver,
liquidator or rehabilitator, shall be considered as a
recaptured contract and not a surrender unless the
reinsurance provided by the Reinsurer hereunder is continued
for the new contract. Any contracts so surrendered and
deemed recaptured shall be treated in accordance with the
recapture terms in Schedule E."
SECTION 11.-EFFECT
Except as amended herein, the Agreement,
together with all Schedules and Exhibits, remains in full
force and effect.
IN WITNESS WHEREOF, UNIVERSAL GUARANTY LIFE
INSURANCE COMPANY and FIRST INTERNATIONAL LIFE INSURANCE
COMPANY have by their respective officers made and entered
into this Amendment as of the 30th day of September, 1996.
UNIVERSAL GUARANTY LIFE FIRST INTERNATIONAL LIFE
INSURANCE COMPANY INSURANCE COMPANY
James E. Melville Jeremy Starr
By By
President Vice President, Reinsurance
Title Title
SCHEDULE B
EXPENSE ALLOWANCE
Expense Allowance = Base Allowance - Closing Interest
Base Allowance = P x Reserves and Liabilities +
Interest Adjustment Factor
Interest Adjustment Factor = $1,600,000 x (A - B)
Closing Interest = (Reserves and Liabilities - Policy Loans
on the Effective Date - Base Allowance)
x D x B/365
Where:
P = 23.7% for Paid-up permanent policies
43.4% for Paid-up term policies
23.0% for Dividends on deposit, endowments
on deposit and reserves on Paid-up
additions bought by Dividends
0.0% for provisions for policyholder
Dividends payable in the following year
100.0% for immediate payment of claim
reserves
3.0% for Annuities
A = 30 Year Treasury Rate in effect three (3)
Business Days prior to the Closing Date
B = 30 Year Treasury Rate on September 6, 1996
(which is 7.12%)
D = Calendar Days between Closing Date and
Effective Date
Records with:
First Character In-Force
"class base" Code
Paid-up Term
ETI A,N,T D
Other Term 4,5,8 B or C
Paid-up Permanent 1,2,3 B or C
Dividend Options amounts in any record
Annuities D,F,S amounts in any record
SCHEDULE G
LIST OF REINSURED POLICIES
[A completed Schedule G will be prepared by the Reinsurer
and provided under separate cover]