Exhibit 10.33
REINSURANCE AGREEMENT
BETWEEN
KEYPORT LIFE INSURANCE COMPANY
PROVIDENCE, RHODE ISLAND
REFERRED TO AS THE "CEDING COMPANY"
AND
RGA REINSURANCE COMPANY
ST. LOUIS, MISSOURI
REFERRED TO AS THE "REINSURER"
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TABLE OF CONTENTS
PAGE
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ARTICLE I GENERAL PROVISIONS 2
ARTICLE II REINSURANCE PREMIUMS 8
ARTICLE III ALLOWANCE 9
ARTICLE IV BENEFIT PAYMENTS 10
ARTICLE V RESERVE ADJUSTMENTS 12
ARTICLE VI EXPENSE AND RISK CHARGE 14
ARTICLE VII EXPERIENCE REFUND 15
ARTICLE VIII ACCOUNTING AND SETTLEMENTS 18
ARTICLE IX DURATION AND RECAPTURE 22
ARTICLE X TERMINAL ACCOUNTING AND SETTLEMENT 24
ARTICLE XI REPRESENTATIONS 26
ARTICLE XII ARBITRATION 27
ARTICLE XIII INSOLVENCY 28
ARTICLE XIV INTERMEDIARY 29
ARTICLE XV EXECUTION AND EFFECTIVE DATE 30
SCHEDULE A ANNUITIES AND RISKS REINSURED 31
SCHEDULE B QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS 32
SCHEDULE C MODIFIED COINSURANCE RESERVE INVESTMENT CREDIT 34
SCHEDULE D SEGREGATED ASSET PORTFOLIO 36
SCHEDULE E INVESTMENT POLICY 37
SCHEDULE F CEDING COMPANY DATA 39
REINSURANCE AGREEMENT
This Agreement is made and entered into by and between Keyport Life Insurance
Company (hereinafter referred to as the "Ceding Company") and RGA Reinsurance
Company (hereinafter referred to as the "Reinsurer").
The Ceding Company and the Reinsurer mutually agree to reinsure on the terms and
conditions stated herein. This Agreement is an indemnity reinsurance agreement
solely between the Ceding Company and the Reinsurer, and performance of the
obligations of each party under this Agreement will be rendered solely to the
other party. In no instance will anyone other than the Ceding Company or the
Reinsurer have any rights under this Agreement, and the Ceding Company will be
and remain the only party hereunder that is liable to any insured, policyowner
or beneficiary under any annuity reinsured hereunder.
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ARTICLE I
GENERAL PROVISIONS
1. ANNUITIES AND RISKS REINSURED. The Reinsurer agrees to indemnify the
Ceding Company for, and the Ceding Company agrees to reinsure with the
Reinsurer, according to the terms and conditions hereof, the portion of
the risks under the annuities described in Schedule A attached hereto.
2. COVERAGES AND EXCLUSIONS.
A. Only the flexible premium deferred annuities described in Schedule A
are reinsured under this Agreement.
B. Riders are not reinsured under this Agreement.
3. PLAN OF REINSURANCE. This indemnity reinsurance is a combination of
coinsurance and modified coinsurance. The Ceding Company will retain,
control and own all assets held in relation to the Modified Coinsurance
Reserve.
4. EXPENSES. The Reinsurer will bear no part of the expenses incurred in
connection with the annuities reinsured hereunder, except as otherwise
provided herein.
5. ANNUITY CHANGES. The Ceding Company must provide written notification to
the Reinsurer of any change which affects the original terms or
conditions of any annuity reinsured hereunder not later than fifteen (15)
days after the change takes effect. The Reinsurer will provide written
notification to the Ceding Company as to the Reinsurer's acceptance or
rejection of the change within fifteen (15) days after receipt of notice
of the change. If the Reinsurer accepts any such change, the Reinsurer
will (a) assume that portion of any increase in the Ceding Company's
liability, resulting from the change, which corresponds to the portion of
the annuities reinsured hereunder, and (b) receive credit for that
portion of any decrease in the Ceding Company's liability, resulting from
the change, which corresponds to the portion of the annuities reinsured
hereunder. If the Reinsurer rejects any such change, the Reinsurer's
liability under this Agreement will be determined as if no such change
had occurred.
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6. NO EXTRACONTRACTUAL DAMAGES. The Reinsurer does not indemnify the Ceding
Company for, and will not be liable for, any extracontractual damages or
extracontractual liability resulting from fraud, oppression, bad faith,
strict liability, or negligent, reckless or intentional wrongs on the
part of the Ceding Company or its directors, officers, employees and
agents. The following types of damages are examples of damages that would
be excluded from this Agreement for the conduct described above: actual
damages, damages for emotional distress, and punitive or exemplary
damages.
7. ANNUITY ADMINISTRATION. The Ceding Company will administer the annuities
reinsured hereunder and will perform all accounting for such annuities;
provided, however, that the Reinsurer reserves the right to participate
in claims administration.
8. INSPECTION. At any reasonable time, the Reinsurer and/or its
representative may inspect, during normal business hours, at the
principal office of the Ceding Company, the original papers and any and
all other books or documents relating to or affecting reinsurance under
this Agreement. The Reinsurer or its representative will not use any
information obtained through any inspection pursuant to this Paragraph
for any purpose not relating to reinsurance hereunder. The Ceding Company
will furnish the Reinsurer and/or its representative with copies of any
underwriting information pertaining to any annuity reinsured under this
Agreement.
9. TAXES AND ASSESSMENTS. The allowance for any premium taxes, state
guarantee fund assessments or special assessments paid in connection with
the annuities reinsured hereunder is included in the Allowance described
in Article III. The Reinsurer will not reimburse the Ceding Company for
any other taxes or assessments paid by the Ceding Company in connection
with the annuities reinsured hereunder.
10. PROXY TAX REIMBURSEMENT. Pursuant to Internal Revenue Code Section 848 as
added by the Revenue Reconciliation Act of 1990 ("IRC Section 848"),
insurance companies are required to capitalize and amortize specified
annuity acquisition expenses. The amount capitalized is determined by
proxy based on a percentage of net premiums. At the Reinsurer's request,
the Ceding Company will reimburse the Reinsurer
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for any positive timing cost to the Reinsurer which results from the
application of IRC Section 848 to the annuities reinsured hereunder and
which the Reinsurer considers material. At the Ceding Company's request,
the Reinsurer will reimburse the Ceding Company for the absolute value of
any negative timing cost to the Ceding Company which results from the
application of IRC Section 848 to the annuities reinsured hereunder and
which the Ceding Company considers material. The Reinsurer and the Ceding
Company agree, however, that any timing cost which would result from the
Regulations published December 29, 1992 pursuant to IRC Section 848 would
not be material and thus not subject to reimbursement hereunder.
11. ELECTION TO DETERMINE SPECIFIED ANNUITY ACQUISITION EXPENSES. The Ceding
Company and the Reinsurer agree that the party with net positive
consideration under this Agreement will capitalize specified annuity
acquisition expenses with respect to annuities reinsured under this
Agreement without regard to the general deductions limitation of IRC
Section 848(c)(1). The Ceding Company and the Reinsurer will exchange
information pertaining to the amount of net consideration under this
Agreement each year to ensure consistency. The Ceding Company will submit
a schedule to the Reinsurer by May 1 of each year showing its calculation
of the net consideration for the preceding taxable year. The Reinsurer
may contest the calculation in writing within thirty (30) days of receipt
of the Ceding Company's schedule. Any differences will be resolved
between the parties so that consistent amounts are reported on the
respective tax returns for the preceding taxable year. This election to
capitalize specified annuity acquisition expense without regard to the
general deductions limitation is effective for the taxable year beginning
January 1, 2000 and all subsequent taxable years during which this
Agreement remains in effect.
12. CONDITION. The reinsurance hereunder is subject to the same limitations
and conditions specified in the annuities issued by the Ceding Company
which are reinsured hereunder, except as otherwise provided in this
Agreement.
13. MISUNDERSTANDINGS AND OVERSIGHTS. If any failure to pay amounts due or to
perform any other act required by this Agreement is unintentional and
caused by misunderstanding or oversight, the Ceding Company and
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the Reinsurer will adjust the situation to what it would have been had
the misunderstanding or oversight not occurred.
14. ADJUSTMENTS. If the Ceding Company's liability under any of the annuities
reinsured hereunder is changed because of a misstatement of age, sex or
any other material fact, the Reinsurer will (a) assume that portion of
any increase in the Ceding Company's liability, resulting from the
change, which corresponds to the portion of the annuities reinsured
hereunder, and (b) receive credit for that portion of any decrease in the
Ceding Company's liability, resulting from the change, which corresponds
to the portion of the annuities reinsured hereunder.
15. REINSTATEMENTS. If an annuity reinsured hereunder lapses, is surrendered
or annuitized and is subsequently reinstated while this Agreement is in
force, the reinsurance for such annuity will be reinstated automatically.
The Ceding Company will pay the Reinsurer the Reinsurer's proportionate
share of all amounts received by the Ceding Company in connection with
the reinstatement of the annuity, plus any amounts previously refunded to
the Ceding Company by the Reinsurer in connection with the lapse of the
annuity.
16. ASSIGNMENT. Neither the Ceding Company nor the Reinsurer may assign any
of its rights, duties or obligations under this Agreement without the
prior written consent of the other party. Any assignment attempted by the
Ceding Company or the Reinsurer, or their statutory successors, without
the prior written consent of the other party shall be considered null and
void leaving the party attempting the assignment liable to the other
party for performance under this Agreement. Notwithstanding the
preceding, the Reinsurer reserves the right to assign and novate the
Reinsurer's rights, duties and interests under this Agreement to Manulife
Reinsurance Limited beginning in calendar year 2001. The Ceding Company
will consent to such assignment and novation.
17. AMENDMENTS. This Agreement may be amended only by written agreement of
the parties. Any change or modification to this Agreement shall be null
and void unless made by amendment to this Agreement and signed by both
parties.
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18. ENTIRE AGREEMENT. The terms expressed herein constitute the entire
agreement between the parties with respect to the annuities reinsured
hereunder. There are no understandings between the parties with respect
to the annuities reinsured hereunder other than as expressed in this
Agreement.
19. CURRENT PRACTICES. The Ceding Company will not materially change, alter
or otherwise compromise its underwriting, claims paying or administrative
practices with respect to the annuities reinsured hereunder without prior
written consent of the Reinsurer.
20. GOVERNING LAW. This Agreement will be governed, construed and enforced in
accordance with the laws of Rhode Island, without giving effect to the
choice of law provisions.
21. NON-WAIVER OF RIGHTS. No forbearance on the part of either party to
insist upon compliance by the other party with the terms of this
Agreement shall be construed as, or constitute a waiver of, any of the
terms of this Agreement.
22. INVALIDITY AND SEVERABILITY. In the event that any provision or term of
this Agreement shall be held to be illegal or unenforceable, all of the
other terms and provisions shall remain in full force and effect, except
if the provision or term held to be illegal or unenforceable is also held
to be a material part of this Agreement such that the party in whose
favor the material term or provision was stipulated herein would not have
entered into this Agreement without such term or provision, then the
party in whose favor the material term or provision was stipulated shall
have the right, upon such holding, to terminate this Agreement.
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ARTICLE II
REINSURANCE PREMIUMS
REINSURANCE PREMIUMS. The Ceding Company will pay the Reinsurer Reinsurance
Premiums on all annuities in effect under this Agreement in an amount equal to
that portion of the gross premiums collected during the Accounting Period, as
defined in Article VIII, Paragraph 1, by the Ceding Company which corresponds to
the portion of the annuities reinsured hereunder. The term "Net Reinsurance
Premiums," as used in this Agreement, means the sum of: (a) the Reinsurance
Premiums, as defined above, plus (b) any proceeds collected by the Reinsurer
under other agreements with respect to the annuities reinsured hereunder,
excluding any retrocession agreements entered into on a coinsurance and modified
coinsurance basis. The Reinsurance Premiums paid to the Reinsurer by the Ceding
Company will be remitted to the Reinsurer at the end of the Accounting Period
during which the gross premiums were collected by the Ceding Company and the
Reinsurer will treat any such Reinsurance Premiums as paid premium for annual
statement purposes regardless of the mode of collection by the Ceding Company on
the annuities reinsured hereunder.
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ARTICLE III
ALLOWANCE
COMMISSION AND EXPENSE ALLOWANCE. The Reinsurer will pay the Ceding Company a
Commission and Expense Allowance at the end of each Accounting Period equal to
.05625 percent times the portion of the annuity value as of the end of the
Accounting Period which corresponds to the portion of the annuities reinsured
hereunder and described in Schedule A.
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ARTICLE IV
BENEFIT PAYMENTS
1. BENEFIT PAYMENTS. Benefit Payments, as referred to in this Agreement,
means the sum of (i) Claims as described in Paragraph 2 below and (ii)
Cash Surrender Values as described in Paragraph 3 below. No liability
will arise under this Agreement for the Reinsurer to reimburse Benefit
Payments which are not determined in accordance with the terms of the
annuities reinsured hereunder.
2. CLAIMS. The Reinsurer will reimburse the Ceding Company for that portion
of the Claims paid by the Ceding Company in accordance with the terms of
the annuities reinsured hereunder which corresponds to the portion of the
annuities reinsured hereunder.
3. CASH SURRENDER VALUES. The Reinsurer will reimburse the Ceding Company
for that portion of the partial and full Cash Surrender Values paid by
the Ceding Company in accordance with the terms of the annuities
reinsured hereunder which corresponds to the portion of the annuities
reinsured hereunder.
4. NOTICE. The Ceding Company will notify the Reinsurer promptly after
receipt of any information regarding Claims on annuities reinsured
hereunder. The reinsurance claim and copies of notification, claim
papers, and proofs will be furnished to the Reinsurer upon request.
5. LIABILITY AND PAYMENT. The Reinsurer will accept the decision of the
Ceding Company with respect to payment of a Claim on an annuity reinsured
hereunder. The Reinsurer will pay its proportionate share of Claims in a
lump sum to the Ceding Company without regard to the form of settlement
by the Ceding Company.
6. CONTESTED CLAIMS. The Ceding Company will advise the Reinsurer of its
intention to contest, compromise or litigate any Claims involving
annuities reinsured hereunder. The Reinsurer may pay its share of the
expense of such contests, in addition to its share of Claims, or it may
choose not to participate. If the
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Reinsurer chooses not to participate, it will discharge its liability by
payment to the Ceding Company of the full amount of its liability on the
annuity reinsured.
7. ANNUITY PAYMENTS.
A. The Reinsurer will be liable, on a coinsurance basis, for its
portion of annuity payments made on any annuity reinsured hereunder
if the annuity payments are based on the terms guaranteed in the
annuity at the time of issue of the annuity.
B. The Reinsurer will not be liable for the reinsurance of any annuity
annuitizing at terms more favorable than those guaranteed at the
time of issue of such annuity. In the event that the Ceding Company
allows annuitization at terms more favorable than those guaranteed
in the annuity at the time of issue of such annuity, such annuity
will be considered surrendered and the Reinsurer will pay the Ceding
Company that portion of the annuity value applied to the
annuitization which corresponds to the portion of the annuities
reinsured hereunder. No further obligation or liability will exist
for the Reinsurer for such annuitized annuities.
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ARTICLE V
RESERVE ADJUSTMENTS
1. MODIFIED COINSURANCE RESERVE ADJUSTMENT.
A. The Modified Coinsurance Reserve Adjustment will be computed each
Accounting Period equal to (i) minus (ii) minus (iii), where:
(i) equals the Modified Coinsurance Reserve, as defined in
Paragraph 2 below, at the end of the current Accounting Period
on the annuities reinsured hereunder;
(ii) equals the Modified Coinsurance Reserve, as defined in
Paragraph 2 below, at the beginning of the current Accounting
Period, on the annuities reinsured hereunder; and
(iii) equals the Modified Coinsurance Reserve Investment Credit, as
described in Schedule C.
In the Accounting Period in which termination of this Agreement
occurs, the reference in (i) above to "the end of the current
Accounting Period" refers to the terminal accounting date as
described in Article X, Paragraph 2.
B. For any Accounting Period in which the amount computed in A. above
is positive, the Reinsurer will pay the Ceding Company such amount.
For any Accounting Period in which the amount computed in A. above
is negative, the Ceding Company will pay the Reinsurer the absolute
value of such amount.
2. MODIFIED COINSURANCE RESERVE. The Modified Coinsurance Reserve is equal
to (i) minus (ii), where:
(i) equals the Gross Statutory Reserve, as defined in Paragraph 4
below; and
(ii) equals the Coinsurance Reserve, as defined in Paragraph 3
below.
3. COINSURANCE RESERVE. The Coinsurance Reserve is equal to (i) minus (ii),
but not less than zero, where:
(i) equals the Gross Statutory Reserve, as defined in Paragraph 4
below; and
(ii) equals the Net Statutory Reserve, as defined in Paragraph 5
below.
The Reinsurer will establish a liability in an amount equal to the
Coinsurance Reserve.
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4. GROSS STATUTORY RESERVE. The term "Gross Statutory Reserve," as used in
this Agreement, means the statutory reserve on the portion of the
annuities reinsured hereunder as calculated by the Ceding Company under
its applicable State law.
5. NET STATUTORY RESERVE. The term "Net Statutory Reserve," as used in this
Agreement, means the reserve as calculated according to the methods
described in Section 807 of the Internal Revenue Code of 1986 on the
portion of the annuities reinsured hereunder.
6. RESERVE STRENGTHENING. Any increase in reserves resulting from a reserve
strengthening with respect to the annuities reinsured hereunder will be
paid by the Ceding Company to the Reinsurer at the end of the Accounting
Period during which the reserve strengthening occurs. This Paragraph
applies to strengthening of statutory reserves, required or voluntary
increased contributions to any special valuation reserve(s), and changes
in the methodology for the determination of any special valuation
reserves(s).
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ARTICLE VI
EXPENSE AND RISK CHARGE
EXPENSE AND RISK CHARGE. The Expense and Risk Charge for each Accounting Period
payable to the Reinsurer by the Ceding Company, will be equal to the sum of (i)
plus (ii) plus (iii) plus (iv), where:
(i) equals .0125 percent times the Segregated Asset Portfolio, as
described in Schedule D, as of the end of the current Accounting
Period;
(ii) for the Accounting Period ending December 31, 2000 only, equals 1.3
percent times the Coinsurance Reserve, determined in accordance
with Article V, Paragraph 3, as of the end of the current
Accounting Period;
(iii) for the Accounting Periods ending March 31, 2001 and thereafter,
equals .325 percent times the net of (a) minus (b), but not less
than zero, where:
(a) equals the Coinsurance Reserve, determined in accordance with
Article V, Paragraph 3, at the end of the current Accounting
Period; and
(b) equals the Experience Refund Account, determined in accordance
with Article VII, Paragraph 3, at the end of the current
Accounting Period, before deduction of item (iii)(d) of
Article VII, Paragraph 3; and
(iv) equals .325 percent times the amount of the Memorandum Account,
determined in accordance with Article VIII, Paragraph 9, at the end
of the preceding Accounting Period, with accrued interest thereon.
Notwithstanding the preceding, in no event will item (iii), as described
above, be less than $20,000 for any Accounting Period.
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ARTICLE VII
EXPERIENCE REFUND
1. GENERAL. An Experience Refund will be paid by the Reinsurer to the Ceding
Company at the end of each Accounting Period with respect to the
reinsurance hereunder, if the operation of the Experience Refund formula
detailed in Paragraph 2 below produces a positive amount for that
Accounting Period. If the operation of the Experience Refund formula
produces a negative amount for the current Accounting Period, then the
Experience Refund is set equal to zero and the negative amount will be
carried forward and included in the Memorandum Account calculation as
described in Article VIII, Paragraph 9, and will be offset against any
future positive Experience Refunds in accordance with item (ii)(e) of the
formula detailed in Paragraph 2 below. No Experience Refund will be paid
by the Reinsurer to the Ceding Company after January 1, 2005.
2. FORMULA. With respect to each Accounting Period, the Experience Refund
will be equal to (i) minus (ii), where:
(i) equals the sum of:
(a) the Net Reinsurance Premiums determined in accordance with
Article II, plus
(b) the Experience Refund Account, determined in accordance with
Paragraph 3 below, at the beginning of the current Accounting
Period; and
(ii) equals the sum of:
(a) Benefit Payments as described in Article IV, plus
(b) the Commission and Expense Allowance determined in accordance
with Article III, plus
(c) the Modified Coinsurance Reserve Adjustment determined in
accordance with Article V, Paragraph 1, plus
(d) the Expense and Risk Charge determined in accordance with
Article VI, plus
(e) the balance of the Memorandum Account, as described in Article
VIII, Paragraph 9, at the end of the preceding Accounting
Period, with accrued interest thereon, plus
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(f) the Experience Refund Account, determined in accordance with
Paragraph 3 below, at the end of the current Accounting
Period.
3. EXPERIENCE REFUND ACCOUNT. For the Accounting Periods beginning January
1, 2000 through December 31, 2001 only, the Experience Refund Account at
the end of each Accounting Period will equal zero. For the Accounting
Periods beginning January 1, 2002 and thereafter, the Experience Refund
Account at the end of each Accounting Period will be equal to (i) plus
(ii) minus (iii), but not to exceed (iv) and not less than zero, where:
(i) equals the Experience Refund Account at the beginning of the
current Accounting Period;
(ii) equals the Net Reinsurance Premiums determined in accordance with
Article II;
(iii) equals the sum of:
(a) Benefit Payments as described in Article IV, plus
(b) the Commission and Expense Allowance determined in accordance
with Article III, plus
(c) the Modified Coinsurance Reserve Adjustment determined in
accordance with Article V, Paragraph 1, plus
(d) the Expense and Risk Charge determined in accordance with
Article VI, plus
(e) the balance of the Memorandum Account, as described in Article
VIII, Paragraph 9, at the end of the preceding Accounting
Period, with accrued interest thereon; and
(iv) equals the lesser of:
(a) 3 percent times the portion of the annuity value, outstanding
on the policies reinsured hereunder as of the end of the
current Accounting Period, which corresponds to the portion of
the policies reinsured hereunder; and
(b) the Coinsurance Reserve, determined in accordance with Article
V, Paragraph 3, as of the end of the current Accounting
Period.
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ARTICLE VIII
ACCOUNTING AND SETTLEMENTS
1. QUARTERLY ACCOUNTING PERIOD. Each Accounting Period under this Agreement
will be a calendar quarter, except that: (a) the initial Accounting
Period runs from the Effective Date of this Agreement through the last
day of the calendar quarter during which the Effective Date of this
Agreement falls, and (b) the final Accounting Period runs from the end of
the preceding Accounting Period until the terminal accounting date of
this Agreement as described in Article X, Paragraph 2. However, the
Reinsurer reserves the right to adjust all accounting and settlements to
a calendar year-to-date basis.
2. QUARTERLY ACCOUNTING REPORTS. Quarterly accounting reports in the form of
Schedule B will be submitted to the Reinsurer by the Ceding Company for
each Accounting Period not later than fifteen (15) days after the end of
each Accounting Period. Such reports will include information on the
amount of Reinsurance Premiums, Commission and Expense Allowance, Benefit
Payments, Experience Refund, Experience Refund Account, Expense and Risk
Charge, Memorandum Account, Modified Coinsurance Reserve, Modified
Coinsurance Reserve Investment Credit, Coinsurance Reserve, Gross
Statutory Reserve, Net Statutory Reserve, Segregated Asset Portfolio,
Amount Withheld by Ceding Company and either a detailed listing of the
Segregated Asset Portfolio or a summarized report demonstrating
compliance with the Investment Policy described in Schedule E.
3. QUARTERLY SETTLEMENTS.
A. The Ceding Company will withhold on behalf of the Reinsurer an
amount equal to the Experience Refund Account determined in
accordance with Article VII, Paragraph 3 (herein referred to as the
"Amount Withheld by Ceding Company"). The Amount Withheld by Ceding
Company will be credited to the Reinsurer and will be considered as
an amount held on behalf of the Reinsurer. The Reinsurer will
consider such amount as a receivable and subject to future
adjustments as provided below. Within fifteen (15) days after the
end of each Accounting Period, the Ceding Company will adjust the
Amount Withheld by Ceding Company, as described above, by an amount
calculated as follows:
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(i) the Experience Refund Account, determined in accordance with
Article VII, Paragraph 3, at the end of the current Accounting
Period, less
(ii) the Experience Refund Account, determined in accordance with
Article VII, Paragraph 3, at the beginning of the current
Accounting Period.
If the amount calculated above is positive, then the Amount Withheld by
Ceding Company will be increased by such amount. If the amount calculated
above is negative, then the Amount Withheld by Ceding Company will be
decreased by such amount.
B. Within fifteen (15) days after the end of each Accounting Period,
the Ceding Company will pay the Reinsurer the sum of:
(i) the Reinsurance Premiums determined in accordance with Article
II, plus
(ii) any Modified Coinsurance Reserve Adjustment payable to the
Reinsurer determined in accordance with Article V, Paragraph
1, plus
(iii) the amount of any reduction in the Amount Withheld by Ceding
Company, as described in A. above.
C. Simultaneously, the Reinsurer will pay the Ceding Company the sum
of:
(i) the amount of Benefit Payments, as described in Article IV,
plus
(ii) the Commission and Expense Allowance determined in accordance
with Article III, plus
(iii) any Modified Coinsurance Reserve Adjustment payable to the
Ceding Company determined in accordance with Article V,
Paragraph 1, plus
(iv) any Experience Refund determined in accordance with Article
VII, plus
(v) the amount of any increase in the Amount Withheld by Ceding
Company, as described in A. above.
4. AMOUNTS DUE QUARTERLY. Except as otherwise specifically provided in this
Agreement, all amounts due to be paid to either the Ceding Company or the
Reinsurer under this Agreement will be determined on a net basis at the
end of each Accounting Period and will be due and payable within fifteen
(15) days after the end of the Accounting Period.
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5. ANNUAL ACCOUNTING REPORTS. The Ceding Company will provide the Reinsurer
with annual accounting reports within thirty (30) days after the end of
the calendar year for which such reports are prepared. These reports will
contain sufficient information about the annuities reinsured hereunder to
enable the Reinsurer to prepare its annual financial reports and to
verify information reported in Schedule C, and will include Exhibit 8 by
reserve basis, Page 7, Page 26 and Schedule S of the NAIC Convention
Blank.
6. ESTIMATIONS. If the amounts, as described in Paragraph 3 above, cannot be
determined by the dates described in Paragraph 4 above, on an exact
basis, such payments will be paid in accordance with a mutually agreed
upon formula which will approximate the actual payments. Adjustments will
then be made to reflect actual amounts when they become available.
7. DELAYED PAYMENTS. For purposes of Paragraph 4 above, if there is a
delayed settlement of a payment due, there will be an interest penalty,
at the Memorandum Account Rate described in Paragraph 10 below for the
period that the amount is overdue. For purposes of this Paragraph, a
payment will be considered overdue thirty (30) days after the date such
payment is due.
8. OFFSET OF PAYMENTS. All monies due either the Ceding Company or the
Reinsurer under this Agreement or any other agreements will be offset
against each other, dollar for dollar, regardless of any insolvency of
either party. The intent being that offsets of mutual debits and mutual
credits will be allowed whether characterized as recoupment, setoff or
otherwise, so as to allow the reinsurance transactions contemplated by
the parties to be viewed as a whole; and in all cases, it is agreed that
the application of this provision shall not be deemed to constitute a
`diminution' in the event of an insolvency of either party. It is further
agreed that the books and records of the Reinsurer shall be deemed,
conclusively, to be correct as to the calculation of any offset amount,
however characterized, and that such calculation shall be binding on the
parties hereto and any statutory successor, whether this Agreement is
terminated or is continuing. However, in the event of an insolvency,
offsets will be allowed in accordance with the statutory, common and case
laws of the state taking jurisdiction over the insolvency as such laws
exist as of the Effective Date of this Agreement.
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9. MEMORANDUM ACCOUNT. Should the settlement formula described in Paragraph
3 above, produce an amount due the Ceding Company, the Reinsurer will pay
such amount in cash or its equivalent within fifteen (15) days after the
quarterly accounting report is received by the Reinsurer. The Reinsurer
will establish a "Memorandum Account" in which such amounts paid to the
Ceding Company and all future such payments will accrue with interest at
the Memorandum Account Rate described in Paragraph 10 below. The balance
of the Memorandum Account at the beginning of any Accounting Period will
equal the absolute value of any negative Experience Refund determined in
accordance with Article VII, Paragraph 2, for the preceding Accounting
Period. These losses, and accrued interest thereon, will be carried
forward to subsequent Accounting Periods and will be a deduction item in
the calculation of future Experience Refunds in accordance with Article
VII, Paragraph 2, item (ii)(e).
10. MEMORANDUM ACCOUNT RATE. The Memorandum Account Rate at the end of each
Accounting Period will be equal to 75 basis points plus the quantity (i)
divided by (ii), where:
(i) equals the sum of the one month London Interbank Offered Rates
(LIBOR) as published by THE WALL STREET JOURNAL as of the last
business day of each calendar month ending during the current
Accounting Period, divided by the number of calendar months ending
during the current Accounting Period; and
(ii) equals four.
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ARTICLE IX
DURATION AND RECAPTURE
1. DURATION. Except as otherwise provided herein, this Agreement will be
unlimited in duration.
2. REINSURER'S LIABILITY. The liability of the Reinsurer with respect to any
annuity reinsured hereunder will begin simultaneously with that of the
Ceding Company, but not prior to the Effective Date of this Agreement.
The Reinsurer's liability with respect to any annuity reinsured hereunder
will terminate on the earliest of: (i) the date such annuity is
recaptured; (ii) the date the Ceding Company's liability on such annuity
is terminated; or (iii) the date this Agreement is terminated.
Termination of the Reinsurer's liability is subject to payments in
respect of such liability in accordance with the provisions of Article X
of this Agreement. In no event should the interpretation of this
Paragraph imply a unilateral right of the Reinsurer to terminate this
Agreement.
However, the Reinsurer and/or the Ceding Company may, upon thirty (30)
days prior written notice to the other party, terminate this Agreement as
to annuities not yet written by the Ceding Company as of the effective
date of such termination.
3. TERMINATION FOR NONPAYMENT OF REINSURANCE PREMIUMS OR OTHER AMOUNTS DUE.
If the Ceding Company fails to pay the Reinsurance Premiums or any other
amounts due to the Reinsurer pursuant to this Agreement, within sixty
(60) days after the end of any Accounting Period, the Reinsurer may
terminate this Agreement, subject to thirty (30) days prior written
notice to the Ceding Company.
4. RECAPTURE. Annuities reinsured hereunder will be eligible for recapture,
at the option of the Ceding Company, on any January 2, following the
fifth anniversary of the Effective Date of this Agreement, subject to one
hundred twenty (120) days prior written notice, or on any other date
which is mutually agreed to in writing. If the Ceding Company opts to
recapture, then the Ceding Company must recapture all of the annuities
reinsured hereunder. In no event may the Ceding Company recapture
anything other than 100 percent of all annuities reinsured hereunder.
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5. INTERNAL REPLACEMENTS. Should the Ceding Company, its affiliates,
successors or assigns, initiate a program of Internal Replacement that
would include any of the annuities reinsured hereunder, the Ceding
Company will immediately notify the Reinsurer. For purposes of this
Agreement, such annuities will be treated as recaptured rather than
surrendered, and such recapture will apply to all annuities reinsured
hereunder. For purposes of this Agreement, the term "Internal
Replacement" will mean any instance in which an annuity or any portion of
the cash value of an annuity is exchanged for another policy or annuity,
not covered under this Agreement, which is written by the Ceding Company,
its affiliates, successors, assigns or venture partners.
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ARTICLE X
TERMINAL ACCOUNTING AND SETTLEMENT
1. TERMINAL ACCOUNTING. In the event that this Agreement is terminated in
accordance with Article IX, Paragraph 3, or all of the reinsurance under
this Agreement is recaptured in accordance with Article IX, Paragraph 4
or Paragraph 5, a Terminal Accounting and Settlement will take place.
2. DATE. The terminal accounting date will be the earliest of: (1) the
effective date of recapture pursuant to any notice of recapture given
under this Agreement, (2) the effective date of termination pursuant to
any notice of termination given under this Agreement, or (3) any other
date mutually agreed to in writing.
3. SETTLEMENT. The Terminal Accounting and Settlement will consist of:
(a) the quarterly settlement as provided in Article VIII, Paragraph 3,
computed as of the terminal accounting date;
(b) payment by the Ceding Company to the Reinsurer of an amount equal to
the Modified Coinsurance Reserve on the annuities reinsured
hereunder as of the terminal accounting date;
(c) payment by the Reinsurer to the Ceding Company of a Terminal Reserve
Adjustment equal to the Modified Coinsurance Reserve on the
annuities reinsured hereunder as of the terminal accounting date;
(d) payment by the Ceding Company to the Reinsurer of any Memorandum
Account as described in Article VIII, Paragraph 9, as of the
terminal accounting date;
(e) payment by the Reinsurer to the Ceding Company of any Experience
Refund Account determined in accordance with Article VII, Paragraph
3, as of the terminal accounting date; and
(f) payment by the Ceding Company to the Reinsurer of any Amount
Withheld by Ceding Company, as described in Article VIII, Paragraph
3A., on the policies reinsured hereunder as of the terminal
accounting date.
If the calculation of the Terminal Accounting and Settlement produces an
amount owing to the Ceding Company, such amount will be paid by the
Reinsurer to the Ceding Company. If the calculation of the
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Terminal Accounting and Settlement produces an amount owing to the
Reinsurer, such amount will be paid by the Ceding Company to the
Reinsurer.
4. SUPPLEMENTARY ACCOUNTING AND SETTLEMENT. In the event that, subsequent to
the Terminal Accounting and Settlement as provided above, a change is
made with respect to any amounts due, a supplementary accounting will
take place pursuant to Paragraph 3 above. Any amount owed to the Ceding
Company or to the Reinsurer by reason of such supplementary accounting
will be paid promptly upon the completion thereof.
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ARTICLE XI
REPRESENTATIONS
REPRESENTATIONS. The Ceding Company acknowledges that, at the Reinsurer's
request, it has provided the Reinsurer with the Ceding Company Data described in
Schedule F prior to the execution of this Agreement by the Reinsurer. The Ceding
Company represents that all material factual information contained in the Ceding
Company Data is complete and accurate as of the date the document containing the
information was prepared. The Ceding Company further represents that any
assumptions made in preparing the Ceding Company Data were based upon informed
judgment and are consistent with sound actuarial principles. The Ceding Company
further represents that it is not aware of any omissions, errors, changes or
discrepancies which would materially affect the Ceding Company Data. The
Reinsurer has relied on such data and the foregoing representations in entering
into this Agreement.
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ARTICLE XII
ARBITRATION
1. GENERAL. All disputes and differences between the Ceding Company and the
Reinsurer on which an agreement cannot be reached will be decided by
arbitration. The arbitrators will construe this Agreement from the
standpoint of practical business and equitable principles and the customs
and practices of the insurance and reinsurance business, rather than from
the standpoint of strict law. Moreover, the arbitrators shall be released
from judicial formalities and shall not be bound by strict rules of
procedure and evidence. The parties intend that the arbitrators will make
their decision with a view to effecting the intent of this Agreement.
2. METHOD. Three arbitrators will decide any differences. They must be
impartial and present or former officers of life insurance companies
other than the parties to this Agreement or any company owned by, or
affiliated with, either party. One of the arbitrators will be appointed
by the Reinsurer, another by the Ceding Company, and the two arbitrators
thus appointed will select a third arbitrator before arbitration begins.
Should one of the parties decline to select an arbitrator within thirty
(30) days after the date of a written request to do so, or should the two
arbitrators selected by the parties not be able to agree upon the choice
of a third, the appointment(s) will be left to the President of the
American Arbitration Association or its successor. The arbitrators will
decide by a majority of votes and their decision will be final and
binding upon the parties. The arbitrators will hand down their decision
within forty-five (45) days of the close of the arbitration proceedings.
The costs of arbitration, including the fees of the arbitrators, will be
shared equally by the parties unless the arbitrators decide otherwise.
Any counsel fees incurred by a party in the conduct of arbitration will
be paid by the party incurring the fees.
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ARTICLE XIII
INSOLVENCY
INSOLVENCY. In the event of the Ceding Company's insolvency, any payments due
the Ceding Company from the Reinsurer pursuant to the terms of this Agreement
will be made directly to the Ceding Company or its conservator, liquidator,
receiver or statutory successor. The reinsurance will be payable by the
Reinsurer on the basis of the liability of the Ceding Company under the
annuities reinsured without diminution because of the insolvency of the Ceding
Company. The conservator, liquidator, receiver or statutory successor of the
Ceding Company will give the Reinsurer written notice of the pendency of a claim
against the Ceding Company on any annuity reinsured within a reasonable time
after such claim is filed in the insolvency proceeding. During the pendency of
any such claim, the Reinsurer may investigate such claim and interpose in the
Ceding Company's name (or in the name of the Ceding Company's conservator,
liquidator, receiver or statutory successor), in the proceeding where such claim
is to be adjudicated, any defense or defenses which the Reinsurer may deem
available to the Ceding Company or its conservator, liquidator, receiver or
statutory successor. The expense thus incurred by the Reinsurer will be
chargeable, subject to court approval, against the Ceding Company as a part of
the expense of liquidation to the extent of a proportionate share of the benefit
which may accrue to the Ceding Company solely as a result of the defense
undertaken by the Reinsurer.
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ARTICLE XIV
INTERMEDIARY
INTERMEDIARY. The Reinsurer and the Ceding Company acknowledge the Reinsurer's
appointment of RGA Financial Group, L.L.C. (hereinafter referred to as "FG") as
the designated reinsurance manager with respect to this Agreement and the
business reinsured hereunder. The Reinsurer hereby directs the Ceding Company to
submit all notices and reports required to be sent to the Reinsurer under this
Agreement and remit all amounts due the Reinsurer under this Agreement directly
to FG as the designated reinsurance manager of the Reinsurer. The Ceding Company
acknowledges the Reinsurer's request and agrees to forward all notices, reports
and remittances required to be sent to the Reinsurer under this Agreement
directly to FG. FG shall receive all notices, reports and remittances on behalf
of the Reinsurer and receipt of such notices, reports and remittances by FG
shall be deemed to be receipt by the Reinsurer.
The Reinsurer and the Ceding Company individually acknowledge that FG has
furnished each with evidence of its Delaware, Missouri and Michigan Reinsurance
Intermediary Manager's licenses.
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ARTICLE XV
EXECUTION AND EFFECTIVE DATE
In witness of the above, this Agreement is executed in duplicate on the dates
indicated below with an Effective Date of January 1, 2000.
KEYPORT LIFE INSURANCE COMPANY
("Ceding Company")
ATTEST:
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- -------------------------------
RGA REINSURANCE COMPANY
("Reinsurer")
ATTEST:
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- -------------------------------
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SCHEDULE A
ANNUITIES AND RISKS REINSURED
ANNUITIES AND RISKS REINSURED. On the Effective Date of this Agreement, the
Reinsurer reinsures an 90 percent quota share of the Ceding Company's net
liability on those Galaxy 5 and Focus 5 flexible premium deferred annuities
issued by the Ceding Company during the period January 1, 2000 through December
31, 2000.
"Net liability," as used in this Agreement, means the Ceding Company's liability
on annuities reinsured hereunder, net of other reinsurance.
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SCHEDULE B
QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS
FROM CEDING COMPANY TO REINSURER
Reporting Quarter: ___________
Calendar Year: ______________
Date Report Completed: _______
1. Reinsurance Premiums (Article II) ________
2. Net Reinsurance Premiums (Article II) ________
3. Benefit Payments (Article IV)
a. Claims _________
b. Cash Surrender Values _________
Benefit Payments = a + b ________
4. Modified Coinsurance Reserve Adjustment (Article V, Paragraph 1)
a. Modified Coinsurance Reserve beginning of
current Accounting Period _________
b. Modified Coinsurance Reserve end of
current Accounting Period _________
c. Equals b - a _________
d. Modified Coinsurance Reserve Investment
Credit (Schedule C) _________
Modified Coinsurance Reserve Adjustment = c - d ________
5. Memorandum Account (Article VIII, Paragraph 9) ________
6. Expense and Risk Charge (Article VI) ________
7. Commission and Expense Allowance (Article III) ________
8. Experience Refund = 2 - 3 - 4 - 5 - 6 - 7 - 9 + beg. 9
(If negative, see Article VII) ________
9. Experience Refund Account (Article VII, Paragraph 3) ________
10. Change in Amount Withheld by Ceding Company (Article VIII, Paragraph 3A.)
a. Experience Refund Account, end of Accounting Period
(Article VII, Paragraph 3) _________
b. Experience Refund Account, beginning of Accounting Period
(Article VII, Paragraph 3) _________
Change in Amount Withheld by Ceding Company = a - b ________
11. Cash Settlement = 1 - 3 - 4 - 7 - 8 - 10 ________
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SUPPLEMENTAL INFORMATION
NUMBER GROSS NET
OF STATUTORY MEMORANDUM STATUTORY
ANNUITIES IN FORCE RESERVE ACCOUNT RESERVE
--------- -------- --------- ---------- ---------
Beginning of Period ________ ________ ________ __________ _________
+ Additions ________ ________ ________ __________ _________
- - Terminations ________ ________ ________ __________ _________
End of Period ________ ________ ________ __________ _________
======== ======== ======== ========== =========
PORTION OF NET AMOUNT
ANNUITY COINSURANCE COINSURANCE WITHHELD BY
VALUE RESERVE RESERVE CEDING COMPANY
Beginning of Period ________ _________ _________ _____________
+ Additions ________ _________ _________ _____________
- - Terminations ________ _________ _________ _____________
End of Period ________ _________ _________ _____________
======== ========= ========= =============
SEGREGATED
ASSET
PORTFOLIO
Beginning of Period ________
+ Additions ________
- - Terminations ________
End of Period ________
========
Any C-1 risk transferred from Ceding Company to Reinsurer ____________
Any C-2 risk transferred from Ceding Company to Reinsurer ____________
Any C-3 risk transferred from Ceding Company to Reinsurer ____________
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SCHEDULE C
MODIFIED COINSURANCE RESERVE INVESTMENT CREDIT
MODIFIED COINSURANCE RESERVE INVESTMENT CREDIT. The Modified Coinsurance Reserve
Investment Credit for any Accounting Period will be equal to (i) x [(ii) /
(iii)], where:
(i) equals (a) plus (b) minus (c), where:
(a) equals the investment income and realized and unrealized
capital gains and losses, calculated by the Ceding Company in
accordance with Exhibit 2, Exhibit 3 and Exhibit 4 of the NAIC
Annual Statement, during the current Accounting Period with
respect to the Segregated Asset Portfolio, described in
Schedule E;
(b) equals the Interest Maintenance Reserve determined in
accordance with Page 3, Line 11.4 of the NAIC Annual
Statement, as of the beginning of the current Accounting
Period with respect to the Segregated Asset Portfolio,
described in Schedule D; and
(c) equals the Interest Maintenance Reserve determined in
accordance with Page 3, Line 11.4 of the NAIC Annual
Statement, as of the end of the current Accounting Period with
respect to the Segregated Asset Portfolio, described in
Schedule D;
(ii) equals (a) plus (b), where:
(a) equals the Modified Coinsurance Reserve, as defined in Article
V, Paragraph 2, at the beginning of the current Accounting
Period; and
(b) equals the Interest Maintenance Reserve determined in
accordance with Page 3, Line 11.4 of the NAIC Annual
Statement, as of the end of the current Accounting Period with
respect to the Segregated Asset Portfolio, described in
Schedule D; and
(iii) equals the Segregated Asset Portfolio, described in Schedule D, at
the end of the current Accounting Period.
Item (i)(a) of the Modified Coinsurance Reserve Investment Credit formula,
described above, will not be adjusted for income taxes or changes in any
provision for taxes, investment management fees, or charges for administrative
fees.
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If the NAIC Annual Statement blank is changed or modified, such that the items
described above do not appear on the pages, exhibits, columns and lines referred
to above, or if they should be eliminated or combined with other amounts or if
the basis set out in the Annual Statement blank for calculation of the Ceding
Company's Modified Coinsurance Reserve Investment Credit should be modified so
that the calculation is not consistent with the calculation of the Modified
Coinsurance Reserve Investment Credit described above, then they will be
determined in accordance with a method satisfactory to both parties to this
Agreement.
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SCHEDULE D
SEGREGATED ASSET PORTFOLIO
SEGREGATED ASSET PORTFOLIO. The Segregated Asset Portfolio is comprised of those
assets supporting the annuities described in Schedule A and will at all times
equal or exceed the sum of:
(a) the Gross Statutory Reserve, as defined in Article V, Paragraph 4,
plus
(b) the Interest Maintenance Reserve, determined in accordance with Page
3, Line 11.4 of the NAIC Annual Statement, as of the end of the
current Accounting Period with respect to the Segregated Asset
Portfolio, described in this Schedule D.
Namely, the Segregated Asset Portfolio of the Ceding Company shall include the
RGA portfolio, and any other accounts or portfolios in which the assets related
to the annuities described in Schedule A may be invested. The Ceding Company
will retain, control and own all assets held in the Segregated Asset Portfolio.
The Segregated Asset Portfolio will continue to be managed in accordance with
the Investment Policy described in Schedule E. The investment manager, on the
execution date of this Agreement, of the Segregated Asset Portfolio will be the
Ceding Company. Notwithstanding the preceding, in no event may the Ceding
Company change investment managers or investment policy for the Segregated Asset
Portfolio without the prior written consent of the Reinsurer. The Reinsurer's
consent will not be unreasonably withheld.
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SCHEDULE E
INVESTMENT POLICY
INVESTMENT POLICY. The following investment policy will be applied to the
Segregated Asset Portfolio described in Schedule D. The Segregated Asset
Portfolio will be comprised of the types of investments specified below and will
be subject to the limitations specified below:
MAXIMUM MAXIMUM
TOTAL % OF ISSUER % OF
TYPE PORTFOLIO PORTFOLIO
---- ---------- -----------
U.S. Government Securities unlimited unlimited
FNMA 50% 15%
FHLMC 50% 15%
Combined FNMA and FHLMC 50% 20%
Other United States Government Agencies 15% 5%
Investment Grade Bonds unlimited 2.0%
Below BBB 15% 1.0%
Below B prohibited
Mortgage Loans 5% 1.0%
Private Placement and Mortgage Loans 25% .15%
Cash and Cash Equivalents minimum of 3%
Mortgage Related Securities
Agency MBS 50%
Whole-Loan MBS 15%
Commercial MBS (Pools) 10%
Commercial MBS (Single Property) 2%
HELOC ABS, Manufactured Housing ABS 10%
Pass-Throughs, PAC's, Sequentials 40%
Subordinates 10%
TAC's, Accruals (Z Bonds), CMO Support Tranches 5%
IO/s/PO's 1%
In no event may the total securities in the Segregated Asset Portfolio with
credit quality ratings from Moody's and/or Standard and Poor's below BBB exceed
15 percent of the Segregated Asset Portfolio, nor may any single security in the
Segregated Asset Portfolio with credit quality ratings from Moody's and/or
Standard & Poor's below BBB, exceed 1.0 percent of the Segregated Asset
Portfolio. Furthermore, in no event may any securities in the Segregated Asset
Portfolio have credit quality ratings from Moody's and/or Standard and Poor's
below B.
In addition, the average credit quality of the fixed income portion of the
Segregated Asset Portfolio must be rated A or higher by Moody's and/or Standard
and Poor's. If an individual security has been assigned different ratings by
Moody's and Standard and Poor's, then the higher rating will be used in
computing the average. In order to verify compliance with this requirement, the
average credit quality will be calculated by assigning a numeric value to each
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security's rating. U.S. Government securities receive a value of 2, Agency
securities receive a value of 3, Aaa and AAA securities receive a value of 4,
Aa1 and AA+ securities receive a value of 5, Aa2 and AA securities receive a
rating of 6, and so on. The weighted average numerical value is then calculated
for the Segregated Asset Portfolio to determine the corresponding average credit
quality rating. For example, an average credit quality rating of 9.4 would
correspond to an A rating and an average credit quality rating of 9.6 would
correspond to an A- rating.
The duration of the Segregated Asset Portfolio will be managed with due regard
to the duration of the liabilities of the annuities reinsured hereunder. In no
event may there exist a difference of more than two years between the duration
of the Segregated Asset Portfolio and the duration of the liabilities of the
annuities reinsured hereunder without approval from the Reinsurer.
Derivative instruments may be used in combination with specific securities to
create synthetic assets. Portfolio guidelines will be applied to such synthetic
assets. Derivative instruments may be used to explicitly manage the risk profile
of the Segregated Asset Portfolio, but cannot be used to circumvent the
investment policy described above. Derivative instrument counterparties must be
either:
(i) an issuer of obligations which are rated NAIC 1 by the SVO or of
obligations or derivative instruments which are rated equivalently
by an independent rating agency;
(ii) a primary dealer of United States government securities as
recognized by the Federal Reserve Bank of New York;
(iii) a securities exchange registered as a national securities exchange
under the Securities Exchange Act of 1934, as amended;
(iv) a board of trade or commodities exchange designated as a contract
market by the Commodity Futures Trading Commission; or
(v) an exchange, board of trade or other similar organization which is
located in, or regulated under the laws of a foreign jurisdiction,
which has been rated AA or above by an independent rating agency.
Newly issued and "to be announced" securities, as well as extended settlement on
purchases of permitted securities, are explicitly allowed as long as the
securities involved otherwise comply with the investment policy described above.
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SCHEDULE F
CEDING COMPANY DATA
o 1999 and 1998 annual statements
o Statement of Investment Policy and Guidelines, received from Jim Greaton
of the Ceding Company by Gary Seifert of RGA Financial Group, L.L.C.
("FG") on or about November 3, 2000
o Facsimile dated September 12, 2000 from Jim Greaton of the Ceding Company
to Gary Seifert of FG that contained product descriptions of the Focus 5
and Galaxy 5 products
o Policy form for the Ceding Company's Galaxy 5 product -- Form Number
FPDA(6)/IND
o Policy Form for the Ceding Company's Focus 5 product - Form Number
FPDA(6)/IND/KF5
o Policy Form for Keyport Benefit Life Insurance Company's ("Keyport
Benefit Life") Focus 5/Galaxy 5 products - Form Number FPDA(6)/CERT(NY)
o Word document (REINSPEC.DOC) received via e-mail from Jim Greaton of the
Ceding Company on September 27, 2000 that presents product specifications
for the two products to be reinsured
o Asset allocation breakdowns for the Ceding Company and Keyport Benefit
Life as of September 30, 2000
o E-mail message from Jim Greaton of the Ceding Company to Gary Seifert of
FG that 1) provides information on marketing of the Focus 5 and Galaxy 5
products and 2) gives an overview of their investment strategy for the
products
o TAS data files (Galaxy5.zip and Focus5.zip) forwarded to Gary Seifert of
FG by Jim Greaton of the Ceding Company on October 3, 2000 illustrating
the Galaxy 5 and Focus 5 products
o Annualized Lapse Rate study performed by the Ceding Company dated October
17, 2000
o Excel file (G5f5930.xls) sent to Gary Seifert of FG by Jim Greaton of the
Ceding Company on October 23, 2000. This file contains premium and
reserve information by product, by company, and by year of issue for
business in force on September 30, 2000.
o E-mail message from Jim Greaton of the Ceding Company to Gary Seifert of
FG dated October 25, 2000 that states that there is no difference between
NY policies and non-NY policies for the business that is reinsured.
o Excel file (galprem.xls) sent to Gary Seifert of FG by Jim Greaton of the
Ceding Company on October 30, 2000. This file contains premium by quarter
by product and by company for business in force on September 30, 1999.
o Excel file (rgarates.xls) sent to Gary Seifert of FG by Jim Greaton of
the Ceding Company on October 30, 2000. This file contains a crediting
rate history for the products to be reinsured.
o Excel file (rgarates.xls) sent to Gary Seifert of FG by Jim Greaton of
the Ceding Company on December 7, 2000. This file contains premium and
reserve information by product, by company, and by year of issue for
business in force on November 30, 2000.
o E-mail from Jim Greaton of the Ceding Company to Gary Seifert of FG that
gives average credited rates by product, by company, and by year of issue
for the products to be reinsured.
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