Average XXX. “Average XXX” means the average adjusted operating return, excluding standard adjustments, on equity, excluding AOCI and cumulative change in fair value of funds withheld embedded derivatives, for the trailing twelve-month period for each of the three years of the Performance Period. Standard adjustments identified are actuarial assumption reviews (e.g., mortality, morbidity, and lapse assumption changes and their impact on reserves and the carrying value of deferred acquisition costs), variable investment income outside of a range of -50% to +50% of income on these investments included in the three-year plan, and integration costs or other adjustments related to merger and acquisition activity. Standard adjustments represent a positive or negative impact to adjusted operating income. Adjusted operating return on equity is a non-GAAP financial measure.
Average XXX. The “Average XXX” for the Performance Period shall be calculated by averaging the Adjusted ROEs determined for each of the three years of the Performance Period. “Adjusted XXX” for any year shall be calculated by dividing the Adjusted NIAT (as defined in Section 2.2) for the year by the Average Equity for the year. “Average Equity” for any year shall mean the average of the Adjusted Equity (as defined below) as of the last day of the year and Adjusted Equity as of the last day of the prior year. “Adjusted Equity” as of any date shall mean the Company’s total shareholders’ equity as of that date, as adjusted to (a) be calculated on the HGAAP Basis, (b) exclude the Company’s adjusted accumulated other comprehensive income (loss), (c) exclude any capital contributions received after the effective time of the Merger, and (d) assume that no dividends were paid in 2016 and that dividends paid in 2017 and 2018 were equal to one-half of the Company’s prior year consolidated net income.
