Common use of Securities Lending Clause in Contracts

Securities Lending. The Segregated Asset Portfolio may engage in securities lending. Securities lending is the act of loaning securities to a third party (the “Borrower”) pursuant to a securities lending agreement, which, under U.S. law, requires that the Borrower provide the lender with collateral equal to or greater than the value of the lent securities. As payment for the loan, the parties negotiate a fee, quoted as an annualized percentage of the value of the lent securities. If the agreed form of collateral is cash, then the fee may be quoted as a “rebate,” meaning that the lender will earn all of the interest that accrues on the cash collateral and will “rebate” an agreed rate of interest to the Borrower. Asset Liability Matching The Ceding Company shall attempt to maintain the weighted-average duration of the assets in the Segregated Asset Portfolio within 1 year of the targeted asset benchmark duration set by the Ceding Company. Notwithstanding the foregoing, however, in the normal course the Ceding Company’s asset-liability management function may discover that the asset/liability duration mismatch exceeds 1 year. In such case, the Ceding Company shall consult with the Reinsurer to determine the course of action to take in reducing or resolving such mismatch.