Common use of Segregated Asset Portfolio Clause in Contracts

Segregated Asset Portfolio. 1. The Reinsured shall establish one or more internally segregated asset portfolio(s) on its investment management system (“Segregated Portfolio”) for the benefit of the Reinsurer. The Reinsured shall deposit reinsurance premium payments directly into the Segregated Portfolio. Deposits by the Reinsured of reinsurance premium payments directly into the Segregated Portfolio shall constitute payment by the Reinsured of such premiums to the Reinsurer and shall satisfy the Reinsured’s obligation hereunder to pay such premiums to the Reinsurer. The Segregated Portfolio as of the effective date of this Agreement is listed in Schedule J. 2. The assets in the Segregated Portfolio shall be invested and reinvested pursuant to the Investment Philosophy and Guidelines (“Investment Policy”) set forth in Schedule I. Changes to the Investment Policy shall require the prior written approval of both the Reinsured and the Reinsurer. 3. The assets in the Segregated Portfolio shall be managed to maintain the aggregate statutory admitted value of assets at a level at least equal to the modified coinsurance reserve for the policies reinsured under this Agreement. 4. The Reinsurer may, at its option, by giving written notice to the Reinsured, cause the Reinsured to establish a trust account (“Reinsurance Trust”) for the benefit and security of the Reinsurer. The Reinsurance Trust shall be formed according to the following principles : a. The use of a Segregated Portfolio is beneficial to the Reinsurer. It is less expensive to maintain and provides for an equitable distribution of investment experience between the Reinsurer and the Reinsured. The Reinsurer should use discretion in exercising its option to form a Reinsurance Trust. The Reinsurer should believe that there is a reasonable probability that the Reinsured can not or will not perform the duties or make the payments required by this Agreement. A substantial ratings downgrade, a consistent failure to perform required duties, a consistent failure to make required payments, or a significant change in ownership or management are examples of events that might trigger such a belief. b. The purpose of the Reinsurance Trust shall be to ensure that the Reinsurer is not obligated to make payments to the Reinsured for benefits, commissions and expenses without the benefit of assets and investment income arising from premiums retained and invested by the Reinsured. FUV-011 – May 1, 2007 14 c. The terms of the Reinsurance Trust shall not enable either the Reinsurer or the Reinsured to enjoy profits or suffer losses that are materially different from what is intended by the workings of this Agreement. In particular, withdrawals of assets from the Reinsurance Trust by either Party shall be subject to conditions and restrictions specified by written amendment to this Agreement and by the Reinsurance Trust document. d. The assets transferred to the Reinsurance Trust shall be a subset of the assets in the Segregated Portfolio. Whole assets shall be transferred. On the date of transfer, the assets shall have an aggregate statutory admitted value at least equal to the modified coinsurance reserve for the quota share of policies reinsured under this Agreement. In so far as it can be achieved, the transferred assets shall be representative of the quality, yield, and duration of assets in the Segregated Portfolio. The Reinsurer shall pay all trustee/custodial fees for the Reinsurance Trust account. e. The Reinsurance Trust shall be established on terms acceptable to the Reinsured and the Reinsurer. 5. Subsequent to the date of transfer, if any, of assets into the Reinsurance Trust, the Reinsured shall deposit premium payments (net of commission and expense allowances and benefit payments) directly into the Reinsurance Trust. Deposits by the Reinsured of premium payments directly into the Reinsurance Trust shall constitute payment by the Reinsured of such premiums to the Reinsurer and shall satisfy the Reinsured’s obligation hereunder to pay such premiums to the Reinsurer. 6. The assets in the Reinsurance Trust shall be invested and reinvested pursuant to the Investment Philosophy and Guidelines (“Investment Policy”) set forth in Schedule I. Changes to the Investment Policy shall require the prior written approval of both the Reinsured and the Reinsurer. 7. The assets in the Reinsurance Trust shall be managed to maintain the aggregate statutory admitted value of assets at a level at least equal to the modified coinsurance reserve for the quota share of the policies reinsured under this Agreement. If, at the end of any calendar quarter, the aggregate statutory admitted value of assets in the Reinsurance Trust is less than the required reserve, the Reinsured shall immediately deposit cash or assets in an amount equal to the shortfall in the Reinsurance Trust. Likewise, if the aggregate statutory admitted value of assets in the Reinsurance Trust is greater than the required reserve, the Reinsured may, with the prior written approval of the Reinsurer, withdraw cash or assets in an amount equal to the excess in the Reinsurance Trust. The permission of the Reinsurer to withdraw excess funds shall not be unreasonably withheld. Notwithstanding the deposit and withdrawal requirements of this paragraph, the Reinsured may ignore any shortfall or excess that is less than the greater of (a) $1 million, or (b) one-half of one percent (0.50%) of the required reserve amount. FUV-011 – May 1, 2007 15 8. For purposes of maintaining the appropriate level of assets in the Segregated Portfolio or the Reinsurance Trust according to this Article XV, statutory admitted asset value shall be determined in accordance with the Reinsured’s standard practice and modified coinsurance reserve shall be determined in accordance with Article X.

Segregated Asset Portfolio. 1. The Reinsured shall establish one or more internally segregated asset portfolio(s) on its investment management system (“Segregated Portfolio”) for the benefit of the Reinsurer. The Reinsured shall deposit reinsurance premium payments directly into the Segregated Portfolio. Deposits by the Reinsured of reinsurance premium payments directly into the Segregated Portfolio shall constitute payment by the Reinsured of such premiums to the Reinsurer and shall satisfy the Reinsured’s obligation hereunder to pay such premiums to the Reinsurer. The Segregated Portfolio as of the effective date of this Agreement is listed in Schedule J. 2. The assets in the Segregated Portfolio shall be invested and reinvested pursuant to the Investment Philosophy and Guidelines (“Investment Policy”) set forth in Schedule I. Changes to the Investment Policy shall require the prior written approval of both the Reinsured and the Reinsurer. 3. The assets in the Segregated Portfolio shall be managed to maintain the aggregate statutory admitted value of assets at a level at least equal to the modified coinsurance reserve for the policies reinsured under this Agreement. 4. The Reinsurer may, at its option, by giving written notice to the Reinsured, cause the Reinsured to establish a trust account (“Reinsurance Trust”) for the benefit and security of the Reinsurer. The Reinsurance Trust shall be formed according to the following principles principles: a. The use of a Segregated Portfolio is beneficial to the Reinsurer. It is less expensive to maintain and provides for an equitable distribution of investment experience between the Reinsurer and the Reinsured. The Reinsurer should use discretion in exercising its option to form a Reinsurance Trust. The Reinsurer should believe that there is a reasonable probability that the Reinsured can not or will not perform the duties or make the payments required by this Agreement. A substantial ratings downgrade, a consistent failure to perform required duties, a consistent failure to make required payments, or a significant change in ownership or management are examples of events that might trigger such a belief. b. The purpose of the Reinsurance Trust shall be to ensure that the Reinsurer is not obligated to make payments to the Reinsured for benefits, commissions and expenses without the benefit of assets and investment income arising from premiums retained and invested by the Reinsured. FUV-011 – May 1, 2007 14. c. The terms of the Reinsurance Trust shall not enable either the Reinsurer or the Reinsured to enjoy profits or suffer losses that are materially different from what is intended by the workings of this Agreement. In particular, withdrawals of assets from the Reinsurance Trust by either Party shall be subject to conditions and restrictions specified by written amendment to this Agreement and by the Reinsurance Trust document. d. The assets transferred to the Reinsurance Trust shall be a subset of the assets in the Segregated Portfolio. Whole assets shall be transferred. On the date of transfer, the assets shall have an aggregate statutory admitted value at least equal to the modified coinsurance reserve for the quota share of policies reinsured under this Agreement. In so far as it can be achieved, the transferred assets shall be representative of the quality, yield, and duration of assets in the Segregated Portfolio. The Reinsurer shall pay all trustee/custodial fees for the Reinsurance Trust account. e. The Reinsurance Trust shall be established on terms acceptable to the Reinsured and the Reinsurer. 5. Subsequent to the date of transfer, if any, of assets into the Reinsurance Trust, the Reinsured shall deposit premium payments (net of commission and expense allowances and benefit payments) directly into the Reinsurance Trust. Deposits by the Reinsured of premium payments directly into the Reinsurance Trust shall constitute payment by the Reinsured of such premiums to the Reinsurer and shall satisfy the Reinsured’s obligation hereunder to pay such premiums to the Reinsurer. 6. The assets in the Reinsurance Trust shall be invested and reinvested pursuant to the Investment Philosophy and Guidelines (“Investment Policy”) set forth in Schedule I. Changes to the Investment Policy shall require the prior written approval of both the Reinsured and the Reinsurer. 7. The assets in the Reinsurance Trust shall be managed to maintain the aggregate statutory admitted value of assets at a level at least equal to the modified coinsurance reserve for the quota share of the policies reinsured under this Agreement. If, at the end of any calendar quarter, the aggregate statutory admitted value of assets in the Reinsurance Trust is less than the required reserve, the Reinsured shall immediately deposit cash or assets in an amount equal to the shortfall in the Reinsurance Trust. Likewise, if the aggregate statutory admitted value of assets in the Reinsurance Trust is greater than the required reserve, the Reinsured may, with the prior written approval of the Reinsurer, withdraw cash or assets in an amount equal to the excess in the Reinsurance Trust. The permission of the Reinsurer to withdraw excess funds shall not be unreasonably withheld. Notwithstanding the deposit and withdrawal requirements of this paragraph, the Reinsured may ignore any shortfall or excess that is less than the greater of (a) $1 million, or (b) one-half of one percent (0.50%) of the required reserve amount. FUV-011 – May 1, 2007 15. 8. For purposes of maintaining the appropriate level of assets in the Segregated Portfolio or the Reinsurance Trust according to this Article XV, statutory admitted asset value shall be determined in accordance with the Reinsured’s standard practice and modified coinsurance reserve shall be determined in accordance with Article X.