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EXHIBIT 10.2
Amendment Number 2 to the
Automatic Flexible Premium Variable Life Reinsurance Agreement Number 2
(Referred to as the Agreement)
Between
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
St. Petersburg, Florida
(referred to as the Reinsured)
and
WMA LIFE INSURANCE COMPANY LIMITED
Xxxxxxxx, Bermuda
(referred to as the Reinsurer)
Effective October 1, 1999
Schedule B2, AMOUNT OF REINSURANCE, is replaced by the following:
The amount of reinsurance under this Agreement shall be the Reinsurer's
quota share percentage shown below of the liability of the Reinsured on
all life insurance policies and riders in the forms listed in Schedule
A, Business Reinsured.
Quota Share Percentages for Issue Dates in 1998, 1999, and 2000: For
issue dates in 1998, the quota share percentage will be 20%.
The quota share percentage shall be 0%, commencing as of the effective
date of this amendment, for policies issued from January 1, 1999
through September 30, 1999 previously reinsured on a 20% quota-share
basis. Pursuant to Amendment Number 1 to the Agreement, Article XVI,
RECAPTURE, Paragraph 1, the Reinsured elects to recapture one hundred
percent (100%) of the Reinsured Policies issued from January 1, 1999,
through September 30, 1999. The Reinsured will pay the Reinsurer a
Recapture Fee equal to (a) plus (b) plus (c), where:
(a) equals $13,355,774 plus accrued interest at an effective rate
of 9%, which shall accrue from October 1, 1999 to the date
such amount is settled and paid, which shall be paid no later
than January 31, 2000,
(b) equals $458,456 plus accrued interest at an effective rate of
6.5%, which shall accrue from October 1, 1999 to the date such
amount is settled and paid, which shall be paid no later than
January 31, 2000, and
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(c) equals $482,441 plus accrued interest at an effective rate of
6.5%, which shall accrue from November 3, 1999 to the date
such amount is settled and paid, which shall be paid no later
than January 31, 2000.
The Reinsured may offset the Recapture Fee against amounts otherwise
due the Reinsured.
For policies issued from October 1, 1999 through December 31, 2000, the
quota share percentage will be 0%.
Quota Share Percentages for Issue Dates in 2001 and later:
Notwithstanding the provisions of the previous three paragraphs and at
any time, on or after January 1, 2000 and before April 1, 2003, the
Reinsurer shall have the option (provided the Reinsurer demonstrates
sufficient capacity) to convert the reinsurance on all policies and
riders reinsured under the Automatic Flexible Premium Variable Life
Reinsurance Agreement Number 3 ("FFB MRT Agreement"), issued from the
beginning of the prior calendar year to the date the Reinsurer elects
to convert the reinsurance on the policies and riders, to the
Agreement. The Reinsurer shall demonstrate its capacity by showing the
Reinsured that its unassigned invested securities, together with
anticipated cash flows (including retrocession facilities), will be
sufficient to meet expected reinsurance settlements, with regard to the
converted reinsurance on the policies and riders, for a period of not
less than twenty-four months following the date the Reinsurer elects to
convert the reinsurance of the policies and riders from the FFB MRT
Agreement to the Agreement. Upon election to convert the reinsurance on
the policies and riders, the initial ceding allowance payable to the
Reinsured shall equal (a) less (b) less (c), where:
(a) equals settlements that would have otherwise occurred under
the Agreement, had the policies and riders been reinsured
under the Agreement from the beginning of the prior calendar
year to the date the Reinsurer elects to convert the
reinsurance on the policies and riders from the FFB MRT
Agreement, accrued at an effective rate of * %, and
(b) equals all settlements due or paid under the FFB MRT Agreement
from the beginning of the prior calendar year to the date the
Reinsurer elects to convert the reinsurance on the policies
and riders to the Agreement from the FFB MRT Agreement,
accrued at an effective rate of *%.
(c) equals the settlement paid for business that was recaptured
for quarters one through three of 1999 under the Co/ModCo
Agreement. This amount is $458,456 measured from October 1,
1999 or $482,441 measured from November 3, 1999, accrued at an
effective rate of * %. This settlement is applicable only
during Year 2000.
The initial ceding allowance shall be payable within 14 days after the
Reinsurer's election to convert the reinsurance of the policies and
riders.
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* Material omitted pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934.
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The Reinsurer and the Reinsured will jointly determine the quota share
percentages for the balance of the calendar year in which the Reinsured
converts the reinsurance on the policies and riders reinsured under the
FFB MRT Agreement to the Agreement. Thereafter, the Reinsurer and the
Reinsured will jointly determine the quota share percentages no later
than December 1st applicable to new issues in the following calendar
year. The determining factors for the quota share percentage are the
expected WMA Total Flexible Premium Variable Life First Year Target
Premiums Collected by the Reinsured for the calendar year that the
quota share percentage will be applicable. This determination of the
quota share percentage will be on a mutually acceptable basis,
recognizing the good faith nature of this Agreement, and with
references to the estimates made by both parties, based on results from
prior periods.
The Scheduled Quota Share Percentages for each threshold of expected
WMA Total Flexible Premium Variable Life First Year Target Premiums
Collected by the Reinsured are shown in the following table:
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WMA TOTAL FLEXIBLE PREMIUM VARIABLE LIFE SCHEDULED
FIRST YEAR TARGET QUOTA SHARE
PREMIUMS COLLECTED PERCENTAGE
BY THE REINSURED (IN MILLIONS)
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$50-149 20%
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$150-199 25%
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$200-249 30%
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$250-599 35%
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$600+ 40%
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* * * * *
Except as expressed herein, all terms, covenants and provisions of the Automatic
Flexible Premium Variable Life Reinsurance Agreement Number 2 that are not in
conflict with the provisions of this amendment shall remain unaltered and in
full force and effect.
In witness of the above, the Reinsured and the Reinsurer, by their respective
officers have executed this amendment in duplicate at the dates and places
indicated and shall be effective as of October 1, 1999.
WESTERN RESERVE LIFE WMA LIFE INSURANCE
ASSURANCE CO. OF OHIO COMPANY LIMITED
at St. Petersburg, Fl at Kamuela, Hawaii
on March 16, 2000 on March 20, 2000
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxxx
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Title: VP & Managing Actuary Title: Vice President
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
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Title: EVP Title: Vice President
