EXHIBIT 10.1
INVESTMENT MANAGEMENT AGREEMENT
between
MARINER PARTNERS INC.
and
NYMAGIC, INC.
on behalf of itself and its subsidiaries
NEW YORK MARINE AND GENERAL INSURANCE COMPANY
and
GOTHAM INSURANCE COMPANY
October 1, 2002
This INVESTMENT MANAGEMENT AGREEMENT, dated the 1st day of October, 2002, is
between Mariner Partners, Inc., a corporation organized under the laws of the
State of Delaware (the "Adviser") and NYMAGIC, Inc. a New York corporation
acting on behalf of itself and its two subsidiaries, New York Marine and General
Insurance Company and Gotham Insurance Company (collectively, the "Client").
WHEREAS, the Client desires to retain the Adviser to provide discretionary
investment advisory services with respect to certain of the assets of the Client
to be invested in accordance with Section 1, below; and
WHEREAS, the Adviser is willing to accept such appointment, subject to the terms
and conditions described herein;
NOW THEREFORE, in consideration of the mutual promises contained herein, and
other good and valuable consideration as set forth herein, the Adviser and the
Client agree as follows:
1. Appointment of the Adviser.
(a) The Client hereby appoints the Adviser to serve as investment adviser
of the Client's investment account assets listed on Schedule A (collectively,
the "Accounts"), and the Adviser hereby accepts such appointment and agrees to
perform its obligations in accordance with the terms of this Agreement (which
includes the Schedules hereto) and the Investment Policy Guidelines (a copy of
which are attached as Schedule B). The Adviser hereby accepts such appointment.
(b) The assets of the Client comprising the Accounts shall be managed by
the Adviser in as many different categories as may be instructed by the Client
from time to time. Initially, the Client has allocated assets into three
different categories, (i) (cash management) the "Liquidity Portfolio", (ii)
(fixed income investing) the "Fixed Income Portfolio" and (iii) (investment in
alternative investment vehicles) the "Hedge Fund Portfolio". The Client may
designate and re-designate the amount of assets in each category from time to
time, in its sole discretion, subject to the limitations imposed by certain
funds invested in the Hedge Fund Portfolio. The Adviser shall ensure that the
assets of each Account are maintained separately on the books of the Client's
custodian and shall manage the assets comprising each Account separately, as
provided by the terms of this Agreement.
2. Authorities and Duties of the Adviser.
(a) The Adviser shall provide investment advisory services to the Accounts
and shall in such capacity have full discretion and authority, without obtaining
the prior approval of the Client or any agent of the Client (except as may be
required by law or as otherwise required by this Agreement), to:
(i) purchase, sell, redeem, invest, reinvest or otherwise trade any
security or other permitted investment on behalf of the Accounts;
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(ii) exercise any conversion and/or subscription rights available in
connection with any securities or other investments;
(iii) instruct an Account's custodian to deliver for cash received,
securities sold, exchanged, redeemed or otherwise disposed of on behalf of
the Account, and to pay cash for securities delivered to the custodian
and/or credited upon acquisition of same;
(iv) determine how to vote all proxies received with respect to
securities held by an Account and direct the custodian as to the voting of
such proxies;
(v) select broker-dealers to purchase, sell or otherwise trade in or
deal with any security;
(vi) place orders with any broker-dealer so selected, to purchase,
sell or otherwise trade in or deal with any security;
(vii) engage personnel, whether full time or part time, in connection
with the investment Advisory services hereunder;
(viii) engage outside professionals, including without limitation
investment sub-advisers, appraisers, attorneys, consultants and other
experts, in connection with the investment advisory services hereunder;
(ix) value the securities and other assets of an Account in accordance
with the valuation policies and guidelines set forth in Section 4;
(x) make and execute all such contracts, agreements, instruments and
other documents as the Adviser may deem necessary or appropriate in
connection with the performance of its investment advisory duties hereunder
or as the Client may reasonably request from time to time; and
(xi) take all such other actions as the Adviser may deem necessary or
appropriate in connection with the performance of its investment advisory
duties hereunder.
(b) In furtherance of the foregoing, the Client hereby designates and
appoints the Adviser as its agent and attorney-in-fact with respect to each
Account, with full power and authority and without the need for further approval
of the Client or any other agent of the Client (except as may be required by law
or as otherwise required by this Agreement), to complete and execute all
documents as may be required to effect an investment and to take any and all
actions that the Adviser, in its discretion, shall deem advisable to carry out
its duties with respect to the assets of the Accounts.
(c) The Adviser shall not effect any investment transaction for an Account
that is inconsistent with (i) any applicable law or regulation, or (ii) the
investment objectives, policies, guidelines and restrictions adopted from time
to time by the Client with respect to such Account.
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(d) With respect to the portion of an Account so designated from time to
time as the "Hedge Fund Portfolio" by the Client, the Adviser shall construct a
portfolio of Hedge Funds on behalf of the relevant Account, the primary purpose
of which shall be to achieve capital appreciation by investing in private
investment entities which are not registered under the U.S. Investment Company
Act of 1940, as amended. The Adviser intends to achieve this objective by
allocating the assets of the account designated to the Hedge Fund Portfolio
among a group of portfolio managers, which may include affiliates of the
Adviser. The Adviser shall be responsible for fund selection, rebalancing,
reconstituting and reviewing the portfolio in accordance with the Adviser's
reasonable business judgment.
3. Fees and Expenses.
(a) The Client shall pay the Adviser an Advisory Fee, in advance, at the
beginning of each calendar quarter, at the rate per annum set forth on Schedule
C as applied to such relevant portion of the Account based on the fair market
value of the assets comprising such portion of the Account as of the last day of
the calendar quarter previously ended, except for the calendar quarter for which
this Agreement is first effective, in which case the Advisory Fee shall be
determined based upon the inception value. The parties hereto agree to
reevaluate the fee schedule on an annual basis and will adjust the schedule of
fees with the mutual consent of all parties hereto.
(b) In computing the market value of any investment held by an Account,
each security listed on a national securities exchange shall be valued at the
last quoted sale price on the valuation date on the principal exchange on which
such security is traded. Any security listed on a national security exchange
that has no quoted last sale price on the valuation date and any other security
or asset shall be valued in a manner determined in good faith by the Adviser to
reflect its fair market value. In respect of fixed-income securities in an
Account, the value of each security for which readily available market
quotations exist is based on the most recent sale, the most recent available bid
price, or the mean between the most recent available bid and asked prices in the
broadest and most representative market for that security as determined by the
Adviser. The Adviser may use independent pricing services to value the
securities at such times and to such extent that the Adviser deems appropriate.
(c) If this Agreement commences or terminates at any time other than the
beginning or end of a calendar quarter, respectively, the Advisory Fee shall be
prorated based on the portion of such calendar quarter during which this
Agreement was in force. Similar adjustments will be made in the event of an
addition or withdrawal of assets during a calendar quarter. The Client
understands that assets invested in hedge funds will bear additional fees and
expenses, including performance-related fees, charged by the respective fund
managers in addition to the Advisory Fee. In the event assets of an Account
designated a Hedge Fund Portfolio are invested in alternative investment
vehicles managed by the Adviser or any of its affiliates, the Advisory Fee
imposed by this Agreement on such assets shall be waived (however, other fee(s)
imposed by such alternative investment vehicle managed by the Adviser or its
affiliate will be charged).
(d) The Adviser shall bear all expenses related to the performance of its
services under this Agreement, including without limitation travel expenses,
research, rent, utilities, and salaries. Any fees or expenses incurred by the
client in connection with the operation or
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maintenance of the Account without the express written consent of the Adviser
shall not be the obligation of the Adviser.
(e) Within ten (10) Business Days after the beginning of each calendar
quarter, the Adviser will provide the Client with a statement setting forth the
aggregate assets of each Account as of the last day of the quarter previously
ended and the calculation of the Advisory Fee payable as of such date. For
purposes of this Agreement, the term Business Day shall mean any day, other than
a Saturday or Sunday, on which commercial banks in New York City are not
authorized or required by law to be closed.
4. Representations and Warranties of the Adviser.
The Adviser represents and warrants to the Client that:
(a) It is a corporation duly formed, validly existing and in good standing
under the laws of the State of Delaware; and
(b) This Agreement has been duly authorized, executed and delivered by the
Adviser and constitutes a valid and binding agreement of the Adviser,
enforceable against it in accordance with its terms, except that the
enforceability thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law).
5. Representations and Warranties of the Client.
The Client represents and warrants to the Adviser that:
(a) It is a corporation duly formed, validly existing and in good standing
under the laws of the State of New York;
(b) This Agreement has been duly authorized, executed and delivered by it
and constitutes a valid and binding agreement of the Client, enforceable in
accordance with its terms except that the enforceability thereof may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(c) The Client hereby represents and warrants that: (a) the Client
beneficially owns all of the assets comprising each of the Accounts or has
discretionary authority over such assets with authority to appoint an investment
Adviser with respect to such assets; (b) there are no restrictions on the
transfer, sale and/or public distribution of the assets comprising each Account;
(c) the Client has appointed no other investment adviser with respect to the
assets comprising the Accounts; and (d) the Client has previously furnished to
the Adviser a copy of all applicable statutes and regulations, if any, regarding
its authority to enter into this Agreement and to undertake the investments
contemplated hereunder; and
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(d) The Client shall have full responsibility for payment of all taxes due
on capital or income held or collected for the Accounts.
6. Other Activities and Investments.
(a) The Adviser shall not be required to devote its full time to the
affairs of the Accounts, but shall devote such of its time to the business and
affairs of the Accounts as it shall, in its discretion exercised in good faith,
determine to be necessary to conduct the affairs of each Account.
(b) The Adviser and each of its directors, officers, affiliates, employees
or agents thereof may engage in or possess an interest in other business
ventures or commercial dealings of every kind and description, independently or
with others, including, but not limited to, management of other accounts,
investment in, or financing, acquisition and disposition of, securities,
investment and management counseling, brokerage services, serving as directors,
officers, advisers or agents of other companies, partners of any partnership, or
trustee of any trust, or entering into any other commercial arrangements,
whether or not any such activities may conflict with any interest of the parties
hereto with respect to the Account.
(c) The Client understands that the Adviser performs investment advisory
services for clients other than the Client and that the Adviser may give advice,
make recommendations and take action with respect to other clients that may be
similar or different from that given to the Client. The Client recognizes that
other clients of the Adviser, as well as the Adviser, its principals, employees,
affiliates and their family members, may hold, and engage in transactions in,
securities purchased or sold for the Client or about which the Adviser has given
the Client recommendations or advice. The Client also agrees that the Adviser
has no obligation to purchase, sell or make recommendations with respect to any
security for the Client that the Adviser purchases, sells or recommends to any
client, or in which the Adviser, its principals, employees, affiliates or their
family members engage. The Adviser, its principals, employees, affiliates and
family members may invest in securities or other investments that are not made
available to the Client.
(d) In executing portfolio transactions for an Account, the Adviser may, to
the extent permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased with those of
other Accounts or its other clients if, in the Adviser's reasonable judgment,
such aggregation (i) will result in an overall economic benefit to the relevant
Account, taking into consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading requirements, and (ii) is
not inconsistent with the investment guidelines applicable to the Account. In
such event, the Adviser will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable manner, consistent
with its fiduciary obligations to the Account and such other clients.
(e) The Client hereby acknowledges that the Client has been informed by the
Adviser that the Adviser is not registered as an Investment Adviser under the
Investment Advisers Act of 1940, as amended, or any state or local authority.
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7. Account and Other Information.
(a) The Adviser shall furnish the Client with statements of the portfolio
assets of each Account and investment results relating thereto on a monthly
basis. Such reports shall indicate the assets in the Account, including their
performance, both in the aggregate and on an Account-by-Account basis (and
within the Hedge Fund Portfolio, on a fund by fund basis). The Adviser shall
also send to the Client copies of financial statements, investment reports or
letters that it receives from the managers of the investment entities in which
an Account invests.
(b) The Adviser shall retain, or arrange for the retention of, for a period
of at least two (2) years from the date of the termination of this is Agreement,
copies of any documents generated or received by the Adviser in the ordinary
course of business relating to the performance of its duties hereunder or to the
compensation payable to the Adviser pursuant to this Agreement.
8. Directions and Information Provided to the Adviser.
(a) The Client may, from time to time, in the Client's discretion, issue
directions or instructions to the Adviser with respect to an Account, provided
that any such directions, instructions or amendments are in writing and
furnished to the Adviser. The Adviser shall be fully protected in, and shall
have no liability for loss resulting from, relying upon any directions,
instructions, or amendments from the Client in accordance with the previous
sentence and the Client shall indemnify and hold the Adviser harmless with
respect to such liability.
(b) The Adviser shall be fully protected in, and shall have no liability
for loss resulting from, acting upon any instrument, certificate or paper
believed by it to be genuine and to be signed or presented on behalf of the
Client by the proper person or persons, and the Adviser shall be under no duty
to make any investigation or inquiry as to any statement contained in any such
writing but may accept the same as conclusive evidence of the truth and accuracy
of the statements therein contained and the Client shall indemnify and hold the
Adviser harmless with respect to such liability.
(c) Notwithstanding anything herein to the contrary, the Adviser shall not
be obligated to follow any instruction or direction of the Client if following
such instruction or direction would interfere with the completion of any
transaction commenced on behalf of an Account prior to the Adviser's receipt of
such instruction, direction or amendment in accordance with the terms of such
transaction.
9. Limitation of Liability; Indemnification.
(a) To the fullest extent permitted by law, the Adviser shall not be liable
to the Client for any expenses, losses, damages, liabilities, demands, charges
and claims of any kind or nature whatsoever (including without limitation any
reasonable legal expenses and costs and expenses relating to investigating or
defending any demands, charges and claims) (collectively, the "Losses") by or
with respect to an Account, except to the extent that such Losses are actual
investment losses which are the direct result of an act or omission taken or
omitted by the Adviser during the term of the Agreement which constitutes gross
negligence or bad faith with
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respect to the Adviser's obligations under this Agreement or a material breach
of this Agreement.
(b) To the fullest extent permitted by law, the Client shall reimburse,
indemnify and hold harmless the Adviser, its affiliates and their shareholders,
partners, directors, officers, employees and any other person controlled by or
controlling the Adviser (collectively, the "Indemnified Parties") for, from and
against any and all direct Losses (i) relating to this Agreement or the Account
arising out of any misrepresentation or act or omission or alleged act or
omission on the part of the Client, its previous advisers, or any of their
agents; or (ii) relating to any demand, charge or claim in respect of any
Indemnified Party's acts, omissions, transactions, duties, obligations or
responsibilities arising in connection with this Agreement, unless (x) a court
with appropriate jurisdiction shall have determined by a final judgment which is
not subject to appeal that such Indemnified Party is liable in respect of the
demands, charges and claims referred to in this subparagraph, (y) the loss
resulted from an act or omission of the Indemnified Party that constitutes gross
negligence, bad faith, or a material breach of this Agreement, or (z) such
Indemnified Party shall have settled such demands, charges and claims without
the Client's consent.
(c) The indemnification provisions set forth in this Agreement shall
survive the termination of this Agreement.
10. Independent Contractor; Sub-Advisers.
For all purposes of this Agreement, the Adviser shall be an independent
contractor and not an employee or dependent agent of the Client or the Account;
nor shall anything herein or any action taken pursuant to this Agreement be
construed as creating a separate trust, fund, joint venture, partnership or
fiduciary relationship of any kind on the part of the Client or an Account with
respect to the Adviser, any of its affiliates or any of its other clients. The
Adviser shall be expressly permitted to retain sub-advisers from time to time to
manage part or all of the Accounts provided that (i) the Adviser shall remain
liable for the management of the assets of each Account as if the Adviser itself
was so acting and (ii) the Adviser shall pay all of the fees and expenses of the
Sub-Adviser from its compensation under this Agreement.
11. Term; Termination.
Subject to the ability of either party to terminate this Agreement as
described below, this Agreement shall remain in full force and effect from the
date first written above until the third annual anniversary of such date, and
may be extended from year to year thereafter with the mutual consent of all
parties hereto (mutual consent shall be assumed unless a party hereto
affirmatively objects). This Agreement may be terminated by any party hereto,
without penalty, at any time upon 30 days' prior written notice or such shorter
period as the parties may agree. On the official date of termination, the
Adviser shall provide the Client with a final report for the Account and a
refund of the Advisory Fee, if required pursuant to Section 3 hereof. The Client
understands and agrees that the Adviser will take all reasonable measures to
protect and preserve the assets of the Account upon termination but any
withdrawals from underlying funds will be subject to the restrictions imposed by
such funds and, as such, the Client may be required to hold such interests after
the date of termination of this Agreement.
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12. Additions; Withdrawals; Reallocations.
The Client may increase or decrease the assets comprising each Account, or
reallocate the amounts allocated to the various portfolios. Once part or all of
the assets comprising an Account are invested by the Adviser in a private
investment fund, any and all assets comprising the Account invested in a fund
may be withdrawn by the Client at any time, but subject to the terms and
conditions applicable to an investor in such fund. The Client further agrees and
acknowledges that any withdrawals from the underlying funds may be restricted to
the extent that the assets comprising the Account are invested in hedge funds.
13. Confidentiality
The Adviser shall treat as confidential all information pertaining to the
Accounts and the Client and all aspects of the relationship established by this
Agreement, except as may be necessary to comply with applicable laws or
regulations. Notwithstanding the foregoing, the Adviser shall not be prohibited
from including the Client on Adviser's list of representative clients.
14. Notices.
Except as otherwise provided herein, all notices or other communications
required or permitted hereunder shall be in writing and shall be delivered,
telecopied or telexed and confirmed to the requisite party, at its address as
follows:
If to the Adviser:
Mariner Partners Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, Chief Operating Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Mariner Partners, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X'Xxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Client:
NYMAGIC, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: A. Xxxxxx Xxxxxx, Executive Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
NYMAGIC, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx Xxxx, general Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Each party may change its address set forth above by giving notice to the other
parties in accordance with the provisions of this Section 17.
15. Miscellaneous.
(a) Amendment; Modification; Waiver. Except as expressly provided herein,
this Agreement shall not be amended, nor shall any provision of this Agreement
be considered modified or waived, unless evidenced by a writing signed by each
of the parties hereto.
(b) Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors, but
the rights and obligations hereunder shall not, except as otherwise expressly
provided herein, be assignable, transferable or delegable without the written
consent of the other party hereto and any attempted assignment (as defined in
the Investment Advisers Act of 1940, as amended), transfer or delegation thereof
without such consent shall be void.
(c) Entire Agreement. This Agreement, constitutes the entire understanding
and agreement between the parties and supercedes all prior understandings and
agreements, whether oral or written, between the parties concerning the subject
matter hereof.
(d) Severability. Each provision of this Agreement shall be considered
separable and if for any reason any provision or provisions herein are
determined to be invalid and contrary to any existing or future law, the balance
of this Agreement shall be interpreted, to the extent practicable, so as to give
effect to the original intent of the parties hereto.
(e) Counterparts. This Agreement may be executed in multiple counterparts
all of which counterparts together shall constitute one agreement.
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(f) Governing Law. This Agreement shall be governed by and construed both
as to validity and enforceability in accordance with the laws of the State of
New York, without regard to the conflict of laws provisions of such
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year set forth above.
MARINER PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Chairman and CEO
NYMAGIC, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and CEO
NEW YORK MARINE AND GENERAL
INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and CEO
GOTHAM INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and CEO
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Schedule A
NYMAGIC, Inc. Accounts:
----------------------
Liquidity Portfolio
Fixed Income Portfolio
Hedge Fund Portfolio
New York Marine and General Insurance Company Accounts:
------------------------------------------------------
Liquidity Portfolio
Fixed Income Portfolio
Hedge Fund Portfolio
Gotham Insurance Company Accounts:
---------------------------------
Liquidity Portfolio
Fixed Income Portfolio
Hedge Fund Portfolio
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SCHEDULE B
NYMAGIC
INVESTMENT POLICY GUIDELINES
OVERVIEW
The company follows an investment policy, which is reviewed quarterly and
revised periodically by management and the Finance Committee of the Board of
Directors. The company recognizes that an important component of its financial
results are the return on invested assets. As such, management will establish
the appropriate mix of traditional fixed income securities and other investments
(including equity and equity-type investments; e.g. hedge funds) to maximize the
rates of return while minimizing undue reliance on low quality securities.
Overall investment objectives are to (i) seek competitive after-tax income and
total return as appropriate, (ii) maintain, in aggregate, medium to high
investment grade asset quality, (iii) ensure adequate liquidity and
marketability to accommodate operating needs, (iv) maintain fixed income
maturity distribution commensurate with the company's business objectives and
(v) provide portfolio flexibility for changing business and investment climates.
The company's investment strategy incorporates guidelines (listed below) for
asset quality standards, asset allocations among investment types and issuers,
and other relevant criteria for the investment portfolio. In addition, invested
asset cash flows, both current income and investment maturities, are structured
after considering projected liability cash flows of loss reserve payouts using
actuarial models.
The investments of the company's subsidiaries will conform to the requirements
contained in the New York State Insurance Law and Regulations as well as the
National Association of Insurance Commissioners.
SPECIFIC GUIDELINES (New York Marine)
1. Liquidity Portfolio: Liquid funds will, at a minimum, represent 7.5% of
total investable funds. Investments in the Liquidity Portfolio shall be
limited to cash, direct obligations of the U.S. Government, repurchase
agreements, obligations of government instrumentalities, obligations of
government sponsored agencies, certificates of deposit, prime bankers
acceptances, prime commercial paper, corporate obligations and tax-exempt
obligations rated Aa3/AA- or MIG2 or better. No investment in the Liquidity
Portfolio will exceed one year's duration from the time of purchase. No
investment in the Liquidity Portfolio will exceed 5% of policyholders'
surplus except for direct obligations of the U.S. Government or its
instrumentalities or repurchase agreements collateralized by direct
obligations of the U.S. Government or its instrumentalities in which case
there will be no limit.
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2. Fixed Income Portfolio: Obligations of the U.S. Government, it's
instrumentalities, and government sponsored agencies will not be restricted
as to amount or maturity. Corporate and tax-exempt investments in the Fixed
Income portfolio will be restricted to those obligations rated Baa2/BBB or
better; concentration will not exceed 5% of policyholder's surplus; and
maturity will not exceed 30 years from date of purchase. Investments in
asset-backed securities shall similarly be rated Baa2/BBB or better and
individual issues will be restricted to 5% of policyholder's surplus.
Likewise maturities will not exceed 30 years from date of purchase.
Preferred stock investments with sinking funds will be rated Baa2/BBB or
better and individual issues will be limited to 5% of policyholder's
surplus. All investments in Fixed Income securities rated less than A3/A-
will be limited to 7% of total investments at the time of purchase.
3. Hedge Funds Portfolio: Investments in this category (including convertible
securities) will not exceed in aggregate 30% of policyholders' surplus or
15% of total investments whichever is greater. Equity investments in any
one issuer will not exceed 5% of policyholders' surplus at the time of
purchase as last reported to the New York State Insurance Department.
Investments in any individual hedge fund will not exceed 5% of
policyholders' surplus at the time of purchase as last reported to the New
York State Insurance Department. For the purposes of this 5% limitation, in
the event that an individual hedge fund is comprised of a pool (basket) of
separate and distinct hedge funds, then this 5% limitation will apply to
the individual funds within the pool (or basket).
SUBSIDIARIES
New York Marine's investments in subsidiary companies are excluded from the
requirements of New York Marine's investment policy.
SPECIFIC GUIDELINES (Gotham)
The investment policy of Gotham is identical to that of New York Marine.
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SCHEDULE C
Assets of the Account allocated to the various portfolios shall be assessed the
fee set forth opposite the portfolio below:
PORTFOLIO FEE
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Liquidity Portfolio 0.20%
Fixed Income Portfolio 0.30%
Hedge Fund Portfolio 1.25%*
*Note, this fee shall be waived at the Account level with respect to the assets
of the Account, if any, invested in hedge funds managed by the Adviser or its
affiliates.
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