AUTOMATIC REINSURANCE AGREEMENT
Between
THE TRAVELERS INSURANCE COMPANY
Hartford, Connecticut
Its Affiliate
THE TRAVELERS LIFE AND ANNUITY COMPANY
Hartford, Connecticut
And
SWISS RE LIFE & HEALTH AMERICA INC.
New York, New York
This Agreement will be referred to as AGREEMENT NO. SA718-98
AUTOMATIC REINSURANCE AGREEMENT
Contents
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ARTICLE I Scope of Agreement
ARTICLE II Commencement & Termination of Liability
ARTICLE III Oversights - Clerical Errors
ARTICLE IV Mortality Net Amount At Risk
ARTICLE V Reinsurance Premiums
ARTICLE VI Reinsurance Administration
ARTICLE VII Settlement of Claims
ARTICLE VIII Tax Credits
ARTICLE IX Regulatory Compliance
ARTICLE X Inspection of Records
ARTICLE XI Insolvency
ARTICLE XII Arbitration
ARTICLE XIII Rights of Offsetting Balances Due
ARTICLE XIV Contract and Program Changes
ARTICLE XV Federal Taxes
ARTICLE XVI Parties to Agreement
ARTICLE XVII Confidentiality
ARTICLE XVIII Entire Agreement
ARTICLE XIX Duration of Agreement
ARTICLE XX Severability
ARTICLE XXI Reserves
ARTICLE XXII Assignment or Transfer
Signature Page
EXHIBIT A - Variable Annuities Covered Under This Agreement
EXHIBIT B - Investment Funds
EXHIBIT C - Loss Carryforward Definitions and Formulae
AUTOMATIC REINSURANCE AGREEMENT
THIS AGREEMENT between THE TRAVELERS INSURANCE COMPANY, and its affiliate, THE
TRAVELERS LIFE AND ANNUITY COMPANY, corporations organized under the laws of the
State of Connecticut, hereinafter referred to in combination as the "Company",
and SWISS RE LIFE & HEALTH AMERICA INC., a corporation organized under the laws
of the State of New York, hereinafter referred to as "Swiss Re Life & Health",
WITNESSETH AS FOLLOWS:
ARTICLE I
Scope of Agreement
1. On and after the 1st day of July, 1998, the Company shall automatically
reinsure with Swiss Re Life & Health, and Swiss Re Life & Health shall
automatically accept, subject to the limitation specified in Paragraph 2 of this
Article, a 100% quota share of the mortality net amount at risk, as defined in
Article IV, generated by the Guaranteed Minimum Death Benefit provisions within
the variable annuity contracts issued by the Company as set forth in Exhibit A.
2. Any contract with a purchase premium that is greater than Two Million
Dollars ($2,000,000) shall require facultative review by Swiss Re Life & Health.
If Swiss Re Life & Health makes an offer of terms to reinsure such a risk, the
Company must accept the offer during the lifetime of the proposed insured, but
not later than the free-look period specified in the contract, to effect the
reinsurance. Acceptance by the Company of a facultative offer made by Swiss Re
Life & Health shall be documented by a dated notation in the Company's
underwriting file and subsequent formal notice to Swiss Re Life & Health which
shall become an Attachment to this Agreement. The Attachment shall include but
not be limited to, the identity of the contract owner, a description of the
contract issued, the effective date of the contract, the effective date of the
reinsurance coverage, the quota share percentage of the reinsurance coverage,
the maximum reinsurance liability on the life and the terms of the reinsurance
coverage. It shall be attested to by the Company and by Swiss Re Life & Health.
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3. Swiss Re Life & Health's maximum aggregate liability in any one
calendar year shall not exceed 5% (500 basis points) of Swiss Re Life & Health's
quota share percentage of the average aggregate account value over each
respective calendar year of coverage. This average shall be calculated by
totaling the aggregate account value as of the end of each calendar month and
dividing the result by the number of months.
4. Swiss Re Life & Health's maximum liability on any one life reinsured
hereunder shall be Two Million Dollars ($2,000,000), multiplied by the quota
share percentage reinsured by Swiss Re Life & Health specified either in
paragraph 1 of this Article, or in the facultative reinsurance terms described
in Paragraph 2 of this Article, as applicable, and calculated as specified in
Article IV of this Agreement. The maximum liability on any one life set forth in
this Paragraph may vary only in accordance with the provisions set forth below
in Paragraph 5 of this Article.
5. On facultative cases submitted under the provisions contained in
Paragraph 2 above, the Company may request that Swiss Re Life & Health revise
the maximum liability limit on any one life contained in Paragraph 4 above, to
Five Million Dollars ($5,000,000). Swiss Re Life & Health has the right to
accept or decline the request.
6. This Agreement covers only the Company's liability for claims paid
under variable annuity contracts written on the contract forms specified in
Exhibit A and supported by investment funds that were reviewed by Swiss Re Life
& Health prior to their issuance.
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ARTICLE II
Commencement & Termination of Liability
1. On reinsurance ceded under the terms of this Agreement, the liability
of Swiss Re Life & Health shall commence simultaneously with that of the
Company, and shall terminate upon the earliest of annuitization of a contract,
complete surrender of a contract or termination of this Agreement in accordance
with the applicable provisions contained in Article XIX, Duration of Agreement,
of this Agreement.
2. Swiss Re Life & Health shall be liable to reimburse claims on only
those deaths where the date of death is on or after July 1, 1998, in accordance
with Article VII.
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ARTICLE III
Oversights - Clerical Errors
1. Should either the Company or Swiss Re Life & Health fail to comply with
any of the terms of this Agreement, and if this is shown to be unintentional and
the result of a misunderstanding, oversight or clerical error on the part of
either the Company or Swiss Re Life & Health, then this Agreement shall not be
deemed abrogated thereby, but both companies shall be restored to the position
they would have occupied had no such oversight, misunderstanding, or clerical
error occurred. Such conditions are to be reported and corrected promptly after
discovery.
2. If the Company or Swiss Re Life & Health discovers that the Company did
not cede reinsurance on a contract it should have reinsured under this
Agreement, the Company may be required to audit its records, at the request of
Swiss Re Life & Health, to determine if reinsurance was unreported on any other
contracts. The Company is expected to take the necessary actions to ensure that
similar oversights do not recur. If Swiss Re Life & Health receives no evidence
whatsoever that the Company has taken action to remedy such a situation, or if
commitments the Company makes to remedy the situation fail to occur in a
timeframe agreed upon with Swiss Re Life & Health, then Swiss Re Life & Health
reserves the right to limit its liability to reported contracts only.
3. Any negligent or deliberate acts or omissions by the Company regarding
the insurance or reinsurance provided are the responsibility of the Company and
its liability insurer, if any, but not that of Swiss Re Life & Health.
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ARTICLE IV
Mortality Net Amount At Risk
1. The mortality net amount at risk for each variable annuity contract
reinsured hereunder shall be equal to the difference between the death benefit
and the account value of the annuity. The reinsured mortality net amount at risk
shall not be less than zero and shall not be greater than the product of the
maximum liability per life set forth in Article I, Paragraph 4 and Paragraph 5,
and the quota share percentage referenced in Article I, Paragraph 1 or Paragraph
2, as applicable. The death benefit and the contract value will be as described
in the variable annuity contract forms specified in Exhibit A.
2. For administrative reporting purposes the mortality net amount at risk
shall be calculated as of the last day of each calendar month.
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ARTICLE V
Reinsurance Premiums
1. Reinsurance premiums shall be calculated monthly. The monthly
reinsurance premium shall be equal to the product of the current monthly premium
rate and Swiss Re Life & Health's quota share percentage of all average
aggregate account values over each calendar month of all variable annuities
reinsured hereunder. The current monthly reinsurance premium rate, expressed in
basis points, shall be equal to:
Benefit (fully described in Exhibit A) Current Monthly Reins. Premium Rate
-------------------------------------- -----------------------------------
Standard .2292
Enhanced .7083
2. The current monthly reinsurance premium rate shall be in effect for a
minimum of 20 years from the effective date of this reinsurance Agreement.
Thereafter, it may be increased based on future expectations, but not beyond the
following guaranteed maximum monthly reinsurance premium rate, expressed in
basis points:
Benefit (fully described in Exhibit A) Guar. Max. Monthly Reinsurance Rate
-------------------------------------- ------------------------------------
Standard .5833
Enhanced 1.5833
3. The monthly reinsurance premium shall be due and payable as described
in Article VI. Swiss Re Life & Health reserves the right to charge interest on
monthly premiums not remitted within 30 days of the schedule set forth in
Article VI. The interest rate payable by the Company to Swiss Re Life & Health
for overdue premiums shall be the 90 Day Federal Government Treasury Xxxx rate
as first published in the Wall Street Journal in the month following the end of
the billing period plus 50 basis points. The method of calculation shall be
simple interest "Bankers' Rule" (or 360 day year).
4. The reinsurance premiums described above shall apply to all automatic
and facultative cases where the per life maximum liability limit is Two Million
Dollars ($2,000,000) multiplied by the applicable quota share percentage
reinsured, and to facultative cases below issue age 56 where the per life
maximum liability limit is Five Million Dollars ($5,000,000) multiplied by the
applicable quota share percentage reinsured. The
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applicable reinsurance rates for all other facultative cases will be agreed upon
between the Company and Swiss Re Life & Health at the time facultative
application is made.
5. The total reinsurance premium shall be reduced on the last day of each
month by the ratio of the sum of Swiss Re Life & Health's share of the mortality
net amount at risk in excess of the maximum liability on any one life reinsured
hereunder calculated as set forth in Article I, Paragraph 4, to Swiss Re Life &
Health's share of the total mortality net amount at risk on all annuity
contracts reinsured hereunder, calculated from the values on the report provided
pursuant to Article VI.
6. The reinsurance premium structure described above shall remain in
effect as long as the death benefit design, the mortality and expense charges,
the administration fees, and the surrender charges in effect at the inception of
this Agreement remain unchanged.
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ARTICLE VI
Reinsurance Administration
1. Within thirty (30) days of the end of each calendar month, the Company
will furnish Swiss Re Life & Health a separate electronic report for each
Guaranteed Minimum Death Benefit design specified in Exhibit A, valued as of the
last day of that month. Each report will indicate for all inforce annuities
reinsured hereunder:
a) Annuitant's name, sex, date of birth, issue age
and social security number
b) Owner's name, sex, date of birth, issue age and
social security number
c) Contract number
d) Contract issue date
e) Contract form number
f) Tax status
g) Current contract value in total and by funding
vehicle, if any
h) Current cash surrender value
i) Cumulative net considerations
j) Current Minimum Guaranteed Death Benefit
k) Current contract death benefit
l) Current contract mortality risk amount
2. Additionally, within thirty (30) days of the end of each calendar
month, the Company will furnish Swiss Re Life & Health with a separate seriatim
death claim report that includes the cause of death.
3. Additionally, within thirty (30) days of the end of each calendar
month, the Company will furnish Swiss Re Life & Health a separate paper report
summarizing the following data:
a) Reinsurance premiums due Swiss Re Life & Health
b) Death claim reimbursements due the Company
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c) Total number of contracts reinsured
d) Total current contract value
e) Total cumulative net considerations
f) Total current Guaranteed Minimum Death Benefit
g) Total current death benefit
h) Total current mortality risk amount
i) Total current cash surrender value
4. If the net balance is due Swiss Re Life & Health, the amount due shall
be remitted with the report statement. If the net balance is due the Company,
Swiss Re Life & Health shall remit the amount to the Company within ten (10)
days of the receipt of the report.
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ARTICLE VII
Settlement of Claims
1. The claims that are eligible for reimbursement are only those that the
Company is required to pay on deaths that occur on or after the effective date
of this Agreement.
2. In the event the Company provides satisfactory proof of claim to Swiss
Re Life & Health, claim settlements made by the Company shall be unconditionally
binding on Swiss Re Life & Health.
3. The death claim reimbursed by Swiss Re Life & Health shall be
determined as of the date due proof of death is received at the Company's
Annuity Service office.
4. Within thirty (30) days of the end of each month, the Company shall
notify Swiss Re Life & Health of the reinsured death benefits paid in that month
and Swiss Re Life & Health shall reimburse the Company, as provided in Article
VI, for the reinsured benefits.
5. Settlements by Swiss Re Life & Health shall be in a lump sum regardless
of the mode of payment made by the Company to the beneficiary.
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ARTICLE VIII
Tax Credits
1. Swiss Re Life & Health shall not reimburse the Company for state
premium taxes.
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ARTICLE IX
Regulatory Compliance
1. Swiss Re Life & Health agrees to comply with all regulatory directives
required to permit the Company to receive statutory reserve credit in all
jurisdictions in which contracts subject to this Agreement are written.
2. The Company warrants that it has secured all necessary federal and
state licenses and approvals, and that it is operating in compliance with
federal investment laws and state investment and insurance laws and regulations.
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ARTICLE X
Inspection of Records
1. Swiss Re Life & Health, or its duly appointed representatives, shall
have the right at all reasonable times and for any reasonable purpose to inspect
at the office of the Company all records referring to reinsurance ceded to Swiss
Re Life & Health.
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ARTICLE XI
Insolvency
1. A party to this Agreement will be deemed "insolvent" when it:
(a) Applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory successor
(hereinafter referred to as the Authorized Representative) of
its properties or assets; or
(b) Is adjudicated as bankrupt or insolvent; or
(c) Files or consents to the filing of a petition in bankruptcy,
seeks reorganization or an arrangement with creditors or takes
advantage of any bankruptcy, dissolution, liquidation, or
similar law or statute; or
(d) Becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction
of the party's domicile.
2. In the event of the insolvency of the Company, all reinsurance made,
ceded, renewed or otherwise becoming effective under this Agreement shall be
payable by Swiss Re Life & Health directly to the Company or to its Authorized
Representative on the basis of the liability of the Company under the contract
or contracts reinsured without diminution because of the insolvency of the
Company. It is understood, however, that in the event of the insolvency of the
Company, the Authorized Representative of the insolvent Company shall give
written notice of the pendency of a claim against the insolvent Company on the
policy reinsured within a reasonable time after such claim is filed in the
insolvency proceeding and that, during the pendency of such claim, Swiss Re Life
& Health may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses which
it may deem available to the Company or to its Authorized Representative.
3. It is further understood that the expense thus incurred by Swiss Re
Life & Health shall be chargeable, subject to court approval, against the
insolvent Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may
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accrue to the Company solely as a result of the defense undertaken by Swiss Re
Life & Health. Where two or more assuming insurers are involved in the same
claim and a majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this Reinsurance
Agreement as though such expense had been incurred by the Company.
4. In the event of the insolvency of Swiss Re Life & Health and the
appointment of receivers therefor, the liability of Swiss Re Life & Health shall
not terminate but shall continue with respect to the reinsurance ceded to Swiss
Re Life & Health by the Company prior to the date of such insolvency or
appointment.
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ARTICLE XII
Arbitration
1. In the event of any difference arising hereafter between the
contracting parties with reference to any transaction under this Agreement, the
same shall be referred to three arbitrators who must be current or former
executive officers of life insurance or life reinsurance companies other than
the two parties to this Agreement or their affiliates, each of the contracting
companies to appoint one of the arbitrators and such two arbitrators to select
the third. If either party refuses or neglects to appoint an arbitrator within
60 days after receipt of the written request for arbitration, the other party
may appoint a second arbitrator.
2. If the two arbitrators fail to agree on the selection of a third
arbitrator within 60 days of their appointment, each of them shall name three
individuals, of whom the other shall decline two, and the decision shall be made
by drawing lots.
3. The arbitrators shall consider this Reinsurance Agreement not merely as
a legal document but also as a gentlemen's agreement. In resolving the dispute,
the arbitrators will give full consideration to the customs and practices of the
life insurance and life reinsurance industry, insofar as they are not in
conflict with the specific terms of this Agreement. The arbitrators shall decide
by a majority vote. There shall be no appeal from their written decision.
4. Unless the arbitrators decide otherwise, each party shall bear the
expense of its own arbitration, including its arbitrator and outside attorney
fees, and shall jointly and equally bear with the other party the expense of the
third arbitrator. Any remaining costs of the arbitration proceedings shall be
apportioned by the Board of Arbitrators.
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ARTICLE XIII
Right of Offsetting Balances Due
1. The Company and Swiss Re Life & Health shall have, and may exercise at
any time, the right to offset any balance or balances due one party to the
other, its successors or assigns, against balances due the other party under
this Agreement or under any other Agreements or Contracts previously or
subsequently entered into between the Company and Swiss Re Life & Health. This
right of offset shall not be affected or diminished because of insolvency of
either party to this Agreement.
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ARTICLE XIV
Contract and Program Changes
1. The Company may amend, substitute, add or delete variable investment
funds to the separate accounts supporting the annuity contract as described in
the contract general provisions. No such change will be made by the Company
without prior notification to Swiss Re Life & Health and without the prior
approval of the Securities and Exchange Commission, if necessary. The Company
agrees to maintain at all times a satisfactory selection of core investment
options with characteristics similar to those listed in Exhibit B.
2. The Company shall also give Swiss Re Life & Health advance notice of any
other changes to its annuity product design, its fees and charges, its annuity
product distribution that would materially impact the target customer for
products covered under this Agreement, or the addition of any riders to any
contract form reinsured hereunder.
3. Should any such change result in a material increase in the reinsured
net amount at risk and/or material decrease in the reinsurance premiums due,
Swiss Re Life & Health shall have the right to modify any of the terms of this
Agreement.
4. For the purposes of this Article, material is understood to mean a
substantial variance from either the original pricing profile or the past
experience on the account, that is expected to be permanent or long lasting.
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ARTICLE XV
Federal Taxes
1. The Company and Swiss Re Life & Health hereby agree to the following
pursuant to Section 1.848-2(g)(8) of the Income Tax Regulation issued December
1992, under Section 848 of the Internal Revenue Code of 1986, as amended. This
election shall be effective as of the Effective Date of this Agreement and for
all subsequent taxable years for which this Agreement remains in effect.
(a) The term "party" will refer to either the Company or Swiss Re
Life & Health, as appropriate.
(b) The terms used in this Article are defined by reference to
Regulation 1.848-2 in effect December 1992.
(c) The party with the net positive consideration for this Agreement
for each taxable year will capitalize specified policy
acquisition expenses with respect to this Agreement without
regard to the general deductions limitation of Section 848(c)(1).
(d) Both parties agree to exchange information pertaining to the
amount of net consideration under this Agreement each year to
ensure consistency or as otherwise required by the Internal
Revenue Service.
(e) The Company will submit a schedule to Swiss Re Life & Health by
May 1 of each year of its calculation of the net consideration
for the preceding calendar year. This schedule of calculations
will be accompanied by a statement stating that the Company will
report such net consideration in its tax return for the preceding
calendar year.
(f) Swiss Re Life & Health may contest such calculation by providing
an alternative calculation to the Company by June 1. If Swiss Re
Life & Health does not so notify the Company, the Company will
report the net consideration as determined by the Company in the
Company's tax return for the previous calendar year.
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(g) If Swiss Re Life & Health contests the Company's calculation of
the net consideration, the parties will act in good faith to
reach an agreement as to the correct amount by July 1. If the
Company and Swiss Re Life & Health reach agreement on an amount
of the net consideration, each party shall report such amount in
their respective tax returns for the previous calendar year.
2. Swiss Re Life & Health and the Company represent and warrant that they
are subject to U.S. taxation under Subchapter L of Chapter 1 of the Internal
Revenue Code.
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ARTICLE XVI
Parties to Agreement
1. This Agreement is an indemnity reinsurance agreement solely between the
Company and Swiss Re Life & Health. The acceptance of reinsurance hereunder
shall not create any right or legal relation whatever between Swiss Re Life &
Health and the annuitant, owner, beneficiary or any other party under any
contracts of the Company which may be reinsured hereunder, and the Company shall
be and remain solely liable to such parties under such contracts reinsured
hereunder.
2. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
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ARTICLE XVII
Confidentiality
1. All matters with respect to this Agreement require the utmost good faith
of both parties. Both the Company and Swiss Re Life & Health shall hold
confidential and not disclose or make competitive use of any shared proprietary
information unless otherwise agreed to in writing, or unless the information
otherwise becomes publicly available or the disclosure of which is required for
retrocession purposes or has been mandated by law or is duly required by
external auditors.
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ARTICLE XVIII
Entire Agreement
1. This Agreement shall constitute the entire agreement between the parties
with respect to business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement and any change or
modification of this Agreement shall be null and void unless made by amendment
to the Agreement and signed by both parties.
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ARTICLE XIX
Duration of Agreement
1. This Agreement shall be unlimited as to its duration but may be reduced
or terminated as provided in this Article, below.
2. This Agreement shall be open for new business for a minimum of three (3)
years as measured from the effective date of this agreement. Any time on or
after the third anniversary of this Agreement and upon 180 days written notice,
either the Company or Swiss Re Life & Health may either cancel this Agreement
for new business unilaterally or amend the terms of reinsurance for new business
by mutual agreement.
3. Any time on or after the 15th anniversary of this Agreement, the Company
may, upon 90 days written notice, irrevocably elect to cancel the reinsurance in
force under this Agreement, provided the loss carryforward, calculated as
described in Exhibit C of this Agreement, is non-negative. Upon election, the
reinsurance shall be recaptured at a constant rate by reducing the quota share
percentage set forth in Article I, paragraph 1, by 2.78% per month. The
reduction shall begin in the month of election and continue for 36 consecutive
months. The quota share percentage will then be equal to 0% and the reinsurance
ceded hereunder will be fully recaptured and this Agreement will then be
terminated.
4. Should the Company fail to pay reinsurance premiums when due, Swiss Re
Life & Health may act to suspend the reinsurance coverage hereunder. Such
suspension shall not occur before reinsurance premiums are 90 days or more in
arrears, and shall only take effect upon the expiration of a 30-day notice
period that Swiss Re Life & Health must give the Company. The reinsurance
coverage will be reinstated at the option of Swiss Re Life & Health upon receipt
of all the overdue premiums. However, Swiss Re Life & Health shall have no
liability for claims that occur during a period of suspension. Also, suspension
of reinsurance coverage shall not relieve the Company of liability for premiums
due Swiss Re Life & Health during the period of non-payment prior to suspension
and shall not relieve Swiss Re Life & Health of liability for claims during the
same period.
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5. The Company may cancel this Agreement for new business and cancel the
inforce reinsurance previously ceded under this Agreement upon the occurrence of
either of the following events:
(a) The statutory capital and surplus of Swiss Re Life & Health falls
below the NAIC Authorized Control Level Risk Based Capital; or
(b) The Company loses reserve credit in a jurisdiction in which it was
licensed on the effective date of this Agreement and the Company
and Swiss Re Life & Health have not been able to correct the loss
of reserve credit within 90 days after receiving notice of the
loss.
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ARTICLE XX
Severability
1. If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not affect or impair the validity or the
enforceability of the remaining provisions of this Agreement.
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ARTICLE XXI
Reserves
1. Swiss Re Life & Health intends to hold the statutory minimum reserves as
required by New York. It is anticipated that New York will adopt NAIC Actuarial
Guideline 34 (AG 34) regarding GMDB reserve methodology and that Swiss Re Life &
Health will establish reserves in accordance with such methodology. Such
methodology will require Swiss Re Life & Health to establish a general account
reserve equal to the present value of projected mortality costs less the present
value of reinsurance premiums. Until New York adopts AG 34, Swiss Re Life &
Health shall hold reserves equal to the greater of (a) and (b) below,
a) Ending Reserve equals Initial Reserve accumulated at 6% plus
[(80% of reinsurance premiums less 100% of incurred claims)
accumulated at a nominal annual interest rate of 3%].
b) one year term cost seriatim reserves calculated based on the net
amount at risk as of the valuation date using a valuation rate
equal to that used for long-term life insurance and the
1) 1983 GAM Valuation table for males and females separately
for contracts issued with the standard death benefit, and
2) 1980 CSO aggregate table for males and females separately
for contracts issued with the enhanced benefit.
2. Although Swiss Re Life & Health intends to hold reserves as described in
paragraph 1 above, Swiss Re Life & Health will hold higher reserves up to the
level required by regulatory authorities at the written request of the Company.
If such a request is made, the Company shall remit to Swiss Re Life & Health an
annualized surplus charge equal to 2% of the difference between the requested
reserve level and the level of reserve Swiss Re Life & Health would hold as
described in paragraph 1 above. The annualized surplus charge will apply only
for the length of time that the excess reserve is held at the Company's request.
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ARTICLE XXII
Assignment or Transfer
1. In no event shall either the Company or Swiss Re Life & Health assign
any of its rights, duties or obligations under this Agreement without the prior
written approval of the other party. Such approval shall not unreasonably be
withheld.
2. In no event shall either the Company or Swiss Re Life & Health transfer
either the policies reinsured under this Agreement or the reinsurance without
the prior written approval of the other party. Such approval shall not
unreasonably be withheld. This provision is not intended to preclude Swiss Re
Life & Health from retroceding the reinsurance on an indemnity basis.
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IN WITNESS WHEREOF, the Company and Swiss Re Life & Health have caused their
names to be subscribed and duly attested hereunder by their respective
Authorized Officers.
THE TRAVELERS INSURANCE COMPANY
By: /s/ [ILLEGIBLE] Attest: /s/ [ILLEGIBLE]
------------------------------ ----------------------------
Title: Actuary Title: DGC
------------------------------ ----------------------------
Date: 12/9/1999 Date: 12/9/99
------------------------------ ----------------------------
THE TRAVELERS LIFE AND ANNUITY COMPANY
By: /s/ [ILLEGIBLE] Attest: /s/ [ILLEGIBLE]
------------------------------ ----------------------------
Title: Actuary Title: DGC
------------------------------ ----------------------------
Date: 12/9/1999 Date: 12/9/99
------------------------------ ----------------------------
SWISS RE LIFE & HEALTH AMERICA INC.
By: /s/ [ILLEGIBLE] Attest: /s/ [ILLEGIBLE]
------------------------------ ----------------------------
Title: VP & Actuary Title: 2ND VP
------------------------------ ----------------------------
Date: 12/17/99 Date: 12/17/99
------------------------------ ----------------------------
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EXHIBIT A
Variable Annuities Covered Under This Agreement
I. Annuity Contract Form Numbers (and all jurisdiction-specific variations)
TRAVELERS INSURANCE COMPANY MARQUIS ANNUITY
FORM NO. FORM TITLE
L-22156 Flexible Premium Individual Deferred Variable Annuity Contract
L-22157 Death Benefit Endorsement (optional)
L-22148 Individual Retirement Annuity Qualification Rider
L-22149 Tax Sheltered Annuity Qualification Rider
L-22150 Pension/Profit Sharing Qualification Rider
L-22161 Nonqualified Annuity Rider - Distribution Requirements
L-22186 Xxxx Individual Retirement Annuity Qualification Rider
TRAVELERS LIFE AND ANNUITY COMPANY MARQUIS ANNUITY
FORM NO. FORM TITLE
TL-22156 Flexible Premium Individual Deferred Variable Annuity Contract
TL-22157 Death Benefit Endorsement (optional)
TL-22148 Individual Retirement Annuity Qualification Xxxxx
XX-22149 Tax Sheltered Annuity Qualification Xxxxx
XX-22150 Pension/Profit Sharing Qualification Xxxxx
XX-22161 Nonqualified Annuity Rider - Distribution Requirements
TL-22186 Xxxx Individual Retirement Annuity Qualification Rider
II. Issue Dates:
Contracts issued on or after July 1, 1998.
III. Reinsured Guaranteed Minimum Death Benefit Design
Standard Death Benefit
Return of Premium up to issue age 85; Frozen thereafter until contract
termination.
Enhanced Death Benefit
Annual Ratchet to attained age 80; Frozen thereafter until contract
termination.
EXHIBIT B
Investment Funds
I. General Account
Fund Name
Travelers Fixed Fund
II. Separate Account - The Travelers Marquis Annuity
Fund Name
AIM Capital Appreciation Portfolio
Delaware REIT Series
Delaware Small Cap Value Series
Dreyfus Capital Appreciation Portfolio
Dreyfus Small Cap Portfolio
Franklin Small Cap Investments Fund Class II
Jurika & Xxxxxx Core Equity Portfolio
Lazard International Equity Portfolio
MFS Research Portfolio
Xxxxxxxxxx Variable Series: Growth Portfolio
NWQ Large Cap Portfolio
OCC Equity Portfolio
Salomon Brothers Variable Investors Fund
Xxxxx Xxxxxx High Income Portfolio
Xxxxx Xxxxxx Large Capitalization Growth Portfolio
Xxxxx Xxxxxx Money Market Portfolio
Strong Xxxxxxx Value Fund II
Xxxxxxxxx Developing Markets Fund Class II
Xxxxxxxxx International Fund Class II
Travelers Disciplined Mid Cap Portfolio
Travelers Large Cap Portfolio
Travelers Strategic Stock Portfolio
Travelers US Government Securities Portfolio
Warburg Emerging Markets Portfolio
Travelers Managed Income Portfolio
Travelers Disciplined Small Cap Stock Portfolio
EXHIBIT C
Loss Carryforward
Definitions and Formulae
t = current month
q = current quarter
(SUM) AV(t) = Sum total of Swiss Re Life & Health's quota share percentage of account values at end of month t
Avg. AV(t) = 50% of ((SUM)AV(t-1) + (SUM)AV(t))
(SUM)GMDB(t) = Sum total of Swiss Re Life & Health's quota share percentage of guaranteed minimum death benefits
at end of month t
Avg. GMDB(t) = 50% of ((SUM)GMDB(t-1) + (SUM)GMDB(t))
APR = annualized premium rate for each product combination
MPR = Monthly premium rate for each product combination
= (APR / 12)
RP(t) = Reinsurance premiums due at end of month t
DBR(t) = Death benefit recoveries in month t
= Sum of individual reinsured variable net risk amounts reimbursed upon death
DBR(o) = 0
MEC(t) = Monthly expense charge for month t, applied to average aggregate account value over the month
= (2.0 basis points / 12) x Avg. AV(t)
MEC(o) = 0
CFWD(t) = Carryforward from month (t-1), adjusted for interest
= [AdjP(t-1) x (1 + CIR(t))]
CFWD(1) = 0
CIR(t) = Carryforward interest rate for month t
= (Avg. U.S. Treasury xxxx rate for month t + 2.0%) / 12
EXHIBIT C, continued
AdjP(t) = Adjusted profit for all products reinsured hereunder for month t
= RP(t)-DBR(t)-MEC(t) + CFWD(t)
AdjP(o) = 0
AdjP(y) = Adjusted profit for calendar year y
Note: This Loss Carryforward methodology will be applied to all classes of risks
reinsured under this agreement as though they were one class.
