REINSURANCE AGREEMENT
BETWEEN
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
A Virginia domiciliary with executive offices in
RICHMOND, VIRGINIA
referred to as the "Ceding Company"
AND
RGA REINSURANCE COMPANY
A Missouri domiciliary with executive offices in
CHESTERFIELD, MISSOURI
referred to as the "Reinsurer"
Effective July 1, 2008
708-282
TABLE OF CONTENTS
Page
----
ARTICLE I GENERAL PROVISIONS.......................................... 2
ARTICLE II REINSURANCE PREMIUMS........................................ 7
ARTICLE III ALLOWANCES.................................................. 8
ARTICLE IV BENEFIT PAYMENTS............................................ 11
ARTICLE V RESERVE ADJUSTMENTS......................................... 14
ARTICLE VI ACCOUNTING AND SETTLEMENTS.................................. 16
ARTICLE VII DURATION AND RECAPTURE...................................... 19
ARTICLE VIII TERMINAL ACCOUNTING AND SETTLEMENT.......................... 22
ARTICLE IX REPRESENTATIONS............................................. 24
ARTICLE X ARBITRATION................................................. 25
ARTICLE XI INSOLVENCY.................................................. 26
ARTICLE XII EXECUTION AND EFFECTIVE DATE................................ 27
SCHEDULE A ANNUITIES AND RISKS REINSURED............................... 28
SCHEDULE B QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS................ 29
SCHEDULE C MODIFIED COINSURANCE RESERVE INVESTMENT CREDIT.............. 32
SCHEDULE D CEDING COMPANY DATA......................................... 35
REINSURANCE AGREEMENT
This Agreement is made and entered into by and between Genworth Life and
Annuity Insurance Company (hereinafter referred to as the "Ceding Company") and
RGA Reinsurance Company (hereinafter referred to as the "Reinsurer").
The Ceding Company and the Reinsurer mutually agree to reinsure on the terms
and conditions stated herein. This Agreement is an indemnity reinsurance
agreement solely between the Ceding Company and the Reinsurer, and performance
of the obligations of each party under this Agreement will be rendered solely
to the other party. In no instance will anyone other than the Ceding Company or
the Reinsurer have any rights under this Agreement, and the Ceding Company will
be and remains the only party hereunder that is liable to any insured,
policyowner or beneficiary under any annuity reinsured hereunder.
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ARTICLE I
GENERAL PROVISIONS
1. Annuities and Risks Reinsured. The Reinsurer agrees to indemnify the Ceding
Company for, and the Ceding Company agrees to reinsure with the Reinsurer,
according to the terms and conditions of this Agreement, the portion of the
risks under the annuities and riders described in the attached Schedule A.
As used in this Agreement, the term "Base Annuities" means the base
variable annuity contracts reinsured under this Agreement; the term
"Riders" means the riders that are issued in connection with the Base
Annuities and are reinsured under this Agreement, as described in Schedule
A; and the term "Annuities" means the Base Annuities and Riders, together,
including extended coverage through spousal continuation and other
deferrals as permitted under the terms of the annuities and by state and
Federal regulations in existence on the Effective Date of this Agreement.
2. Coverages and Exclusions.
A. Only the Base Annuities and Riders described in Schedule A are
reinsured under this Agreement.
B. Only Annuities sold by the Ceding Company in those jurisdictions where
the Ceding Company is licensed to issue annuities.
3. Plan of Reinsurance. This indemnity reinsurance will be on a modified
coinsurance basis for the Base Annuities and on a coinsurance basis for all
Riders. The Ceding Company will retain, control and own all assets held in
relation to the Modified Coinsurance Reserve.
4. Expenses. The Reinsurer will bear no part of the expenses incurred in
connection with the Annuities, except as otherwise provided herein.
5. Annuity Changes. The Ceding Company must provide written notification to
the Reinsurer of any change which affects the original terms or conditions
of any annuity form reinsured hereunder not later than fifteen (15) days
after the change takes effect. The Reinsurer will provide written
notification to the
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Ceding Company as to the Reinsurer's acceptance or rejection of the change
within fifteen (15) days after receipt of notice of the change. If the
Reinsurer accepts any such change, the Reinsurer will (a) assume that
portion of any increase in the Ceding Company's liability, resulting from
the change, which corresponds to the portion of the annuities reinsured
hereunder, and (b) receive credit for that portion of any decrease in the
Ceding Company's liability, resulting from the change, which corresponds to
the portion of the annuities reinsured hereunder. If the Reinsurer rejects
any such change, the Reinsurer's liability under this Agreement will be
determined as if no such change had occurred. Notwithstanding the
preceding, any changes in the funds available within the Segregated Asset
Portfolio, as described in Schedule C, shall not be subject to this
Paragraph 5.
6. No Extracontractual Damages. The Reinsurer does not indemnify the Ceding
Company for, and will not be liable for, any extracontractual damages or
extracontractual liability resulting from fraud, oppression, bad faith,
strict liability, or negligent, reckless or intentional wrongs on the part
of the Ceding Company or its directors, officers, employees and agents. The
following types of damages are examples of damages that would be excluded
under this Agreement for the conduct described above: actual damages,
damages for emotional distress, and punitive or exemplary damages.
7. Annuity Administration. The Ceding Company will administer the Annuities
reinsured hereunder and will perform all accounting for such Annuities.
8. Inspection. At any reasonable time, the Reinsurer and the Ceding Company,
or their duly appointed representatives, may inspect, during normal
business hours, at the principal office of the other party, the original
papers and any and all other books or documents relating to or affecting
reinsurance under this Agreement. The parties will not use any information
obtained through any inspection pursuant to this Paragraph for any purpose
not relating to reinsurance hereunder.
9. Taxes and Assessments. The allowance for any premium taxes, state guarantee
fund assessments or special assessments paid in connection with the
Annuities is included in the Allowances, as described in Article III. The
Reinsurer will not reimburse the Ceding Company for any other taxes or
assessments paid by the Ceding Company in connection with the Annuities.
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10. Election to Determine Specified Annuity Acquisition Expenses. The Ceding
Company and the Reinsurer agree to the election pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations effective December 29,
1992, under Section 848 of the Internal Revenue Code of 1986, as amended
(such election being referred to as the "DAC Tax Election") whereby:
(a) The party with net positive consideration under this Agreement for
each taxable year will capitalize specified annuity acquisition
expenses with respect to the Annuities reinsured under this Agreement
without regard to the general deductions limitation of
Section 848(c)(1) of the Internal Revenue Code of 1986, as amended.
(b) The 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. If
requested, the Ceding Company will provide supporting information
reasonably requested by the Reinsurer. The term "net consideration"
means "net consideration" as defined in Regulation Section 1.848-2(f).
(c) The DAC Tax Election will be effective for the first taxable year in
which this Agreement is effective and for all years for which this
Agreement remains in effect.
The Ceding Company and the Reinsurer will each attach a schedule to their
respective federal income tax returns filed for the first taxable year for
which this DAC Tax Election is effective. Such schedule will identify the
Agreement as a reinsurance agreement for which the DAC Tax Election under
Regulation Section 1.848-2(g)(8) has been made.
11. Condition. The reinsurance hereunder is subject to the same limitations and
conditions specified in the Annuities and their accompanying prospectuses,
except as otherwise provided in this Agreement.
12. Misunderstandings and Oversights. If any failure to pay amounts due or to
perform any other act required by this Agreement is unintentional and
caused by misunderstanding or oversight, the Ceding Company and the
Reinsurer will adjust the situation to what it would have been had the
misunderstanding or oversight not occurred.
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13. Adjustments. If the Ceding Company's liability under any of the Annuities
reinsured hereunder is changed because of a misstatement of age, sex or any
other material fact, the Reinsurer will (a) assume that portion of any
increase in the Ceding Company's liability, resulting from the change,
which corresponds to the portion of the Annuities reinsured hereunder, and
(b) receive credit for that portion of any decrease in the Ceding Company's
liability, resulting from the change, which corresponds to the portion of
the Annuities reinsured hereunder.
14. Reinstatements. If an Annuity lapses, and is subsequently reinstated while
this Agreement is in force, the reinsurance for such Annuity will be
reinstated automatically. The Ceding Company will pay the Reinsurer the
Reinsurer's proportionate share of all amounts received by the Ceding
Company in connection with the reinstatement of the Annuity, plus any
amounts previously refunded to the Ceding Company by the Reinsurer in
connection with the lapse of the Annuity.
15. Remedies and Waiver. All remedies of any party are cumulative. Failure of
either the Ceding Company or the Reinsurer to exercise any right,
privilege, power or remedy at law, equity or in existence by virtue of this
Agreement or to otherwise insist upon strict compliance with any of the
terms, provisions and conditions of this Agreement, or the obligations of
the other party, will not constitute a waiver of such right, privilege,
power, remedy, term, provision, condition, or obligation. Moreover, the
failure of either party to enforce any part of this Agreement shall not be
deemed to be an act of ratification or consent. No prior transactions or
dealings between the parties shall be deemed to establish any custom or
usage waiving or modifying any provision of this Agreement.
16. Assignment. Neither party may assign any of its rights, duties or
obligations under this Agreement without the prior written consent of the
other, which consent will not be unreasonably withheld.
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17. Choice of Law. This Agreement will be governed by the laws of the Ceding
Company's State of Domicile, without giving effect to the choice of law
provisions. Notwithstanding the preceding, this Paragraph shall not be
interpreted to permit the parties to avoid their obligations to arbitrate
their disputes pursuant to Article X of this Agreement.
18. Amendments. This Agreement may be amended only by written agreement of the
parties. Any change or modification to this Agreement shall be null and
void unless made by amendment to this Agreement and signed by both parties.
19. Current Practices. The Ceding Company will not materially change, alter or
otherwise compromise its underwriting, claims paying or administrative
practices with respect to the annuities reinsured hereunder without the
prior written consent of the Reinsurer.
20. Entire Agreement. The terms expressed herein constitute the entire
agreement between the parties with respect to the Annuities. There are no
understandings between the parties with respect to the Annuities other than
as expressed in this Agreement.
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ARTICLE II
REINSURANCE PREMIUMS
Reinsurance Premiums. The Ceding Company will pay the Reinsurer Reinsurance
Premiums on all Annuities in an amount equal to that portion of the gross
premiums collected by the Ceding Company during the Accounting Period which
corresponds to the portion of the Annuities reinsured hereunder. The
Reinsurance Premiums paid to the Reinsurer by the Ceding Company will be
remitted to the Reinsurer at the end of the Accounting Period during which the
gross premiums were collected by the Ceding Company.
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ARTICLE III
ALLOWANCES
1. Commission and Expense Allowance. The Reinsurer will pay the Ceding Company
a Commission and Expense Allowance for each Accounting Period equal to the
net of:
(i) the product of (a) times (b), where:
(a) equals the Commission Rate, as specified in the table below; and
Commission Rate
----------------
Issue Age Range Choice Selections
--------------- ------ ----------
0 - 75 7.72% 7.02%
76 - 80 7.72% 5.72%
81 + 6.72% 4.42%
(b) equals the Reinsurance Premiums determined in accordance with
Article II, plus
(ii)the product of (a) times (b), where:
(a) equals the Account Value Rate, as specified in the table below,
times the quota share reinsured hereunder, as described in
Schedule A; and
Account Value Rate
----------------
Policy Year Choice Selections
----------- ------ ----------
1 - 6 0.03% 0.205%
7 + 0.205% 0.205%
(b) equals the Average Account Value, determined in accordance with
Article V, Paragraph 4, for the current Accounting Period, plus
(iii)the product of (a) times (b), where:
(a) equals $43.75 times the quota share reinsured hereunder, as
described in Schedule A; and
(b) equals the number of Base Annuities reinsured hereunder
outstanding as of the end of the current Accounting Period, plus
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(iv)the product of (a) times (b), where:
(a) equals $230 times the quota share reinsured hereunder, as
described in Schedule A; and
(b) equals the number of Base Annuities issued during the current
Accounting Period, minus
(v) the Investment Credit, as defined below.
The Investment Credit, which will be paid by the Ceding Company to the
Reinsurer pursuant to item (v) above, is included to offset expenses
relating to the promotion of additional investments in the underlying
funds and expenses relating to the maintenance of customer accounts in
item (iii) above, shall equal the product of (a) times (b), where:
(a) equals 0.0975 percent times the quota share reinsured hereunder, as
described in Schedule A; and
(b) equals the Average Account Value, determined in accordance with
Article V, Paragraph 4, for the current Accounting Period.
The 0.0975 percent factor shall be recalculated from time to time, but no
more frequently than annually, using a methodology that is mutually
acceptable to both parties.
2. Commission Chargeback. For any Annuity reinsured hereunder that is either
surrendered or partially withdrawn during the current Accounting Period,
the Ceding Company will pay the Reinsurer a Commission Chargeback at the
end of the Accounting Period equal to (a) plus (b), where:
(a) equals the sum of (i) times (ii) times (iii), with respect to each
such Annuity, where:
(i) equals 1.0 for any Annuity reinsured hereunder that is either
surrendered, or incurs a partial withdrawal in the first six
policy months, and 0.5 for any Annuity reinsured hereunder that is
either surrendered, or incurs a partial withdrawal in policy
months seven through twelve;
(ii)equals the Commission Rate, as specified in item (i)(a) of
Paragraph 1 above; and
(iii)equals the total Reinsurance Premiums, determined in accordance
with Article II, received with respect to any such Annuity that is
surrendered for all
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Accounting Periods since inception of this Agreement, or the quota
share reinsured hereunder, as described in Schedule A, times the
gross amount withdrawn for any such Annuity that incurred a
partial withdrawal during the current Accounting Period; and
(b) equals the product of (i) times (ii), where:
(i) equals $230 times the quota share reinsured hereunder, as
described in Schedule A; and
(ii)equals the number of Base Annuities surrendered as "Free Looks",
in accordance with the terms of the Annuities reinsured hereunder,
during the current Accounting Period.
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ARTICLE IV
BENEFIT PAYMENTS
1. Benefit Payments. Benefit Payments, as referred to in this Agreement, means
the sum of (i) Claims, as described in Xxxxxxxxx 0 xxxxx, (xx) Cash
Surrender Values and cancellation proceeds, as described in Xxxxxxxxx 0
xxxxx, (xxx) Partial Withdrawals, as described in Paragraph 4 below, and
(iv) Annuity Payments, as described in Paragraph 8 below.
2. Claims. The Reinsurer will reimburse the Ceding Company for that portion of
Claims paid by the Ceding Company during the current Accounting Period in
accordance with the terms of the Annuities and the prospectuses, which
corresponds to the portion of the Annuities reinsured hereunder. The term
"Claims" with regard to the Base Annuity means the amount payable upon
death, including Account Value and any Base Annuity death benefit amount
guaranteed in excess of the Account Value. With regard to the Riders, the
term "Claims" means the amount guaranteed in excess of the Account Value
that is payable in accordance with the terms of the Annuity contracts.
3. Cash Surrender Values and Cancellation Proceeds. The Reinsurer will
reimburse the Ceding Company for that portion of the Cash Surrender Values
and of the cancellation proceeds paid by the Ceding Company during the
current Accounting Period, including those surrendered as "Free Looks", in
accordance with the terms of the Annuities which corresponds to the portion
of the Annuities reinsured hereunder.
4. Partial Withdrawals. The Reinsurer will reimburse the Ceding Company for
that portion of the Partial Withdrawals paid by the Ceding Company during
the current Accounting Period in accordance with the terms of the Annuities
which corresponds to the portion of the Annuities reinsured hereunder.
5. Notice. The Ceding Company will notify the Reinsurer promptly after receipt
of any information regarding Claims on the Annuities. The reinsurance claim
and copies of notification, claim papers, and proofs will be furnished the
Reinsurer upon request.
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6. Liability and Payment. The Reinsurer will accept the decision of the Ceding
Company with respect to payment of Claims owed under the contractual terms
of the Annuities and as specified under the terms of this Agreement. The
Reinsurer will pay its proportionate share of Claims to the Ceding Company
as follows:
a. The Reinsurer will pay a lump sum to the Ceding Company of its
proportionate share of death benefit proceeds regardless of the method
of death claim settlement (including the Base Annuity death benefit,
settlements by spousal continuation or 5 year deferral, as well as the
guaranteed minimum death benefit ("GMDB") Riders described in
Schedule A).
b. For Claims under the guaranteed withdrawal benefit ("GMWB") Riders,
the Reinsurer will pay its proportionate share of any Income Payments
or lump sum amount payable under the terms of the Reduction in
Contract Value provisions in the Rider reinsured hereunder. Any Income
Payments will equal a fixed amount for the life of the annuitant or,
if there are joint annuitants, the last surviving annuitant.
The Applicable Present Value Rate at the end of each Accounting Period
will be equal to (i) plus (ii), where:
(i) equals 15 basis points;
(ii)equals the USD zero-coupon interest rate for the period from the
date of which the calculation is being made to the payment date of
the cash flow being discounted. The USD zero-coupon interest rate
shall be calculated by the Reinsurer from prevailing USD LIBOR and
swap market rates as quoted on Bloomberg at the end of business
for the current Accounting Period and converted to an annual
effective basis.
7. Contested Claims. The Ceding Company will advise the Reinsurer of its
intention to contest, compromise or litigate any Claims involving the
Annuities. The Reinsurer will pay its share of the expenses of such
contests, in addition to its share of Claims, unless it chooses not to
participate. If the Reinsurer chooses not to participate, it will discharge
its liability by payment to the Ceding Company of the full amount of its
liability on the Annuity reinsured hereunder.
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8. Annuity Payments. Annuitizations under the terms of the Base Annuities will
be treated as surrenders. The Reinsurer will reimburse the Ceding Company
for Annuity Payments equal to the quota share percentage of the Annuities
times the Cash Surrender Values of such Annuities as of the date of such
annuitization. The Reinsurer will reimburse the Ceding Company for payments
made pursuant to Rider guarantees as described in Paragraph 6 above.
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ARTICLE V
RESERVES
1. Base Annuities Modified Coinsurance Reserve Adjustment.
A. The Modified Coinsurance Reserve Adjustment will be computed at the
end of each Accounting Period equal to (i) minus (ii) minus (iii),
where:
(i) equals the Modified Coinsurance Reserve, as defined in Paragraph 2
below, at the end of the current Accounting Period on the
Annuities;
(ii)equals the Modified Coinsurance Reserve, as defined in Paragraph 2
below, at the end of the preceding Accounting Period on the
Annuities; and
(iii)equals the Modified Coinsurance Reserve Investment Credit
described in Schedule C.
With respect, however, to the Accounting Period during which the
Effective Date of this Agreement occurs, the reference in (ii) above
to "the end of the preceding Accounting Period" refers to the
Effective Date of this Agreement. In the Accounting Period in which
termination of this Agreement occurs, the reference in (i) above to
"the end of the current Accounting Period" refers to the terminal
accounting date, as described in Article VIII, Paragraph 2.
B. For any Accounting Period in which the amount computed in A. above is
positive, the Reinsurer will pay the Ceding Company such amount. For
any Accounting Period in which the amount computed in A. above is
negative, the Ceding Company will pay the Reinsurer the absolute value
of such amount.
2. Modified Coinsurance Reserve. The term "Modified Coinsurance Reserve," as
used in this Agreement, means the product of (i) times [(ii) plus (iii)],
where:
(i) equals the quota share percentage of the Annuities; and
(ii)equals the sum of the product of (a) times (b), with respect to
each inforce Annuity, where:
(a) equals the Cash Surrender Value Percentage, as defined below;
and
(b) equals the Cash Surrender Value with respect to the Annuity;
and
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(iii)equals the sum of the product of (a) times (b), with respect to
each inforce Annuity, where:
(a) equals the Account Value Percentage, as defined below; and
(b) equals the Account Value, as defined in Paragraph 3 below,
with respect to the Annuity.
Cash Surrender Value Account Value
Product Percentage Percentage
------- -------------------- -------------
Choice 50% 50%
Selections 40% 60%
3. Account Value. The term "Account Value," as used in this Agreement, means
the contract value determined in accordance with the terms of the Annuities.
4. Average Account Value. The term "Average Account Value," as used in this
Agreement, means the product of 50 percent times [(i) + (ii)], where:
(i) equals the Account Value, as defined in Paragraph 3 above, as of
the beginning of the current Accounting Period; and
(ii)equals the Account Value, as defined in Paragraph 3 above, as of
the end of the current Accounting Period.
5. General Account. The term "general account," as used in this Agreement,
means the guaranteed interest options and dollar cost averaging ("DCA")
with respect to the Annuities.
6. Rider Coinsurance. The Ceding Company will deduct reserve credit in its
statutory financial statements for the quota share portion of its statutory
reserves for the Riders. Correspondingly, the Reinsurer will establish
appropriate reserves in its statutory financial statements for this quota
share portion.
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ARTICLE VI
ACCOUNTING AND SETTLEMENTS
1. Quarterly Accounting Period. Each Accounting Period under this Agreement
will be a calendar quarter, except that: (a) the initial Accounting Period
runs from the Effective Date of this Agreement through the last day of the
calendar quarter during which this Agreement is executed by both parties,
and (b) the final Accounting Period runs from the end of the preceding
Accounting Period until the terminal accounting date of this Agreement, as
described in Article VIII, Paragraph 2. However, the Reinsurer reserves the
right to adjust all accounting and settlements to a calendar year-to-date
basis.
2. Quarterly Accounting Reports. Quarterly accounting reports in the form of
Schedule B will be submitted to the Reinsurer by the Ceding Company for
each Accounting Period not later than forty five (45) days after the end of
each Accounting Period. Such reports will include information on the amount
of Reinsurance Premiums, Commission and Expense Allowance, Commission
Chargeback, Benefit Payments, Modified Coinsurance Reserve, investment
advisory and distribution fees received (referred to herein as "Investment
Advisory Fees"), Statutory Reserve and Modified Coinsurance Reserve
Investment Credit.
3. Quarterly Settlements.
A. Within forty five (45) days after the end of each Accounting Period,
the Ceding Company will pay the Reinsurer the sum of:
(i) Reinsurance Premiums determined in accordance with Article II, plus
(ii)the Commission Chargeback determined in accordance with Article
III, Xxxxxxxxx 0, xxxx
(xxx)xxx Modified Coinsurance Reserve Adjustment payable to the
Reinsurer, determined in accordance with Article V, Paragraph 1.
B. Simultaneously, the Reinsurer will pay the Ceding Company the sum of:
(i) Benefit Payments, as described in Article IV, plus
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(ii)the Commission and Expense Allowance determined in accordance with
Article III, Xxxxxxxxx 0, xxxx
(xxx)xxx Modified Coinsurance Reserve Adjustment payable to the Ceding
Company, determined in accordance with Article V, Paragraph 1.
4. Amounts Due Quarterly. Except as otherwise specifically provided in this
Agreement, all amounts due to be paid to either the Ceding Company or the
Reinsurer under this Agreement will be determined on a net basis at the end
of each Accounting Period and will be due and payable within forty five
(45) days after the end of the Accounting Period.
5. Annual Accounting Reports. The Ceding Company will provide the Reinsurer
with annual accounting reports within thirty (30) days after the end of the
calendar year for which such reports are prepared. These reports will
contain sufficient information about the Annuities to enable the Reinsurer
to prepare its annual financial reports and to verify the information
reported in Schedule B, and will include Exhibit 5 by reserve basis, Page
7, Page 28, and Schedule S of the Annual Statement.
6. Weekly Reports. Not later than seven (7) days after the end of each
calendar week, the Ceding Company will provide the Reinsurer with reports
showing more detailed information with respect to the Annuities described
under "Weekly Seriatim Data File" in Schedule B hereto on a weekly basis.
Further, the Ceding Company will provide the Reinsurer any additional data
reasonably requested by the Reinsurer from time to time with respect to the
Annuities.
7. Estimations. If the amounts, as defined in Paragraph 3 above, cannot be
determined by the dates described in Paragraph 4 above, on an exact basis,
such payments will be paid in accordance with a mutually agreed upon
formula which will approximate the actual payments. Adjustments will then
be made to reflect actual amounts when they become available.
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8. Delayed Payments. For purposes of Paragraph 4 above, if there is a delayed
settlement of a payment due, there will be an interest penalty, at the
Delayed Payment Rate described in Paragraph 9 below, for the period that
the amount is overdue. For purposes of this Paragraph, a payment will be
considered overdue thirty (30) days after the date such payment is due, and
the interest penalty will be determined by multiplying the amount due by
the product of the Delayed Payment Rate multiplied by a fraction, the
numerator of which is the number of days the amount was overdue and the
denominator of which is 360.
9. Delayed Payment Rate. The Delayed Payment Rate at the end of each
Accounting Period will be equal to 75 basis points plus the quotient of the
sum of the one month London Interbank Offered Rates (LIBOR) as published by
The Wall Street Journal at the end of each calendar month ending during the
current Accounting Period, divided by the number of calendar months ending
during the current Accounting Period.
10. Offset of Payments. All monies due either the Ceding Company or the
Reinsurer under this Agreement or any other reinsurance agreements between
the parties will be offset against each other, dollar for dollar,
regardless of any insolvency of either party. However, in the event of an
insolvency, offsets will be allowed in accordance with the statutory,
common and case laws of the state taking jurisdiction over the insolvency.
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ARTICLE VII
DURATION AND RECAPTURE
1. Duration. Except as otherwise provided herein, this Agreement is unlimited
in duration.
2. Reinsurer's Liability. The liability of the Reinsurer with respect to any
Annuity will begin simultaneously with that of the Ceding Company, but not
prior to the Effective Date of this Agreement. The Reinsurer's liability
with respect to any Annuity will terminate on the earliest of: (i) the date
such Annuity is recaptured; (ii) the date the Ceding Company's liability on
such Annuity is terminated; or (iii) the date this Agreement is terminated.
Termination of the Reinsurer's liability is subject to payments in respect
of such liability in accordance with the provisions of Article VIII of this
Agreement. In no event should the interpretation of this Paragraph imply a
unilateral right of the Reinsurer to terminate this Agreement.
However, the Reinsurer and/or the Ceding Company may, upon ninety (90) days
prior written notice to the other party, terminate this Agreement as to
annuities not yet written by the Ceding Company as of the effective date of
such termination.
3. Termination for Nonpayment of Reinsurance Premiums or Other Amounts Due. If
the Ceding Company fails to pay the Reinsurance Premiums or any other
amounts due to the Reinsurer pursuant to this Agreement, within seventy
five (75) days after the end of any Accounting Period, the Reinsurer may
terminate this Agreement, subject to thirty (30) days prior written notice
to the Ceding Company.
4. Recapture. The Annuities may be recaptured at any time upon mutual
agreement in writing between the Ceding Company and the Reinsurer. If the
Ceding Company opts to recapture, then the Ceding Company must recapture
all of the Annuities. In no event may the Ceding Company recapture anything
other than 100 percent of all Annuities.
5. Recapture Charge. In the event this Agreement is terminated in accordance
with Paragraphs 3 and 4 above, or Paragraph 6 below, a Termination Value
shall be calculated in good faith by the Reinsurer as of
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the effective date of termination according to "best practices" that are
appropriate to valuing variable annuities and related cash flows and
consistent with the terms of this Agreement. The Ceding Company shall have
sixty (60) calendar days to either accept the Termination Value as
calculated or raise objections. The parties shall cooperate with each other
in order to resolve any disagreement with respect to the Termination Value.
If the parties cannot mutually agree on the Termination Value, then the
calculation will be submitted to a nationally recognized, independent
actuarial firm or the actuarial group of a nationally recognized,
independent accounting firm (hereinafter the "Actuarial Firm"), that is
mutually acceptable to the parties for determination of a Termination Value
which is reasonably consistent with the terms of this Agreement. If the
parties cannot reach agreement as to the Actuarial Firm, then such
appointment will be decided by the President of the Society of Actuaries.
The decision of the Actuarial Firm with respect to the Termination Value
will be final and binding upon the parties. The parties will share equally
in the costs and expenses, if any, incurred by the Actuarial Firm and the
Society of Actuaries.
It is recognized and acknowledged by both parties that "best practices" for
valuing cash flows linked to variable annuities include:
i) commencing with seriatim in force data as of the effective date of
termination;
ii) fixing actuarial assumptions such as lapse, mortality, mortality
improvement, utilization, etc. within a range deemed consistent with
market standards;
iii)determining market inputs for interest rates, implied volatilities,
and other market inputs; and
iv) valuing the present value of all the future cash flows using the
inputs and assumptions determined above.
The discount rate used in the present value of future cash flows described
above will not reflect any credit deterioration by the Ceding Company since
the Effective Date of this Agreement.
If the projected Termination Value is positive, the absolute value shall be
paid as a Recapture Charge to the Reinsurer by the Ceding Company. Payment
of such amount will be made within thirty (30) days of receipt of the
calculation. The terminal accounting date will be the effective date of
termination pursuant to this Agreement.
- 20 -
6. Internal Replacements. Should the Ceding Company, its affiliates,
successors or assigns, initiate a program of Internal Replacement that
would include any of the Annuities, the Ceding Company will immediately
notify the Reinsurer. Such program would not include any replacements
initiated by any distributors independent of the Ceding Company. The
Reinsurer may elect to treat such Annuities as recaptured rather than
surrendered, and such recapture will apply to all Annuities. For purposes
of this Agreement, the term "Internal Replacement" means any instance in
which an Annuity or any portion of the cash value of an Annuity is
exchanged for another policy or annuity, not covered under this Agreement,
which is written by the Ceding Company, its affiliates, successors or
assigns.
- 21 -
ARTICLE VIII
TERMINAL ACCOUNTING AND SETTLEMENT
1. Terminal Accounting. In the event that this Agreement is terminated in
accordance with Article VII, Paragraph 3, or all reinsurance under this
Agreement is recaptured in accordance with Article VII, Paragraphs 4 and 6,
a Terminal Accounting and Settlement will take place.
2. Date. The terminal accounting date will be the earliest of: (1) the
effective date of recapture pursuant to any notice of recapture given under
this Agreement, (2) the effective date of termination pursuant to any
notice of termination given under this Agreement, or (3) such other date
mutually agreed to in writing.
3. Settlement. The Terminal Accounting and Settlement will consist of:
(a) the quarterly settlement as provided in Article VI, Paragraph 3,
computed as of the terminal accounting date;
(b) payment by the Ceding Company to the Reinsurer of a Terminal Reserve
equal to the Modified Coinsurance Reserve, as defined in Article V,
Paragraph 2, on the Annuities as of the terminal accounting date;
(c) payment by the Reinsurer to the Ceding Company of a Terminal Reserve
Adjustment equal to the Modified Coinsurance Reserve, as defined in
Article V, Paragraph 2, on the Annuities as of the terminal accounting
date; and
(d) payment by the Ceding Company to the Reinsurer of any Recapture Charge
determined in accordance with Article VII, Paragraph 5, computed as of
the terminal accounting date.
If the calculation of the Terminal Accounting and Settlement produces an
amount owing to the Ceding Company, such amount will be paid by the
Reinsurer to the Ceding Company. If the calculation of the Terminal
Accounting and Settlement produces an amount owing to the Reinsurer, such
amount will be paid by the Ceding Company to the Reinsurer.
- 22 -
4. Supplementary Accounting and Settlement. In the event that, subsequent to
the Terminal Accounting and Settlement as provided above, a change is made
with respect to any amounts due, a supplementary accounting will take place
pursuant to Paragraph 3 above. Any amount owed to the Ceding Company or to
the Reinsurer by reason of such supplementary accounting will be paid
promptly upon the completion thereof.
- 23 -
ARTICLE IX
REPRESENTATIONS
Representations. The Ceding Company acknowledges that, at the Reinsurer's
request, it has provided the Reinsurer with the Ceding Company Data described
in Schedule D prior to the execution of this Agreement by the Reinsurer. The
Ceding Company represents that all factual information contained in the Ceding
Company Data is complete and accurate as of the date the document containing
the information was prepared. The Ceding Company further represents that any
assumptions made in preparing the Ceding Company Data were based upon informed
judgment and are consistent with sound actuarial principles. The Ceding Company
further represents that it is not aware of any omissions, errors, changes or
discrepancies that would materially affect the Ceding Company Data. The
Reinsurer has relied on Ceding Company Data and the foregoing representations
in entering into this Agreement.
- 24 -
ARTICLE X
ARBITRATION
1. General. Except with respect to the method of resolving a dispute over the
calculation of a Termination Value, as set forth in Article VII, Paragraph
5, all disputes and differences between the Ceding Company and the
Reinsurer on which an agreement cannot be reached will be decided by
arbitration. The arbitrators will construe this Agreement from the
standpoint of practical business and equitable principles and the customs
and practices of the insurance and reinsurance business, rather than from
the standpoint of strict law. Moreover, the arbitrators shall be released
from judicial formalities and shall not be bound by strict rules of
procedure and evidence. The parties intend that the arbitrators will make
their decision with a view to effecting the intent of this Agreement.
2. Method. Three arbitrators will decide any differences. They must be
impartial and present or former officers of life insurance companies other
than the parties to this Agreement or any company owned by, or affiliated
with, either party. One of the arbitrators is to be appointed by the
Reinsurer, another by the Ceding Company, and the two arbitrators thus
appointed will select a third arbitrator before arbitration begins. Should
one of the parties decline to select an arbitrator within ninety (90) days
after the date of any written request to do so or should the two
arbitrators selected by the parties not be able to agree upon the choice of
a third, the appointment(s) will be left to the XXXX Reinsurance and
Insurance Arbitration Society - US ("XXXXX - US") umpire selection process.
The arbitrators will decide by a majority of votes and their decision will
be final and binding upon the parties. The arbitrators will hand down their
decision within forty-five (45) days of the close of the arbitration
proceedings. The costs of arbitration, including the fees of the
arbitrators, will be shared equally by the parties unless the arbitrators
decide otherwise. Any counsel fees incurred by a party in the conduct of
arbitration will be paid by the party incurring the fees.
- 25 -
ARTICLE XI
INSOLVENCY
Ceding Company's Insolvency. In the event of the Ceding Company's insolvency,
any payments due the Ceding Company from the Reinsurer pursuant to the terms of
this Agreement will be made directly to the Ceding Company or its conservator,
liquidator, receiver or statutory successor. The reinsurance will be payable by
the Reinsurer on the basis of the liability of the Ceding Company under the
Annuities without diminution because of the insolvency of the Ceding Company.
The conservator, liquidator, receiver or statutory successor of the Ceding
Company will give the Reinsurer written notice of the pendency of a claim
against the Ceding Company on any Annuity within a reasonable time after such
claim is filed in the insolvency proceeding. During the pendency of any such
claim, the Reinsurer may investigate such claim and interpose in the Ceding
Company's name (or in the name of the Ceding Company's conservator, liquidator,
receiver or statutory successor), in the proceeding where such claim is to be
adjudicated, any defense or defenses which the Reinsurer may deem available to
the Ceding Company or its conservator, liquidator, receiver or statutory
successor. The expense thus incurred by the Reinsurer will be chargeable,
subject to court approval, against the Ceding Company as a part of the expense
of liquidation to the extent of a proportionate share of the benefit that may
accrue to the Ceding Company solely as a result of the defense undertaken by
the Reinsurer.
Reinsurer's Insolvency. In the event of the Reinsurer's insolvency, the Ceding
Company may recapture the Annuities reinsured hereunder, subject to prior
written notice. Such recapture will be subject to the payment of a Terminal
Accounting and Settlement, as described in Article VIII, Paragraph 3.
Insolvency, for purposes of this Paragraph, is defined to be: (a) the filing of
voluntary or involuntary petition for liquidation by or on behalf of the
Reinsurer, (b) any assignment for the benefit of creditors, or (c) the
appointment of a conservator, liquidator, receiver, or statutory successor to
conserve or administer the Reinsurer's properties or assets.
- 26 -
ARTICLE XII
EXECUTION AND EFFECTIVE DATE
In witness of the above, this Agreement is executed in duplicate on the dates
indicated below with an Effective Date of July 1, 2008.
GENWORTH LIFE AND ANNUITY INSURANCE
ATTEST: COMPANY ("Ceding Company")
By: By:
---------------------------------- ---------------------------------
Title: Title:
---------------------------------- ---------------------------------
Date: Date:
---------------------------------- ---------------------------------
RGA REINSURANCE COMPANY
ATTEST: ("Reinsurer")
By: By:
---------------------------------- ---------------------------------
Title: Title:
---------------------------------- ---------------------------------
Date: Date:
---------------------------------- ---------------------------------
- 27 -
SCHEDULE A
ANNUITIES AND RISKS REINSURED
Annuities and Risks Reinsured. The amount of reinsurance under this Agreement
will be a 50 percent quota share of the Ceding Company's net liability on those
variable annuities, and those riders attached to those variable annuities,
which are issued by the Ceding Company on or after the Effective Date of this
Agreement and described below:
Base Annuities:
Form Number
Product (plus any state variation) Plan Code
------- -------------------------- -----------
Choice 2003 (unbundled) 1.5%
9/2/03 P1154 GECHC03
Choice 2003 (unbundled) 3.0% P1154 GECHOICE03
Choice LIP 2007 P1154 CHCLIP07
Choice LIP 2007 Joint P1154 CHCLIP07J
Choice LIP 2008 P1154 4/00 CHCLIP08
Choice Oregon 5/03 3% P1154 4/00 SPVCHCOR03
Choice Oregon 71+ 5/03 3.0% P1154 4/00 SPV2CHOR03
Selections 2003 (unbundled) 1.5%
9/2/2003 P1156 with P5176 GESHRT03
Selections 2003 (unbundled) 3.0% P1156 with P5176 GESHORT03
Selections LIP 2007 P1156 with P5176 SELLIP07
Selections LIP 2007 Joint P1156 with P5176 SELLIP07J
Selections LIP 2008 P1156 with P5176 SELLIP08
Riders:
Form Number
Rider (plus any state variation) Plan Code
----- -------------------------- ---------------------------
Greater of 5% Rollup P5224 GMDB5C03 (5% Rollup),
or Annual Ratchet DB1RATC03 (Annual Ratchet)
GMDB Optional 5% Rollup P5223 GMDB503
Lifetime Income Plus
2007 (LIP) P5339 LIPR07
Lifetime Income Plus
Rider 2008 (LIP) P5362 LIPR08
Lifetime Income Plus
2008 with optional
DB Rider P5362DB LIPR08DB
Annual Step-Up (ASDB) P5222 DB1RAT03
Earnings Protection
Rider (EPR) P5239 TEDBR01, TEDBR03
"Net liability" will mean the Ceding Company's liabilities on the Annuities.
During the term of this Agreement, the Ceding Company and its affiliates will
retain not less than 50 percent of the liability on the Annuities.
- 28 -
SCHEDULE B
QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS
FROM CEDING COMPANY TO REINSURER
Accounting Period: _________________
Calendar Year: ____________________
Date Report Completed: _____________
1. Reinsurance Premiums (Article II) ______
2. Benefit Payments (Article IV)
a. Claims ______
b. Cash Surrender Values and Cancellation Proceeds ______
c. Partial Withdrawals ______
d. Annuity Payments ______
Benefit Payments = a + b + c + d ______
3. Modified Coinsurance Reserve Adjustment (Article V, Paragraph 1)
a. Modified Coinsurance Reserve end of current Accounting
Period ______
b. Modified Coinsurance Reserve end of preceding Accounting
Period ______
c. Modified Coinsurance Reserve Investment Credit (Schedule C) ______
Modified Coinsurance Reserve Adjustment = a - b - c ______
4. Commission and Expense Allowance (Article III, Paragraph 1) ______
5. Commission Chargeback (Article III, Paragraph 2)
6. Cash Settlement = 1 - 2 - 3 - 4 + 5 ______
Commission and Expense Allowance (Article III, Paragraph 1)
(i) Commission Rate x Reinsurance Premiums ______
(ii) Account Value Rate x quota share reinsured x Average Account
Value, for current Accounting Period ______
(iii) $43.75 x quota share reinsured x number of Base Annuities
outstanding at end of current Accounting Period ______
(iv) $230 x quota share reinsured x number of Base Annuities issued
during current Accounting Period ______
(v) Investment Credit ______
Commission and Expense Allowance equals (i) + (ii) + (iii) + (iv) - (v) ______
Modified Coinsurance Reserve (Article V, Paragraph 2)
(i) Quota share reinsured hereunder ______
(ii) Sum of [Cash Surrender Value Percentage x Cash Surrender
Values] with respect to each inforce Annuity ______
- 29 -
(iii) Sum of [Account Value Percentage x Account Value] with respect to
each inforce Annuity ______
(iv) Modified Coinsurance Reserve = (i) x [(ii) + (iii)] ______
Modified Coinsurance Reserve Investment Credit (Schedule C)
Modified Coinsurance Reserve Investment Credit = ______
Weekly Seriatim Data File
. Company Code
. Policy Number
. Broker Dealer Channel
. Plan Code
. Annuitant Issue Date
. Annuitant Issue Age
. Annuitant Date of Birth
. Annuitant Gender
. Joint Annuitant Issue Age
. Joint Annuitant Date of Birth
. Joint Annuitant Gender
. Issue State (annuitant)
. Resident State (annuitant)
. Total Account Value
. Calendar year to date Premiums
. GMDB Type
. GMDB Rider Charge Rate
. GMDB Termination Date
. Annual Step-Up GMDB Value (generated with month end values, rather than
values as of run date)
. 5% Rollup GMDB Value (generated with month end values, rather than
values as of run date)
. Earnings Protector GMDB Base (generated with month end values, rather
than values as of run date)
. Protected Payment Death Benefit Base (generated with month end values,
rather than values as of run date)
. GMWB Type
. GMWB Rider Charge Rate
. GMWB Benefit Base
. GMWB Rollup Value
. GMWB Ratchet Value
. GMWB Latest Reset Date
. GMWB Termination Date
. Systematic Withdrawal Indicator
. Sum of Initial premiums and all Subsequent premiums under the contract,
from inception through Valuation Date
. Sum of all Withdrawals under the contract, including any Withdrawal
Charges, from inception through Valuation Date
. Withdrawal Indicator (if contract has active rider and there has been at
least one withdrawal after the later of Rider Effective Date or most
recent Reset Date)
. Qualified/non-qualified indicator
. Portfolio Option indicator
- 30 -
Weekly Seriatim Fund Detail File
. Company Code
. Policy Number
. Fund Name
. Account Value
. Percentage of Total
Weekly Seriatim GMWB Systematic Withdrawal File
. Company Code
. Policy
. Start Date
. Stop Date
. Frequency
. Withdrawal Type
. Amount
. Percentage
Quarterly Seriatim Data File
As of the end of each calendar quarter, the Ceding Company will send the
Reinsurer data files the same seriatim data as specified in the weekly files
described above as well as the following additional seriatim data:
. Company Code
. Policy Number
. Distribution Channel
. Annuity Termination Date
. Total Fund Value
. Total Cash Surrender Value
. Premiums received during the quarter
. Premium Bonus / Credit Enhancement Amount
. Policy fee Collected during the quarter
. Rider Fees collected during the quarter (by rider)
. Account Value Released by Death during the quarter
. Account Value Released by Full or Partial Surrender or Annuitization
during the quarter
. Cash surrender Amount paid on Full or Partial Surrender or Annuitization
during the quarter
. Total Death Benefit amount paid during the quarter (including rider
benefits)
. Payment amount during the quarter after the annuity value becomes zero
. G34 Statutory reserves
. G34 Tax reserves
Quarterly Investment Returns
. Fund Name
. Annualized Fund Return for the Quarter
. Gross Investment Advisory Fee
. Net Investment Advisory Fee
- 31 -
SCHEDULE C
MODIFIED COINSURANCE RESERVE INVESTMENT CREDIT
Modified Coinsurance Reserve Investment Credit. The Modified Coinsurance
Reserve Investment Credit, for any Accounting Period, equals the accrued
investment income and capital gains and losses, realized and unrealized,
allocated to the portion of the annuities reinsured hereunder during the
current Accounting Period with respect to the Segregated Asset Portfolio held
by the Ceding Company, calculated by the Ceding Company on a statutory basis,
gross of any Investment Advisory Fees paid by the Ceding Company during the
current Accounting Period, but not adjusted for income taxes, changes in any
provisions for taxes or charges for mortality and expense risks. Namely, the
Segregated Asset Portfolio held by the Ceding Company shall include those funds
and any portfolios in which the assets related to the annuities reinsured
hereunder may be invested. The Ceding Company will notify the Reinsurer
promptly in writing of any changes in such funds and portfolios.
Notwithstanding the preceding, for purposes of administrative simplicity, a
mathematical equivalent to such accrued investment income and capital gains and
losses, realized and unrealized, will be used to determine the Modified
Coinsurance Reserve Investment Credit equal to the product of (i) times (ii),
where:
(i) equals the quota share percentage of the annuities reinsured hereunder
as described in Schedule A; and
(ii)equals the net of the following:
(a) the Account Value, as defined in Article V, Paragraph 3, as of the
end of the current Accounting Period, minus
(b) the Account Value, as defined in Article V, Paragraph 3, as of the
beginning of the current Accounting Period, plus
(c) the product of (1) times [(2) minus (3) plus (4)], where:
(1) equals the Ceding Company's Internal Borrowing Rate, as
defined below, as of the end of the current Accounting Period;
- 32 -
(2) equals 0.50 times [(A) plus (B)], where:
(A) equals the sum of items (ii) plus (iii), as defined in
Article V, Paragraph 2, as of the beginning of the current
Accounting Period; and
(B) equals the sum of items (ii) plus (iii), as defined in
Article V, Paragraph 2, as of the end of the current
Accounting Period;
(3) equals the Average Account Value, as defined in Article V,
Paragraph 4, for the current Accounting Period; and
(4) equals the Average Account Value, as defined in Article V,
Paragraph 4, for the current Accounting Period, with respect
to the general account, minus
(d) the interest credited to the policyholders on funds in the general
account, including any policy loans, during the current Accounting
Period with respect to the Annuities reinsured hereunder, plus
(e) the Account Value, as defined in Article V, Paragraph 3, released
with respect to the Annuities reinsured hereunder for which Claims
are paid during the current Accounting Period in accordance with
Article IV, Paragraph 2, plus
(f) the Account Value, as defined in Article V, Paragraph 3, released
with respect to the Annuities reinsured hereunder for which Cash
Surrender Values are paid during the current Accounting Period in
accordance with Article IV, Paragraph 3, plus
(g) the Account Value, as defined in Article V, Paragraph 3, released
with respect to the Annuities reinsured hereunder for which
Partial Withdrawals are paid during the current Accounting Period
in accordance with Article IV, Paragraph 4, plus
(h) the Account Value, as defined in Article V, Paragraph 3, released
with respect to the Annuities reinsured hereunder for which
Annuity Payments are paid during the current Accounting Period in
accordance with Article IV, Paragraph 8, plus
(i) policy fee collected by the Ceding Company during the current
Accounting Period, minus
(j) the gross premiums collected by the Ceding Company during the
current Accounting Period with respect to the Annuities reinsured
hereunder, minus
- 33 -
(k) the credit enhancement credited to the policyholder in accordance
with the terms of the Annuities reinsured hereunder during the
current Accounting Period with respect to the Annuities reinsured
hereunder, plus
(l) the mortality and expense charges calculated by the Ceding Company
during the current Accounting Period with respect to the Annuities
reinsured hereunder, plus
(m) the GMDB rider and living benefit rider charges calculated by the
Ceding Company during the current Accounting Period with respect
to the Riders reinsured hereunder.
The Internal Borrowing Rate at the end of each Accounting Period will be equal
to the quotient of [(I) plus (II)] divided by (III), where:
(I) equals 15 basis points;
(II)equals the sum of the one month London Interbank Offered Rates (LIBOR)
as published by The Wall Street Journal at the end of each business
day ending during the current Accounting Period, divided by the number
of business days ending during the current Accounting Period; and
(III)equals four.
- 34 -
SCHEDULE D
CEDING COMPANY DATA
. CD Rom received on September 19, 2007 by Xxxxx Xxxxxx of the Reinsurer
from Xxxxx Xxxx of the Ceding Company with the following information on
the Lifetime Income Plus 2007 annuity:
. Product narrative
. Prospectus
. Contract
. Base annuity contract including optional DBs
. Actuarial documentation
. Email dated January 29, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx and Xxxxx Xxxxxx of the Reinsurer, with a copy to Xxxxx
Xxxxx and Xxxx Xxxxxxx of the Ceding Company, containing a Zip file with
the following:
. A comparison of the GMWB benefit riders, as they have evolved over
time
. Pricing assumptions for the 2007 and 2008 versions
. May 2007 prospectus
. December supplement prospectus with the LIP 08 introduction
. Email dated March 6, 2008, from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx of the Reinsurer and Xxxxx Xxxxx and Xxxx Xxxxxxx of the
Ceding Company with a copy to Xxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxx,
Xxxx Xxxxxx and Xxxxx Xxxxx of the Reinsurer containing a Zip file with
the following:
. Functional narratives of GMWB riders (GWA, LIP I, LIP II, LIP 2007,
LIP 2008)
. A PowerPoint presentation of features and some assumptions across
most of the GMWB riders reinsured hereunder
. Actuarial Documentation documents for LIP 2008 assuming that Choice
is the Base Annuity
. A summary of in-force (by products, issue years and demographics),
utilization experience, production and M&E charges with respect to
the Annuities reinsured hereunder
. Email dated March 6, 2008, from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx of the Reinsurer and Xxxxx Xxxxx and Xxxx Xxxxxxx of the
Ceding Company with a copy to Xxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxx,
Xxxx Xxxxxx and Xxxxx Xxxxx of the Reinsurer, containing a PDF file with
the prospectuses for the Choice and Selections Annuities reinsured
hereunder.
. Email dated March 25, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx of the Reinsurer and Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxxx
X. Xxxxxx of the Ceding Company, containing information on the following
assumptions:
. Mortality
. DCA rates
. Maintenance expenses
. Policy fees
. Clarification with respect to the basic death benefit with partial
withdrawal on page A-1 in the prospectuses for the Choice and
Selections Annuities reinsured hereunder
. Election rate of PPDB
. Email dated May 6, 2008 from Xxxxx Xxxxxx of the Ceding Company to Xxxxx
Xxxxxx and Xxxxx Xxxxxx of the Reinsurer and Xxxx Xxxxxxx and Xxxxx
Xxxxx of the Ceding Company notifying of the material that was sent via
Federal Express to RGA on May 6, 2008 regarding the Ceding Company's
Retire Ready variable annuity series and containing Zip files with the
following:
. Product Feature Summaries
. Income Rider Specifications of LIP 2008 and LIP 2007
. Optional Death Benefit Rider Specifications
. Sample policy forms of the Choice Annuities reinsured hereunder
. CD Rom received on May 7, 2008 by Xxxxx Xxxxxx of the Reinsurer from
Xxxxx Xxxxxx of the Ceding Company with the following information on the
Ceding Company's Retire Ready variable annuity series (part 1):
. Product Feature Summaries
- 35 -
. Income Rider Specifications of LIP 2008 and LIP 2007
. Optional Death Benefit Rider Specifications
. Sample policy forms of the Choice Annuities reinsured hereunder
. Prospectuses of Choice, Selections, Extra, Freedom, Foundation,
Personal Income Design and Bonus
. Email dated May 7, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding Company
to Xxxxx Xxxxxx and Xxxxx Xxxxx of the Ceding Company and Xxxxx Xxxxxx
and Xxxxx Xxxxxx of the Reinsurer, with a copy to Xxxx Xxxxxxx of the
Ceding Company with an excel file of the inventory summary
. CD Rom received May 8, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company by Xxxxx Xxxxxx of the Reinsurer with the following information
on the Ceding Company's Retire Ready variable annuity series (part 2):
. Experience Study on mortality, lapse and utilization rates
. Assumptions on lapse and GMWB utilization
. Commission and General Expense Assumptions
. Inforce Dataset
. General Assumptions
. Fund Information
. Request for Final Quote RESPONSE
. Email dated May 16, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding Company
to Xxxxx Xxxxxx and Xxxxx Xxxxxx of the Reinsurer and Xxxxx Xxxxxx of
the Ceding Company with a copy to Xxxx Xxxxxxx and Xxxxx Xxxxx of the
Ceding Company, containing excel files of Variable Comp Options, LIP08
Utilization Summary, a PDF file with LIP08 training material and a text
file with GMWB Utilization Assumptions. This email also contains
information on the following assumptions:
. Sales of LIP 2007
. Mortality
. Lapse rates
. GMWB utilization assumptions
. Election rates for all riders
. Email dated May 21, 2008, from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxxx and Xxxxx Xxxxxx of the Reinsurer and Xxxxx
Xxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxxx of the Ceding Company with a copy
to Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxx of the
Reinsurer, containing an excel file of an Appendix of Responses and a
Zip file with Product Feature Summaries. The email also contains
information on the following assumptions:
. Production
. Clarification of the fields in the Access database
. Utilization of LIP 2008
. Email dated May 22, 2008, from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxxx and Xxxxx Xxxxxx of the Reinsurer and Xxxxx
Xxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxxx of the Ceding Company with a copy
to Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxx of the
Reinsurer, containing information related to mortality and
product-specific information
. Email dated May 28, 2008, from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxx and Xxxxx Xxxxx of the Reinsurer with a copy to
Xxxxx Xxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxxx of the Ceding Company and
Xxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxx of the Reinsurer containing a
html file on the DCA rate with respect to Annuities reinsured hereunder
and an Excel file with 176 Annuities which should be in the separate
account instead of the fixed account. The email also contains
information on the following:
. The commission to be paid under this Agreement
. Fixing an error in the inforce date file "Attachment for VA
Reinsurance.xls"
. DCA rates
. Email dated June 2, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding Company
to Xxxxx Xxxxx and Xxxxx Xxxxx of the Reinsurer with a copy to Xxxxx
Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxxx and Xxxx Xxxxxx of the Reinsurer and
Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxx of the Ceding Company,
containing an excel file of Fund Ids Revised.
. Email dated June 11, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxx and Xxxxx Xxxxx of the Reinsurer with a copy to
Xxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxxx and Xxxx Xxxxxx of the Reinsurer
and Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxx of the Ceding Company
containing a ZIP file on required investment strategies.
- 36 -
. Email dated June 19, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxxx and Xxxxx Xxxxxx of the Reinsurer with a copy to
Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxx of the Ceding Company and
Xxxxxx Xxxx, Xxxx Xxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxx of the Reinsurer
containing a ZIP file on updated inforce data summary with respect to
the Annuities reinsured hereunder.
. Email dated June 23, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxxx of the Reinsurer containing a ZIP file on
updated inforce data summary for the 2008 issues of Annuities reinsured
hereunder.
. Email dated June 24, 2008 from Xxxxxx Xxxxxxxx, Xx. of the Ceding
Company to Xxxxx Xxxxx of the Reinsurer with a copy to Xxxxx Xxxxx of
the Reinsurer which discussed joint variable Annuities reinsured
hereunder in the inforce data.
. Annuities that elect the "free look" option will be treated as if such
Annuities were not reinsured under this Agreement.
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AMENDMENT ONE
ATTACHED TO AND MADE A PART OF THE
REINSURANCE AGREEMENT NUMBER 708-282
BETWEEN
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
"Ceding Company"
AND
RGA REINSURANCE COMPANY
"Reinsurer"
708-282-A1
The Ceding Company and the Reinsurer agree to amend this Reinsurance Agreement
as follows:
I. ARTICLE III, ALLOWANCES, Paragraph 1, is replaced in its entirety by the
following:
1. Commission and Expense Allowance. The Reinsurer will pay the Ceding
Company a Commission and Expense Allowance for each Accounting Period
equal to the net of:
(i) the product of (a) times (b), where:
(a) equals the Commission Rate, as specified in the table below;
and
Commission Rate
Issue Age ----------------
Range For The Following Issue Dates Choice Selections
--------- ----------------------------- ------ ----------
0 - 75 Prior to December 8, 2008 7.72% 7.02%
On or after December 8, 2008 7.85% 6.22%
76 - 80 Prior to December 8, 2008 7.72% 5.72%
On or after December 8, 2008 7.85% 4.92%
81 + Prior to December 8, 2008 6.72% 4.42%
On or after December 8, 2008 6.85% 3.62%
(b) equals the Reinsurance Premiums determined in accordance with
Article II, plus
(ii)the product of (a) times (b), where:
(a) equals the Account Value Rate, as specified in the table
below, times the quota share reinsured hereunder, as described
in Schedule A; and
Account Value Rate
----------------
Policy Year Choice Selections
----------- ------ ----------
1 - 6 0.03% 0.205%
7 + 0.205% 0.205%
(b) equals the Average Account Value, determined in accordance
with Article V, Paragraph 4, for the current Accounting
Period, plus
(iii)the product of (a) times (b), where:
(a) equals $43.75 times the quota share reinsured hereunder, as
described in Schedule A; and
(b) equals the number of Base Annuities reinsured hereunder
outstanding as of the end of the current Accounting Period,
plus
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(iv)the product of (a) times (b), where:
(a) equals $230 times the quota share reinsured hereunder, as
described in Schedule A; and
(b) equals the number of Base Annuities issued during the current
Accounting Period, minus
(v) the Investment Credit, as defined below.
The Investment Credit, which will be paid by the Ceding Company to the
Reinsurer pursuant to item (v) above, is included to offset expenses
relating to the promotion of additional investments in the underlying
funds and expenses relating to the maintenance of customer accounts in
item (iii) above, shall equal the product of (a) times (b), where:
(a) equals 0.0975 percent times the quota share reinsured
hereunder, as described in Schedule A; and
(b) equals the Average Account Value, determined in accordance
with Article V, Paragraph 4, for the current Accounting Period.
The 0.0975 percent factor shall be recalculated from time to time, but
no more frequently than annually, using a methodology that is mutually
acceptable to both parties.
II. SCHEDULE A, ANNUITIES AND RISKS REINSURED, is replaced in its entirety by
the following:
Annuities and Risks Reinsured. The amount of reinsurance under this
Agreement will be a 50 percent quota share of the Ceding Company's net
liability on those variable annuities, and those riders attached to those
variable annuities, which are issued by the Ceding Company on or after the
Effective Date of this Agreement and described below:
Base Annuities:
Form Number
Product (plus any state variation) Plan Code Issued On Or After
------- -------------------------- ----------- ------------------
Choice 2003 (unbundled) 1.5% 9/2/03 P1154 GECHC03 July 1, 2008
Choice 2003 (unbundled) 3.0% P1154 GECHOICE03 July 1, 2008
Choice LIP 2007 P1154 CHCLIP07 July 1, 2008
Choice LIP 2007 Joint P1154 CHCLIP07J July 1, 2008
Choice LIP 2008 P1154 4/00 CHCLIP08 July 1, 2008
Choice with LIPS 2008 Rider P1154 CHCLPS08 December 8, 2008
Choice Oregon 5/03 3% P1154 4/00 SPVCHCOR03 July 1, 2008
Choice Oregon 71+ 5/03 3.0% P1154 4/00 SPV2CHOR03 July 1, 2008
Selections 2003 (unbundled) 1.5% 9/2/2003 P1156 with P5176 GESHRT03 July 1, 2008
Selections 2003 (unbundled) 3.0% P1156 with P5176 GESHORT03 July 1, 2008
Selections LIP 2007 P1156 with P5176 SELLIP07 July 1, 2008
Selections LIP 2007 Joint P1156 with P5176 SELLIP07J July 1, 2008
Selections LIP 2008 P1156 with P5176 SELLIP08 July 1, 2008
Selections with LIPS 2008 Rider P1156 SELLPS08 December 8, 2008
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Riders:
Form Number
Rider (plus any state variation) Plan Code Issued On Or After
----- -------------------------- ------------------- ------------------
Greater of 5% Rollup or Annual Ratchet P5224 GMDB5C03 (5% July 1, 2008
Rollup), DB1RATC03
(Annual Ratchet),
DB1CHC01 (Inherent
1 Year Ratchet)
GMDB Optional 5% Rollup P5223 GMDB503 July 1, 2008
Lifetime Income Plus 2007 (LIP) P5339 LIPR07 July 1, 2008
Lifetime Income Plus Rider 2008 (LIP) P5362 LIPR08 July 1, 2008
Lifetime Income Plus 2008 with optional DB Rider P5362DB LIPR08DB July 1, 2008
Annual Step-Up (ASDB) P5222 DB1RAT03 July 1, 2008
Earnings Protection Rider (EPR) P5239 TEDBR01, TEDBR03 July 1, 2008
Lifetime Income Plus Solutions (LIPS) Rider 2008 P5409 5/08 LIPS08 December 8, 2008
Lifetime Income Plus Solutions Rider 2008 with optional DB
Rider P5409DB 5/08 LIPS08DB December 8, 2008
"Net liability" will mean the Ceding Company's liabilities on the Annuities.
During the term of this Agreement, the Ceding Company and its affiliates
will retain not less than 50 percent of the liability on the Annuities.
III.The following is added to SCHEDULE D, CEDING COMPANY DATA:
. Email dated June 27, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx of the Reinsurer with a copy to Xxxxx Xxxxx, Xxxx Xxxxxxx,
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx, Xx. of the Ceding Company
containing a ZIP file with the Lifetime Income Plus Solutions rider
("LIPS") pricing assumptions and comparison of utilization rates between
LIPS and LIP 2008. The email also contains main product changes from the
Lifetime Income Plus Rider 2008 ("LIP 2008") to LIPS and answers to
questions about LIPS.
. Email dated June 27, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxxx of the Reinsurer and Xxxxx Xxxxx of the Ceding Company with
a copy to Xxxx Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx Xxxxxxxx, Xx. of the
Ceding Company containing answers to questions about LIPS assumptions.
. Email dated August 22, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxxx Xxxx of the Reinsurer with a copy to Xxxxxx X. Xxxxxx and Xxxxxx
Xxxxxxxx of the Ceding Company and Denis
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Xxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxx of the Reinsurer containing answers
to questions about LIPS profitability from the Reinsurer during a call
to Xxxxx Xxxx of the Ceding Company on August 19, 2008.
. Email dated August 27, 2008 from Xxxxx Xxxxxx of the Ceding Company to
Xxxxx Xxxxx of the Reinsurer with a copy to Xxxxx Xxxxx, Xxxx Xxxxxxx,
Xxxx Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx Xxxxxxxx of the Ceding
Company and Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxxx Xxxx of
the Reinsurer containing a comparison of LIPS to LIP 2008.
. Email dated September 18, 2008 from Xxxxxx X. Xxxxxx of the Ceding
Company to Xxxxx Xxxxx of the Reinsurer with a copy to Xxxxx Xxxxxx of
the Ceding Company and Xxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxx of the
Reinsurer containing a ZIP file with a cell by cell analysis of the
changes from LIP 2008 to LIPS.
In witness of the above, this Amendment One is executed in duplicate on the
dates indicated below, with an Effective Date of December 8, 2008.
ATTEST: GENWORTH LIFE AND ANNUITY INSURANCE
COMPANY ("Ceding Company")
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
ATTEST: RGA REINSURANCE COMPANY
("Reinsurer")
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
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