[NELICO/EXETER - AGREEMENT NO. 15890]
CONFIDENTIAL
PARTIAL COMMUTATION AGREEMENT
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THIS PARTIAL COMMUTATION AGREEMENT, dated as of November 3, 2014 (the
"Execution Date"), (this "Agreement") is made and entered into by and between
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EXETER REASSURANCE COMPANY, LTD., a life insurance company organized under the
laws of the State of Delaware (the "Reinsurer"), and NEW ENGLAND LIFE INSURANCE
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COMPANY, a Massachusetts insurance company (the "Company").
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WHEREAS, the Reinsurer provides reinsurance coverage to the Company in
respect of certain liabilities arising out of contract riders ("Liabilities")
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issued by the Company in connection with certain variable annuities issued by
the Company (the "Reinsured Contracts"), in accordance with the terms of an
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Amended and Restated Automatic Reinsurance Agreement, dated as of July 1, 2004,
as amended (the "Reinsurance Agreement"); and
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WHEREAS, the Company and the Reinsurer desire a full and final settlement,
discharge and release of any and all of each of their respective liabilities,
duties and obligations under the Reinsurance Agreement for all Liabilities
arising under all Reinsured Contracts except for those Reinsured Contracts whose
Liabilities have been retroceded in whole or in part by the Reinsurer pursuant
to the retrocession agreements set forth on Appendix A attached hereto (the
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Reinsured Contracts subject to such settlement, discharge and release, the
"Commuted Reinsured Contracts").
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NOW, THEREFORE, the Company and the Reinsurer (each a "Party", and
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together, the "Parties") agree as follows:
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Article I.
DEFINITIONS
Section 1.2. DEFINITIONS. For purposes of this Agreement, the following
terms have the respective meanings set forth below:
"Applicable Law" means any law, statute, ordinance, regulation, order,
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injunction, judgment, decree, constitution or treaty enacted, promulgated,
issued, enforced or entered by any Governmental Authority applicable to any
Person or such Person's businesses, properties, assets or rights, as may be
amended from time to time.
"Governmental Authority" means, with respect to a Party, any governmental
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agency or authority, quasi-governmental agency or authority, international body,
or self-regulatory agency, empowered under law to regulate the business of, or
taxes owed by, such Party within its jurisdiction.
"Person" means an individual, corporation, partnership, joint venture,
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limited liability company, association, trust, unincorporated organization,
Governmental Authority or other entity.
Article II.
COMMUTATION
Section 2.1. COMMUTATION. Effective as of 12:01 a.m. New York time on
November 1, 2014 (the "Effective Time"), the Parties hereby commute one hundred
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percent (100%) of all liabilities ceded to the Reinsurer under the Reinsurance
Agreement with respect to the Commuted Reinsured Contracts (such liabilities,
the "Commuted Reinsured Contract Liabilities"). For the avoidance of doubt, if
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any portion of the Liabilities arising out of a Reinsured Contract are
retroceded by the Reinsurer to a third party, all of the Liabilities arising out
of such Reinsured Contract will remain reinsured by the Reinsurer under the
terms of the Reinsurance Agreement and such Reinsured Contract (a "Non-Commuted
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Reinsured Contract") will not be a Commuted Reinsured Contract.
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Section 2.2. TERMINATION. Effective as of the Effective Time, the
Reinsurance Agreement shall also be terminated for new contracts issued by the
Company from and after the Effective Time.
Article III.
COMMUTATION CONSIDERATION
Section 3.1. COMMUTATION CONSIDERATION.
(a) Notwithstanding anything contained in the Reinsurance Agreement to the
contrary, as consideration for the Parties' commutation of the Commuted
Reinsured Contract Liabilities, the Reinsurer shall owe to the Company (if
positive), or the Company shall owe to the Reinsurer (the absolute value if
negative) an amount equal to the GAAP Reserves as of the Effective Time (the
"Consideration"). "GAAP Reserves" means, as of the date of determination, an
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amount equal to the gross reserves that are required to be held by the Reinsurer
with respect to the Commuted Reinsured Contract Liabilities, determined in
accordance with then applicable generally acceptable accounting principles
consistently applied. The Consideration shall be determined and paid in
accordance with Sections 3.1(c) and (d) below.
(b) In addition, the Reinsurer shall owe to the Company, or the Company
shall owe to the Reinsurer, as applicable, the net amount due in respect of the
Commuted Reinsured Contract Liabilities for the calendar month ended October 31,
2014, determined in accordance with Article VI of the Reinsurance Agreement (the
"Final Net Settlement Amount"). The Final Net Settlement Amount shall be
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determined and paid in accordance with Sections 3.1(c) and (d) below.
(c) On the Execution Date, the Reinsurer shall pay to the Company (or, as
directed by the Company, to a designee of the Company) (if positive), or the
Company shall pay to the Reinsurer (or, as directed by the Reinsurer, to a
designee of the Reinsurer) (the absolute value if negative) cash and investment
assets (including derivatives) having an aggregate market value as of the
Execution Date equal to the sum of (i) the Reinsurer's estimate of the
Consideration, which estimate shall be based on GAAP Reserves as of September
30, 2014 (the "Estimated
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Consideration"), plus (ii) the Reinsurer's estimate of any Final Net Settlement
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Amount due to the Company, less (iii) the Reinsurer's estimate of any Final Net
Settlement Amount due to the Reinsurer.
(d) No later than 45 business days following the Execution Date, the
Reinsurer shall deliver to the Company a statement (the "Adjusted Consideration
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Statement") setting forth the Reinsurer's calculations of the actual amounts of
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the Consideration and the Final Net Settlement Amount, along with a calculation
of any payments required to be made by the parties to reflect any differences
between the amount of the actual Consideration or Final Net Settlement Amount
and the Estimated Consideration or the Reinsurer's estimate of the Final Net
Settlement Amount. The net amount of any such adjustment payments shall be made
by the owing party to the receiving party (or, as directed by the receiving
party, to a designee of the receiving party) in cash and/or investment assets
(including derivatives) no later than 15 days following the Company's receipt of
the Adjusted Consideration Statement.
(e) In the event that the Reinsurer has provided any letters of credit or
trust agreements for the benefit of the Company pursuant to the Reinsurance
Agreement, the Company agrees to take all actions reasonably requested by the
Reinsurer to reduce the amount of such letters of credit or release trust assets
to the Reinsurer to reflect the commutation of the Commuted Reinsured Contract
Liabilities.
Section 3.2. COMPANY RELEASE OF THE REINSURER WITH RESPECT TO THE COMMUTED
REINSURED CONTRACTS. In consideration of the payments described in Section 3.1
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and the release provided in Section 3.3, as of the Effective Time, the Company
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hereby forever releases and discharges the Reinsurer, and its predecessors,
successors, affiliates, agents, officers, directors, employees and shareholders,
from any and all past, present, and future obligations, adjustments, liability
for payment of interest, offsets, actions, causes of action, suits, debts, sums
of money, accounts, premium payments, reckonings, bonds, bills, covenants,
contracts, controversies, agreements, promises, damages, judgments, liens,
rights, costs and expenses (including attorneys' fees and costs actually
incurred), claims and demands, liabilities and losses of any nature whatsoever,
all whether known or unknown, vested or contingent, that the Company now has,
owns, or holds or claims to have, own, or hold, or at any time had, owned, or
held, or claimed to have had, owned, or held, or may after the execution of this
Agreement have, own, or hold or claim to have, own, or hold, against the
Reinsurer, arising from, based upon, or in any way related to the Commuted
Reinsured Contracts, it being the intention of the Parties that this release
operate as a full and final settlement of the Reinsurer's current and future
liabilities to the Company under and in connection with the Commuted Reinsured
Contracts, PROVIDED, HOWEVER, that this release does not discharge obligations
of the Reinsurer that have been undertaken or imposed by the terms of this
Agreement.
Section 3.3. REINSURER RELEASE OF THE COMPANY WITH RESPECT TO THE COMMUTED
REINSURED CONTRACTS. In consideration of the commutation set forth in
Article II, the payments described in Section 3.1 and the release provided in
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Section 3.2, as of the Effective Time, the Reinsurer hereby forever releases and
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discharges the Company, and its predecessors, successors, affiliates, agents,
officers, directors, employees and shareholders, from any and all past, present,
and future obligations, adjustments, liability for payment of interest, offsets,
actions, causes of action, suits, debts, sums of money, accounts, premium
payments, reckonings, bonds, bills, covenants,
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contracts, controversies, agreements, promises, damages, judgments, liens,
rights, costs and expenses (including attorneys' fees and costs actually
incurred), claims and demands, liabilities and losses of any nature whatsoever,
all whether known or unknown, vested or contingent, that the Reinsurer now has,
owns, or holds or claims to have, own, or hold, or at any time had, owned, or
held, or claimed to have had, owned, or held, or may after the execution of this
Agreement have, own, or hold or claim to have, own, or hold, against the
Company, arising from, based upon, or in any way related to the Commuted
Reinsured Contracts, it being the intention of the Parties that this release
operate as a full and final settlement of the Company's current and future
liabilities to the Reinsurer under and in connection with the Commuted Reinsured
Contracts, PROVIDED, HOWEVER, that this release does not discharge obligations
of the Company that have been undertaken or imposed by the terms of this
Agreement.
Article IV.
MISCELLANEOUS
Section 4.1. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally or by overnight courier (providing proof of delivery) to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice):
(a) if to Company:
Xxxx Xxxxxx
New England Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx Xxxx, XX 00000
Email: xxxxxxx@xxxxxxx.xxx
(b) if to the Reinsurer:
Xxxxxxxxxxx Xxxxxx
Exeter Reassurance Company, Ltd.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Email: xxxxxxx@xxxxxxx.xxx
Notice given by personal delivery or overnight courier shall be
effective upon actual receipt.
Section 4.2. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including any annexes and schedules hereto) constitutes the entire agreement,
and supersedes all prior agreements, understandings, representations and
warranties, both written and oral, among the Parties with respect to the subject
matter of this Agreement. This Agreement is not intended to confer upon any
Person other than the Parties hereto any rights, benefits or remedies, and no
such Person shall be entitled to xxx any Party with respect thereto.
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Section 4.3. GOVERNING LAW. This Agreement and any dispute arising
hereunder shall be governed by, and construed in accordance with, the laws of
the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 4.4. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise (other than
following the Execution Date by operation of law in a merger or scheme of
arrangement), by either Party without the prior written consent of the other
Party, and any such assignment that is not consented to shall be null and void.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the Parties and their respective
successors and assigns.
Section 4.5. JURISDICTION; ENFORCEMENT.
(a) Each of the Parties hereto hereby irrevocably and unconditionally
submits to the exclusive jurisdiction of any court of the United States or any
state court, which in either case is located in the City and County of New York
(each, a "New York Court") for purposes of enforcing this Agreement or
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determining any claim arising from or related to the transactions contemplated
by this Agreement. In any such action, suit or other proceeding, each of the
Parties hereto irrevocably and unconditionally waives and agrees not to assert
by way of motion, as a defense or otherwise any claim that it is not subject to
the jurisdiction of any such New York Court, that such action, suit or other
proceeding is not subject to the jurisdiction of any such New York Court, that
such action, suit or other proceeding is brought in an inconvenient forum or
that the venue of such action, suit or other proceeding is improper; PROVIDED,
that nothing set forth in this sentence shall prohibit any of the Parties hereto
from removing any matter from one New York Court to another New York Court. Each
of the Parties hereto also agrees that any final and unappealable judgment
against a Party hereto in connection with any action, suit or other proceeding
will be conclusive and binding on such Party and that such award or judgment may
be enforced in any court of competent jurisdiction, either within or outside of
the United States. A certified or exemplified copy of such award or judgment
will be conclusive evidence of the fact and amount of such award or judgment.
Any process or other paper to be served in connection with any action or
proceeding under this Agreement shall, if delivered or sent in accordance with
Section 4.1, constitute good, proper and sufficient service thereof.
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(b) The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, without the necessity of posting bond or other
undertaking, the Parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in accordance with this Agreement,
this being in addition (subject to the terms of this Agreement) to any other
remedy to which such Party is entitled at law or in equity. In the event that
any Action is brought in equity to enforce the provisions of this Agreement, no
Party hereto shall allege, and each Party hereto hereby waives any defense or
counterclaim, that there is an adequate remedy at law.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF
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OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OR ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES
SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 4.5(c).
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Section 4.6. SEVERABILITY; AMENDMENT; WAIVER.
(a) Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any Applicable Law in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(b) This Agreement may be amended or a provision hereof waived only by a
written instrument signed by each of the Company and the Reinsurer.
(c) No delay on the part of any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any Party of any right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
Section 4.7. NO OFFSET. No Party to this Agreement may offset any amount
due to the other Party hereto or any of such other Party's affiliates against
any amount owed or alleged to be owed from such other Party or its affiliates
under this Agreement or any other agreement without the written consent of such
other Party.
Section 4.8. PARAGRAPH AND SECTION HEADINGS. The headings of the sections
and subsections of this Agreement are inserted for convenience only and shall
not be deemed to constitute a part thereof.
Section 4.9. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the Parties and
delivered to the other Party. Each Party may deliver its signed counterpart of
this Agreement to the other Party by means of electronic mail or any other
electronic medium utilizing image scan technology, and such delivery will have
the same legal effect as hand delivery of an originally executed counterpart.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Reinsurer and the Company have caused this
Agreement to be signed by their respective duly authorized officers, all as of
the date first written above.
EXETER REASSURANCE COMPANY, LTD.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: President
NEW ENGLAND LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Vice President
SIGNATURE PAGE - NELICO PARTIAL COMMUTATION AGREEMENT
APPENDIX A
RETROCESSION AGREEMENTS
Automatic Retrocession Agreement between Exeter Reassurance Company, Ltd. and
AXA Corporate Solutions Life Reinsurance Company, effective April 1, 2001
(Treaty ID. 15910)
Indemnity Retrocession Agreement between Exeter Reassurance Company, Ltd. and
Catalyst Re Ltd., effective October 1, 2005 (Treaty ID. 18244)
Amended and Restated Retrocession Agreement among Exeter Reassurance Company,
Ltd., Boston Re Ltd. and Credit Suisse Securities (USA) LLC, solely in its
capacity as Valuation Agent, effective November 1, 2006 (Treaty ID. 19306)
GMIB Retrocession Agreement among Exeter Reassurance Company, Ltd., Boston Re
Ltd. and Credit Suisse Securities (USA) LLC, solely in its capacity as Valuation
Agent, effective July 30, 2007 (Treaty ID. 19714)
Retrocession Agreement (GMDB) among Exeter Reassurance Company, Ltd., Decart Re
Ltd. and BNP Paribas S.A., solely in its capacity as Reinsurer Valuation Agent
and Metropolitan Life Insurance Company, solely in its capacity as Cedant
Valuation Agent, effective October 1, 2012 (Treaty ID. 21250)
