Exhibit 7.1
[LOGO]
THIS REINSURANCE AGREEMENT
is made between
THE LIFE INSURANCE COMPANY OF VIRGINIA
of 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000
(hereinafter referred to as "the Company")
and
THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY
OF AMERICA
of Lansing, Michigan
Executive Offices: 000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx Trust Tower
Xxxxxxx, Xxxxxxx X0X 0X0
(hereinafter referred to as "the Reinsurer")
The following Articles, qualified by the
Exhibits of the Agreement, will form
the basis of the Agreement.
This Agreement may be referred to as Agreement No. SBA280-94
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TABLE OF CONTENTS
ARTICLES
I Business Covered - Forms and Manuals - Issue Rules
II Amounts of Coverage - Facultative Coverage
III Reinsurance Premiums
IV Data Notification
V Premium Accounting
VI Liability - Amount and Duration - Currency - DAC Tax - Taxes and Expenses
VII Policy Changes
VIII Increase in Retention - Recapture due to Termination
IX Claims
X Oversights - Arbitration
XI Insolvency
XII Alterations to Agreement - Parties to Agreement - Inspection of Records
XIII Duration of Agreement - Severability - Benefit - Construction
EXHIBITS
A-I Business Covered
A-II Investment Funds Available
B Application for Reinsurance
C Premium Rates, General Terms, Annual Rate Calculation and Adjustment
D The Company's Retention Limits
E The Reinsurer's Acceptance Limits
F Reinsurance Listing
G DAC Tax Election
-2-
ARTICLE I
Business This Agreement applies to all minimum guaranteed death
Covered benefit risk on variable annuity contracts, as defined in
Exhibit A-I, which are on lives resident in the United
States.
The Company agrees to cede to the Reinsurer and the
Reinsurer agrees to accept automatically, in accordance with
the terms of this Agreement, amounts of the above benefits
that exceed the Company's retention limits as set out in
Exhibit D.
The amounts retained by the Company on the business covered
by this Agreement shall not be reinsured by the Company on
any basis whatsoever without the agreement of the Reinsurer.
Reinsurances accepted by the Company shall not be included
hereunder unless mutually agreed otherwise by the Company
and the Reinsurer.
Forms and The Company agrees to file with the Reinsurer, copies of all
Manuals appropriate contract forms, prospectuses, rate manuals,
retention schedules, application forms, receipts and other
related material. If new material is published, or changes
are made in the material already filed, the Company agrees
to promptly provide the Reinsurer with copies of such
material.
Issue Rules The Company hereby declares and agrees that the contracts
covered under this Agreement shall be issued in accordance
with the Company's normal issue rules for each such contract
and which are in effect at the commencement date of this
Agreement. These rules shall be provided to the Reinsurer on
request and any material change in these rules shall be
subject to the approval of the Reinsurer before being
applied to the contracts to be covered by this Agreement.
-3-
ARTICLE II
Amounts of Whenever the Company retains its full retention, as set out
Coverage in Exhibit D, on any one life, the Company shall cede to the
Reinsurer all the excess up to the limits specified in
Exhibit E. The Reinsurer agrees to accept such business
automatically.
It is understood that the amount retained by the Company
shall include its retention under any previous issues.
Facultative There shall be no facultative coverage under this Agreement.
Coverage
-4-
ARTICLE III
Reinsurance The reinsurance premiums are set out in Exhibit C.
Premiums
The reinsurance premiums are recalculated for each issue
year of business as set out in Exhibit C.
The Reinsurer agrees to give the Company at least forty five
(45) days notice prior to the anniversary of the Agreement
of its intention to change the reinsurance premium rate
other than as outlined in Exhibit C. The Reinsurer may only
exercise this right if the investment funds available under
the contract have been changed since the rate was last set.
If the funds have been changed, the Reinsurer may only
change the reinsurance premium rate if (a) the newly-added
funds are not excluded from coverage under the minimum
guaranteed death benefit risk and (b) the effect is a
material increase or decrease in the investment risk as
determined by the Reinsurer.
-5-
ARTICLE IV
Data For all business reinsured under this Agreement, the Company
Notification shall provide the Reinsurer with Reports providing the
details set out in Exhibits C and F.
-6-
ARTICLE V
Premium The Company undertakes to send to the Reinsurer, within 30
Accounting days of the month end, payment for the previous month based
on the calculations set out in Exhibit F.
In addition, an adjustment premium will be calculated as
outlined in Exhibit C at the end of the year to reflect any
increases or decreases in the reinsurance premium from the
estimate used. This payment shall be included with the
monthly payment for December.
-7-
ARTICLE VI
Liability The liability of the Reinsurer shall commence simultaneously
with that of the Company for all contracts ceded and
accepted by the Reinsurer in accordance with the terms of
this Agreement.
The Reinsurer shall not be liable for surrenders, loans,
reserves or annuity payments.
Amount and The liability of the Reinsurer for all contracts under this
Duration Agreement shall cease at the same time as the liability of
the Company ceases and shall not exceed the Company's
contractual liability under the terms of its contracts. The
Reinsurer's liability for any given annuity contract shall
be the greater of X and Y where:
X = Zero ($0.00)
and
Y = (The Current Death Benefit) minus
(The Current Account Value)
In no case shall the Reinsurer's total liability on an
individual life exceed the Maximum Single Life Claim Amount
set out in Exhibit E regardless of the number of contracts
covering the life.
Notwithstanding the foregoing, the Reinsurer at its option,
on thirty (30) days notice to the Company in writing, may
terminate its liability for any reinsurances for which the
reinsurance payments have not been paid within sixty (60)
days after billing.
Currency All cessions under this Agreement shall be effected in the
same currency as the original contract and the premiums and
liabilities shall be expressed and payable in that currency.
-8-
DAC Tax The Company and the Reinsurer agree to the DAC Tax Election
pursuant to Section 1.848-2(g)(8) of the Income Tax
Regulation under Section 848 of the Internal Revenue code of
1986, as amended, whereby:
(a) the party with the net positive consideration for this
Agreement for each taxable year will capitalize
specified contract acquisition expenses with respect to
this Agreement without regard to the general deductions
limitation of Section 848(c)(1); and
(b) both parties agree to exchange information pertaining
to the amount of net consideration under this Agreement
each year to ensure consistency.
The term "net consideration" will refer to the net
consideration as defined in Regulation Section 1.848-2(f).
The method and timing of the exchange of this information is
set out in Exhibit G.
This DAC Tax Election shall be effective for all years for
which this Agreement remains in effect.
The Company and the Reinsurer represent and warrant that
they are subject to U.S. taxation under either the
provisions of subchapter L of Chapter 1 or the provisions of
subpart F of subchapter N of Chapter 1 of the Internal
Revenue Code of 1986, as amended.
Taxes and Apart from any taxes, allowances, commissions, refunds, and
Expenses expenses specifically referred to elsewhere in this
Agreement, no commissions, allowances, taxes or proportion
of any expense shall be paid by the Reinsurer to the Company
in respect of any cession.
-9-
ARTICLE VII
Policy Changes When a reinsured variable annuity contract lapses, or is
cancelled, the reinsurance shall be cancelled.
Reinsurance shall cease when a reinsured variable annuity
contract annuitizes.
If interest benefits are discontinued during the prior
month, the month end account value for ratchet and interest
benefit as set forth in Exhibit F will be reduced and the
month end account value for the ratchet benefit will
likewise be increased by the associated amounts of account
value.
If interest benefits are added during the prior month, the
month end account value for the ratchet and interest benefit
will be increased and the month end account value for the
ratchet benefit will likewise be decreased by the associated
amounts of account value.
-10-
ARTICLE VIII
Increase in The reinsurance under this Agreement shall be maintained in
Retention force without reduction except as specifically provided for
elsewhere in this Agreement.
The Company may increase its limits of retention at time of
renewal by giving written notice to the Reinsurer of the new
limits of retention and the effective date of such new
retention schedule.
The Company's retention limits are set out in Exhibit D.
Recapture due The Company may not recapture inforce business as a result
to Retention of an increase in retention.
Increase
Recapture Should this Agreement terminate in accordance with the
due to provisions set out in Article XIII, the Company may
Termination recapture all existing reinsurance provided, (a) that the
Reinsurer receives notification of the recapture from the
Company at least five (5) years prior to the date of
recapture and (b) that this Agreement has been inforce for
fifteen (15) consecutive years as at the date of recapture.
Should either or both conditions not be satisfied recapture
would be deferred until such time as both conditions are
satisfied, or as otherwise agreed to by both the Reinsurer
and the Company. However, if the Company terminates the
Agreement because the Reinsurer has increased the
reinsurance premium rate, due to a change in available
investment funds, as described in Article III (Reinsurance
Premiums), the Company may recapture all inforce business in
a period not less than 90 days following notice of
termination.
Recapture The terms and conditions for the Company to recapture
due to reinsurance in force under this Agreement due to the
Insolvency of insolvency of the Reinsurer are set out in the Insolvency
Reinsurer clause in Article XI of this Agreement.
-11-
ARTICLE IX
Claims The Reinsurer shall be liable to the Company for the minimum
guaranteed death benefits reinsured and reinsurance shall
not exceed the Company's contractual liability for minimum
guaranteed death benefits under the terms of its policies.
The Reinsurer's share of interest, which is based on the
death proceeds paid by the Company, shall be payable in
addition to the death claim settlement.
Copies of all claims papers shall be mailed immediately by
the Company to the Reinsurer. The settlement made by the
Company shall be binding on the Reinsurer.
Any claim for an amount less than the Claims Notification
Amount set out in Exhibit C, shall appear as a deduction
from the premium payment due on the Monthly Premium and
Claims Report (Exhibit F) sent to the Reinsurer. Any claim
for an amount greater than the Claims Notification Amount
shall be paid by the Reinsurer in one lump sum.
Should any claim be settled on a reduced compromise basis,
the Company and the Reinsurer shall participate in such
reductions in proportion to their respective liabilities
under the contracts reinsured.
Likewise shall any special expenses for investigative or
legal fees (excluding compensation of salaried employees) be
shared.
The Reinsurer is not liable for extracontractual damages,
such as punitive damages, bad faith damages or other damages
which may arise from the acts or omissions of the Company in
its conduct with its own insured, contract owner,
beneficiary or assignee of the contract or others.
-12-
ARTICLE X
Oversights It is agreed that in the event that any unintentional or
accidental failure to comply with the terms of this
Agreement can be shown to be the result of an oversight,
misunderstanding or clerical error, both parties shall be
restored to the position they would have occupied had the
oversight, misunderstanding or clerical error not occurred.
This provision shall apply only to oversights,
misunderstandings or clerical errors relating to the
administration of reinsurance covered by this Agreement. Any
negligent or deliberate acts or omissions by the Company
regarding the coverage provided are the responsibility of
the Company and its liability insurer, if any, but not that
of the Reinsurer.
Arbitration Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by
arbitration, and the arbitrators, who shall regard this
Agreement from the standpoint of practical business as well
as the law, are empowered to determine as to the
interpretation of the treaty obligation.
Each party shall appoint one arbitrator and these two
arbitrators will select a third arbitrator within two weeks
of the appointment of the second. The second arbitrator is
to be selected within two weeks after the notice is provided
that the first arbitrator is selected. Should the two
arbitrators not agree on the choice of the third, then each
party shall name four (4) candidates to serve as the
arbitrator. Beginning with the party who did not initiate
arbitration, each party shall eliminate one candidate from
the eight listed until one candidate remains. If this
candidate declines to serve as the arbitrator, the candidate
last eliminated will be approached to serve. This process
shall be repeated until a candidate has agreed to serve as
the third arbitrator. All three arbitrators must be officers
of Life Insurance Companies or Life Reinsurance Companies
excluding, however, officers of the two parties to this
Agreement, their affiliates or
-13-
subsidiaries or past employees of any of these entities. The
place of meeting of the arbitrators shall be decided by a
majority vote of the arbitrators. The written decision of a
majority of the arbitrators shall be final and binding on
both parties and their respective successors and assigns.
All costs of the arbitration and expenses and fees of the
arbitrators shall be borne equally by the parties, unless
otherwise ordered by the arbitrators.
The arbitrators shall render a decision within four months
of the appointment of the third arbitrator, unless both
parties agree otherwise. In the event no decision is
rendered within four months, new arbitrators shall be
selected as above.
Alternatively, if both parties consent, any controversy may
be settled by arbitration in accordance with the rules of
the American Arbitration Association.
Judgement upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.
It is specifically the intent of both parties that this
arbitration provision shall replace and be in lieu of any
statutory arbitration provision, if the law so permits.
-14-
ARTICLE XI
Insolvency For the purpose of this Agreement, the Company or the
Reinsurer shall be deemed "insolvent" when it:
a) applies for or consents to the appointment of a
rehabilitator, conservator, liquidator or statutory
successor of its properties or assets; or
b) makes an assignment for the benefit of its creditors;
or
c) is adjudicated as bankrupt or insolvent; or
d) files or consents to the filing of a petition in
bankruptcy, seeks reorganization or an arrangement with
creditors or takes advantage of any bankruptcy,
dissolution, liquidation, or similar law or statute; or
e) becomes the subject of an order to rehabilitate or an
order to liquidate as defined by the insurance code of
the jurisdiction of the domicile of the Company or the
Reinsurer, as the case may be.
In the event of the insolvency of either the Reinsurer or
the Company, any amounts owed by the Company to the
Reinsurer and by the Reinsurer to the Company with respect
to this Agreement shall be set-off and only the balance
shall be paid.
The Reinsurer shall be liable only for the amounts reinsured
and shall not be or become liable for any amounts or
reserves to be held by the Company on contracts reinsured
under this Agreement. In the event of the Insolvency of the
Reinsurer, any amounts recoverable by the Company will not
be reduced as a result of delinquency proceedings involving
the Reinsurer.
In the event of the insolvency of the Company, the
reinsurance obligations under this Agreement shall be
payable by the Reinsurer
-15-
directly to the Company, its liquidator, rehabilitator,
conservator or statutory successor, immediately upon demand,
with reasonable provision for verification on the basis of
the claims allowed against the insolvent company by any
court of competent jurisdiction or by any rehabilitator,
conservator, liquidator or statutory successor having
authority to allow such claims without diminution because of
the insolvency of the company, or because the rehabilitator,
conservator, liquidator or statutory successor has failed to
pay all or a portion of any claims.
It is understood, however, that in the event of such
insolvency, the rehabilitator, conservator, liquidator or
statutory successor of the Company shall give written notice
of the pendency of a claim against the Company on the
contract reinsured within a reasonable time after such claim
is filed in the insolvency proceedings, and that during the
pendency of such claim the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceedings
where such claim is to be adjudicated, any defense or
defenses which it may deem available to the Company or its
liquidator, rehabilitator, conservator or statutory
successor.
It is further understood that the expense thus incurred by
the Reinsurer shall be chargeable, subject to court
approval, against the Company as part of the expense of
conservation or liquidation to the extent of a proportionate
share of the benefit which may accrue to the Company solely
as a result of the defense undertaken by the Reinsurer.
Where two or more reinsurers are involved in the same claim
and a majority in interest elect to interpose defense to
such claim, the expense shall be apportioned in accordance
with the terms of the reinsurance Agreement as though such
expense had been incurred by the Company.
In the event of the insolvency of the Reinsurer, the Company
may cancel this Agreement for new business by promptly
providing the Reinsurer, its rehabilitator, conservator,
liquidator or statutory successor with written notice of the
cancellation effective the date on which the Reinsurer's
insolvency is established by the authority
-16-
responsible for such determination. Any requirement for a
notification period prior to the cancellation of the
Agreement would not apply under such circumstances.
In addition, the Company may provide the Reinsurer, its
rehabilitator, conservator, liquidator or statutory
successor with written notice of its intent to recapture all
reinsurance in force under this Agreement regardless of the
duration the reinsurance has been in force. The effective
date of a recapture due to insolvency would be the date on
which the Reinsurer's insolvency is established by the
authority responsible for such determination. Such a
recapture would be subject to the monetary terms specified
in Exhibit B.
-17-
ARTICLE XII
Alterations Any alteration to this Agreement shall be null and void
to Agreement unless attached to the Agreement and signed by both parties.
Parties to This is an Agreement solely between the Company and the
Agreement Reinsurer. The acceptance of reinsurance hereunder shall not
create any right or legal relation between the Reinsurer and
the insured, beneficiary, or any other party to any contract
of the Company which may be reinsured hereunder.
This Agreement represents the entire agreement between the
Company and the Reinsurer and supersedes, with respect to
its subject matter, any prior oral or written agreements
between the parties.
Inspection The Reinsurer shall have the right, at any reasonable time,
of Records to inspect at the office of the Company all records, books
and documents relating to the insurance under this
Agreement.
-18-
ARTICLE XIII
Duration of This Agreement is effective as from the date set out in
Agreement Exhibit A-I and is unlimited as to its duration. It may be
made inapplicable to future insurances either in whole or in
part by either party giving at least ninety (90) days notice
to that effect by registered letter to the other party.
During the period of such ninety (90) days the Reinsurer
shall continue to participate in all insurances coming under
the terms of this Agreement. This notification period would
be waived in the event the Reinsurer is deemed insolvent.
Further, the Reinsurer remains liable for all the minimum
guaranteed death benefit risk existing at the date of the
expiration set forth in the notice until their natural
expiration, unless the parties mutually decide otherwise or
as specified otherwise in this Agreement.
Severability In the event that any of the provisions herein contained
shall be invalid or unenforceable, such declaration or
adjudication shall in no manner affect or impair the
validity or the enforceability of the other and remaining
provisions of this Agreement and such other and remaining
provisions shall remain in full force and effect as though
such invalid or unenforceable provisions or clauses had not
been herein included or made a part of this Agreement.
Benefit Except as herein otherwise provided, this Agreement shall be
binding upon the parties hereto and their respective
successors and assigns.
-19-
Construction This Agreement shall be construed and administered in
accordance with the laws of the Commonwealth of Virginia and
the rights and obligations of this Agreement shall, at all
times, be regulated under the laws of the Commonwealth of
Virginia.
Made in duplicate and executed by both parties.
Signed for and on behalf of THE LIFE INSURANCE COMPANY OF VIRGINIA
/s/ Illegible /s/ Illegible
--------------- -----------------
Richmond, this 16th day of February, 1995
Signed for and on behalf of THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY
OF AMERICA
/s/ Illegible /s/ Illegible
--------------- -----------------
Toronto, this 27th day of January, 1995
Prepared by /s/ Illegible
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-20-
EXHIBIT A-I
BUSINESS COVERED
Effective Date:
New Business July 1, 1994
Inforce Business July 1, 1994
Definition:
The minimum guaranteed death benefit risk shall be defined as the current
minimum guaranteed death benefit minus the current account value.
Business Covered:
One hundred percent of the minimum guaranteed death benefit risk on Variable
Annuity new business contracts issued in excess over the Company's retention,
specified in Exhibit C, is eligible for Automatic coverage.
One hundred percent of the minimum guaranteed death benefit risk on Variable
Annuity automatic reinsurance in force in excess of the Company's retention,
specified in Exhibit C.
Variable Annuity Form Nos.
Commonwealth Annuity (Flexible Premium Variable Deferred Annuity - Form P1140)
P1142 - 4/94
P1142N - 6/94
P1143 - 4/94
EXHIBIT A-II
LIST OF FUNDS
Fidelity Variable Insurance Products Fund
*Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity VIPF II
Asset Manager Portfolio
Xxxxxxxxx & Xxxxxx Advisors Management Trust
Balanced Portfolio
Growth Portfolio
Limited Maturity Bond Portfolio
Life of Virginia Series Fund, Inc.
*Money Market Portfolio
Government Securities Portfolio
Common Stock Index Portfolio
Total Return Portfolio
Xxxxxxxxxxx Variable Account Funds
*Xxxxxxxxxxx Money Market
Xxxxxxxxxxx High Income Fund
Xxxxxxxxxxx Bond Fund
Xxxxxxxxxxx Capital Appreciation Fund
Xxxxxxxxxxx Multiple Strategies Fund
Xxxxxxxxxxx Growth Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
Notes:
* Increase in Guaranteed Minimum Death Benefit Rider amount associated
with investments in these portfolios is limited to the extent that net
return after separate account charges is less than 6% annual in any
valuation period. Maximum increase in any valuation period is 6%
annual.
EXHIBIT B
APPLICATION FOR REINSURANCE
1. There shall be no application forms sent to the Reinsurer as there will be
no underwriting involved with this business.
EXHIBIT C
PREMIUM RATES AND GENERAL TERMS
1. RATE CRITERIA: The rates set out in this Exhibit shall be used for
automatic reinsurance of any contract covered by this Agreement.
2. PREMIUM TAX: There shall be no separate reimbursement of Premium Tax.
3. RECAPTURE: Due to Insolvency of Reinsurer.
Inforce Period: Not Applicable.
The Recapture Fee applicable due to the insolvency of the
Reinsurer, shall be mutually agreed upon by the Company and the
Reinsurer, its rehabilitator, conservator, liquidator or
statutory successor.
4. CLAIMS NOTIFICATION AMOUNT: $25,000.
5. LIST OF FUNDS: The Reinsurer reserves the right to modify the rates if the
available funds listed in Exhibit A-I of this Agreement are changed.
EXHIBIT C
Life of Virginia PAGE 2
Variable Annuity Death Benefit For year end
--------------
Annual Rate Calculation and Adjustment Prepared on:
--------------
--------------------------------------------------------------------------------
Ratchet Benefit
A B C
Age Range Distribution * Rate (bp) (A * B)
--------- -------------- --------- -------------
0-49 % 2.9
---------- -------------
50-59 % 4.8
---------- -------------
60-64 % 7.3
---------- -------------
65-69 % 8.6
---------- -------------
70+ % 14.6
---------- -------------
Weighted Average Rate:
-------------
(Round to nearest 1/10 basis point)
* The distribution should be based on premiums paid on contracts
issued in the prior year
Adjustment premium 1 = Total reinsurance premiums paid in the prior year on
contracts issued in the prior year x [(the Weighted
Average Rate calculated above / the Estimate Rate
used for the prior year) - 1]
Estimated Rate for the current year = the Weighted Average Rate calculated above
--------------------------------------------------------------------------------
Ratchet & Interest Benefit
A B C
Age Range Distribution * Rate (bp) (A * B)
--------- -------------- --------- -------------
0-49 % 3.3
---------- -------------
50-59 % 6.6
---------- -------------
60-64 % 12.2
---------- -------------
65-69 % 17.3
---------- -------------
70+ % 40.8
---------- -------------
Weighted Average Rate:
-------------
(Round to nearest 1/10 basis point)
* The distribution should be based on premiums paid on contracts
issued in the prior year
Adjustment premium 2 = Total reinsurance premiums paid in the prior year on
contracts issued in the prior year x [(the Weighted
Average Rate calculated above / the Estimate Rate
used for the prior year) - 1]
Estimated Rate for the current year = the Weighted Average Rate calculated above
--------------------------------------------------------------------------------
Total Adjustment Premium
Total Adjustment Premium = Adjustment Premium 1 + Adjustment Premium 2
The Total Adjustment Premium is payable to the Reinsurer (Company)
EXHIBIT C
Life of Virginia PAGE 3
Variable Annuity Death Benefit For year end
--------------
Annual Rate Calculation and Adjustment Prepared on:
--------------
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Premium Rate Record
----------------------------------------------------------------
Ratchet Benefit Ratchet & Interest Benefit
------------------------- --------------------------------
Estimated** Actual Estimated** Actual
----------------------------------------------------------------
1994 & prior 7 7 14 14
1995 7 14
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
----------------------------------------------------------------
** The estimated premium rate for a given year (excluding 1994
& prior) will always equal the actual rate for the preceding
year.
EXHIBIT D
THE COMPANY'S RETENTION LIMITS
Retention Limit:
For Issue Ages 0 - 85: Zero
EXHIBIT E
THE REINSURER'S ACCEPTANCE LIMITS
Automatic Limit:
For Issue Ages 0 - 85: Unlimited
Maximum Single Life Claim Amount: $1,000,000
EXHIBIT F
DATA NOTIFICATION
DATA NOTIFICATION: The Company shall send to the Reinsurer reports, similar to
those shown in this Exhibit, at the times indicated below:
Report Frequency Due Date Example Reference
------ --------- -------- -----------------
1. Monthly Premium and Monthly 21st Exhibit F, pgs. 2 & 3
Claims Report
(Ratchet Benefit)
2. Monthly Premium and Monthly 21st Exhibit F, pgs. 4 & 5
Claims Report
(Ratchet and Interest Benefit)
3. Monthly Premium and Monthly 21st Exhibit F, pg. 6
Claims Report
(Net Premium Due)
4. Annual Inforce Report Annually to be determined Exhibit F, pg.7
ANNUAL RATE CALCULATION AND ADJUSTMENT: It is understood that the Company shall
provide the Reinsurer with an adjustment premium to be calculated as outlined in
Exhibit C at the end of the year to reflect any increases or decreases in the
reinsurance premium from the estimate used. This payment shall be included with
the monthly payment for December.
EXHIBIT F
PAGE 2
Life of Virginia
Variable Annuity Death Benefit For the Month of: /
--------- -----
Monthly Premium & Claims Report Prepared on:
---------------
PREMIUM (Ratchet Benefit) Page 1 of 5
D
A B C [(A+B)*C]
Month Start Month End Premium Rate in -------------
Year of Issue Account Value Account Value Basis Points (2*12*10,000)
------------- ------------- ------------- --------------- -------------
1994 or prior 7
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1995
------------- ------------- --------------- -------------
1996
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1997
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1998
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1999
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2000
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2001
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2002
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2003
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2004
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2005
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2006
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2007
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2008
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Total Monthly Premium:
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EXHIBIT F
PAGE 3
Life of Virginia
Variable Annuity Death Benefit For the Month of: /
--------- -----
Monthly Premium & Claims Report Prepared on:
---------------
CLAIMS (Ratchet Benefit) Page 2 of 5
Reinsured Amount *$25,000
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A B C = (B - A)
Contract # Name Date of Birth Date of Issue Date of Death Account Value Death Benefit Rein. Amount
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Total Deductible Claims:
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* means Less Than
Reinsured Amount > or = $25,000
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A B C = (B - A)
Contract # Name Date of Birth Date of Issue Date of Death Account Value Death Benefit Rein. Amount
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---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
Total Non-Deductible Claims:
------------
EXHIBIT F
PAGE 4
Life of Virginia
Variable Annuity Death Benefit For the Month of: /
--------- -----
Monthly Premium & Claims Report Prepared on:
---------------
PREMIUM (Ratchet & Interest Benefit) Page 3 of 5
D
A B C [(A+B)*C]
Month Start Month End Premium Rate in -------------
Year Of Issue Account Value Account Value Basis Points (2*12*10,000)
------------- ------------- ------------- --------------- -------------
1994 or prior 14
------------- ------------- --------------- -------------
1995
------------- ------------- --------------- -------------
1996
------------- ------------- --------------- -------------
1997
------------- ------------- --------------- -------------
1998
------------- ------------- --------------- -------------
1999
------------- ------------- --------------- -------------
2000
------------- ------------- --------------- -------------
2001
------------- ------------- --------------- -------------
2002
------------- ------------- --------------- -------------
2003
------------- ------------- --------------- -------------
2004
------------- ------------- --------------- -------------
2005
------------- ------------- --------------- -------------
2006
------------- ------------- --------------- -------------
2007
------------- ------------- --------------- -------------
2008
------------- ------------- --------------- -------------
Total Monthly Premium:
-------------
EXHIBIT F
PAGE 5
Life of Virginia
Variable Annuity Death Benefit For the Month of: /
--------- -----
Monthly Premium & Claims Report Prepared on:
---------------
CLAIMS (Ratchet & Interest Benefit) Page 4 of 5
Reinsured Amount *$25,000
----------------------------------------------------------------------------------------------------------------
A B C = (B - A)
Contract # Name Date of Birth Date of Issue Date of Death Account Value Death Benefit Rein. Amount
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
Total Deductible Claims:
------------
* means Less Than
Reinsured Amount > or = $25,000
----------------------------------------------------------------------------------------------------------------
A B C = (B - A)
Contract # Name Date of Birth Date of Issue Date of Death Account Value Death Benefit Rein. Amount
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
---------- ---- ------------- ------------- ------------- ------------- ------------- ------------
Total Non-Deductible Claims:
------------
EXHIBIT F
PAGE 6
Life of Virginia
Variable Annuity Death Benefit For the Month of: /
--------- -----
Monthly Premium & Claims Report Prepared on:
---------------
NET PAYMENT DUE Page 5 of 5
A) Total Monthly Premium (from Page 1) (Ratchet Benefit)
-----------
B) Total Monthly Premium (from Page 3) (Ratchet & Interest Benefit)
-----------
C) Total Deductible Claims (from Page 2) (Ratchet Benefit)
-----------
D) Total Deductible Claims (from Page 4) (Ratchet & Interest Benefit)
-----------
E) Net Payment Due (A+B-C-D)
-----------
Amount (E) is payable to the Reinsurer (Company)
EXHIBIT F
Life of Virginia PAGE 7
Variable Annuity Death Benefit For year end
--------------
Annual Inforce Report Prepared on:
--------------
--------------------------------------------------------------------------------
ALL POLICIES
Ratchet Benefit Ratchet & Int. Total
Total Account Value:
--------------- -------------- -----------
Total Death Benefits:
--------------- -------------- -----------
Total Number of Contracts:
--------------- -------------- -----------
-----------------------------------------------------------------------------------------------------------
Reinsured Amounts > or = $25,000
-----------------------------------------------------------------------------------------------------------
A B C = (B-A) Benefit
Contract # Name Date of Birth Date of Issue Account Value Death Benefit Rein Amount Type
-----------------------------------------------------------------------------------------------------------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
---------- ---- ------------- ------------- ------------- ------------- ----------- ---------
Total Reinsured Amount:
-----------------------
EXHIBIT G
DAC TAX ELECTION
Method of Exchanging Information
The Reinsurer and the Company agree to the DAC Tax Election and accordingly will
exchange information in the following manner:
1. The Reinsurer will submit a Schedule to the Company by May 1, of each year,
of its calculation of the net consideration (as referred to in Article VI)
for the preceding calendar year.
2. The Company, in turn, will complete the Schedule by indicating acceptance
of the Reinsurer's calculations of the net consideration or by noting any
discrepancies. The Company will return the completed Schedule to the
Reinsurer by June 1, of each year.
3. If there are any discrepancies between the Company's and the Reinsurer's
calculation of the net consideration, the parties will act in good faith to
resolve the discrepancies by July 1, of each year.
ADDENDUM No. 2 to the Reinsurance Agreement referred to as No. SBA280-94 made
between THE LIFE INSURANCE COMPANY OF VIRGINIA (hereinafter referred to as "the
Company") and THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY OF AMERICA
(hereinafter referred to as "the Reinsurer").
It is hereby declared and agreed that effective May 1, 1996, Exhibit A-II of the
above Agreement shall be replaced by the attached Exhibit A-II (Revised May 1,
1996) in order that the following funds be either added or deleted from the
Agreement:
Added to the Life of Virginia Series Fund, Inc. effective May 1, 1995:
International Equity Portfolio
Real Estate Securities Portfolio
Added to the Agreement effective October 2, 1995:
Xxxxx American Fund
Growth Portfolio
Small Capitalization Portfolio
Janus Aspen Series
Balanced Portfolio
Flexible Income Portfolio
Trusts to be no longer included under this Agreement effective October 2, 1995:
Xxxxxxxxx & Xxxxxx Advisers Management Trust
Balanced Portfolio
Growth Portfolio
Limited Maturity Bond Portfolio
Portfolios to be no longer included under this Agreement effective October 2,
1995:
From the Fidelity Variable Insurance Products Fund:
Money Market Portfolio
High Income Portfolio
From the Xxxxxxxxxxx Variable Accounts Fund:
Xxxxxxxxxxx Money Market
It is further understood that as per Article III of this Agreement, the
Reinsurer has determined that the addition of any funds does not materially
increase or decrease the investment risk, therefore, the reinsurance premium
rate as shown in Exhibit C of this Agreement shall remain unchanged.
If, at the end of any calendar year, the funds listed above total more than 10%
of the total account value of all contracts covered by this Agreement, the
Reinsurer may re-evaluate the investment risk of these funds. The Reinsurer may
change the premium rate at that time as set out in Article III.
All other terms and conditions remain unaltered.
Made in duplicate and executed by both parties.
Signed for and on behalf of THE LIFE INSURANCE COMPANY OF VIRGINIA
/s/ Illegible /s/ Illegible
------------- -------------
Richmond, this 3rd, day of June, 1996
and for and on behalf of THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY OF
AMERICA
/s/Illegible /s/Illegible
------------ ------------
Toronto, this 8 day of May, 1996
EXHIBIT A-II
(Revised May 1,1996)
LIST OF FUNDS
Fidelity Variable Insurance Products Fund
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity VIPF II
Asset Manager Portfolio
Contrafund Portfolio
Life of Virginia Series Fund, Inc.
*Money Market Portfolio
Government Securities Portfolio
Common Stock Index Portfolio
Total Return Portfolio
International Equity Portfolio
Real Estate Securities Portfolio
Xxxxxxxxxxx Variable Account Funds
Xxxxxxxxxxx High Income Fund
Xxxxxxxxxxx Bond Fund
Xxxxxxxxxxx Capital Appreciation Fund
Xxxxxxxxxxx Multiple Strategies Fund
Xxxxxxxxxxx Growth Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Federated Insurance Management Series
Utility Fund
Corporate Bond Fund
Xxxxx American Fund
Growth Portfolio
Small Capitalization Portfolio
Notes:
* Increase in Guaranteed Minimum Death Benefit Rider amount associated
with investments in these portfolios is limited to the extent that net
return after separate account charges is less than 6% annual in any
valuation period. Maximum increase in any valuation period is 6%
annual.
ADDENDUM No. 1 to the Reinsurance Agreement referred to as No. SBA280-94 made
between THE LIFE INSURANCE COMPANY OF VIRGINIA (hereinafter referred to as "the
Company") and THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY OF AMERICA
(hereinafter referred to as "the Reinsurer").
It is hereby declared and agreed that effective January 4, 1995, Exhibit A-II in
the above Agreement shall be replaced by the attached Exhibit A-II (Revised
January 4, 1995) in order that the following funds be added to the Agreement:
Fidelity VIPF II
Contrafund Portfolio
Federated Insurance Management Services
Utility Fund
Corporate Bond Fund
It is further understood that as per Article III of this Agreement, the
Reinsurer has determined that the addition of these funds does not materially
increase or decrease the investment risk, therefore, the reinsurance premium
rate as shown in Exhibit C of this Agreement shall remain unchanged.
If, at the end of any calendar year, the funds listed above total more than 10%
of the total account value of all contracts covered by this Agreement, the
Reinsurer may re-evaluate the investment risk of these funds. The Reinsurer may
change the premium rate at that time as set out in Article III.
All other terms and conditions remain unaltered.
Made in duplicate and executed by both parties.
-2-
Signed for and on behalf of THE LIFE INSURANCE COMPANY OF VIRGINIA
/s/ Illegible /s/ Illegible
------------- -------------
Richmond, this 16th day of February,1995
and for and on behalf of THE MERCANTILE AND GENERAL LIFE REASSURANCE COMPANY OF
AMERICA
/s/ Illegible /s/ Illegible
------------- -------------
Toronto, this 27 day of January, 1995
EXHIBIT A-II
(Revised January 1, 1995)
LIST OF FUNDS
Fidelity Variable Insurance Products Fund
*Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity VIPF II
Asset Manager Portfolio
+Contrafund Portfolio
Xxxxxxxxx & Xxxxxx Advisers Management Trust
Balanced Portfolio
Growth Portfolio
Limited Maturity Bond Portfolio
Life of Virginia Series Fund, Inc.
*Money Market Portfolio
Government Securities Portfolio
Common Stock Index Portfolio
Total Return Portfolio
Xxxxxxxxxxx Variable Account Funds
*Xxxxxxxxxxx Money Market
Xxxxxxxxxxx High Income Fund
Xxxxxxxxxxx Bond Fund
Xxxxxxxxxxx Capital Appreciation Fund
Xxxxxxxxxxx Multiple Strategies Fund
Xxxxxxxxxxx Growth Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
Federated Insurance Management Series
+Utility Fund
+Corporate Bond Fund
Notes:
* Increase in Guaranteed Minimum Death Benefit Rider amount associated
with investments in these portfolios is limited to the extent that net
return after separate account charges is less than 6% annual in any
valuation period. Maximum increase in any valuation period is 6%
annual.
+ added January 4, 1995
