INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD.
AND
AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD.
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made on the 23rd day of June, 1997
BETWEEN:
(1) INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD., having its
registered office at 00 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx, XX00, (xxx
"Client") of the one part; and
(2) AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD., having its registered office
at XXX Xxxxx, Xxxxxxx Xxxx, Xxxxxx 0, Xxxxxxx (the "Company") of the other
part.
WHEREAS:
The Client wishes to obtain investment management services in respect of
certain assets and the Company is willing to provide such services subject
to the terms and conditions set out in this Agreement, which Agreement
both parties wish to supersede any prior Investment Management Agreement
and any amendments thereto entered into between the parties hereto.
IT IS HEREBY AGREED by and between the parties hereto as follows:
1. From and after the date hereof, this Agreement shall supersede any prior
Investment Management Agreement and any amendments thereto entered into
between the parties hereto.
2. APPOINTMENT
2.1. The Client hereby appoints the Company, and the Company hereby accepts the
appointment, as investment manager for the Client of such cash, securities
or other property as shall from time to time be comprised in the portfolio
described in the Schedule hereto (the "Portfolio"). The Portfolio shall be
held in the custody of a custodian agreeable to the Company, which shall
be the custodian named in Schedule I hereto (the "Custodian") or such
other custodian as the parties shall agree in writing (the "Additional
Custodian").
2.2. Any cash, securities or other property transferred to the Custodian by the
Client shall in the absence of express instructions to the contrary form
part of the Portfolio. Any income derived from the Portfolio, any monies
resulting from disposal or redemption of securities or other property
forming part of the Portfolio, and any securities or other property
purchased out of any such proceeds, shall be added to the Portfolio.
2
2.3. Subject as hereinafter provided, the Client warrants that it is and shall
during the continuance of this Agreement remain the beneficial owner of
the Portfolio free of all liens, charges, options and third party rights
whatsoever.
3. CUSTODY
3.1. Subject to 3.2. below, all funds and assets transferred to the Company by
the Client or otherwise acquired pursuant hereto plus securities or other
property purchased or acquired pursuant hereto shall be deposited with the
Custodian for safekeeping.
3.2. Notwithstanding the foregoing, subject to all necessary or desirable
consents of any relevant authorities, the Company or the Custodian may
give effect to their obligations hereunder by depositing securities or
other investments held or acquired pursuant hereto with any Additional
Custodian or with Euroclear, CEDEL or other securities clearing houses or
by employing sub-custodians or other agents.
3.3 As the Client shall request, registered securities will be registered in
the name of the Client, the Custodian or any trustee or nominee company
specified in the Schedule hereto or notified by the Client to the Company
from time to time, which trustee or nominee company will hold them as
nominee for the Client.
4. SCOPE OF AUTHORIZATION
4.1. The Client hereby authorizes the Company on the Client's behalf to invest
and re-invest, and vary the investment of, the Portfolio and any part
thereof, in accordance with the guidelines specified in the Schedule
hereto and as the Client may communicate by written instructions to the
Company from one or more persons authorized by the Board of Directors of
the Client from time to time but otherwise at the complete and absolute
discretion of the Company; provided however that the disposition of the
Client's property shall at all times be and remain within the Client's
control. The Client shall furnish the Company with a certified copy of any
resolution of the Board of Directors of the Client authorizing any person
to give instructions to the Company on the Client's behalf, and the
Company shall be entitled to accept such resolution as conclusive evidence
of that persons authority to give such instructions to the Company.
4.2. The Company shall make all decisions concerning any purchases, sales,
conversion privileges, subscription rights or other options appertaining
to the Portfolio of which the Company has written notice, in each case in
accordance with the Company's understanding of any investment policy
and/or investment guidelines set out in the Schedule hereto or
communicated by the Client in writing to the Company.
4.3. The Custodian shall deliver securities or other property, make payments or
otherwise move any part of the Portfolio on the Client's behalf on the
express instructions of the Client in writing or by tested telex or
facsimile.
4.4 The Company shall not (a) vote, tender or convert any securities in the
Portfolio, (b) execute waivers, consents and other instruments with
respect to such securities, and (c) endorse, transfer or deliver such
securities or consent to any class action, plan of
3
reorganization, merger, combination, consolidation, liquidation,
liquidation or similar plan with respect to such securities; provided,
however, that the Company shall deliver to the Client any notice
solicitation, plan, or other documentation relating to any of the
foregoing which is provided to the Company in its capacity as the
representative of the Client. The Company shall not incur any liability to
the Client by reason of any such failure to perform any such services
other than by reason of its failure to deliver as described in the
provision above. If the Company shall receive prior written notice of the
Client, in each case in accordance with the Investment Policy Guideline
set out in Schedule I hereto, in sufficient time, as determined by the
Company in its sole discretion, to perform any of the above-described
services, the Company, in the exercise of its best efforts, shall perform
such service on behalf of the Client.
4.5. The Company may appoint brokers, clearing organizations, agents or other
parties or intermediaries as the Client may agree from time to time for
the performance of any of its duties relating to the investment and
management of the Portfolio hereunder. Fees of brokers and such other
intermediaries and of the Custodian shall be paid by the Custodian out of
the Portfolio and all such payments shall be reported directly to the
Client.
4.6. The authorities herein contained are continuing ones and shall remain in
full force and effect until revoked by termination of this Agreement,
which termination will not affect any transaction entered into prior to
the date on which such termination took effect.
4.7. In this Agreement "Affiliate" means any holding company or subsidiary of
the relevant party or any other subsidiary of such a holding company
("subsidiary" and "holding company" having the meanings given to them by
section 155 of the Companies Act 1963).
4.8. The Company may sell or purchase investments which are included in, or
intended to become part of, the Portfolio as part of a larger transaction
or series of transactions in which other persons are interested PROVIDED
THAT the terms of such purchase or sale are in the Company's reasonable
opinion fair and equitable and, where the Company deals on behalf of the
Client and other persons as part of a larger transaction, or in a
transaction not specifically allocated to the Client at the time of
dealing, the transaction is to be identified in the Company's records on
the day of dealing as being expressly, wholly or to a specified extent for
the benefit of the Client and is to be accordingly allocated to the Client
and the price paid or received being that price agreed in the original
transaction should also be recorded in the Company's records on the day of
dealing.
4.9. Nothing contained in this Agreement shall prevent the Company or any of
its Affiliates from engaging in other businesses or rendering services of
any kind to any other person or entity. In connection therewith, the
Company and its Affiliates may, without limitation:
(a) receive fees for services rendered to any of the issuers of
securities held in the Portfolio;
4
(b) be retained to provide services to the Client or any of its
Affiliates in addition to the services the subject of this Agreement;
(c) hold the capital stock of the Client or any of its Affiliates; and
(d) hold the capital stock of any of the issuers of securities held in
the Portfolio.
4.10. Portfolio investments and reinvestments may differ from those made or
recommended with respect to other clients, including investment companies,
even though the investment objectives may be the same or similar. The
Company shall not be liable for such differences as exist between
Portfolio investments or reinvestments and investments or reinvestments
made or recommended with respect to other clients of the Company.
4.11. Movements in currency exchange rates may have a separate effect,
unfavorable as well as favorable, on the gain or loss otherwise
experienced on a Portfolio investment. The Company shall not be liable for
any losses experienced on a Portfolio investment due to movements in
currency rates.
4.12. The Company may appoint any person, firm or corporation to act as
sub-investment adviser and/or sub-investment manager to assist the Company
in the performance of its obligations under this Agreement. The Company
shall notify the Client of any such appointment. Fees of any such
sub-investment adviser or sub-investment manager shall be paid by the
Company and shall not be paid by the Client.
5. REPORTING
The Company shall at least once a month provide the Client with statements
containing information which may be set out in a Schedule hereto and such
other reports or data as may be reasonably requested. The Company shall
maintain appropriate records of all its activities hereunder and shall
make such records available to the Client or its agents as the Client
shall reasonably request.
6. FEES
As remuneration for the services provided under this Agreement the Client
shall pay to the Company the fees set out in Schedule I hereto. The fees
shall be paid each month in arrears. It is agreed between the Client and
the Company that the fees as set out in the Schedule hereto are subject to
revision by the Company after one year from the date of this Agreement on
at least 45 days notice to the Client.
7. REPRESENTATIONS AND WARRANTIES
7.1. The Client hereby represents and warrants to the Company as follows:
5
(a) the Client is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and has the corporate power and corporate authority to own its
assets and to transact the business in which it is now engaged;
(b) the Client has the corporate power and corporate authority to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by
the Client and constitutes a legal, valid and binding obligation of
the Client enforceable against the Client in accordance with its
terms.
No consent of any person, including without limit the stockholders or
creditors of the Client, and no license, permit, approval or
authorization of, or exemption by any governmental authority is
required by the Client in connection with this Agreement;
(c) the execution, delivery and performance of this Agreement will not
violate any provision of any existing law or regulation binding on
the Client, or any order, judgment, award or decree of any court,
arbitrator or government authority binding on the Client, or the
Memorandum of Association or bye-laws, both as amended, of the
Client, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Client is a party
or by which the Client or any of its assets may be bound, or require
the creation or imposition of any lien on any property, assets or
revenues of the Client pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument
or undertaking;
(d) the Client shall deliver to the Company such information, papers and
documents required or reasonably requested by the Company in
connection with the performance of its duties for the Portfolio;
(e) the Client shall promptly notify the Company of any facts or
circumstances or any change therein which may, directly or
indirectly, affect the management of the Portfolio by the Company;
(f) the list of signatures provided as part of Schedule II constitutes
the valid signatures of all officers, employees or agents of the
Client authorized to take action with respect to the Portfolio and
the Company shall be entitled to rely conclusively on any document
executed by any one of them;
(g) subject as herein provided, the Client is and shall during the term
of this Agreement remain as the beneficial owner of the Portfolio,
free and clear of any and all liens, charges, options and
encumbrances or other third party rights whatsoever.
8. LIMITS ON COMPANY RESPONSIBILITY
8.1. The duties and obligations of the Company shall be determined solely by
the express provisions of this Agreement and the Company shall be
responsible only for the good
6
faith performance of its duties and obligations as are specifically set
out in this Agreement. The Company shall not be bound in any way by any
agreement or contract between the Client and any third party (whether or
not the Company has knowledge thereof).
8.2. The Company shall not be responsible in any manner whatsoever for any
failure or inability of the Client to honour any of the provisions of this
Agreement.
8.3. The Company shall not be responsible for the solvency of or the due and
proper performance of the obligations of any third party bank, clearing
organization, broker, intermediary, nominee or agent appointed or employed
by the Company in good faith for the performance of its duties but the
Company shall make available to the Client such rights (if any) as the
Company may have against such person or institution in the event of the
insolvency of the said persons or institutions or its failure properly to
perform such obligations and shall give such assistance as the Client may
reasonably require to exercise such rights.
8.4. The Company shall be fully protected in acting on and relying upon any
written advice, certificate, notice, direction, instruction, request or
other paper or document which the Company in good faith believes to be
genuine and to have been signed or presented by the proper party or
parties, and may assume that any person purporting to give such advice,
certificate, notice, direction, instruction or request or other paper or
document has been duly authorized to do so.
8.5. The Company may seek legal advice in the event of any dispute or question
as to the construction of any of the provisions of this Agreement or its
duties hereunder, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in
good faith in reliance upon and in accordance with the opinion of such
legal advice.
8.6. The Company shall not be liable to the Client for any acts or omissions by
the Company, its employees and agents under and in connection with this
Agreement, except by reason of acts or omissions constituting bad faith,
gross negligence or willful misconduct.
8.7. The Client shall reimburse and indemnify the Company for, and hold it
harmless against, any loss, liability or expense, including without limit
legal fees, incurred without bad faith, willful misconduct or gross
negligence on the part of the Company arising out of or in connection with
its acceptance of, or the performance of its duties and obligations under,
this Agreement as well as the costs and expenses of defending against any
claim or liability arising out of or relating to this Agreement.
8.8. While the Company will endeavour to obtain the best price in any
transaction effected for the Client in accordance with the terms of this
Agreement, neither the Company nor any sub-investment manager or
sub-investment adviser appointed pursuant to clause 4.11 of this
Agreement, will owe the Client the duty of "Best Execution" as defined in
the IMRO Rules or elsewhere, other than as may be agreed in writing
between the Client and the Company from time to time.
7
8.9. Any complaints by the Client should be addressed in the first instance to
any Director of the Company.
9. LIABILITY FOR LOSSES
9.1. The Company shall not be liable for loss caused directly or indirectly by
government restrictions, exchange or market rulings, suspension of
trading, war, strikes or other conditions beyond the Company's control.
10. CONFIDENTIALITY
Except as required by the provisions of any applicable laws, rules, and
regulations or by any court order, neither of the parties hereto shall
during the continuance of this Agreement or after its termination disclose
any information relating to the business, investments, finances or other
matters of a confidential nature to any third party of which it may in the
course of the performance of the Agreement have become possessed.
11. TERMINATION AND AMENDMENT
11.1. This Agreement may be terminated by either party at any time from one year
after the date of this Agreement upon giving at least 30 days' written
notice to the other party.
11.2. Subject to any commitments made prior to the date of notice of termination
pursuant to sub-clause 11.1. above to purchase or dispose of securities or
other property (which shall be executed or completed even after such
date), the Company shall not after the date of said notice of termination
execute any further transactions on the Client's behalf. Upon termination,
neither of the parties shall have any obligation to the other except for
the parties' obligations under Clauses 8.7 and 10 and the Company's
obligation to return to the Client (as promptly as practicable in such
forms as it may then exist) the Portfolio, after deduction of management
fees and other sums properly due to the Company under this Agreement to
the date of termination, together with a full account of all transactions
effected up to such date.
12. WITHDRAWAL
12.1. The Client may withdraw any part of the Portfolio from management by the
Company at any time by giving 30 days' notice to the Company in writing.
Any assets withdrawn will be delivered to the Client as soon as
practicable thereafter.
12.2. A notice to withdraw the whole of the Portfolio will terminate this
Agreement as if it were a notice given under Clause 11, provided that such
notice may only be given in accordance with Clause 11.
8
13. GOVERNING LAW
13.1. This Agreement shall be governed by and construed in accordance with the
laws of the Republic of Ireland.
13.2. If any suit or arbitration is instituted by any of the parties hereto to
enforce any of the terms or conditions of this Agreement, each of the
parties hereto hereby submits to the jurisdiction of the courts of the
Republic of Ireland.
14. ARBITRATION
14.1. In the event of any dispute arising out of or in relation to this
Agreement the same shall be decided by Arbitration in accordance with the
provisions of the Arbitration Xxx 0000, or any statutory modification or
re-enactment thereof for the time being in force.
14.2. For the purposes of this Agreement the Arbitrator shall be chosen by the
President for the time being of the Incorporated Law Society of Ireland.
15. NOTICES
15.1. Notices to the Company may be delivered or dispatched by registered mail,
or may be faxed or telexed to the Company's address in Dublin, and to such
other addresses (and in the case of telex or fax to such telex or fax
addresses) as the Company may have designated in writing to the Client.
Such notices shall be deemed to have been properly delivered or given
hereunder and shall be effective on the date of delivery if delivered,
telexed or faxed or, if dispatched by registered mail, on the day on which
the same have been tendered for delivery by post.
15.2. Notices to the Client may be delivered or dispatched by registered mail,
or may be telexed or faxed to the Client's registered office or to such
other address as may be notified in writing by the Client to the Company.
Such notices shall be deemed to have been properly delivered or given
hereunder and shall be effective on the date of delivery if delivered,
telexed or faxed or, if dispatched by registered mail, on the day on which
the same have been tendered for delivery by post.
16. RULES
16.1. Where at any time compliance with any provision in this Agreement would be
contrary to any bye-law, rule, regulation or code of conduct or practice
in force from time to time and applying to either party, then the parties
shall meet to discuss in good faith a method of amending this Agreement in
light of such circumstances. If the parties cannot agree on a satisfactory
amendment within 45 days of the parties becoming aware of such potential
conflict, then either party may by notice to the other terminate this
Agreement forthwith. Sub-clause 11.2. shall apply to such termination.
16.2. If any provision or condition of this Agreement shall be held to be
invalid or unenforceable by any court, or regulatory agency or body, such
invalidity or unenforceability shall attach only to such provision or
condition. The validity of the remaining provisions shall not be affected
thereby and this Agreement shall be carried out as if such invalid or
unenforceable provision or conditions were not contained herein.
9
17. ENTIRE AGREEMENT AND AMENDMENTS
17.1. This Agreement, together with the Schedules hereto, constitutes the entire
agreement between the parties with respect to the management of the
Portfolio and matters ancillary thereto, including all accounts which the
Client may open or re-open with the Company, and supersedes and
extinguishes any arrangement, representations and/or warranties previously
given or made other than those expressly set out in this Agreement.
17.2. The express terms hereof control and supersede any course of performance
and/or usage of the trade.
17.3. This Agreement may not be amended except by a notice in writing signed by
both of the parties hereto.
18. NO WAIVER
Neither the failure nor delay on the part of any party in exercising any
right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the
same or any other right, remedy, power or privilege nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with
respect to any other occurrence. No waiver hereunder shall be effective
unless it is in writing and is signed by the party asserted to have
granted such waiver.
19. NO JOINT VENTURE
The Company and the Client are not partners or joint venturers together
and nothing herein shall be construed to make them such partners or joint
venturers or impose liability as such by reason thereof.
20. SUCCESSORS AND ASSIGNS
No assignment of this Agreement may be made by any party to this Agreement
without the consent of the other parties hereto, and any such assignment
made without such consent shall be null and void for all purposes. Subject
to the foregoing, the provisions of this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by each of the
parties hereto and their respective successors and assigns.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument, and such counterparts
together shall constitute one and the same instrument.
10
22. GENERAL
22.1. The Company may whether for its own account or that of any other person
acquire, hold or deal in any investments of any kind, nature or
description whatsoever, and nothing in this Agreement shall prevent the
Company from contracting or entering into or being interested in any
financial, banking, commercial, advisory or other transaction with any
other person.
22.2. The Company shall at all times maintain and keep in full force and effect
such insurance against such risks as is customary and appropriate for
investment management activities similar to those of the Company.
23. EFFECTIVE DATE AND SCHEDULES
This Agreement shall take effect from the 23rd of June 1997 subject to any
matter specified in the Schedules.
24. HEADINGS
The section headings contained herein are for convenience only and shall
not alter or limit or define the provisions hereof.
IN WITNESS whereof the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
SIGNED BY: ____________________________________
FOR AND ON BEHALF OF
INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD.
SIGNED BY: _____________________________________
FOR AND ON BEHALF OF
AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD.
11
SCHEDULE I
INVESTMENT POLICY GUIDELINE
I. PORTFOLIO
1. The Client is INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY
LTD. The Portfolio shall be called PROP (the "Portfolio").
a. The Portfolio represents capital for solvency purposes of the
Client.
b. The primary objective of the Portfolio is preservation of capital.
A secondary objective is returns commensurate with the Benchmark as
hereinafter defined.
2. The Portfolio is to be invested only in the asset class(es) detailed
below; together with all subsequent additions thereto of which the
Company is given notice, and all other property acquired therefrom,
proceeds therefrom, or in substitution therefor, less authorized
payment by the Custodian.
Asset Class Min% Max%
-----------------------------------------------------
[x] Fixed Income Securities 0 100
----- -----
[x] Money Market Instruments 0 100
----- -----
[x] Equity Securities 0 20
----- -----
[ ] Convertible Bonds _____ _____
[ ] Equity Derivatives _____ _____
[ ] Financial Derivatives _____ _____
[x] Foreign Exchange Contracts 0 20
----- -----
[ ] Foreign Exchange Derivatives _____ _____
[x] Money Market Funds 0 100
----- -----
[x] Repurchase Agreements 0 100
----- -----
[ ] _____ _____
[ ] _____ _____
Other asset classes shall not be permitted without the express written
approval of the Client.
[ ] Additional detail is attached as Asset Class Schedule.
a. The Portfolio shall be denominated in US dollars, hereinafter
referred to as the Base Currency.
3. Counterparty Risk
a. Wherever possible, all securities transactions shall be executed
"delivery versus payment."
b. All securities transactions shall be executed with commercial
banks, investment banks, brokers and trading firms
("Counterparties") of recognized standing in the financial markets.
c. To the extent that OTC Options and other derivatives, Foreign
Exchange Contracts and Repurchase Agreements are permitted in
Section I.2, they shall be executed with Counterparties of
recognized standing in the financial markets. Further, such
Counterparties shall carry Investment Grade Ratings, as defined by
Xxxxx'x or Standard & Poor's.
1
II. BENCHMARK
The Portfolio performance shall be measured with regard to the following
composite index which shall be considered the base asset allocation of the
Client:
Salomon Eurodollar 1-3 year Index 42.5
--------
Salomon Eurodollar 3-5 year Index 42.5
--------
US S & P 500 Index 15.0
--------
III. CUSTODIAN
1. The main Custodian is AIG Global Investment Trust Services, Ltd.,
although additional Custodian accounts may be opened with the approval
of the Client.
IV. GENERAL FIXED INCOME GUIDELINES
1. Currency
The Fixed Income Portfolio is a [ ] Single Currency Account
[ ] Hedged Currency Account
[X] Multi-Currency Account
as hereinafter defined.
a. A Single Currency Account shall be invested 100% in the Base
Currency as defined in Section I.2.a. Securities denominated in
or linked to other currencies are permitted only at the direction
of the Client.
b. A Hedged Currency Account shall be invested in securities
denominated in or linked to any currency provided, however, that
foreign exchange contracts, futures and/or options are executed
to reduce the net non-Base Currency exposure to less than 5% of
the Portfolio Market Value.
c. A Multi-Currency Account shall be invested in securities
denominated in or linked to any currency. Whether or not foreign
exchange contracts, futures and or options are permitted in
Section I.2., the non-Base Currency exposure of the Portfolio
shall not exceed 20.0% of the Portfolio Market Value. The net
non-Base Currency exposure shall not exceed 20.0% of the
Portfolio Market Value.
Unless permitted in Section I.2., Foreign Exchange Contracts
shall not be executed for a Multi-Currency Account except for the
acquisition or disposition of securities or for the conversion of
coupon/dividend receipts to the Portfolio Base Currency; no
hedging or speculative currency transactions are permitted.
2. Country Risk
The Portfolio is a [X] Diversified Country Risk Account
[ ] Targeted Country Risk Account as hereinafter
defined.
All country limits are percent of Portfolio Market Value on date of
purchase and refer to the country of issuer or guarantor. In the case
of banking institutions, the country of a full branch shall be deemed
to be the domicile of the head office. Country exposures shall not
exceed the greater of the country limit or U.S. $5,000,000 equivalent
at the time of purchase.
2
A Diversified Country Risk Account permits the following per country
limits.
a. United States 100%
b. Canada Switzerland 75%
Germany United Kingdom
Japan
c. EEC, EIB, ECSC, World Bank (IBRD), Other Supranationals 50%
d. Australia Finland Luxembourg Portugal 25%
Austria France Netherlands Spain
Belgium Ireland New Zealand Sweden
Denmark Italy Norway
e. Other (Total value of all securities not covered under
IV.2.a.-d. above) 10%
A Targeted Country Risk Account specifically targets the
investment opportunities in one or more particular countries as
detailed below:
------------------------ -----------%
------------------------ -----------%
------------------------ -----------%
[ ] Additional detail attached as Country Risk Schedule.
3. Issuer Limits
a. Except in the case of Supranational, Sovereign, and Sovereign -
supported issues, where the limits under IV.2 above apply, the
securities of one issuer should not exceed the greater of 10.0%
of the Portfolio Market Value or U.S. $5,000,000 at time of
purchase.
4. Issue Limits
a. In the case of fixed income securities, no holding should exceed
the greater of 10% of the amount outstanding or U.S. $5,000,000
nominal at the time of purchase.
5. Maturity Limits
a. In the case of fixed income securities, no individual security
shall have a remaining modified duration greater than EIGHT YEARS.
b. In the case of money market securities, no individual security
shall have a remaining maturity greater than ten years,
notwithstanding the frequency of any rate reset provision of the
security.
c. The Portfolio shall maintain a target weighted average modified
duration of between approximately 1.25 and 3.75 years. For
purposes of this calculation only, the maturity of a floating rate
security is deemed to be its next succeeding reset date.
6. US Securities
The purchase of US securities is permitted.
3
7. Credit Risk
a. All securities purchased for the Portfolio which carry a long term
rating by either Standard & Poor's or Moody's shall have a rating
of AA- or AA3 or better at the time of purchase. Notwithstanding
the foregoing, securities may be purchased for the Portfolio which
have ratings of A- or A3 or better provided that, in aggregate,
they do not constitute more than 25% of the Portfolio Market
Value. (Securities which are not so rated at the time of intended
purchase shall not be permitted except on a case by case approval
of the Client.)
All securities purchased for the Portfolio which carry a short
term rating by either Standard & Poor's or Moody's shall have a
rating of A-1 or P-1 or better at the time of purchase. Notwith-
standing the foregoing, securities may be purchased for the
Portfolio which have ratings of A-2 or P-2 or better provided
that, in aggregate, they do not constitute more than 25% of the
Portfolio Market Value. (Securities which are not so rated at the
time of intended purchase shall not be permitted except on a case
by case approval of the Client.)
b. Unrated securities are permitted. The unrated securities shall
have credit quality at the time of purchase, as determined in good
faith by the Company, equivalent to other permitted securities
which are rated as in IV.7.a. The Client shall be notified at
least quarterly as to the composition and status of the unrated
securities held in the Portfolio.
c. A security purchased either in accordance with Section IV.7.a.
which receives a downwardly revised rating or in accordance with
Section IV.7.b. which receives a newly established rating that in
either case would make such security ineligible for further
purchase remains a permitted security to the extent of the then
current holdings.
d. Private placements are permitted. Any private placements
purchased for the Portfolio shall be marketable securities. This
permission is specifically intended to allow the purchase of
unlisted securities.
[ ] Additional detail is attached as Credit Risk Schedule.
8. Realized Gains/Losses
Net realized capital gains and losses should be minimized. (For
example: To the extent fixed income assets are permitted, bond switch
activity to enhance returns is encouraged, but should not become
excessive and should be undertaken within the context of minimizing
net gains and losses).
V. GENERAL EQUITY GUIDELINES
The Equity portion of the portfolio seeks to replicate the aggregate price
and yield performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"), an index which emphasizes large capitalization
companies in the United States.
4
VI. FEES
The fee schedule will be calculated as follows: 0.35% per annum on the
first $100 million U.S. dollars, or equivalent of Portfolio Market value;
0.25% per annum on the next $100 million; and 0.15% per annum on any amount
exceeding $200 million.
The fees will be calculated based on the previous month end Market value of
the portfolio (including accrued interest) and are payable monthly in
arrears. The fees shall be reduced proportionally for any part of a period
in which this Agreement is not in full effect.
[ ] Additional detail is attached as Supplementary Fee Schedule
Signed by:_________________________________________
for and on behalf of
INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY LIMITED
Signed by: _________________________________________
for and on behalf of
AIG GLOBAL INVESTMENT CORPORATION (IRELAND) LIMITED
5
SCHEDULE II
AUTHORIZED PERSONS
Name(s) and address(es) of persons authorized to give and receive notices,
consents or other communications.
Name Address
-------------------- ------------------------------------------
Xxxxx X. Xxxxxxxxxxx AIG Global Investment Corp. (Ireland) Ltd.
Iwan R. Datwiler XXX Xxxxx
Xxxxxxx Xxxx
Xxxxxx 0,
Xxxxxxx
PHN: 353-1-283-7766
FAX: 000-0-000-0000
TLX: 91965
-------------------------------------------------
-------------------------------------------------
Name Address
-------------------- ------------------------------------------
Xxxx X. Xxxxxxx International Property Catastrophe
Xxxx X. Xxxxx Reinsurance Co. Ltd.
Xxxxxx X. Xxxxxxxxxxxx P.O. Box HM 152
Xxxxxxxx XX AX
Bermuda
PHN: 000-000-0000
FAX: 000-000-0000
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
______________________
1 Version: 25 June 1997.
6
