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EXHIBIT 10.2
Amendment Number 5 to the
Automatic Variable Annuity Reinsurance Agreement
(Referred to as the Agreement)
Between
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
of St. Petersburg, Florida
(referred to as the Reinsured)
and
WMA LIFE INSURANCE COMPANY LIMITED
of Xxxxxxxx, Bermuda
(referred to as the Reinsurer)
Effective January 1, 2000
I. Article XIII, GENERAL PROVISIONS, Paragraph 6, Assignment or Transfer,
is replaced by the following:
6. Assignment or transfer. In no event shall either the Reinsured
or the Reinsurer assign any of its rights, duties or
obligations under this Agreement without the prior written
approval of the other party. Such approval shall not be
unreasonably withheld.
In no event shall either the Reinsured or the Reinsurer
transfer either the Reinsured Plans reinsured under this
Agreement or the reinsurance without the prior written
approval of the other party. Such approval shall not be
unreasonably withheld provided such transfer is for the
principal purpose of:
(i) ceding mortality risks in excess of either parties'
retention limit(s) on a monthly or yearly renewable
term plan of reinsurance, or
(ii) securing financial reinsurance, which shall not
result in a material increase in surplus through a
reduction of any liability in any financial statement
filed with any regulatory authority, and/or shall not
result in a permanent transfer by the Reinsurer of
the Business Reinsured.
II. Schedule B1, AMOUNT OF REINSURANCE, is replaced by the following:
1. At any time on or after January 1, 2000 and before January 1,
2003, the Reinsurer shall have the option (provided the
Reinsurer demonstrates sufficient capacity) to prospectively
increase the quota share percentage on all reinsured policies
issued from January 1, 1999 to the date the Reinsurer elects
to increase the quota share
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percentage. The quota share percentage, as increased, shall
not exceed the Scheduled Quota Share Percentage in accordance
with terms contained in Schedule B1 of the Agreement, as
amended. The Reinsurer shall demonstrate its capacity by
showing the Reinsured that its unassigned invested securities,
together with anticipated cash flows (including retrocession
facilities), will be sufficient to meet expected reinsurance
settlements, with regard to the policies subject to the
increased quota share percentage, for a period of not less
than twenty-four months following the date the Reinsurer
elects to increase the quota share percentage. Upon election
to increase the quota share percentage, the initial ceding
allowance payable to the Reinsured shall equal (a) less (b),
where:
(a) equals settlements that would have otherwise occurred under
the Agreement, had the increased quota share percentage been
applicable from the policy issue date to the date the
Reinsurer elects to increase the quota share percentage,
accrued at an effective rate of (*)%, and
(b) equals all settlements due or paid under the Agreement from
the policy issue date to the date the Reinsurer elects to
increase the quota share percentage, accrued at an effective
rate of (*)%.
The initial ceding allowance shall be payable within 14 days
after the Reinsures election to increase the quota share
percentage.
2. The Reinsurer agrees to exercise, in unison, its option to
convert business reinsured under the Automatic Flexible
Premium Variable Life Reinsurance Agreement Number 3 to the
Automatic Flexible Premium Variable Life Reinsurance Agreement
Number 3 and its option to prospectively increase its quota
share on business reinsured under the Automatic Variable
Annuity Reinsurance Agreement.
The Reinsurer shall exercise its options in a manner such that
the ratio of:
(i) the initial ceding allowance due The Reinsured on business
converted under the Automatic Flexible Premium Variable Life
Reinsurance Agreement Number 3 to (ii) the initial ceding
allowance otherwise due The Reinsured if all in force business
were converted under the Automatic Flexible Premium Variable
Life Reinsurance Agreement Number 3,
shall equal the ratio of:
(i) the initial ceding allowance due The Reinsured on business
subject to the quota share increase under the Automatic
Variable Annuity Reinsurance Agreement to (ii) the initial
ceding allowance otherwise due The Reinsured if the quota
share were increased to the maximum allowable on all in force
business issued on or after January 1, 1999.
For example, assume if on March 31, 2001:
- The Reinsurer were to convert all policies reinsured
under the Automatic Flexible Premium Variable Life
Reinsurance Agreement Number 3 to the Automatic
Flexible Premium Variable Life Reinsurance Agreement
Number 2, the initial ceding allowance would equal
$40,000,000, and
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(*)Material omitted pursuant to Rule 24b-2 under the Securities Exchange Act of
1934.
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- The Reinsurer were to increase the quota share on all
policies reinsured under the Automatic Variable
Annuity Reinsurance Agreement to the maximum
otherwise permitted, the initial ceding allowance
would equal $20,000,000, and
- The total combined initial ceding allowance to paid
by the Reinsurer is $30,000,000, then
- The Reinsurer would only be permitted to convert
policies reinsured under the Automatic Flexible
Premium Variable Life Reinsurance Agreement Number 3
to the Automatic Flexible Premium Variable Life
Reinsurance Agreement Number 2, on a last in first
reinsured basis, until the initial ceding allowance
equals $20,000,000 (2/3 of the total), and
- The Reinsurer would only be permitted to increase the
quota-share on policies reinsured under the Automatic
Variable Annuity Reinsurance Agreement to the maximum
otherwise permitted, on a last in first reinsured
basis, until the initial ceding allowance equals
$10,000,000 (1/3 of the total).
Thereafter, the quota share percentage applicable to all new
policies issued and reinsured shall be determined in
accordance with terms contained in Schedule B1 of the
Agreement, as amended.
* * * * *
Except as expressed herein, all terms, covenants and provisions of the Automatic
Variable Annuity Reinsurance Agreement, as amended, not in conflict with the
provisions of this amendment shall remain unaltered and in full force and
effect.
In witness of the above, the Reinsured and the Reinsurer, by their respective
officers have executed this amendment in duplicate at the dates and places
indicated and shall be effective as of January 1, 2000.
WESTERN RESERVE LIFE WMA LIFE INSURANCE
ASSURANCE CO. OF OHIO COMPANY LIMITED
at St. Petersburg, FL at Duluth, GA
on December 28, 2000. on December 29, 2000.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
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Title: VP & Managing Actuary Title: VP
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. XxXxxxxx
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Title: EVP Title: VP & Actuary
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