Exhibit (8)(i)
ENGAGEMENT SCHEDULE II
regarding
Master Services Agreement
(Outsourcing Solutions Division Services)
THIS ENGAGEMENT SCHEDULE II (the "SCHEDULE II"), dated as of November 17, 2000
(the "Effective Date"), is made and executed by and between LIBERTY INSURANCE
SERVICES CORPORATION, a South Carolina corporation ("LIS") and GENERAL AMERICAN
LIFE INSURANCE COMPANY a Missouri corporation ("GENERAL AMERICAN"), and replaces
prior Engagement Schedule dated as of November 17, 2000 in its entirety. This
Schedule II dated as of November 17, 2000 has been executed pursuant to the
above described Master Services Agreement dated as of November 17, 2000 (the
"MASTER AGREEMENT") executed by said parties.
NOW THEREFORE, in consideration of the mutual covenants and promises hereinafter
set forth, the parties hereby agree as follows:
Special Terms and Conditions
SCOPE OF SERVICES: The Services to be provided by LIS are set forth more fully
in EXHIBIT A attached hereto and incorporated herein.
COMPENSATION: LIS shall be paid for the services provided in accordance with the
terms and conditions set forth in EXHIBIT B attached hereto and incorporated
herein.
EXPENSES REIMBURSABLE: See the expenses itemized in EXHIBIT B attached hereto.
2002 HOURLY RATES: LIS' Outsourcing Solutions Division's hourly rates for 2002
are set forth in EXHIBIT C attached hereto and incorporated herein.
PERFORMANCE STANDARDS: The Standards by which specific services are measured and
reported to General American are as set forth in EXHIBIT D attached hereto and
incorporated herein.
SERVICES COMMENCEMENT DATES: LIS shall commence the providing of ongoing
administration Services (described in said EXHIBIT A), on the Effective Date.
INITIAL TERM OF THIS ENGAGEMENT: Three (3) years, from and after the Effective
Date of this Schedule II.
General American/LIS Engagement Schedule_v11002
page 2
PRIMARY SERVICES SITE: 0000 Xxxxxxxx Xxxxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000 or
0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, or other
administrative locations of LIS.
PRODUCTS BEING ADMINISTERED UNDER THIS SCHEDULE: Fixed and Variable Annuity
products and an Adjustable Life product as set forth in EXHIBIT E attached
hereto and incorporated herein.
DELIVERABLES (if any): not applicable
RELATIONSHIP MANAGER: For LIS: Xxx Organ; For General American: Xxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxx Xxxxxx
Remaining Terms and Conditions
1. MASTER AGREEMENT INCORPORATED
It is agreed by the parties that, except as modified or superseded by this
Engagement Schedule II, or any addenda hereto, all of the terms and conditions
of the Master Agreement are hereby incorporated herein and made a part of this
Schedule II. Unless otherwise indicated herein, any reference to the "Engagement
Schedule" or the "Schedule" shall be deemed to refer, collectively, to this
document and all other exhibits and other agreements (including the Master
Agreement) incorporated herein.
2. SERVICES
All Services provided pursuant to this Schedule II shall be paid for by General
American in accordance with the terms of this Schedule II. Those Services that
are provided on a per item or per rate basis (as described in Exhibit B) shall
be invoiced and paid for by General American in accordance with the rates
provided in Exhibit B. All other Services will be provided by LIS on a time and
materials basis, with the labor rates for such Services which are chargeable at
LIS' then current hourly rates. LIS' current rates, as of the Effective Date of
this Agreement, have been attached hereto, as Exhibit C. LIS reserves the right
to change such hourly rates on thirty days prior notice to General American;
provided, however, that in no event shall LIS be entitled to change such hourly
rates more often than once for any twelve month period during the term of this
Schedule.
3. POST-TERM SERVICES.
In the event that this Engagement Schedule II expires or is terminated (other
than due to the material breach by General American), LIS agrees that, in order
to assist in providing transitional service to General American, LIS shall offer
reasonable assistance to General American in converting the records of General
American from the LIS system to whatever service or system is selected by
General American (provided, however, that LIS may establish
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General American/LIS Engagement Schedule_v11002
such compensation procedures as it may reasonably require [including the payment
of any then existing indebtedness of General American to it] to ensure it is
paid, for all such assistance, at its then current standard rates and fees).
4. GENERAL PROVISIONS
a. RELATIONSHIP OF PARTIES. Nothing contained in this Schedule II shall be
construed as creating a joint venture, partnership, or employment relationship
between the parties hereto.
b. CHOICE OF LAW AND FORUM. This Schedule II shall be deemed to have been
entered into in St. Louis County, Missouri, on the Effective Date and shall be
governed by and construed in accordance with the terms and conditions contained
in the Master Agreement regarding choice of law. Any suit or claim permitted to
be filed under the Master Agreement will be brought solely in the United States
District Court for the Eastern District of Missouri, and each party hereby
submits to the personal jurisdiction thereof.
c. ATTORNEYS' FEES. If either party to this Schedule II is required to engage
in any proceedings, legal or otherwise, to enforce its rights under this
Schedule, the prevailing party shall be entitled to recover from the other, in
addition to any other sums due, the reasonable attorney's fees, costs and
necessary disbursements involved in said proceedings.
d. FORCE MAJEURE. Neither party shall be liable for delays in the performance
of any of its obligations hereunder due to causes beyond its reasonable control.
The phrase "causes beyond its reasonable control" shall be deemed to include,
but not be limited to, acts of God or strikes.
e. PARTIAL INVALIDITY. In the event that one or more of the provisions
contained in this Schedule II shall for any reason be held illegal, invalid or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any of the other provisions contained in this Schedule.
f. WAIVER OF BREACH. The failure of each party at any time or times to require
performance of any provision hereof shall not operate as a waiver and will in no
manner affect the right at a later time to enforce such provision.
g. COMPLIANCE WITH LAWS. General American agrees to comply with all applicable
laws, rules and regulations in connection with the availing itself of Services,
and its other activities under this Schedule II.
h. FACSIMILE SIGNED EXECUTION COPY. It is understood and agreed by the parties
that a signed copy of this Schedule II (bearing an authorized, original
signature of the signing party) shall, if sent by facsimile to one or more other
parties, be enforceable against the signing party or parties, provided that the
parties further agree that in the event of such execution of this Schedule by
facsimile, hard copy originals shall be executed and circulated promptly
thereafter.
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General American/LIS Engagement Schedule_v11002
i. ASSIGNMENT. This Schedule II shall be binding upon the parties' respective
successors and permitted assigns. The parties acknowledge and agree that the
Services provided by LIS pursuant to this Schedule II were contracted for by
GENERAL AMERICAN based upon the particular skills of LIS' Outsourcing Solutions
Division. LIS may not assign the Services obligations under this Schedule II
without the prior written consent of GENERAL AMERICAN, which consent shall not
be unreasonably withheld. Provided, however, LIS may assign this Schedule and/or
any of its rights and/or obligations hereunder, upon written notice to GENERAL
AMERICAN and without GENERAL AMERICAN's consent:
(a) to any affiliate of LIS, or
(b) in connection with any change of control of LIS or its Outsourcing
Solutions Division business unit, or
(c) in connection with the sale of substantially all of the assets of
LIS or its Outsourcing Solutions Division business unit.
j. MISCELLANEOUS. In the event of a conflict between the terms and conditions
of this Schedule II and those of the Master Agreement or any prior schedule, the
terms and conditions of this Schedule II shall control. Any capitalized terms
appearing in this Schedule II shall, unless otherwise provided herein, have the
meaning given them in the Master Agreement.
5. ENTIRE AGREEMENT
This Schedule II, including the attachments hereto and the Master Agreement
incorporated herein, constitutes the sole agreement between General American and
LIS with respect to the subject services, and no representation, provisions,
warranty, term, condition, promise, duty or liability, whether expressed or
implied, shall be binding upon or applied to LIS except as provided herein or
incorporated herein. This Schedule II supersedes all proposals, oral or written,
and all other communications between the parties relating to the subject matter
hereof, including without limitation, the previously executed administrative
service agreement by and between General American and Genelco Incorporated dated
January 1, 1995, the prior schedule dated as of November 17, 2000, and may not
be amended except by a writing signed by General American and LIS.
THIS CONTRACT (i.e., IN THE MASTER AGREEMENT, WHICH TERMS ARE INCORPORATED
HEREIN) CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES. IN WITNESS WHEREOF, LIS and General American have caused this Schedule
II to be executed in multiple counterparts by their duly authorized and
empowered officers or representatives as of the Effective Date set forth above.
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General American/LIS Engagement Schedule_v11002
GENERAL AMERICAN LIFE INSURANCE COMPANY
By: ______________________________________
Duly Authorized Officer
/s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx, AVP, Annuity Operations
Date Executed: 10/24/02
ACCEPTED BY:
LIBERTY INSURANCE SERVICES CORPORATION
By: /s/ Xxxxxxx-Xxx Xxxxxxxx
-----------------------------
Xxxxxxx Xxx Xxxxxxxx, Vice President Licensing and Annuity
Administration
Date Executed: 11/8/02
EXHIBITS ATTACHED TO THIS ENGAGEMENT SCHEDULE
- AMENDED EXHIBIT A - Description of Services
- AMENDED EXHIBIT B - Fee Schedule
- EXHIBIT C - Hourly Rates - 2002
- EXHIBIT D - Performance Standards
- EXHIBIT E - Products Being Administered
Page 6
General American/LIS Engagement Schedule_v11002
EXHIBIT A
TO ENGAGEMENT SCHEDULE II
BETWEEN LIBERTY INSURANCE SERVICES CORPORATION AND GENERAL AMERICAN
ADMINISTRATIVE SERVICES
PERFORMED BY LIS
The parties agree to develop mutually agreeable procedures with regard to the
services outlined in this Exhibit A.
I. NEW BUSINESS PROCESSING
A. Screens applications based on issue requirements and data
entered to admin system.
B. Process transfers (1035), payroll deduction payments (TSA) and
direct payments as requested.
C. Prepares contract data page and issues contract for paid
business and mails to contract owners or agents.
D. Establishes and maintains all certificate owner, annuitant,
and contract owner records, as applicable, on computer and
imaging systems.
E. Notifies agent of any error or missing data needed to
establish certificate owner, annuitant or contract owner
records.
F. Prints, prepares and mails confirmation statements for initial
and payments to additional owners with copies to agents on
variable business.
G. Sends monies received with application into designated
lockbox, if appropriate.
H. Prints and maintains inventory of all annuity contracts (or
annuity certificates), guarantees, and endorsements, as
applicable.
II. FINANCIAL TRANSACTIONS
A. COLLECTIONS
1. Receives purchase payments and reconciles amount paid
with returned billing statements or other remittance
media.
2. Prepares group billing lists for all periodic payment
contracts, as required by client.
3. Establishes billing for loans and processes loan
payments as they are received.
4. Updates the contract owner master records to reflect
financial transactions processed. Generates accounting
entries to support each financial transaction.
Exhibit A - Page 1
General American/LIS Engagement Schedule_v11002
B. DISBURSEMENTS
1. Receives and processes requests for withdrawals
(including minimum required distributions, systematic
withdrawals, and loans), surrenders, free-look
cancellations, death claims and annuitizations.
2. Prepares checks for disbursement transactions and
forwards to appropriate party. This process is
performed using General American's CDS system.
3. Maintains supply of General American check stock. Check
stock is provided by General American. Reviews printed
checks for reasonableness.
III. CONTRACT MAINTENANCE
A. Receives and processes, after securing proper authorization,
all contract owner service requests including information
requests, transfers of ownership, and changes of any other
information maintained for the contracts.
B. Researches all inquiries using both data stored in the system
and imaged records. Responds to any questions or inquiries.
C. Images all copies of communications from owners and
annuitants.
D. Retains and accounts for any contract administrative charges.
E. Handles "conservation" procedures for withdrawals over certain
$ amounts.
IV. CONTRACT OWNER REPORTING
A. Prepares and mails statement of account to each owner or
annuitant on a calendar or policy year quarter basis.
Prepares and mails special year end letters to XXX contract
owners as Fair Market Value Letters
B. Prepares and mails prospectuses, annual and semi-annual
reports to contract owners, both underlying fund and
separate account reports.
C. Coordinates/tallies Proxies for all General American annuity
business.
V. ACCOUNTING SERVICES
A. GENERAL
1. Maintains chart of accounts to support transaction
accounting.
2. Provides daily accounting reports or extracts.
3. Retains systems generated reports in accordance with a
retention schedule mutually established. Provides
access to such reports for internal and external
auditing.
Exhibit A - Page 2
General American/LIS Engagement Schedule_v11002
4. Provides information necessary to post accounting
entries to the general ledger.
5. Perform monthly accrual entries for items such as
separate account liabilities, management fees, vendor
payments, etc.
6. Perform ad hoc financial analysis of General American's
annuity financial statements as necessary. This
analysis will only pertain to assistance to General
American's accountants and actuaries in performing
their financial analysis.
7. Provide assistance in year-end statutory "Blue and
Green Book" filings through the completion of "year-end
letters".
B. CASH RECEIPTS
1. Tracks all deposit checks on LIS' Outsourcing Solutions
Division's systems.
2. Provides balancing services including cash deposits
equal to cash applied to contracts, unapplied cash is
monitored to ensure all cash is properly and
efficiently handled.
3. Processes lock box receipts according to schedule.
4. Supports check, EFT and wire transfer methods of
payments.
5. Provides support assistance in the research and
resolution of returned checks.
6. Deposits all cash received under the contracts into a
designated bank account.
7. Images all checks and assigns them a control number.
Balances, edits, endorses and prepares daily deposit.
8. On dishonored items, reverses all transactions,
prepares reports and communicates with contract owner.
9. Process Pre-Authorized Check (PAC) payments through the
use of General American's mainframe.
C. ACCOUNT RECONCILIATION
1. Reconciles other suspense and withholding accounts
monthly.
2. Balances all suspense accounts to ensure that financial
transactions processed are complete.
VI. COMMISSION
A. Pay commissions and send payment detail on GTG/VA business.
B. Creates and maintains detailed commission transaction records
for each GTG payment.
Exhibit A - Page 3
General American/LIS Engagement Schedule_v11002
C. Creates and maintains summary for advance commissions
processed for TSA Durham
D. Creates commission adjustment transactions as necessary due to
free-look cancellations.
E. Reconciles commissions advanced to commissions earned and the
resulting balance. TSA Durham Only
F. Maintain "increase" spreadsheets to report contribution
increases of TSA Durham business.
VII. CONTRACT OWNER TAX REPORTING
A. Reconciles gross distributions and withholdings on general
ledger records with 1099s filed.
B. Prepares report or extract of federal withholding, state
withholding, and state premium tax deducted
VIII. FINANCIAL AND MANAGEMENT REPORTS
A. Provides, on the time schedule agreed upon, periodic reports,
which will be specified, as mutually agreed by the parties,
during the implementation phase. It is understood and agreed
by the parties, however, that any reports, other than those
standard system and management reports currently available
on the system, will only be provided on a time and materials
basis.
B. Provide monthly liability, sales and fund performance reports
to General American management in the current approved form.
Any adjustment to the current report format will be made on
a time and materials basis.
C. Provide Unit Value and Net Asset reporting to select reporting
services. If any additional reporting services are added to
the current list, set up will be charged on a time and
materials basis.
D. Completion of surveys to selected reporting agencies (ex.
LOMA, VARDS, etc.). If any additional surveys are added to
the current list, set up will be charged on a time and
materials basis.
IX. BUSINESS RESUMPTION PLAN
A. Maintains and, in the event of a disaster (fire, earthquake,
etc.), implements business resumption plan to ensure
operations can continue as usual.
Exhibit A - Page 4
General American/LIS Engagement Schedule_v11002
X. REGULATORY STATEMENT REPORTS
A. Prepares IRS Reports 1099-R for contract owners who received
annuity payments or distributions, and IRS Report 5498 for
XXX contributions. Mails to contract owners and IRS.
B. Responds to any requests from plan administrators, trustees or
owners, as necessary, for information affecting the plan,
contract, etc.
XI. ON-LINE ACCESS
A. LIS agrees to grant on-line access to Durham Company for
purposes of accessing policy and agent information. The
access software to be used should be agreed upon by those
two parties. A portion of the expenses for such on-line
access will be allocated to Durham.
XII. TELECOMMUNICATION SERVICES
A. Records all calls for General American and customer's
protection.
B. Provides service through toll-free numbers.
C. Customer Service Reps available 7:00 a.m. to 7:00 p.m.,
Central Time, Monday-Friday, on business days as defined.
Exhibit A - Page 5
General American/LIS Engagement Schedule_v11002
EXHIBIT B
TO ENGAGEMENT SCHEDULE II
BETWEEN LIBERTY INSURANCE SERVICES CORPORATION AND GENERAL AMERICAN
(FEE SCHEDULE - ANNUITY PRODUCTS)
SERVICES PROVIDED:
ADMINISTRATION (includes customer service) FEES
------------------------------------------ ----
1. New Business/Application Processing
- Standard Applications $25/app
- 1035/Rollover Applications $30/app
2. Monthly In-Force Maintenance: (increases by 5%
in 2001 and 2002 and 2003)
- GT Global $12.82/contract
- GT Global (SELIC) $50/contract (invoiced quarterly)
- Variable Annuity (Individual) $8.75/contract
- TSA Annuity $7.19/contract
- SPIA/SPAD $5.55/contract
- TSA Annuitized $5.55/contract
3. Monthly Minimum $400,000
(With respect to the said Annuity Monthly Minimum charges, it is understood and
agreed that LIS will xxxx General American the greater of (i) the applicable
Monthly Minimum amount, or (ii) the actual in-force maintenance fees. Other fees
and costs, including without limitation, new business fees, information
technology services fees, and out of pocket expenses are not included in the
Monthly Minimum charge calculation.
(FEE SCHEDULE - LIFE PRODUCT)
SERVICES PROVIDED:
ADMINISTRATION (includes customer service) FEES
------------------------------------------ ----
1. Monthly In-Force Maintenance $2.67/policy
2. Monthly Minimum $1,500
(With respect to the said Life Monthly Minimum charges, it is understood and
agreed that LIS will xxxx General American the greater of: (i) the applicable
Monthly Minimum amount, or (ii) the actual in-force maintenance fees. Other fees
and costs, including without limitation, new business fees, information
technology services fees, and out of pocket expenses are not included in the
Monthly Minimum charge calculation.
Exhibit B
General American/LIS Engagement Schedule_v11002
INFORMATION TECHNOLOGY SERVICES FEES
1. Software development, customization, data conversion, etc. - Time &
Materials
PASS THROUGH EXPENSES
The monthly in-force maintenance fee described above contains an annual
allowance for out-of-pocket expenses of a maximum amount equal to four hundred
thousand dollars ($400,000) (regardless of the actual monthly in-force
maintenance fees or the Monthly Minimum amount paid). Any out-of-pocket expenses
in excess of the allowance will be passed through directly to General American.
Exhibit B
General American/LIS Engagement Schedule_v11002
EXHIBIT C
TO ENGAGEMENT SCHEDULE II
BETWEEN LIBERTY INSURANCE SERVICES CORPORATION AND GENERAL AMERICAN
(Hourly Rates for LIS' Outsourcing Division--2002)
--------------------------------------------------
General Description Hourly Rates
--------------------------------------------------
Officers $ 315.00
Directors
Manager III
Consultant VI
------------------------------------------------
Manager II $ 236.00
Consultant III
------------------------------------------------
Project Manager $ 194.00
Senior I/T Consultant
Manager I
Consultant II
------------------------------------------------
Lead Business Analyst $ 168.00
Lead Programmer Analyst
Sr. Business Analyst
Sr. Programmer Analyst
Sr. LAN Administrator
Consultant I
Analyst III
------------------------------------------------
LAN Administrator $ 147.00
Programmer Analyst
Business Analyst
Analyst II
------------------------------------------------
Project Administration $ 121.00
Analyst I
------------------------------------------------
General American/LIS Engagement Schedule_v11002
EXHIBIT D
TO ENGAGEMENT SCHEDULE II
BETWEEN LIBERTY INSURANCE SERVICES CORPORATION AND GENERAL AMERICAN
ADMINISTRATION SERVICE STANDARDS
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IVA Fixed
--------------------------------------------------------------------------------------------------
NEW BUSINESS
--------------------------------------------------------------------------------------------------
- Policy issued (TSA only) 2 days 12 days
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- Exchanges (paperwork surrendering Co.) 1 day 5 days
--------------------------------------------------------------------------------------------------
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IN FORCE
--------------------------------------------------------------------------------------------------
- Financial transactions (loans, surrenders, partial 5 days 5 days
withdrawals, funds transfers or exchanges)
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- Non-financial transactions (address change, 5 days 5 days
beneficiary change, name change)
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
CORRESPONDENCE
--------------------------------------------------------------------------------------------------
- Routine 5 days 5 days
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- Regulatory 7 days 7 days
--------------------------------------------------------------------------------------------------
- Complaints (LIS to acknowledge receipt of 2 days 2 days
complaint to GENERAL AMERICAN)
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--------------------------------------------------------------------------------------------------
STATEMENT MAILING (AFTER PRINTING) 3 days 7 days
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
CLAIMS (paperwork to claimant) 7 days 7 days
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Average Accuracy Rate is 98%
Call Center : 80% of calls answered in 16 seconds or less. Abandonment Rate of
Less than 2.0%
General American/LIS Engagement Schedule_v11002
EXHIBIT E
TO ENGAGEMENT SCHEDULE II
BETWEEN LIBERTY INSURANCE SERVICES CORPORATION AND GENERAL AMERICAN
PRODUCTS BEING ADMINISTERED
LIFE:
An adjustable life product code-named PSI (Protect, Save, Invest) is
administered on LSP. This block of business is closed to new issues.
Distribution system: General American agents.
ANNUITY:
XXXXX ~
A few blocks of individual variable and fixed annuities with no specific
code-names (other than one fixed product is code-named Flex 2) are administered
on Xxxxx. The IVA and fixed annuities are a closed block of business with a few
exceptions granted for QDRO and split beneficiary. New participants to existing
HR-10 plans can be added. Distribution system: General American agents.
A block of tax-sheltered annuities is also administered on Xxxxx. The TSA
products have no specific code-name. The TSA block of business is closed to new
business with the exception of new participants to existing cases. Distribution
system: General American agents.
VANTAGE ~
A block of individual variable annuities code-named GT Global Allocator is
administered on Vantage. This block of business is closed to new issues. In
addition to supporting this product for General American, we also provide
administrative services for this product for SELIC, a subsidiary of General
American.
A block of tax-sheltered annuities is also administered on Vantage. The TSA
products are codenamed Galaxy, Consolidator, 5-Star, and Premier 5. The only
product currently being sold is Premier 5. With the exception of Premier 5, the
TSA block of business is closed to new business. Increases to existing contracts
are allowed. Distribution system: X.X. Xxxxxx agents.
INSTALLMENT CHECK SYSTEM ~
A block of fixed Single Premium Immediate Annuities (SPIA) and TSA
annuitizations with no specific code-name is administered on the Installment
Check System. Only TSA annuitizations have new issues. The Installment Check
System is supported at General American.
EXCEL ~
A block of GTG annuitizations (Variable Single Premium Annuities) with no
specific code-name is administered on an enhanced Excel spreadsheet. These
contracts are all annuitizations from an existing contract.
General American/LIS Engagement Schedule_v11002
