EXHIBIT 8(g)
UNCONDITIONAL CAPITAL MAINTENANCE AGREEMENT
BETWEEN
AMERICAN INTERNATIONAL GROUP, INC.
AND
AMERICAN GENERAL LIFE INSURANCE COMPANY
This Unconditional Capital Maintenance Agreement (this "Agreement"), is made,
entered into and effective as of March 30, 2011, by and between American
International Group, Inc., a corporation organized under the laws of the State
of Delaware ("AIG"), and American General Life Insurance Company, a corporation
organized under the laws of the Texas (the "Company").
WITNESSETH:
WHEREAS, the Company is a life insurer subject to certain capital
requirements of the insurance laws and regulations of Texas (the "Domiciliary
State");
WHEREAS, the Company is an indirect wholly owned subsidiary of AIG; and
WHEREAS, AIG has an interest in unconditionally maintaining and enhancing
the Company's financial condition:
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. In the event that the Company's Total Adjusted Capital for each of
the Company's first and third fiscal quarters (as determined based
on the Company's first and third fiscal quarterly filed statutory
financial statements, respectively, subject to any adjustments or
modifications thereto required by the Domiciliary State's insurance
department or the Company's independent auditors) falls below the
Specified Minimum Percentage of the Company's projected Company
Action Level RBC (in each case as estimated by the Company as of the
end of each such first and third fiscal quarters, as the case may
be), AIG shall, within the respective time periods set forth under
paragraph 4, in accordance with paragraph 5 and in compliance with
applicable law, provide to the Company cash, cash equivalents,
securities or other instruments that qualify (as admitted assets)
for purposes of calculating the Company's Total Adjusted Capital, as
a contribution and not as a loan, in an amount such that the
Company's Total Adjusted Capital as of the end of each of the
Company's second and fourth fiscal quarter, as the case may be, will
be projected to be at least equal to the Specified Minimum
Percentage of the Company's Company Action Level RBC.
Notwithstanding the foregoing, AIG may, at any time as it deems
necessary in its sole discretion and in compliance with applicable
law, make a contribution to the Company in such amount as is
required for the Company's Total Adjusted Capital to equal a
percentage of its Company Action Level RBC determined to be
appropriate by the Company and AIG.
2. In the event that the Company's Total Adjusted Capital (a) for each
of the Company's first, second and third fiscal quarters (as
determined based on the Company's first, second and third fiscal
quarterly filed statutory financial statements, respectively,
subject to any adjustments or modifications thereto required by the
Domiciliary State's insurance department or the Company's
independent auditors) is in excess of the Specified Minimum
Percentage of the Company's projected Company Action Level RBC (in
each case as estimated by the Company as of the end of each such
first, second and third fiscal quarters, as the case may be) or (b)
as of each fiscal year end (as shown in the Company's fiscal
year-end filed statutory financial statements, together with any
adjustments or modifications thereto required by the Domiciliary
State's insurance department or the Company's independent auditors)
is in excess of the Specified Minimum Percentage of the Company's
Company Action Level RBC (as shown in such fiscal year-end statutory
financial statements), the Company shall, within the respective time
periods set forth under paragraph 4, in accordance with paragraph 5
and subject to approval by the Company's board of directors as
required by the laws of the Domiciliary State, declare and pay
dividends ratably to its equity holders in an aggregate amount equal
to the lesser of (i) the amount necessary to reduce the Company's
projected or actual Total Adjusted Capital as of each of the end of
the Company's fiscal quarter or fiscal year, as the case may be, to
a level equal to or not materially greater than the Specified
Minimum Percentage of the Company's Company Action Level RBC or (ii)
the maximum amount permitted by the Domiciliary State's law to be
paid as an ordinary dividend less an amount that the Company and AIG
agree is appropriate to protect the Company from exceeding such
maximum amount allowed by such Domiciliary State's law as a result
of potential audit adjustments or adjustments to the projections on
which such dividend amount is based. For the avoidance of doubt,
this paragraph shall only require the Company to pay ordinary
dividends; under no circumstances shall the Company be required to
pay any dividend which would trigger the
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extraordinary dividend provisions of Section 823.107 of the
Insurance Law of the Domiciliary State or that is otherwise
prohibited by the Domiciliary State. Notwithstanding the foregoing,
this Agreement does not prohibit the payment of extraordinary
dividends to reduce the Company's projected or actual Total Adjusted
Capital to a level equal to or not materially greater than the
Specified Minimum Percentage of the Company's Company Action Level
RBC.
3. For the avoidance of doubt, the terms "Total Adjusted Capital",
"Company Action Level RBC", and "Surplus to Policyholders" shall
have the meanings ascribed thereto under the insurance laws and
regulations of the Domiciliary State, or, with respect to "Total
Adjusted Capital" and "Company Action Level RBC", if not defined
therein, shall have the meanings ascribed thereto in the risk-based
capital ("RBC") instructions promulgated by the National Association
of Insurance Commissioners ("NAIC"). The term "Specified Minimum
Percentage" shall be equal to the percentage set forth on Schedule 1
attached hereto, which shall be agreed to by AIG and the Company at
least once every year beginning upon the date of the filing of the
Company's 2010 Annual Statement with the Domiciliary State's
insurance department and following review against the capital
adequacy standards and criteria ("Agency Criteria") of each of
Standard & Poor's Corp. ("S&P"), Xxxxx'x Investors Service
("Moody's") and A.M. Best Company ("A.M. Best"). Notwithstanding the
obligation of the Company and AIG to review the Specified Minimum
Percentage on an annual basis, the parties hereto agree to review
and revise the Specified Minimum Percentage on a more frequent
basis, if the parties agree it is appropriate, to take into account
(a) any material changes after the date hereof to any Agency
Criteria adopted by any of S&P, Moody's or A.M. Best, on the one
hand, or to the law of the Domiciliary State or NAIC RBC rules or
instructions, on the other hand, which causes the results under the
Agency Criteria to diverge from that under the law of the
Domiciliary State or NAIC RBC rules or instructions, (b) the Company
completes a material transaction that is treated materially
differently by the Agency Criteria, on the one hand, and the NAIC
RBC rules or instructions, on the other hand, or (c) any other
material development or circumstance affecting the Company which AIG
and the Company agree merits a reevaluation of the Specified Minimum
Percentage then in effect.
4. The Company and AIG agree that any contribution to be made under
paragraph 1 will take place within the following two time periods
per year, as applicable: (a) during the time beginning on the first
business day after the filing of the Company's first fiscal
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quarterly statutory financial statements and ending on the last
business day prior to the end of the Company's second fiscal
quarter; and (b) during the time beginning on the first business day
after the filing of the Company's third fiscal quarterly statutory
financial statements and ending on the last business day prior to
the end of the Company's fourth fiscal quarter. Notwithstanding the
foregoing, in compliance with applicable law, any capital
contribution provided for under paragraph 1 may be made by AIG after
the close of any fiscal quarter or fiscal year of the Company but
prior to the filing by the Company of its statutory financial
statements for such fiscal quarter or fiscal year, respectively, and
contributions of this nature shall be recognized as capital
contributions receivable as of the balance sheet date of the yet to
be filed quarterly or annual financial statement (as the case may
be), pursuant to paragraph 8 of Statement of Statutory Accounting
Principles No. 72, to the extent approved by the Domiciliary State.
The Company and AIG further agree that any dividends to be made
under paragraph 2 will take place as soon as practicable after the
filing by the Company of the relevant fiscal quarter-end or fiscal
year-end statutory financial statements or such earlier time as may
be agreed by the Company and AIG.
5. At the time that any contribution is due under paragraph 4, AIG
agrees that it will either (a) make such contribution to the
Company's direct parent and cause such direct parent to then
contribute such funds, securities or instruments so contributed by
AIG to the Company, or (b) make such contribution directly to the
Company without receiving any capital stock or other ownership
interest in exchange therefor, subject in either case to any
required regulatory approvals. At any time any dividends are due
under paragraph 4, the Company agrees that it will make such
dividend to the Company's direct parent and will use its best
efforts to cause such direct parent to then dividend or otherwise
provide such funds to AIG. All contributions and dividends
contemplated under this Agreement shall be approved, declared and
made, as applicable, in compliance with applicable law, including,
without limitation, approval by the board of directors of each
applicable entity (including the Company) and any prior notice
requirements specified under applicable rules and regulations of the
Domiciliary State.
6. Subject to the requirements of applicable law and the approval, to
the extent required, by any or all of the Company's senior
management, relevant management committees, board of directors, and
of any insurance regulator, the Company hereby acknowledges that, in
a manner consistent with past practice and
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any other reasonable requirements of AIG, it will comply with all
financial and budgetary planning, risk mitigation, derisking or
pricing, corporate governance, investment, informational and
procedural requirements set forth by AIG.
7. AIG hereby waives any failure or delay on the part of the Company in
asserting or enforcing any of its rights or in making any claims or
demands hereunder.
8. Unless earlier terminated in accordance with this paragraph 8, this
Agreement shall continue indefinitely. AIG shall have the absolute
right to terminate this Agreement upon thirty (30) days' prior
written notice to the Company, which notice shall state the
effective date of termination (the "Termination Date"); provided,
however, that AIG agrees not to terminate this Agreement unless (a)
AIG significantly modifies the corporate structure or ownership of
the Company, or (b) AIG sells the Company to an acquirer (i) having
a rating from at least one of S&P, Xxxxx'x, A.M. Best or a
substitute agency, which is a nationally recognized statistical
rating organization, that is at least equal to the lower of (x)
AIG's then-current rating from such agency or (y) the Company's
then-current rating as supported by this Agreement from such agency;
or (ii) such that, immediately on the effective date of the sale by
AIG of the Company, the Company's capitalization is consistent with
the minimum capital adequacy standards and criteria of at least one
of S&P, Xxxxx'x, A.M. Best or a substitute agency, which is a
nationally recognized statistical rating organization, for a rating
that is equal to or better than the Company's then-current rating on
the date immediately preceding such sale. To the extent not
terminated previously by AIG pursuant to the foregoing, this
Agreement will terminate automatically one year after the closing of
any sale of the Company by AIG, and all provisions hereof will be of
no further force and effect. For the avoidance of doubt, the
termination of this Agreement pursuant to this paragraph 8 shall not
relieve either party of any obligation it may owe to the other party
hereunder that existed prior to, and remains outstanding as of, the
Termination Date.
9. Any policyholder holding a policy issued by the Company prior to the
termination of this Agreement shall have the right to demand that
the Company enforce the Company's rights under paragraphs 1, 4 and 5
of this Agreement, and, if the Company fails or refuses to take
timely action to enforce such rights or the Company defaults in any
claim or other payment owed to any such policyholder when due, such
policyholder may proceed directly against AIG to enforce the
Company's rights under paragraphs 1, 4 and 5 of this
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Agreement; provided, however, that no policyholder of the Company
may take any action authorized under this paragraph 9 unless and
until (a) such policyholder has given AIG written notice of its
intent to enforce the terms of this Agreement as provided in this
paragraph 9, which notice shall specify in reasonable detail the
nature of and basis for the policyholder's complaint and (b) AIG has
failed to comply with this Agreement within sixty (60) days after
such notice is given; and, provided, further, that upon termination
of this Agreement in accordance with paragraph 8 hereof, the rights
of any policyholder as provided for under this paragraph 9 shall
terminate effective as of the Termination Date, except with respect
to the obligation of AIG (if any) to make capital contributions to
the Company pursuant to paragraphs 1, 4 and 5 of this Agreement
solely to the extent such obligation arose prior to, and remained
unsatisfied as of, the Termination Date (it being understood that
upon AIG's satisfaction of all such obligations after the
Termination Date, no such policyholder shall have any rights against
the Company or AIG, as the case may be, under this paragraph 9).
10. This Agreement is not, and nothing herein contained and nothing done
pursuant hereto by AIG shall constitute or be construed or deemed to
constitute, an evidence of indebtedness or an obligation or
liability of AIG as guarantor, endorser, surety or otherwise in
respect of any obligation, indebtedness or liability, of any kind
whatsoever, of the Company. This Agreement does not provide, and is
not intended to be construed or deemed to provide, any policyholder
of the Company with recourse to or against any of the assets of AIG.
11. Any notice, instruction, request, consent, demand or other
communication required or contemplated by this Agreement shall be in
writing, shall be given or made or communicated by United States
first class mail, addressed as follows:
If to AIG:
American International Group, Inc.
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
If to the Company:
American General Life Insurance Company
c/o SunAmerica Financial Group, Inc.
0000-X Xxxxx Xxxxxxx
0
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
American General Life Insurance Company
c/o SunAmerica Financial Group, Inc.
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: General Counsel
12. The covenants, representations, warranties and agreements herein set
forth shall be mutually binding upon and inure to the mutual benefit
of AIG and its successors and the Company and its successors.
13. This Agreement shall be governed by and construed in accordance with
the laws of New York, without giving effect to the principles of
conflict of laws.
14. If any provision of this Agreement shall be declared null, void or
unenforceable in whole or in part by any court, arbitrator or
governmental agency, said provision shall survive to the extent it
is not so declared and all the other provisions of this Agreement
shall remain in full force and effect unless, in each case, such
declaration shall serve to deprive any of the parties hereto of the
fundamental benefits of or rights under this Agreement.
15. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations
and discussion, whether oral or written, of the parties. This
Agreement may be amended at any time by written agreement or
instrument signed by the parties hereto.
16. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same
agreement among the parties.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AMERICAN INTERNATIONAL GROUP, INC.
By: XXXXX X. XXXXXXXXX
---------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
By: XXXXXX X. GENDER
---------------------------------------------
Name: Xxxxxx X. Gender
Title: Senior Vice President and Treasurer
AMERICAN GENERAL LIFE INSURANCE COMPANY
By: XXX X. XXXXXXXX
---------------------------------------------
Name: Xxx X. Xxxxxxxx
Title: Senior Vice President and Chief Financial Officer
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SCHEDULE 1
The Specified Minimum Percentage shall initially equal 350% of the Company's
Company Action Level RBC.
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