EXHIBIT 8(C)
AMENDED AND RESTATED
UNCONDITIONAL CAPITAL MAINTENANCE AGREEMENT
BETWEEN
AMERICAN INTERNATIONAL GROUP, INC.
AND
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
This Amended and Restated Unconditional Capital Maintenance Agreement (this
"Agreement"), is made, entered into and effective as of February 18, 2014, by
and between American International Group, Inc., a corporation organized under
the laws of the State of Delaware ("AIG"), and The Variable Annuity 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;
WHEREAS, AIG has an interest in unconditionally maintaining the Company's
financial condition; and
WHEREAS, AIG and the Company executed that certain Unconditional Capital
Maintenance Agreement, dated March 30, 2011 (as amended, the "2011 CMA"), and
the parties have agreed to amend and restate such 2011 CMA as provided in this
Agreement:
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. Capital Contributions. 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, taking
into account (for purposes of such estimation) facts and circumstances
occurring after the end of such fiscal quarter but before such time as
AIG would be obligated pursuant to paragraph 3 to make a contribution),
AIG shall, within the respective time periods set forth under paragraph
3, in accordance with paragraph 4 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. Defined Terms. For the avoidance of doubt, the terms "Total Adjusted
Capital" and "Company Action Level RBC" shall have the meanings ascribed
thereto under the insurance laws and regulations of the Domiciliary
State, or, 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 2014
1
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.
3. Timing of Capital Contributions. 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 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.
4. Funding Mechanics. At the time that any contribution is due under
paragraph 3, 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. All contributions contemplated under this Agreement
shall be approved and made in compliance with applicable law, including,
without limitation, approval by the board of directors of each
applicable entity and any prior notice or approval requirements
specified under applicable rules and regulations.
5. AIG Policies. 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 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.
6. No Failure to Claim. 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.
7. Termination. Unless earlier terminated in accordance with this paragraph
7, 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, in each case, (i) having a rating from
at
2
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 modification of corporate structure or 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 modification of corporate structure or 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 7 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.
8. Policyholder Rights. 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, 3 and 4 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, 3 and 4 of this Agreement; provided, however,
that no policyholder of the Company may take any action authorized under
this paragraph 8 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 8, 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 7 hereof, the
rights of any policyholder as provided for under this paragraph 8 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, 3 and 4 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 8).
9. No Indebtedness; No Policyholder Recourse Against AIG. 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.
10.Notices. 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 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
3
If to the Company:
The Variable Annuity Life Insurance Company
0000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
The Variable Annuity Life Insurance Company
c/o AIG Life and Retirement
0 XxxXxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: General Counsel
11.Successors. 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.
12.Governing Law. 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.
13.Severability. 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.
14.Entire Agreement; Amendments. 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.
15.Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.Counterparts. 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]
4
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: /s/ XXXXXXX X. XXXXXXX
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Corporate Actuary
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By: /s/ XXXX XXXX XXXXXX
--------------------------
Name: Xxxx Xxxx Xxxxxx
Title: Executive Vice
President & Chief
Financial Officer
5
SCHEDULE 1
The Specified Minimum Percentage shall equal 385% of the Company's Company
Action Level RBC.
6
