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EXHIBIT 10.1
Amendment Number 4 to the
Automatic Flexible Premium Variable Life Reinsurance Agreement Number 2
(Referred to as the Agreement)
Between
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
St. Petersburg, Florida
(referred to as the Reinsured)
and
WMA LIFE INSURANCE COMPANY LIMITED
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 B2, AMOUNT OF REINSURANCE, is replaced by the following:
1. At any time, on or after January 1, 2000 and before April 1,
2003, the Reinsurer shall have the option (provided the
Reinsurer demonstrates sufficient capacity) to convert the
reinsurance on all policies and riders reinsured under the
Automatic Flexible Premium Variable Life Reinsurance Agreement
Number 3 ("FFB MRT Agreement"), issued from January 1, 1999 to
the date the Reinsurer elects to convert the reinsurance on
the policies and riders, to the Agreement. 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
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settlements, with regard to the converted reinsurance on the
policies and riders, for a period of not less than twenty-four
months following the date the Reinsurer elects to convert the
reinsurance of the policies and riders from the FFB MRT
Agreement to the Agreement. Upon election to convert the
reinsurance on the policies and riders, the initial ceding
allowance payable to the Reinsured shall equal (a) less (b)
less (c), where:
(a) equals settlements that would have otherwise occurred
under the Agreement, had the policies and riders been
reinsured under the Agreement from the policy issue
date to the date the Reinsurer elects to convert the
reinsurance on the policies and riders from the FFB
MRT Agreement, accrued at an effective rate of (*) %,
and
(b) equals all settlements due or paid under the FFB MRT
Agreement from the policy issue date to the date the
Reinsurer elects to convert the reinsurance on the
policies and riders to the Agreement from the FFB MRT
Agreement, accrued at an effective rate of (*) %.
(c) equals the settlement paid for business that was
recaptured for quarters one through three of 1999
under the Co/ModCo Agreement. This amount is $458,456
measured from October 1, 1999, accrued at an
effective rate of (*) %.
The initial ceding allowance shall be payable within 14 days
after the Reinsurer's election to convert the reinsurance of
the policies and riders.
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 the terms contained in Schedule B2 of the
Agreement, as amended.
* * * * *
Except as expressed herein, all terms, covenants and provisions of the Automatic
Flexible Premium Variable Life Reinsurance Agreement Number 2, as amended, that
are 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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