EXECUTION VERSION
REINSURANCE AGREEMENT
BETWEEN
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(REFERRED TO AS THE CEDING COMPANY)
AND
FORETHOUGHT LIFE INSURANCE COMPANY
(REFERRED TO AS THE REINSURER)
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS 3
SECTION 1.1 DEFINITIONS 3
ARTICLE II. BASIS OF REINSURANCE AND BUSINESS REINSURED 8
SECTION 2.1 REINSURANCE 8
SECTION 2.2 SEPARATE ACCOUNTS 9
SECTION 2.3 MODIFIED COINSURANCE ACCOUNT 9
SECTION 2.4 NON-GUARANTEED ELEMENTS 9
SECTION 2.5 INSURANCE CONTRACT CHANGES 9
SECTION 2.6 FOLLOW THE FORTUNES 10
ARTICLE III. PAYMENTS; MODIFIED COINSURANCE ADJUSTMENTS; SETTLEMENT;
ADMINISTRATION AND ACCOUNTING 10
SECTION 3.1 PAYMENTS BY THE REINSURER AND THE CEDING COMPANY 10
SECTION 3.2 MODIFIED COINSURANCE ADJUSTMENT 10
SECTION 3.3 INVESTMENT CREDIT ON MODIFIED COINSURANCE ASSETS 11
SECTION 3.4 SETTLEMENT OF MODIFIED COINSURANCE ADJUSTMENT 11
SECTION 3.5 ACCOUNTING REPORT 11
SECTION 3.6 SETTLEMENT 12
SECTION 3.7 DELAYED PAYMENTS 12
SECTION 3.8 OFFSET AND RECOUPMENT RIGHTS 12
SECTION 3.9 CERTAIN REPORTS 12
ARTICLE IV. LICENSES; SECURITY 12
SECTION 4.1 LICENSES 12
SECTION 4.2 SECURITY 13
SECTION 4.3 TRUST ACCOUNT AND SETTLEMENTS 13
SECTION 4.4 INVESTMENT OF TRUST ASSETS 13
SECTION 4.5 DEPOSIT OF ASSETS 14
SECTION 4.6 ADJUSTMENT OF SECURITY AND WITHDRAWALS 14
SECTION 4.7 WITHDRAWALS BY THE CEDING COMPANY 14
SECTION 4.8 REINSURANCE CREDIT 14
SECTION 4.9 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE REINSURER 15
ARTICLE V. OVERSIGHTS; COOPERATION; REGULATORY MATTERS 15
SECTION 5.1 OVERSIGHTS 15
SECTION 5.2 COOPERATION 16
SECTION 5.3 REGULATORY MATTERS 16
ARTICLE VI. DAC TAX 16
SECTION 6.1 ELECTION 16
SECTION 6.2 DEFINITIONS 16
SECTION 6.3 EXCHANGE OF INFORMATION 16
SECTION 6.4 EFFECTIVENESS 17
SECTION 6.5 U.S. TAX STATUS REPRESENTATION 17
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TABLE OF CONTENTS
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SECTION 6.6 TRANSFER OF INSURANCE RISK ERROR! BOOKMARK NOT DEFINED.
SECTION 6.7 BREACH OF REPRESENTATION 17
ARTICLE VII. INSOLVENCY 17
SECTION 7.1 INSOLVENCY OF THE CEDING COMPANY 17
ARTICLE VIII. DURATION; TERMINATION 17
SECTION 8.1 AGREEMENT DURATION 17
SECTION 8.2 SURVIVAL 18
SECTION 8.3 RECAPTURE 18
SECTION 8.4 RECAPTURE PAYMENTS 18
ARTICLE IX. INDEMNIFICATION; DISCLAIMER 19
SECTION 9.1 REINSURER'S OBLIGATION TO INDEMNIFY 19
SECTION 9.2 CEDING COMPANY'S OBLIGATION TO INDEMNIFY 19
SECTION 9.3 NO DUPLICATION 19
SECTION 9.4 WAIVER OF DUTY OF UTMOST GOOD FAITH 19
ARTICLE X. MISCELLANEOUS 19
SECTION 10.1 NOTICES 19
SECTION 10.2 ENTIRE AGREEMENT 20
SECTION 10.3 CAPTIONS 20
SECTION 10.4 GOVERNING LAW AND JURISDICTION 20
SECTION 10.5 NO THIRD PARTY BENEFICIARIES 21
SECTION 10.6 EXPENSES 21
SECTION 10.7 COUNTERPARTS 21
SECTION 10.8 SEVERABILITY 21
SECTION 10.9 WAIVER OF JURY TRIAL; MULTIPLIED AND PUNITIVE DAMAGES 21
SECTION 10.10 TREATMENT OF CONFIDENTIAL INFORMATION 21
SECTION 10.11 ASSIGNMENT 22
SECTION 10.12 CONSTRUCTION 22
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REINSURANCE AGREEMENT
THIS
REINSURANCE AGREEMENT (the "Agreement"), is made and entered into on April
25, 2012, effective as of the Effective Time by and between Hartford Life and
Annuity Insurance Company, a
Connecticut-domiciled life insurance company (the
"Ceding Company"), and Forethought Life Insurance Company, an Indiana-domiciled
life insurance company (the "Reinsurer"). For purposes of this Agreement, the
Ceding Company and the Reinsurer shall each be deemed a "Party."
WHEREAS, the Ceding Company and the Reinsurer have entered into a Master
Agreement, dated as of April 25, 2012 (the "Master Agreement"); and
WHEREAS, the Ceding Company wishes to cede to the Reinsurer, and the Reinsurer
wishes to reinsure, on a [REDACTED] indemnity reinsurance basis, on the terms
and conditions set forth herein, the Covered Insurance Policies (as hereinafter
defined).
NOW, THEREFORE, in consideration of the mutual and several promises and
undertakings herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Ceding Company
and the Reinsurer agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 DEFINITIONS. Any capitalized term used but not defined herein shall
have the meaning set forth in the Master Agreement. The following terms have the
respective meanings set forth below throughout this Agreement:
"Accounting Period" means, during the term of this Agreement, (i) prior to the
date of an Interim Business Termination, each calendar month and (ii) after the
date of an Interim Business Termination, each calendar quarter or month, as
determined by the Ceding Company in its reasonable discretion (in each case, or
any fraction thereof ending on the Recapture Date or the Termination Date, as
applicable).
"Accounting Report" has the meaning set forth in Section 3.5.
"Agreement" has the meaning set forth in the preamble.
"Ceding Company" has the meaning set forth in the preamble.
"Ceding Company Indemnified Parties" has the meaning set forth in Section 9.1 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Action Level RBC" means,
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"Confidential Information" means all documents and information concerning one
Party, any of its Affiliates, the Reinsured Liabilities or the Covered Insurance
Policies, including any information relating to any Person insured directly or
indirectly under the Covered Insurance Policies, furnished to the other Party or
such other Party's Affiliates or representatives in connection with this
Agreement or the transactions contemplated hereby, except that Confidential
Information does not include information which: (a) at the time of disclosure or
thereafter is generally available to and known by the public other than by way
of a wrongful disclosure by a Party hereto or by any representative or Affiliate
of a Party hereto; (b) was or becomes available on a non-confidential basis from
a source other than the Parties hereto or their representatives, provided that
such source is not and was not prohibited from transmitting the information by a
contractual, legal, fiduciary, or other obligation of confidentiality by a Party
hereto; or (c) was independently developed without violating any obligations
under this Agreement and without the use of any Confidential Information.
"Covered Insurance Policies" means any and all endorsements, riders,
certificates and contracts of insurance issued by the Ceding Company on or after
the Effective Time that correspond to the annuity products identified on
Schedule 1.1 and any renewals thereof, including without limitation all such
contracts lapsed and terminated with unpaid claims or subsequently reinstated.
"Effective Time" means 12:00 a.m. EST on May 1, 2012.
"Eligible Assets" has the meaning set forth in Section 4.4 of this Agreement.
"Extra Contractual Obligations" means all liabilities and obligations to any
Person (including a Governmental Body) arising out of or relating to the Covered
Insurance Policies (other than liabilities or obligations arising under the
express terms and conditions, and within the limits, of the Covered Insurance
Policies), including any liability for fines, penalties, taxes, fees,
forfeitures, compensatory or punitive, exemplary, special, treble, bad faith,
tort or any other form of extra contractual damages awarded against or paid by
the Ceding Company, including all legal fees and expenses relating thereto,
which liabilities or obligations arise from any act, error or omission, whether
intentional, negligent or in bad faith, arising out of (i) the form, sale,
marketing, underwriting, production, issuance, cancellation or administration of
the Covered Insurance Policies, (ii) the investigation, defense, trial,
settlement or handling of claims, benefits, or payments under the Covered
Insurance Policies, (iii) the failure to pay or the delay in payment or errors
in calculating or administering the payment of benefits, claims or any other
amounts due or alleged to be due under or in connection with the Covered
Insurance Policies, including unclaimed property liabilities arising under or
relating to the Reinsured Policies, or (iv) the failure of the Covered Insurance
Policies to qualify for their intended tax status.
"Fair Market Value" means with respect to an asset (or liability), the amount at
which the that asset (or liability) could be bought (or incurred) or sold (or
settled) in a current transaction between willing parties, that is, other than
in a forced or liquidation sale.
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"Fund Value" means the separate account assets funding variable benefits of the
Covered Insurance Policies.
"Financial Asset" means "financial asset" as defined in the UCC.
"General Account Liabilities" means all gross liabilities, obligations, expenses
and Taxes arising out of or relating to the Covered Insurance Policies incurred
after the Effective Time, including Extra Contractual Obligations, other than
the Separate Account Liabilities.
"General Account Reserves" means the aggregate amount of general account
reserves of the Ceding Company (without regard to the transactions contemplated
by this Agreement) with respect to the Covered Insurance Policies, in each case
calculated consistent with the reserve requirements, statutory accounting rules
and actuarial principles applicable to the Ceding Company under the Applicable
Law; provided the term "General Account Reserves" does not include the Separate
Account Reserves.
"Interest Maintenance Reserve" means the liability reserve determined in
accordance with SAP, the purpose of which is to amortize realized capital gains
and losses resulting from fluctuations in the interest rate.
"Investment Property" means "investment property" as defined in the UCC.
"Loss" shall have the meaning set forth in Section 9.1.
"Master Agreement" shall have the meaning set forth in the recitals.
"Modified Coinsurance Account" shall have the meaning set forth in Section 2.3.
"Modified Coinsurance Adjustment" shall have the meaning set forth in Section
3.2.
"Modified Coinsurance Assets" means the assets held by the Ceding Company in
support of the Modified Coinsurance Reserve.
"Modified Coinsurance Reserve" means the General Account Reserves and the
Separate Account Reserves held by the Ceding Company.
"Non-Guaranteed Element Policy" means the policy of the Ceding Company with
respect to Non-Guaranteed Elements provided to the Reinsurer on or before the
Effective Time.
"Non-Guaranteed Elements" means cost of insurance charges, loads and expense
charges, pricing assumptions, credited interest rates, participation rates, and
any other non-guaranteed elements with respect to the Covered Insurance
Policies.
"Party" has the meaning set forth in the preamble.
"Premiums" means premiums, considerations, deposits, charges, fees, and similar
receipts with respect to the Covered Insurance Policies.
"Proceeds" means "proceeds" as defined in the UCC.
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"Recapture Date" has the meaning set forth in Section 8.3 of this Agreement.
"Recapture Triggering Event" means any of the following occurrences:
(a) the Reinsurer has become insolvent or has been placed into liquidation,
rehabilitation, conservation, supervision, receivership or similar
proceedings (whether voluntary or involuntary), or there has been
instituted against it proceedings for the appointment of a receiver,
liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other
agent known by whatever name, to take possession of its assets or assume
control of its operations;
(b) the Reinsurer ceases to maintain any of (i) a Standard & Poor's
Corporation's (or its successor's) insurer financial strength rating of at
least BBB+, (ii) a Xxxxx'x Investors Services, Inc.'s (or its successor's)
insurer financial strength rating of at least Baa1, or (iii) an A.M. Best
Company, Inc.'s (or its successor's) claims paying rating of at least B++;
(c) the Reinsurer's Total Adjusted Capital falls below one-hundred fifty
percent (150%) of Company Action Level RBC as of a quarter-end and has not
been cured as of the forty-fifth (45th) calendar day following such
quarter-end; provided that in the event following the Effective Date there
is a material change in the factors and formula prescribed by the National
Association of Insurance Commissioners with respect thereto, the Parties
will amend this Agreement to incorporate an alternate calculation that is
reasonably equivalent to the Company Action Level RBC in effect as of the
Effective Time within 30 days after the implementation of such change, and
if the Parties cannot agree on any such alternative, the Reinsurer shall
continue to calculate its Company Action Level RBC as if such material
change had not occurred;
(d) there has been a material breach of this Agreement or any Transaction
Agreement by the Reinsurer, including failure to fund the Trust Account as
required, and such breach has not been cured within thirty (30) calendar
days after notice;
(e) the Ceding Company is unable to receive Reserve Credit within thirty (30)
calendar days of Reinsurer's receipt of written notice from the Ceding
Company as to the inability to receive Reserve Credit;
(f) the Ceding Company and Reinsurer have not entered into the Purchase
Agreement on or prior to June 15, 2012; or
(g) the Purchase Agreement terminates pursuant to its terms.
"Recoverables" has the meaning set forth in Section 3.1(a) of this Agreement.
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"Reinsured Liabilities" means the General Account Liabilities and the Separate
Account Liabilities.
"Reinsurer" has the meaning set forth in the preamble.
"Reinsurer Indemnified Parties" has the meaning set forth in Section 9.2 of this
Agreement.
"Required Balance" means,
[REDACTED]
"Reserve Credit" means full statutory financial statement credit for the
reinsurance ceded to the Reinsurer under this Agreement in the Ceding Company's
NAIC Annual Statement Blank and in all Statutory Financial Statements required
to be filed with any Governmental Body charged with supervision of insurance
companies in all United States jurisdictions in which the Ceding Company is
licensed, authorized or accredited to transact business.
"SAP" means the statutory accounting principles prescribed or permitted by the
insurance regulatory authorities of the State of
Connecticut or other applicable
jurisdictions.
"Security Entitlements" means "security entitlement" as defined in of the UCC.
"Separate Account Liabilities" means all gross liabilities, obligations and
expenses of the Ceding Company arising under or relating to the Covered
Insurance Policies incurred on or after the Effective Time to the extent payable
out of the Separate Accounts.
"Separate Account Policies" means the Covered Insurance Policies which are
funded, in whole or in part, by the Separate Accounts.
"Separate Account Reserves" means the reserves attributable to the Separate
Account Liabilities, as determined in accordance with SAP.
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"Separate Accounts" means the registered and unregistered separate accounts of
the Ceding Company applicable to the Covered Insurance Policies.
"Separate Account Surplus Asset" means the general account asset equal to the
Fund Value minus the Separate Account Reserves.
"Statutory Financial Statements" means, with respect to any Party, the annual
and quarterly statutory financial statements of such Party filed with the
Governmental Body charged with supervision of insurance companies in the
jurisdiction of domicile of such Party to the extent such Party is required by
Applicable Law to prepare and file such financial statements.
"Terminal Accounting Period" means the Accounting Period during which the
Recapture Date or the Termination Date occurs.
"Terminal Settlement Statement" has the meaning set forth in Section 8.4 of this
Agreement.
"Termination Date" means the date on which this Agreement is terminated in
accordance with the terms and conditions of Article VIII hereof.
"Total Adjusted Capital" means with respect to any insurance company, its total
adjusted capital as calculated in accordance with the most current formula for
calculating total adjusted capital adopted by the National Association of
Insurance Commissioners.
"Transaction Agreements" means this Agreement, the Trust Agreement, the Master
Agreement, the Services Agreement and the Purchase Agreement.
"Treasury Regulations" means the Treasury Regulations (including temporary and
proposed Treasury Regulations) promulgated by the United States Department of
Treasury with respect to the Code or other United States federal Tax statutes.
"Trust Account" means the trust account established by the Reinsurer for the
benefit of the Ceding Company under the Trust Agreement.
"Trust Agreement" has the meaning set forth in Section 4.2(a) of this Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time in the
State of
Connecticut.
ARTICLE II.
BASIS OF REINSURANCE AND BUSINESS REINSURED
SECTION 2.1 REINSURANCE. Subject to the terms and conditions of this Agreement,
as of the Effective Time, the Ceding Company hereby cedes on an indemnity
reinsurance basis to the Reinsurer, and the Reinsurer hereby accepts and agrees
to assume and indemnity reinsure, [REDACTED] of all Reinsured Liabilities on a
modified coinsurance basis. This Agreement is solely between the Ceding Company
and the Reinsurer and shall not create any legal relationship whatsoever between
the Reinsurer and any Person
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other than the Ceding Company. The reinsurance effected under this Agreement
shall be maintained in force, without reduction, unless such reinsurance is
recaptured, terminated or reduced as provided herein. On and after the Effective
Time, the Reinsurer shall pay to or on behalf of the Ceding Company, as and when
due, all Reinsured Liabilities.
SECTION 2.2 SEPARATE ACCOUNTS.
(a) For each of the Separate Account Policies, the amount to be invested on a
variable basis in accordance with the terms of such Separate Account Policy
shall be held by the Ceding Company in the Separate Accounts, and all
Premiums with respect to such Separate Account Policy shall be deposited in
the Separate Accounts to the extent required to be deposited therein by
such Separate Account Policy.
(b) For each of the Separate Account Policies, the amount to be paid with
respect to surrenders, loans, annuitization payments, death benefits or any
other amounts with respect to such Separate Account Policy shall be paid out
of the Separate Accounts to the extent required by such Separate Account
Policy. For purposes hereof, the Reinsured Liabilities attributable to the
Covered Insurance Policies shall be apportioned between the General Account
Liabilities or the Separate Account Liabilities in a manner consistent with
the Ceding Company's policies in effect from time to time.
SECTION 2.3 MODIFIED COINSURANCE ACCOUNT. On the date hereof, the Ceding
Company will segregate the Modified Coinsurance Assets into the separate
accounts and segregated portfolios listed in Schedule 2.3 and/or any segregated
portfolios as subsequently agreed by the Parties (collectively, the "Modified
Coinsurance Account"), separate from the Ceding Company's general account
assets. The Ceding Company shall retain, control and own all Modified
Coinsurance Assets. This Agreement and the establishment of the Modified
Coinsurance Account shall not modify the obligations of the Ceding Company or
the rights of its policyholders with respect to its separate accounts or its
general account.
SECTION 2.4 NON-GUARANTEED ELEMENTS. From and after the Effective Time, the
Ceding Company shall establish the applicable Non-Guaranteed Elements under the
Covered Insurance Policies in accordance with the Non-Guaranteed Element Policy.
The Ceding Company shall take into account the recommendations of the Reinsurer
in establishing such Non-Guaranteed Elements, but shall retain the ultimate
authority to establish the Non-Guaranteed Elements in accordance with the
Non-Guaranteed Element Policy.
SECTION 2.5 INSURANCE CONTRACT CHANGES. The Ceding Company, on its own
initiative, shall not change the terms or conditions of any Covered Insurance
Policy, other than for any change required by the terms of any Covered Insurance
Policies, by reason of the requirement of any Governmental Body or otherwise
required by Applicable Law. If the Reinsured Liabilities under any of the
Covered Insurance Policies are changed (i) because of changes made on or after
the Effective Time pursuant to the terms of any Covered Insurance Policies or by
reason of the requirements of any Governmental Body or otherwise required by
Applicable Law, Reinsurer will participate, on the reinsurance basis set forth
in Section 2.1(a), and assume
With respect to any change required by the terms of any Covered Insurance
Policies or
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by reason of the requirement of any Governmental Body or otherwise required by
Applicable Law, the Ceding Company shall, to the extent practicable, prior to
the effectiveness of any such change, promptly notify Reinsurer of such proposed
change and afford Reinsurer, at the Reinsurer's expense, the opportunity, to the
extent practicable, to object to such change under applicable administrative
procedures (both formal and informal). In the event the Reinsurer seeks to
object as provided in the previous sentence, Reinsurer shall indemnify and hold
the Ceding Company harmless in accordance with Article IX of the Agreement.
SECTION 2.6 FOLLOW THE FORTUNES. The Reinsurer's liability under this Agreement
shall attach simultaneously with that of the Ceding Company under the Covered
Insurance Policies, and the Reinsurer's liability under this Agreement shall be
subject in all respects to the same risks, terms, rates, conditions,
interpretations, assessments, waivers, proportion of Premiums paid to the Ceding
Company without any deductions for brokerage, and to the same modifications,
alterations, terminations and recaptures, as the respective Covered Insurance
Policies and Reinsured Liabilities to which liability under this Agreement
attaches, the true intent of this Agreement being that the Reinsurer shall,
subject to the terms, conditions, and limits of this Agreement, follow the
fortunes of the Ceding Company under the Covered Insurance Policies, and the
Reinsurer shall be bound, without limitation, by all payments and settlements
under the Covered Insurance Policies.
ARTICLE III.
PAYMENTS; MODIFIED COINSURANCE ADJUSTMENTS; SETTLEMENT;
ADMINISTRATION AND ACCOUNTING
SECTION 3.1 PAYMENTS BY THE REINSURER AND THE CEDING COMPANY. The Reinsurer
shall pay, to the Ceding Company, the Reinsured Liabilities in accordance with
this Article III. The Ceding Company shall pay, as consideration for the
reinsurance provided herein, and subject in any event to Reinsurer's compliance
with and performance of the terms and conditions of the Transaction Agreements,
to the Reinsurer [REDACTED] and all other payments, collections and recoveries
relating to Covered Insurance Policies actually received by the Ceding Company
pursuant to the Covered Insurance Policies from and after the Effective Time
(the "Recoverables"). The Recoverables will be held by the Ceding Company in the
Modified Coinsurance Account and reflected in the immediately succeeding
Accounting Report in accordance with this Article III. The Parties acknowledge
and agree that the Ceding Company retains all right, title and interest to all
Premiums and other amounts received with respect to the Covered Insurance
Policies, subject to its contractual obligations under this Agreement to pay
corresponding amounts over to the Reinsurer. The Parties acknowledge and agree
that Reinsurer shall be responsible for and has hereby assumed the financial
risk of any uncollected or uncollectible Recoverables.
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SECTION 3.2 MODIFIED COINSURANCE ADJUSTMENT.
[REDACTED]
SECTION 3.3 INVESTMENT CREDIT ON MODIFIED COINSURANCE ASSETS.
[REDACTED]
SECTION 3.4 SETTLEMENT OF MODIFIED COINSURANCE ADJUSTMENT. If the Modified
Coinsurance Adjustment for the Accounting Period is a positive amount, the
Ceding Company shall owe such amount to the Reinsurer. If the Modified
Coinsurance Adjustment for the Accounting Period is a negative amount, the
Reinsurer shall owe the absolute value of such amount to the Ceding Company.
SECTION 3.5 ACCOUNTING REPORT. The Ceding Company will administer, or cause the
administration of, the Covered Insurance Policies and cause periodic accountings
with respect thereto. Within thirty (30) days of the last day of each Accounting
Period, the Ceding Company shall provide to the Reinsurer a statement in the
form as set forth in Exhibit B hereto (the "Accounting Report"), setting forth,
among other things, as of and for the period ending on the last day of such
Accounting Period, the following information: Reinsured Liabilities,
Recoverables, the Required Balance, the Fair Market Value of the Modified
Coinsurance Assets, the Modified Coinsurance Reserves and the Modified
Coinsurance Adjustment. All reports, remittances and payments due to or from a
Party hereto shall be made in accordance with the procedures set forth herein.
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SECTION 3.6 SETTLEMENT. Amounts due between the Parties for each Accounting
Period in respect of the Covered Insurance Policies shall be as reported by the
Ceding Company on the Accounting Report. If the balance is payable to the
Reinsurer the Ceding Company shall remit payment within thirty (30) days of
submission of the Accounting Report. If the balance is payable to the Ceding
Company, the Reinsurer shall remit payment to the Ceding Company within thirty
(30) days after receiving the Accounting Report. Payment shall be made in cash.
SECTION 3.7 DELAYED PAYMENTS. If there is a delayed settlement of any payment
due hereunder, interest will accrue on such payment at the then applicable prime
rate of interest, as reported by The Wall Street Journal, until settlement is
made. For purposes of this Section 3.7 a payment will be considered overdue, and
such interest will begin to accrue, on the first day immediately following the
date such payment is due. For greater clarity, (i) a payment shall be deemed to
be due hereunder on the last date on which such payment may be timely made under
the applicable provision, and (ii) interest will not accrue on any payment due
the Reinsurer hereunder unless the delayed settlement thereof was caused by the
Ceding Company.
SECTION 3.8 OFFSET AND RECOUPMENT RIGHTS. Any debits or credits incurred on or
after the Effective Time in favor of or against either the Ceding Company or
Reinsurer with respect to the Transaction Agreements are deemed mutual debits or
credits, and may be set off and recouped, and only the net balance shall be
allowed or paid. This Section 3.8 shall apply to the fullest extent permitted by
Applicable Law notwithstanding the existence of any insolvency, rehabilitation,
conservatorship or comparable proceeding by or against the Ceding Company or the
Reinsurer.
SECTION 3.9 CERTAIN REPORTS.
(a) Not later than sixty (60) calendar days after the end of each calendar
year, and forty-five (45) calendar days after the end of any calendar
quarter other than the quarter ending on December 31, the Reinsurer shall
provide to the Ceding Company a calculation of the Company Action Level RBC
of the Reinsurer. Each such calculation shall include reasonable supporting
detail.
(b) The Reinsurer shall provide written notice of the occurrence of any
Recapture Triggering Event within two (2) Business Days after its
occurrence. In addition, Reinsurer shall cooperate fully with the Ceding
Company and promptly respond to the Ceding Company's reasonable inquiries
from time to time concerning the determination of whether a Recapture
Triggering Event has occurred.
(c) At the Ceding Company's request, the Reinsurer shall provide the Ceding
Company with its annual and quarterly Statutory Financial Statements and a
copy of its annual audited Statutory Financial Statements along with the
audit report thereon.
ARTICLE IV.
LICENSES; SECURITY
SECTION 4.1 LICENSES. At all times during the term of this Agreement, the
Reinsurer shall hold and maintain all licenses and authorizations required under
Applicable Law and
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otherwise take all action that may be necessary (i) so that the Ceding Company
may receive Reserve Credit, and (ii) to perform its obligations hereunder.
SECTION 4.2 SECURITY.
(a) As soon as practicable following the date hereof, the Parties shall choose
a trustee to serve as trustee under a Trust Agreement, and shall finalize
and execute the Trust Agreement, which shall be substantially in the form
set forth as Exhibit A hereto (the "Trust Agreement"). The Reinsurer agrees
to post collateral upon execution of the Trust Agreement in an amount equal
to the Required Balance. The Reinsurer, as grantor, is creating the Trust
Account with a trustee approved by the Ceding Company, naming the Ceding
Company as sole beneficiary thereof. Reinsurer shall ensure that at all
times, in accordance with the terms set forth herein and in the Trust
Agreement, the Trust Account holds assets with a Fair Market Value equal to
[REDACTED] of the Required Balance. All transfers to and withdrawals from
the Trust Account shall be in accordance with and subject to the
requirements set forth in the Trust Agreement.
(b) The Reinsurer hereby grants to the Ceding Company a security interest in and
continuing lien on all Reinsurer's right, title and interest in, to and
under the following, in each case, whether now owned or existing or
hereafter acquired or arising, and wherever located: the Trust Account; all
Investment Property and Financial Assets credited to the Trust Account; all
Security Entitlements related to the Trust Account; and all Proceeds of any
or all of the foregoing to secure the obligations of the Reinsurer to the
Ceding Company. Any amounts withdrawn from the Trust in accordance with this
Article IV and pursuant to the terms of the Trust Agreement, shall be
automatically released from, and withdrawn free and clear of any security
interest created herein. During the term of the Trust Agreement, the
Reinsurer shall not, and shall direct that the trustee shall not, grant or
cause to be granted in favor of any third person any security interest
whatsoever in any of the assets in the Trust Account or in the residual
interest therein.
SECTION 4.3 TRUST ACCOUNT AND SETTLEMENTS. The trustee shall hold assets in the
Trust Account pursuant to the terms of the Trust Agreement. All settlements of
account under the Trust Agreement between Ceding Company and Reinsurer shall be
made in United States dollars in cash or its equivalent.
SECTION 4.4 INVESTMENT OF TRUST ASSETS. The assets held in the Trust Account
shall be valued at their Fair Market Value as of the date as of which such
assets are required to be valued. The assets that may be held in the Trust
Account shall consist of cash, certificates of deposit issued by a U.S. bank and
payable in U.S. dollars and investments of the type permitted by
Connecticut
Insurance Regulations Section Section 38a-88-6 and 38a-88-7 or any successor
provision and all other Applicable Laws that would govern the permitted assets
for the Trust Account; provided, that each such investment that is a security is
issued by an institution that is not the parent, subsidiary or affiliate of
either Reinsurer or Company, and (ii) such investments shall be managed in
accordance with the investment guidelines as set forth on Exhibit C (the assets
pursuant to this sentence being the "Eligible Assets").
13
SECTION 4.5 DEPOSIT OF ASSETS. Prior to depositing assets in the Trust Account,
Reinsurer will execute assignments or endorsements in blank, or transfer legal
title to the trustee of all shares, obligations or any other assets requiring
assignments, in order that the Ceding Company, or the trustee upon the direction
of the Ceding Company, may whenever necessary negotiate these assets without the
consent or signature from the Reinsurer or any other entity.
SECTION 4.6 ADJUSTMENT OF SECURITY AND WITHDRAWALS. The amount of security
provided by the Reinsurer shall be adjusted following the end of each Accounting
Period as provided herein.
(a) If the aggregate Fair Market Value of the Eligible Assets held in the Trust
Account at the end of any Accounting Period is less than the Required
Balance, calculated based on the most recent Accounting Report, the
Reinsurer shall, no later than five (5) calendar days following delivery of
the Accounting Report provided pursuant to the terms hereof, transfer
additional Eligible Assets to the Trust Account so that the aggregate Fair
Market Value of the Eligible Assets held in the Trust Account is not less
than the Required Balance.
(b) If the aggregate Fair Market Value of the Eligible Assets in the Trust
Account at the end of any Accounting Period exceeds one hundred and two
percent (102%) of the Required Balance, then the Reinsurer shall have the
right to seek approval (which shall not be unreasonably or arbitrarily
withheld) from the Ceding Company to withdraw the excess. For the purposes
of the foregoing sentence, in the event that a Recapture Triggering Event
has occurred, the Parties acknowledge and agree that it shall not be
unreasonable for the Ceding Company to withhold its consent to any such
withdrawal of any amounts over one hundred and two percent (102%).
SECTION 4.7 WITHDRAWALS BY THE CEDING COMPANY. The Ceding Company may withdraw
the assets held in the Trust Account in accordance with the terms of the Trust
Agreement upon or after providing five (5) days' prior written notice to the
Reinsurer; provided however, that, following any such withdrawal, the Ceding
Company may only apply such assets for one or more of the following purposes:
(a) to pay, or reimburse the Ceding Company for payment of, Premiums received
by Reinsurer hereunder which are to be returned to policyholders because of
cancellations of Covered Insurance Policies reinsured hereunder;
(b) to pay, or reimburse the Ceding Company for payment of, surrenders,
benefits, losses or other amounts payable pursuant to the provisions of the
Covered Insurance Policies reinsured hereunder or any other amounts the
Ceding Company claims are legally and properly due hereunder, including any
recapture payment; and
(c) to pay any amounts due and unpaid from the Reinsurer under any Transaction
Agreement.
SECTION 4.8 REINSURANCE CREDIT. Reinsurer shall, at its own expense, take all
steps (including the posting of letters of credit or other acceptable security)
necessary so as to permit the Ceding Company to obtain Reserve Credit.
14
SECTION 4.9 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE REINSURER. For
purposes of perfecting the security interest in the Trust Account, the Reinsurer
hereby represents and warrants to the Ceding Company, and covenants for the
benefit of the Ceding Company, as follows:
(a) The Reinsurer is (and, for the past five (5) years, has been) a stock
insurance company organized under the laws of Indiana. For the past five
years and as of the Effective Time, the chief executive office of the
Reinsurer within the meaning of section 9-307 of the UCC was located in
Indianapolis, Indiana. The Reinsurer shall not change its jurisdiction of
organization or its chief executive office (within the meaning of section
9-307 of the UCC), except upon thirty (30) calendar days' prior written
notice to the Ceding Company. In the event that the Reinsurer changes its
jurisdiction of organization or the location of its chief executive office,
it will only change to a jurisdiction of organization or change the
location of its chief executive office to a jurisdiction in the United
States. The Reinsurer's true corporate name, as reflected in its
organization documents of record in the State of Indiana, is (and, for the
past five (5) years, has been) that set forth in the preamble hereto.
(b) The Reinsurer owns and will own its interest in the assets in the Trust
Account free and clear of any security interest in, or lien or adverse claim
on, such assets. From and after the date hereof, the Reinsurer shall not
authorize the filing of any other financing statement with respect to any
asset in the Trust Account, nor authorize the granting of "control" (for
purposes of this paragraph, as defined in the UCC) over any of such asset to
any Person other than the Ceding Company. From and after the date hereof,
the Reinsurer shall not grant any further security interest in, or lien on,
the assets in the Trust Account.
(c) The Reinsurer shall do, execute or otherwise authenticate, acknowledge and
deliver, or cause to be done, executed or otherwise authenticated,
acknowledged and delivered, such instruments of transfer or other records,
and take such other steps or actions, as the Ceding Company may reasonably
deem necessary to create, perfect or preserve the security interest granted
to the Ceding Company by Section 4.2 and under the Trust Agreement or to
ensure that such security interest remains prior to any and all other
security interests, liens or other interests of any other Person; and the
Reinsurer hereby authorizes the Ceding Company, in the Reinsurer's name or
otherwise, to take, or cause to be taken, any of the foregoing steps or
actions upon any failure by the Reinsurer to comply with any written
request of the Ceding Company in respect of any matter subject to this
Section 4.11(c).
ARTICLE V.
OVERSIGHTS; COOPERATION; REGULATORY MATTERS
SECTION 5.1 OVERSIGHTS. Unintentional or inadvertent delays, errors or
omissions made in connection with this Agreement or any transaction hereunder
(i) shall not relieve either Party from any liability which would have attached
had such delay, error or omission not occurred; and (ii) both Parties shall be
restored as closely as possible to the positions they would have occupied if no
delay, error or omission had occurred, provided always that such error or
omission is rectified as soon as reasonably practicable after discovery by the
Party making such error or omission or responsible for such delay, and provided,
further, that said responsible Party shall be responsible for any additional
liability which attaches as a result.
15
SECTION 5.2 COOPERATION. Each Party hereto shall cooperate fully with the other
in all reasonable respects in order to accomplish the objectives of this
Agreement.
SECTION 5.3 REGULATORY MATTERS. Subject to the provisions of Article VIII of
this Agreement, if the Ceding Company or the Reinsurer receives notice of, or
otherwise becomes aware of, any regulatory inquiry, investigation or proceeding
relating to the Covered Insurance Policies that would reasonably be expected to
have an adverse effect on the other Party, the Ceding Company or the Reinsurer,
as applicable, shall promptly notify the other Party thereof, whereupon the
Parties, at their own expense, shall cooperate in good faith and use their
respective commercially reasonable efforts to resolve such matter in a mutually
satisfactory manner, in light of all the relevant business, regulatory and legal
facts and circumstances.
ARTICLE VI.
DAC TAX
SECTION 6.1 ELECTION. The Ceding Company and the Reinsurer jointly agree to the
DAC tax election pursuant to Section 1.848-2(g)(8) of the Treasury Regulations
issued under Section 848 of the Code whereby:
(a) The Party with the net positive consideration for this Agreement for each
taxable year shall capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Code Section 848(c)(1); and
(b) Both Parties shall exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency.
SECTION 6.2 DEFINITIONS. As used in this Article, the terms "net positive
consideration," "specified policy acquisition expenses" and "general deductions
limitation are defined by reference to Treasury Regulations Section 1.848-2 and
Code Section 848, in effect as of the Effective Time.
SECTION 6.3 EXCHANGE OF INFORMATION. The method and timing of the exchange of
this information shall be as follows:
(a) The Reinsurer shall submit a schedule to the Ceding Company by May 1 of
each year of its calculation of the net consideration for the preceding
calendar year.
(b) The Ceding Company shall, in turn, complete the schedule by indicating
acceptance of the Reinsurer's calculation of net consideration or shall note
in writing any discrepancies. The Ceding Company shall return the completed
schedule to the Reinsurer by June 1 of each year.
(c) If there are any discrepancies between the Parties' calculations of net
consideration, the Parties shall act in good faith to resolve these
discrepancies in a manner that is accept able to both Parties by July 1 of
each year.
(d) The Parties shall attach the final schedule to their respective U.S. federal
income tax returns for each taxable year in which consideration is
transferred under this
16
Agreement. The schedule shall identify this Agreement and restate the election
described in this Article and shall be signed by both Parties.
SECTION 6.4 EFFECTIVENESS. This DAC tax election shall first become effective
for the taxable year that includes the Effective Time and shall remain in effect
for all years for which this Agreement remains in effect.
SECTION 6.5 U.S. TAX STATUS REPRESENTATION. Each of the Parties represents and
warrants that it is subject to U.S. taxation under the provisions of Subchapter
L of Chapter 1 of Subtitle A of the Code.
SECTION 6.6 BREACH OF REPRESENTATION. Should either Party breach the
representation and warranty of tax status set forth in this Article, the
breaching Party agrees to indemnify and hold the non-breaching Party, its
directors, officers, employees, agents, and shareholders harmless from all
liability, loss, damages, fines, penalties, interest, and reasonable attorney's
fees, which the non-breaching Party, its directors, officers, employees, agents,
and shareholders may sustain by reason of such breach.
ARTICLE VII.
INSOLVENCY
SECTION 7.1 INSOLVENCY OF THE CEDING COMPANY. In the event of the insolvency of
the Ceding Company, all reinsurance made, ceded, renewed or otherwise becoming
effective under this Agreement shall be payable by the Reinsurer directly to the
Ceding Company or to its statutory liquidator, receiver or statutory successor
on the basis of the liability of the Ceding Company under the Covered Insurance
Policies without diminution because of the insolvency of the Ceding Company. It
is understood, however, that in the event of the insolvency of the Ceding
Company, the liquidator, receiver or statutory successor of the Ceding Company
shall give written notice of the pendency of a claim against the Ceding Company
on a Covered Insurance Policy within a reasonable period of time after such
claim is filed in the insolvency proceedings and that during the pendency of
such claim the Reinsurer may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any defense or
defenses which it may deem available to the Ceding Company or its liquidator,
receiver or statutory successor. It is further understood that the expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the Ceding Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Ceding Company
solely as a result of the defense undertaken by the Reinsurer.
ARTICLE VIII.
DURATION; TERMINATION
SECTION 8.1 AGREEMENT DURATION. This Agreement shall continue in force until
such time as the Ceding Company's liability with respect to all Covered
Insurance Policies reinsured hereunder is terminated in accordance with their
respective terms, or the Ceding Company has elected to recapture the reinsurance
of Covered Insurance Policies in full in accordance with Section 8.3.
17
SECTION 8.2 SURVIVAL. Notwithstanding the other provisions of this Article
VIII, the terms and conditions of Articles I, VI and IX and the provisions of
Sections 10.1, 10.4, 10.6, 10.9 and 10.10 shall remain in full force and effect
after the Termination Date.
SECTION 8.3 RECAPTURE.
(a) Upon the occurrence of a Recapture Triggering Event, the Ceding Company
shall have the right (but not the obligation) to recapture all, and not
less than all, of the Covered Insurance Policies, by providing the
Reinsurer with written notice of its intent to effect recapture. Recapture
of the Covered Insurance Policies shall be effective on the tenth (10th)
day following the day on which the Ceding Company has provided the
Reinsurer with such notice (the "Recapture Date"). Upon a recapture by the
Ceding Company, the Ceding Company will recapture all liabilities and
obligations arising under the terms of the Covered Insurance Policies
including any Extra Contractual Obligations.
(b) Following a recapture pursuant to this Section 8.3, subject to the payment
obligations described in Section 8.4, both the Ceding Company and the
Reinsurer will be fully and finally released from all rights and obligations
under this Agreement in respect of the Covered Insurance Policies, including
any claims of the Reinsurer to Modified Coinsurance Assets held in
connection with recaptured Covered Insurance Policies, other than any
payment obligations due hereunder prior to the Recapture Date but still
unpaid on such date. Following the consummation of the recapture or
termination, no additional Premiums or other amounts payable under such
Covered Insurance Policies shall be payable to Reinsurer hereunder and nor,
for the avoidance of doubt, shall Reinsurer have any further right to
receive any Recoverables.
(c) Notwithstanding the remedies contemplated by this Article VIII or the
Transaction Agreements, the Ceding Company may, in its sole discretion,
require direct payment by the Reinsurer of any sum in default under the
Transaction Agreements in lieu of exercising the remedies in Article VIII,
and it shall be no defense to any such claim that Ceding Company might have
had other recourse.
SECTION 8.4 RECAPTURE PAYMENTS. In connection with a recapture pursuant to
Section 8.3, the Reinsurer shall prepare a settlement statement within fifteen
(15) calendar days of the Recapture Date or the Termination Date, as applicable
(the "Terminal Settlement Statement") setting forth the terminal settlement
calculated in accordance with Exhibit D for the Terminal Accounting Period (the
"Terminal Settlement"). If the amount of the Terminal Settlement for the
Terminal Accounting Period is positive, the Ceding Company shall pay such amount
to the Reinsurer within five (5) calendar days of its receipt of the Terminal
Settlement Statement. If the amount of the Terminal Settlement for the Terminal
Accounting Period is negative, the Reinsurer shall pay the absolute value of
such amount to the Ceding Company at the time it delivers the Terminal
Settlement Statement to the Ceding Company. In addition, following the Recapture
Date or the Termination Date, the Trust Account shall be terminated and any
remaining amounts or amount held in trust pursuant to Section 4.3 shall be
released to the Reinsurer after the full satisfaction of the Terminal Settlement
pursuant to the Terminal Settlement Statement.
18
ARTICLE IX.
INDEMNIFICATION; DISCLAIMER
SECTION 9.1 REINSURER'S OBLIGATION TO INDEMNIFY. The Reinsurer hereby agrees to
indemnify, defend and hold harmless the Ceding Company and its Affiliates and
their respective officers, directors, stockholders, employees, representatives,
successors and assigns (collectively, the "Ceding Company Indemnified Parties")
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, Taxes (other than income taxes and
franchise taxes thereof), fees, costs and expenses (including reasonable legal
fees and expenses) ("Losses") incurred by the Ceding Company Indemnified Parties
to the extent arising from (i) any breach by the Reinsurer of the covenants and
agreements of the Reinsurer contained in this Agreement, (ii) the Reinsured
Liabilities, (iii) any Covered Insurance Policy and (iv) any successful
enforcement of this indemnity.
SECTION 9.2 CEDING COMPANY'S OBLIGATION TO INDEMNIFY. The Ceding Company hereby
agrees to indemnify, defend and hold harmless the Reinsurer and its Affiliates
and their respective officers, directors, stockholders, employees,
representatives, successors and assigns (collectively, the "Reinsurer
Indemnified Parties") from and against any and all Losses incurred by the
Reinsurer to the extent arising from (i) any breach by the Ceding Company of the
covenants and agreements of the Ceding Company contained in this Agreement, and
(ii) any successful enforcement of this indemnity.
SECTION 9.3 NO DUPLICATION. To the extent that a Reinsurer Indemnified Party or
a Ceding Company Indemnified Party has received payment in respect of a Loss
pursuant to the provisions of the Master Agreement, such Reinsurer Indemnified
Party or Ceding Company Indemnified Party shall not be entitled to
indemnification for such Loss under this Agreement to the extent of such
payment.
SECTION 9.4 WAIVER OF DUTY OF UTMOST GOOD FAITH. In recognition that each Party
has consummated the transactions contemplated by this Agreement, based on
mutually negotiated representations, warranties, covenants, remedies and other
terms and conditions as are fully set forth herein and therein, the Ceding
Company and Reinsurer absolutely and irrevocably waives resort to the duty of
"utmost good faith" or any similar principle in connection with the formation or
performance of this Agreement.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 NOTICES. Any notice, request or other communication to be given by
any Party hereunder shall be in writing and shall be delivered personally, sent
by registered or certified mail, postage prepaid, by overnight courier with
written confirmation of delivery or by facsimile transmission or electronic mail
with written confirmation of error-free transmission. Any such notice shall be
deemed given when so delivered personally or sent by facsimile or electronic
mail transmission (and immediately after facsimile or electronic mail
transmission confirmed by telephone), if mailed, on the date shown on the
receipt therefor, or if sent by
19
overnight courier, on the date shown on the written confirmation of delivery.
Such notices shall be given to the following address:
To Ceding Company: Hartford Life and Annuity Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Director of Life Law
With concurrent
copies (which will not
constitute notice) to: The Hartford
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
Sidley Austin LLP
0 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx
To the Reinsurer: Forethought Life Insurance Company
Forethought Financial Group
0000 Xxxxxxxxx Xxxxxxx
Xxx. 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
SECTION 10.2 ENTIRE AGREEMENT. This Agreement, together with the Trust
Agreement, constitutes the entire agreement among the Parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
discussions, writings and agreements between them with respect thereto. This
Agreement may not be amended or modified in any respect whatsoever except by
instrument in writing signed by the Parties hereto.
SECTION 10.3 CAPTIONS. The captions of this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.4 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed
in all respects, including validity, interpretation and effect, by the laws of
the State of
Connecticut without regard to principles of conflicts of law
thereof that would result in the application of the laws of a different
jurisdiction. The Parties agree that any action or proceeding, however
characterized, relating to or arising out of the transactions contemplated by
this Agreement may be maintained in the courts of the State of
Connecticut or
the federal court for the District of
Connecticut and the Parties hereby
irrevocably submit to the exclusive jurisdiction of any such
20
court for the purposes of any such action or proceeding and irrevocably agree to
be bound by any judgment rendered by any such court with respect to any such
action or proceeding. The Parties hereby waive any objection they may now or
hereafter have to the venue of any such action or proceeding in any such court
and any claim that such action or proceeding has been brought in an inconvenient
forum. The Parties agree that any service of any process, summons, notice,
document or other paper shall, if delivered, sent or mailed in accordance with
Section 10.1 of this Agreement, constitute good, proper and sufficient service
thereof.
SECTION 10.5 NO THIRD PARTY BENEFICIARIES. Except as otherwise expressly set
forth in any provision of this Agreement, nothing in this Agreement is intended
or shall be construed to give any Person, other than the Parties hereto, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION 10.6 EXPENSES. Except as otherwise provided herein, the Parties hereto
shall each bear their respective expenses incurred in connection with the
negotiation, preparation, execution, and performance of the Transaction
Agreements and the transactions contemplated thereby, including all fees and
expenses of counsel, actuaries and other representatives.
SECTION 10.7 COUNTERPARTS. This Agreement may be executed by the Parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the Parties hereto. Each
counterpart may be delivered by facsimile or electronic mail transmission, which
transmission shall be deemed delivery of an originally executed document.
SECTION 10.8 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, that provision shall be
interpreted to be only so broad as is enforceable.
SECTION 10.9 WAIVER OF JURY TRIAL; MULTIPLIED AND PUNITIVE DAMAGES. Each of the
Parties hereto irrevocably waives (i) any and all right to trial by jury with
respect to any first party action filed by the other Party, and (ii) any right
to punitive, incidental, consequential or multiplied damages, either pursuant to
common law or statute, in each case in any legal proceedings arising out of or
related to this Agreement or the transactions contemplated hereby (but not as to
any action by one Party against the other seeking indemnification for a third
party claim against the Party initiating the action, to the extent that such
damages may be recoverable as part of the indemnification by the indemnified
Party).
SECTION 10.10 TREATMENT OF CONFIDENTIAL INFORMATION.
(a) The Parties agree that, other than as contemplated by this Agreement and to
the extent permitted or required to implement the transactions contemplated
by this Agreement, the Parties will keep confidential and will not use or
disclose the other Party's
21
Confidential Information and the terms and conditions of this Agreement,
including the exhibits and schedules hereto, except as otherwise required
by Applicable Law or any order or ruling of any state insurance regulatory
authority or any other Governmental Body.
(b) The confidentiality obligations contained in this Agreement shall not apply
to the federal Tax structure or federal Tax treatment of this Agreement and
each Party hereto may disclose to any and all persons, without limitation of
any kind, the federal Tax structure and federal Tax treatment of this
Agreement; provided, that such disclosure may not be made until the earliest
of (x) the date of the public announcement of discussions relating to this
Agreement, (y) the date of the public announcement of this Agreement, or (z)
the date of the execution of this Agreement. The preceding sentence is
intended to cause this Agreement to be treated as not having been offered
under conditions of confidentiality for purposes of Section 1.6011-4(b)(3)
(or any successor provision) of the Treasury Regulations promulgated under
Section 6011 of the Code, and shall be construed in a manner consistent with
such purpose. Subject to the provision with respect to disclosure in the
first sentence of this subsection (b), each Party hereto acknowledges that
it has no proprietary or exclusive rights to the federal Tax structure of
this Agreement or any federal Tax matter or federal Tax idea related to this
Agreement.
SECTION 10.11 ASSIGNMENT. This Agreement will inure to the benefit of and be
binding upon the respective successors and permitted assigns of the Parties.
Except as provided below in this Section 10.11, neither Party may assign any of
its duties or obligations hereunder without the prior written consent of the
other Party and any attempted assignment in violation of this provision shall be
invalid ab initio; provided, however, that this Agreement shall inure to the
benefit and bind those who, by operation of law, become successors to the
Parties, including any liquidator, rehabilitator, receiver or conservator and
any successor, merged or consolidated entity.
SECTION 10.12 CONSTRUCTION.
(a) For purposes of this Agreement, the words "hereof," "herein," "hereby" and
other words of similar import refer to this Agreement as a whole unless
otherwise indicated.
(b) Whenever the singular is used herein, the same shall include the plural, and
whenever the plural is used herein, the same shall include the singular,
where appropriate.
(c) For purposes of this Agreement, the term "including" means "including but
not limited to."
(d) Whenever used in this Agreement, the masculine gender shall include the
feminine and neutral genders.
(e) All references herein to Articles, Sections, Subsections, Paragraphs,
Exhibits and Schedules shall be deemed references to Articles, Sections,
Subsections and Paragraphs of, and Exhibits, Annexes and Schedules to, this
Agreement, unless the context shall otherwise require.
22
(f) Any reference herein to any statute, agreement or document, or any section
thereof, shall, unless otherwise expressly provided, be a reference to such
statute, agreement, document or section as amended, modified or
supplemented (including any successor section) and in effect from time to
time.
(g) All terms defined in this Agreement shall have the defined meaning when
used in any Schedule, Annex, Exhibit, certificate or other documents
attached hereto or made or delivered pursuant hereto unless otherwise
defined therein.
[The rest of this page intentionally left blank.]
23
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
effective April 25, 2012.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President, Wealth Management
FORETHOUGHT LIFE INSURANCE COMPANY
By:
--------------------------------
Name:
Title:
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
effective April 25, 2012.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
By:
--------------------------------
Name:
Title:
FORETHOUGHT LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Chairman, President and CEO
SCHEDULE 1.1
COVERED INSURANCE POLICIES
1. Hartford Personal Retirement Manager III Suite of Variable Annuities or
Hartford Leaders products (based on state availability) including all optional
riders and proprietary products sold as of April 1, 2012. Hartford will use
commercially reasonable efforts to launch an optional living benefit and an
optional death benefit and/or any other features Hartford anticipated to launch
on or about May 1, 2012.
2. Fixed Indexed Annuity Portfolio of products including, crediting
methodologies and Riders sold as of April 1, 2012. Hartford will use
commercially reasonable efforts to launch (at Hartford's sole discretion with
respect to such products' specifications (including pricing terms and other
features)) optional riders and/or crediting methodologies Hartford anticipated
to launch on or about August 2012.
3. CRC Select III.
4. Hartford Income Annuity.
NOTE: CRC Contracts sold prior to May 1, 2012 that renew after such date are not
in scope for reinsurance.
SCHEDULE 2.3
MODIFIED COINSURANCE ACCOUNT
Hartford Life Insurance Company Separate Account Seven
Hartford Life and Annuity Insurance Company Separate Account Seven
Market Value Adjustment Separate Account
[General Account Segregated Portfolios to be created.]
