Exhibit G
EXECUTION COPY
RECAPTURE AND RELEASE AGREEMENT
This RECAPTURE AND RELEASE AGREEMENT (the "AGREEMENT"), dated
as of April 19, 2013 and effective as of 12:01 a.m. on April 1, 2013
(the "EFFECTIVE TIME"), is by and between Commonwealth Annuity and
Life Insurance Company, an insurance company organized under the
laws of Massachusetts (the "CEDING COMPANY") and Ariel Capital
Reinsurance Company Limited, an insurance company organized under
the laws of Bermuda acting on behalf of the Segregated Account
2009-001 (the "REINSURER").
WHEREAS, the Ceding Company and the Reinsurer entered into a
Coinsurance and Modified Coinsurance Agreement, dated as of December
24, 2009 (the "REINSURANCE AGREEMENT"); and
WHEREAS, the Ceding Company and the Reinsurer desire to effect
a full and final recapture of the liabilities ceded under the
Reinsurance Agreement and a full and final settlement, discharge and
release of any and all of each of their respective liabilities,
rights, duties and obligations under the Reinsurance Agreement, all
on the terms hereinafter set forth. Capitalized terms used but not
separately defined herein shall have the respective meanings
ascribed to them under the Reinsurance Agreement.
NOW, THEREFORE, the Ceding Company and the Reinsurer (each a
"PARTY", and collectively, the "PARTIES") agree as follows:
ARTICLE I
RECAPTURE CONSIDERATION
Section 1.1 RECAPTURE CONSIDERATION
(a) As consideration for the Ceding Company's recapture
of the reinsurance ceded under the Reinsurance Agreement and
its release and discharge of the Reinsurer contemplated
hereunder, the Reinsurer (i) agrees that the Ceding Company
may cease maintaining the Modco Deposit and (ii) agrees to pay
by wire transfer to the Ceding Company cash and securities
with a fair market value in an amount equal to the Recapture
Amount (as defined below) on the date hereof, such cash and
securities to be sent to an account designated by the Ceding
Company.
(b) The "RECAPTURE AMOUNT" shall be an amount equal to:
(i) an amount equal to the General Account
Remainder Reserves as of the Effective Time in an
amount of $49,869,574.76; PLUS
(ii) the amount of the "Quarterly Settlement
Amount" set forth in the Quarterly Report for the
calendar quarter ending immediately prior to the
Effective Time that is payable by the Reinsurer, if
any; MINUS
(iii) a recapture allowance in the sum of
$58,408,299.77; MINUS
(iv) the amount of the "Quarterly Settlement
Amount" set forth in the Quarterly Report for the calendar
quarter ending immediately prior to the Effective Time that
is payable by the Ceding Company, if any.
(c) In order to facilitate the calculation of the Recapture
Amount, the Ceding Company has prepared a Quarterly Report for the
calendar quarter ending immediately prior to the Effective Time,
which is attached hereto as Exhibit A. Such Quarterly Report
includes the Ceding Company's calculation of the General Account
Remainder Reserves as of the Effective Time.
(d) For clarity, the provisions of this SECTION 1.1 supersede
any contrary provision in the Reinsurance Agreement, including the
termination provisions in Article XIII of the Reinsurance Agreement.
ARTICLE II
RECAPTURE AND RELEASE
Section 2.1 CEDING COMPANY RECAPTURE AND RELEASE OF THE REINSURER.
In consideration of the receipt of the payment set forth in ARTICLE I and
the release provided in Section 2.2, effective as of the Effective Time,
the Ceding Company:
(a) hereby recaptures all Reinsured Liabilities previously
ceded to the Reinsurer under the reinsurance Agreement; and
(b) hereby forever releases and discharges the Reinsurer and
its predecessors, successors, parents, assigns, officers, directors,
agents, employees, representatives, liquidators, rehabilitators,
receivers, shareholders, heirs, executors, administrators, and
attorneys from any and all past, present, and future obligations,
adjustments, liability for payment of interest, offsets, actions,
causes of action, suits, debts, sums of money, accounts, premium
payments, reckonings, bonds, bills, covenants, contracts,
controversies, agreements, promises, damages, judgments, liens,
rights, costs and expenses (including attorneys' fees and costs
actually incurred), claims and demands, liabilities and losses of
any nature, kind, character and description whatsoever, whether
grounded in law or in equity, in admiralty, in contract, in tort, or
otherwise (including any claims based on fraud, bad faith or
extra-contractual liabilities), all whether known or unknown,
reported or unreported, discovered or undiscovered, suspected or
unsuspected, vested or contingent, that the Ceding Company now has,
owns, or holds or claims to have,
2
own, or hold, or at any time had, owned, or held, or claimed to
have had, owned, or held, or may after the execution of this
Agreement have, own, or hold or claim to have, own, or hold, arising
out of conduct or matters occurring prior to or subsequent to the
execution of this Agreement, against the Reinsurer, arising from,
based upon, or in any way related to the Reinsurance Agreement, it
being the intention of the Parties that this release operate as a
full and final settlement of the Reinsurer's past, current and
future liabilities to the Ceding Company under and in connection
with the Reinsurance Agreement, PROVIDED, however, that this release
does not discharge obligations of the Reinsurer that have been
undertaken or imposed by the terms of this Agreement.
Section 2.2 REINSURER RELEASE OF THE CEDING COMPANY. Effective as of
the Effective Time, the Reinsurer hereby forever releases and discharges
the Ceding Company, and its predecessors, successors, parents, assigns,
officers, directors, agents, employees, representatives, liquidators,
rehabilitators, receivers, shareholders, heirs, executors, administrators,
and attorneys from any and all past, present, and future obligations,
adjustments, liability for payment of interest, offsets, actions, causes
of action, suits, debts, sums of money, accounts, premium payments,
reckonings, bonds, bills, covenants, contracts, controversies, agreements,
promises, damages, judgments, liens, rights, costs and expenses (including
attorneys' fees and costs actually incurred), claims and demands,
liabilities and losses of any nature, kind, character and description
whatsoever, whether grounded in law or in equity, in admiralty, in
contract, in tort, or otherwise (including any claims based on fraud, bad
faith or extra-contractual liabilities), all whether known or unknown,
reported or unreported, discovered or undiscovered, suspected or
unsuspected, vested or contingent, that the Reinsurer now has, owns, or
holds or claims to have, own, or hold, or at any time had, owned, or held,
or claimed to have had, owned, or held, or may after the execution of this
Agreement have, own, or hold or claim to have, own, or hold, arising out
of conduct or matters occurring prior to or subsequent to the execution of
this Agreement, against the Ceding Company, arising from, based upon, or
in any way related to the Reinsurance Agreement, it being the intention of
the Parties that this release operate as a full and final settlement of
the Ceding Company's past, current and future liabilities to the Reinsurer
under and in connection with the Reinsurance Agreement, PROVIDED, however,
that this release does not discharge obligations of the Ceding Company
that have been undertaken or imposed by the terms of this Agreement.
ARTICLE III
INDEPENDENT INVESTIGATION; SPECIAL WAIVER
Section 3.1 INDEPENDENT INVESTIGATION. The Ceding Company and the
Reinsurer acknowledge that they have each entered into this Agreement in
reliance on their own independent investigation and analysis of the facts
underlying their participation in the Reinsurance Agreement, and that no
representations, warranties or promises of any kind have been made,
directly or indirectly, to induce them to execute this Agreement other
3
than those which are expressly set forth herein. Nevertheless, the Parties
acknowledge that they may later discover facts different from or in
addition to those now known or believed to be known regarding their
participation in the Reinsurance Agreement and agree that this Agreement
shall remain in force notwithstanding the existence of or belief regarding
any different or additional facts.
ARTICLE IV
ARBITRATION
Section 4.1 ARBITRATION. Any dispute between the Ceding Company and
the Reinsurer arising out of the provisions of this Agreement, or
concerning its interpretation or validity shall be submitted to
arbitration in the manner set forth in the arbitration provision set forth
in Article XI of the Reinsurance Agreement.
ARTICLE V
COMPROMISE
Section 5.1 COMPROMISE. The Parties agree that this Agreement sets
forth a compromise and shall never at any time for any purpose be
considered as an admission of liability or responsibility on the part of
any Party hereto regarding any aspect of the Reinsurance Agreement.
ARTICLE VI
FURTHER ASSURANCES
Section 6.1 FURTHER ASSURANCES. The Ceding Company and the Reinsurer
agree to execute promptly any and all supplemental agreements, releases,
affidavits, waivers and all other documents of any nature or kind which
the other Party may reasonable require in order to implement the
provisions or objectives of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties with respect to the matters addressed
hereunder and supersedes all prior agreements and understandings, both
oral and written, between the Parties with respect to the subject matter
of this Agreement. There are no understandings between the Parties with
respect to the subject matter of this Agreement other than as expressed
herein.
Section 7.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of law thereof.
Section 7.3 SUCCESSORS AND ASSIGNS.
4
(a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto
and their respective successors and assigns; provided that
no Party may assign, delegate or otherwise transfer any of
its rights or obligations under this Agreement without the
consent of each other Party hereto, and that any purported
assignment without the consent of the other Party shall be
void and of no force or effect.
(b) No provision of this Agreement is intended to
confer upon any Person other than the Parties hereto any
rights or remedies hereunder
Section 7.4 AMENDMENTS.
(a) Any provision of this Agreement may be amended
if, but only if, such amendment is in writing and is signed
by each Party to this Agreement. Any change or modification
to this Agreement shall be null and void unless made by an
amendment hereto signed by each party to this Agreement.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 7.5 SEVERABILITY. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under
any present or future law or if determined by a court of competent
jurisdiction to be unenforceable, and if the rights or obligations
of the Ceding Company or the Reinsurer under this Agreement will
not be materially and adversely affected thereby, such provision
shall be fully severable, and this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
Section 7.6 COUNTERPARTS. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall be deemed to have
been executed and delivered when each Party hereto shall have
received a counterpart hereof signed by the other Party hereto and
then become effective as of the Effective Time.
5
IN WITNESS WHEREOF, the Parties hereto have caused
this Agreement to be executed by their duly authorized
representatives.
COMMONWEALTH ANNUITY AND LIFE
INSURANCE COMPANY
By /s/ Xxxxxxxx Xxx Xxxxxx
------------------------------------
Name: Xxxxxxxx Xxx Xxxxxx
Title: President & CEO
ARIEL CAPITAL REINSURANCE COMPANY
LIMITED
(acting on behalf of the Segregated Account 2009-001)
By /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: Director
6
EXHIBIT A
EXHIBIT A1
FINAL SETTLEMENT REPORT EFFECTIVE 4/1/2013
(i) Afliac General Account Remainder Reserves $ 889,067,180.80
minus Afliac reserves included in the modco reserves 839,197,606.04
-----------------------
Total Coinsurance General Account Reserves 49,869,574.76
(ii) Quarterly Settlement Amount due to Ceding Company 43,972,212.85
(iii) Recapture Allowance (58,408,299.77)
(iv) Quarterly Settlement Amount due to Reinsurer 0.00
-----------------------
Total amount to be paid to Commonwealth Annuity $ 35,433,487.84
-----------------------
EXHIBIT A2
CwA MONTHLY SETTLEMENT (POSITIVE DUE TO ACRC,
NEGATIVE DUE TO CwA) 2013 2013 2013
JANUARY FEBRUARY MARCH
Prior General Account Modco Reserves $ 875,387,457.02 $ 856,535,420.19 $ 849,129,483.38
Current General Account Modco Reserves 856,535,420.19 849,129,483.38 839,197,606,04
---------------------------------------------------------------
Monthly Gen Acct. Res. Change 18,852,036,83 7,405,936.81 9,931,877.34
GA Reinsurance Premiums (1,459,246.57) 1,376,870.90 (1,071,033.38)
SA Net Transfers 209,866.61 2,393,372.86 1,950,413.78
Interest and Other Earnings (32,268,031.72) (205,098.14) (18,663,100.72)
GA Expense Allowance (423,479.46) (591,192.23) (426,886.13)
SA Charges Collected 3,160,926.77 2,869,514.87 3,185,270.55
Premium Taxes Paid
Policy Admin Fee (598,548.75) (593,870.14) (590,176.04)
GA Liabilities Paid (11,618,405.37) (20,936,128,21) (6,457,280.02)
---------------------------------------------------------------
Total AFLIAC Settlement (24,144,881.66) (8,280,593.28) (12,140,914.62)
---------------------------------------------------------------
PL Settlement (5,726,907.69) 3,334,414.46 2,986,669.94
---------------------------------------------------------------
Total Settlement to/(from) ACRC $ (29,871,789.35) $ (4,946,178.82) $ (9,154,244.68)
===============================================================
Total amount due from ACRC $ (43,972,212.85)
7
