EXHIBIT (J)(3)
AMENDED AND RESTATED
UNCONDITIONAL CAPITAL MAINTENANCE AGREEMENT
BETWEEN
AMERICAN INTERNATIONAL GROUP, INC.
AND
THE UNITED STATES LIFE INSURNANCE COMPANY IN THE CITY OF NEW
YORK
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 United States Life Insurance
Company of New York, a corporation organized under the laws of the New York
(the "Company").
WITNESSETH:
WHEREAS, the Company is a life insurer subject to certain capital
requirements of the insurance laws and regulations of New York (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 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
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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
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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
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
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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
If to the Company:
The United States Life Insurance Company in the
City of New York
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
The United States Life Insurance Company in the
City of New York
c/o AIG Life and Retirement
1999 Avenue of the Stars, 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.
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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]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
AMERICAN INTERNATIONAL GROUP, INC.
By: ---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Corporate Actuary
THE UNITED STATES LIFE INSURANCE
COMPANY IN THE CITY OF NEW YORK
By: ---------------------------------
Name: Xxxx Xxxx Xxxxxx
Title: Executive Vice President
& Chief Financial Officer
SCHEDULE 1
The Specified Minimum Percentage shall equal 385% of the Company's Company
Action Level RBC.
