EXECUTION VERSION
AMENDED AND RESTATED
INDEMNITY
RETROCESSION AGREEMENT
COVERAGE EFFECTIVE AS OF APRIL 1, 2006
BETWEEN
METLIFE INSURANCE COMPANY USA
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REFERRED TO AS THE "COMPANY"
AND
CATALYST RE LTD.
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REFERRED TO AS THE "REINSURER"
TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS.................................................... 4
ARTICLE II. REINSURANCE COVERAGE.......................................... 7
ARTICLE III. GENERAL PROVISIONS........................................... 8
ARTICLE IV. REINSURANCE PREMIUMS.......................................... 10
ARTICLE V. BENEFIT ALLOWANCES............................................. 10
ARTICLE VI. RECAPTURE..................................................... 10
ARTICLE VII. ACCOUNTING AND SETTLEMENTS................................... 11
ARTICLE VIII. DURATION.................................................... 12
ARTICLE IX. COLLATERAL ACCOUNT............................................ 13
ARTICLE X. TERMINAL ACCOUNTING AND SETTLEMENT............................. 13
ARTICLE XI. DISPUTE RESOLUTION............................................ 15
ARTICLE XII. INSOLVENCY................................................... 16
ARTICLE XIII. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.... 17
ARTICLE XIV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REINSURER... 21
ARTICLE XV. DAC TAX....................................................... 23
ARTICLE XVI. MISCELLANEOUS................................................ 26
ARTICLE XVII. EXECUTION................................................... 30
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AMENDED AND RESTATED INDEMNITY RETROCESSION AGREEMENT
This Amended and Restated Indemnity Retrocession Agreement (this
"Agreement") is made and entered into by and between MetLife Insurance Company
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USA, an insurer domiciled in the State of Delaware (the "Company"), and Catalyst
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Re Ltd., a reinsurer domiciled in the Islands of Bermuda (the "Reinsurer"), with
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coverage effective as of April 1, 2006. Each of the Company and the Reinsurer
are referred to herein from time to time as a "party" and collectively as the
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"parties."
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WHEREAS, on September 26, 2006, the Reinsurer and Exeter Reassurance
Company, Ltd. ("Exeter") entered into that certain Indemnity Retrocession
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Agreement, effective as of April 1, 2006 (as amended, the "Indemnity
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Retrocession Agreement"), pursuant to which the Reinsurer reinsures Exeter for
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certain risks associated with variable annuity contracts, I.E., the Reinsured
Contracts (as defined below) reinsured from (i) MetLife Insurance Company of
Connecticut ("MICC") and (ii) MetLife Life and Annuity Company of Connecticut
----
("MLAC") to Exeter pursuant to two reinsurance agreements;
----
WHEREAS, in connection with an internal restructuring, as of December 7,
2007, MLAC merged with and into MICC, with MICC surviving the merger;
WHEREAS, pursuant to an Amendment to the Indemnity Retrocession Agreement,
effective January 1, 2014, all variable annuity contracts ceded thereunder that
were issued to contractholders resident in New York on the issue date thereof
were recaptured by MICC;
WHEREAS, in connection with an internal restructuring, as of November 14,
2014, MICC has been redomiciled from Connecticut to Delaware and renamed MetLife
Insurance Company USA, and immediately following this redomestication and name
change, Exeter has
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merged with and into the Company, with the Company surviving the merger (the
"Exeter Merger");
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WHEREAS, as a result of the Exeter Merger, the Company, as successor to
Exeter, is no longer ceding or reinsuring the Reinsured Contracts since the
Reinsured Contracts are direct policy obligations of the merged company;
WHEREAS, following the Exeter Merger, the Company, as successor to Exeter,
and the Reinsurer wish to continue the reinsurance arrangement created by the
Indemnity Retrocession Agreement, as amended and restated pursuant to this
Agreement, such that the Reinsured Risks formerly retroceded to the Reinsurer
pursuant to the Indemnity Retrocession Agreement will be directly ceded from the
Company to the Reinsurer pursuant to this Agreement; and
WHEREAS, the Company and the Reinsurer mutually agree to reinsure on the
terms and conditions set forth herein;
WHEREAS, this Agreement is an indemnity reinsurance agreement solely
between the Company and the Reinsurer, and performance of the obligations of
each party under this Agreement will be rendered solely to the other party;
WHEREAS, except as set forth in Article XII, in no instance will anyone
other than the Company or the Reinsurer have any rights under this Agreement;
and
WHEREAS, the Reinsurer shall not have any liability with respect to any
contract owner, contract issuer, annuitant or beneficiary under any Reinsured
Contract.
NOW, THEREFORE, in consideration of mutual covenants contained in this
Agreement and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties agree as follows:
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ARTICLE I.
DEFINITIONS
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As used in this Agreement, the following terms shall have the following
meanings (definitions are applicable to both the singular and the plural forms
of each term defined in this Article):
"Accounting Period" shall have the meaning specified in Article VII,
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Section 1.
"Account Value" shall mean, as to each Reinsured Contract, the policy
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value, including all separate and fixed account assets, included in determining
the amounts actually paid upon death under such Reinsured Contract.
"Bank" shall mean Societe Generale, a French corporation.
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"Benefit Allowance" shall have the meaning specified in Appendix A.
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"Business Day" means any day that is not a Saturday or a Sunday or a day on
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which banks in the State of New York are authorized or required by law to close.
"Cash Collateral Pledge Agreement" means that certain Cash Collateral
--------------------------------
Pledge Agreement, dated as of September 28, 2006, by and among the Reinsurer,
the Bank and the Company (as successor to Exeter).
"Company SAP Statements" means the annual financial statements filed by the
----------------------
Company with the Delaware Department of Insurance, based on the accounting
principles permitted or prescribed under Delaware insurance law.
"Coverage Effective Date" is April 1, 2006.
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"Economic Loss (or Gain)" shall mean, at any point in time, an amount equal
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to (i) any Reinsurance Premium or other amounts due the Reinsurer pursuant to
this Agreement and unpaid as of the Termination Date less (ii) any Reinsured
Claims or other amounts due the Company pursuant to this Agreement and unpaid as
of the Termination Date, plus (iii) the total of all
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payments the Reinsurer makes or would have to make or receive in order to unwind
all of its hedging, investment and financing positions related to this
Agreement, including but not limited to OTC derivatives, exchange traded
derivatives, investments and borrowings. For transactions with counterparties
that are not affiliated with the Reinsurer, including all transactions conducted
on an exchange, the payment amount included in the calculation of Economic Loss
will be the actual payment that the Reinsurer makes or receives or would have to
make or receive. For affiliate transactions, the amount included in the
calculation will be the fair market bid or offer value as applicable, depending
on whether Reinsurer is selling or buying or would be selling or buying.
"Extracontractual Damages" means all liabilities for any and all costs,
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expenses, damages, liabilities or obligations of any kind or nature (including
without limitation attorneys fees, consequential and incidental damages, and
punitive and exemplary damages) which are incurred by the Company or any related
entity or any of their respective representatives arising out of, resulting
from, or relating to, any alleged or actual act or omission, whether or not in
bad faith, intentional, willful, negligent, reckless, careless or otherwise, of
the Company in connection with a Reinsured Contract, and which are not
contractually covered by the terms and conditions of such Reinsured Contract,
whether or not such acts or omissions occurred before or after the Coverage
Effective Date.
"Governmental Authority" means any national, federal, state, local or other
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court, arbitrator, administrative agency, commission or division, insurance or
securities regulatory or self-regulatory body or securities or commodities
exchange, including, but not limited to, the Delaware Department of Insurance.
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"Guaranteed Minimum Death Benefits (GMDB)" means the actual total amounts
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paid by the Company under the Reinsured Contracts upon death of an owner or
annuitant thereunder, including the waiver of surrender charges.
"Internal Replacement Contracts" means any contracts issued by the Company
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to the owner of a contract listed on Schedule C as an internal replacement
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(including, but not limited to, the issuance of a contract by the Company or any
predecessor of the Company as a replacement of a contract originally issued by
the Company or any predecessor of the Company).
"Keepwell Agreement" means the Keepwell Agreement dated January 19, 2006
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entered into between the Bank and the Reinsurer.
"Net Amount Due" shall have the meaning specified in Article VII,
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Section 3.
"Periodic Settlements Report" means a settlement report substantially in
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the form of Schedule A.
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"Premium Payment Period" means the period commencing on the Coverage
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Effective Date and ending on March 31, 2021.
"Proxy Total Account Value" shall have the meaning specified in Appendix A.
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"Reinsurance Accounting Report" means an accounting report substantially in
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the form of Schedule B.
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"Reinsurance Premiums" shall have the meaning specified in Article IV.
--------------------
"Reinsured Claims" means, with respect to any Accounting Period, the lesser
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of (i) the amount otherwise due the Company from the Reinsurer with regards to
the Reinsured Risks and (ii) the Benefit Allowance applicable to such Accounting
Period.
"Reinsured Contracts" means those individual variable annuity contracts
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issued by the Company (or any predecessor of the Company) between December 2,
2000 and September 30,
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2005 having the codes and issue dates listed on Schedule C and in-force as of
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the Coverage Effective Date, and all Internal Replacement Contracts. For the
avoidance of doubt, the Reinsured Contracts shall not include those variable
annuity contracts that were issued to contractholders resident in New York on
the issue date thereof that were recaptured by MICC, effective January 1, 2014,
pursuant to an Amendment to the Indemnity Retrocession Agreement.
"Reinsured Risks" means GMDB amounts payable by the Company on the death of
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the owner, annuitant or continuing spouse, as applicable, under Reinsured
Contracts in excess of the applicable Account Values (without regard to any "top
up" pursuant to a spousal continuation benefit), and limited in all events to
(i) death benefits payable under contract provisions, endorsements or riders
providing for an annual step-up death benefit based on anniversary date values,
plus applicable waiver of surrender charges and (ii) the risks under the
Reinsured Contracts that were previously reinsured by Exeter under the Indemnity
Retrocession Agreement prior to the Exeter Merger.
"Terminal Accounting and Settlement" shall have the meaning specified in
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Article X, Section 1.
"Termination Date" shall have the meaning specified in Article VIII,
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Section 2.
ARTICLE II.
REINSURANCE COVERAGE
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1. Risks Reinsured. Commencing on the Coverage Effective Date, the
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Reinsurer agrees to assume from the Company, and the Company agrees to retrocede
to the Reinsurer, subject to the terms and conditions hereof and limitations set
forth herein, the Reinsured Risks.
2. Form of Reinsurance. The reinsurance hereunder is indemnity reinsurance.
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3. Coverages and Exclusions. Only Reinsured Risks are reinsured under this
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Agreement, and the Reinsurer accepts no liability for any liabilities of the
Company, including,
7
without limitation, liabilities for annuitization, cash surrenders, dividends,
or any riders providing additional or supplemental benefits arising under or in
connection with the Reinsured Contracts other than the Reinsured Risks and
liabilities that would not have been reinsured by the Reinsurer under the
Indemnity Retrocession Agreement prior to the Exeter Merger.
4. No Extracontractual Damages. The Reinsurer does not indemnify the
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Company for, and will not be liable for, any Extracontractual Damages.
5. Expenses. The Reinsurer will bear no part of the expenses incurred in
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connection with the Reinsured Contracts.
6. Taxes and Assessments. The Reinsurer will not reimburse the Company for
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any taxes or guaranty fund or similar assessments paid by the Company.
ARTICLE III.
GENERAL PROVISIONS
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1. Administration. All of the usual and customary servicing and
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administrative functions and duties ("Administration") associated with the
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Reinsured Contracts shall continue to be the responsibility of the Company. The
Company agrees that (i) it will continue to perform such Administration in
accordance with its standards in effect prior to the Coverage Effective Date,
(ii) it will promptly notify the Reinsurer if it is unable to provide any of the
reports, records, documents, instruments, files or other information necessary
or required to perform Administration of the Reinsured Contracts, and (iii) it
will not agree to any amendment to any of the GMDB benefit provisions of any of
the Reinsured Contracts, or exercise any discretionary rights with respect to
such provisions where such exercise would increase the risk assumed by the
Reinsurer hereunder, in each case without the consent of the Reinsurer.
2. Audit and Inspection. At any reasonable time, either party may inspect,
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during normal business hours, at the principal office of the other, the original
papers and any and all
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other books or documents relating to or affecting reinsurance under this
Agreement. Information obtained through any inspection pursuant to this
Paragraph will not be used for any purpose not relating to reinsurance
hereunder.
3. Misunderstandings and Oversights. If any failure to pay amounts due or
--------------------------------
to perform any other act required by this Agreement is unintentional and caused
by misunderstanding or oversight, the Company and the Reinsurer will adjust the
situation to what it would have been had the misunderstanding or oversight not
occurred. The first party discovering such misunderstanding or oversight, or an
act resulting from such misunderstanding or oversight, will notify the other
party in writing promptly upon discovery thereof, and the parties shall act to
correct such misunderstanding or oversight within twenty (20) Business Days of
such other party's receipt of such notice. However, this section shall not be
construed as a waiver by either party of its rights to enforce strictly the
terms of this Agreement.
4. Third Party Reinsurance. The Company agrees that it will not enter into
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any reinsurance agreements whereby the Company cedes risks relating to the GMDB
benefits under the Reinsured Contracts without the prior written consent of the
Reinsurer, other than this Agreement.
5. Retrocession. The Reinsurer may retrocede all or a portion of the
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Reinsured Risks. The Reinsurer shall provide prompt notice to the Company of any
such retrocession made by the Reinsurer.
6. Setoff and Recoupment. Any debts or credits, matured or unmatured,
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liquidated or unliquidated, regardless of when they arose or were incurred, in
favor of or against either the Company or the Reinsurer with respect to this
Agreement are deemed mutual debts or credits, as the case may be, and shall be
setoff from any amounts due to the Company or the Reinsurer
9
hereunder, as the case may be, and only the net balance shall be allowed or
paid. This setoff provision (to the extent permitted by law) shall not be
modified or reconstrued due to the insolvency, liquidation, rehabilitation,
conservatorship, or receivership of either party.
ARTICLE IV.
REINSURANCE PREMIUMS
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In consideration of the reinsurance provided hereunder, the Company shall
pay to the Reinsurer reinsurance premiums for each Accounting Period during the
Premium Payment Period equal to 12.45 basis points times the Proxy Total Account
Value, in accordance with the calculation set forth in Appendix A (the
"Reinsurance Premium"). Premium payments shall be made as specified in Paragraph
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3 of Article VII of this Agreement.
ARTICLE V.
BENEFIT ALLOWANCES
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The amount payable by the Reinsurer to the Company under this Agreement for
any Accounting Period shall not exceed the Benefit Allowance as of the end of
such Accounting Period.
ARTICLE VI.
RECAPTURE
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At the request of the Company, the Reinsurer will offer a full or partial
recapture payment amount at which the Company may recapture all or a portion of
the Reinsured Risks within thirty (30) days after receipt of such offer by the
Company, such amount to equal the Reinsurer's Economic Loss or Gain associated
with the full or partial recapture as of the Business Day prior to the date such
offer is made. Such request can be made by the Company up to four (4) times
each Accounting Period. The decision to recapture shall be made at the sole
discretion of the Company. The recapture payment amount will be subject to a
final adjustment to reflect changes between the date of the offer and the
recapture date.
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ARTICLE VII.
ACCOUNTING AND SETTLEMENTS
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1. Accounting Period. The Accounting Periods under this Agreement will be
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each consecutive 12-month period beginning on the Coverage Effective Date,
PROVIDED THAT the final Accounting Period shall be the period commencing on the
applicable anniversary of the Coverage Effective Date and ending on the
Termination Date.
2. Reinsurance Accounting Reports. Within ten (10) Business Days of the end
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of each Accounting Period, the Company shall provide a Reinsurance Accounting
Report to the Reinsurer setting forth the Reinsured Risks for such period.
3. Periodic Settlements. Within twelve (12) Business Days after the end of
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each Accounting Period, the Reinsurer shall provide a Periodic Settlement Report
to the Company setting out the Reinsurance Premium, the Reinsured Claims and the
Net Amount Due for such period. The Net Amount Due will equal the Reinsurance
Premium less Reinsured Claims. Within fifteen (15) Business Days of the end of
each Accounting Period, the Company shall remit the Net Amount Due to the
Reinsurer, if such amount is positive. If the Net Amount Due is negative, then
the Reinsurer shall, within fifteen (15) Business Days of the end of each
Accounting Period, remit to the Company the absolute value of such amount.
During any periods after payment becomes due, interest shall accrue at a rate
equal to LIBOR plus 3.75% for the period from the due date through and including
the actual payment date.
If no Reinsurance Accounting Report is provided by the Company to the
Reinsurer within ten (10) Business Days after the end of the Accounting Period,
the Reinsurer shall, nevertheless, provide a report to the Company within twelve
(12) Business Days after the end of the Accounting Period setting out the
Reinsurance Premium owed by the Company and such
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amount shall be payable by the Company in accordance with the provisions of
Paragraph 3 of this Article VII.
4. Payments. All payments made pursuant to this Agreement shall be made by
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wire transfer of immediately available non-reversible United States Federal
Funds to such bank account or accounts as designated by the recipient. All
payments should be made free and clear and net of any deductions or
withholdings.
5. Estimations. If the amounts due hereunder cannot be determined at such
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dates as defined in Paragraph 3 above, on an exact basis, such payments will be
based on reasonable estimations of actual payments. Adjustments will then be
made to reflect actual amounts due as soon as possible.
ARTICLE VIII.
DURATION
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1. Duration. This Agreement covers Reinsured Risks paid by the Company
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during the period beginning on the Coverage Effective Date and ending on the
Termination Date.
2. Reinsurer's Liability. The liability of the Reinsurer with respect to
---------------------
reinsurance provided hereunder will begin simultaneously with that of the
Company under the Reinsured Contracts, but not prior to the Coverage Effective
Date of this Agreement. The Reinsurer's liability with respect to the Reinsured
Risks will terminate on the earliest of: (i) the date when all liabilities of
the Company under the Reinsured Contracts terminate and all amounts due the
Company from the Reinsurer are settled, (ii) the effective date of any recapture
of the Reinsured Risks by the Company in accordance with Article VI, (iii) the
effective date of any termination of this Agreement in accordance with paragraph
(3) below, or (iv) the twenty fifth (25th) anniversary of the Coverage Effective
Date (the earliest of (i), (ii), (iii) or (iv) being the "Termination Date").
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3. Termination for Nonpayment of Reinsurance Premiums or Other Amounts Due.
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If the Company fails to pay the Reinsurance Premiums or any other amounts due to
the Reinsurer pursuant to this Agreement, within twenty (20) Business Days after
the end of any Accounting Period the Reinsurer may terminate this Agreement,
subject to ten (10) Business Days prior written notice to the Company, in which
event the provisions of Article X, Paragraph 3 shall become applicable. If the
Reinsurer fails to pay any amounts due to the Company pursuant to this Agreement
within twenty (20) Business Days after the receipt of the Reinsurance Accounting
Report, the Company may terminate this Agreement, subject to ten (10) Business
Days prior written notice to the Reinsurer.
ARTICLE IX.
COLLATERAL ACCOUNT
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On September 28, 2006, the Company entered into the Cash Collateral Pledge
Agreement with the "Bank" and established a deposit account pursuant thereto
(the "Collateral Account") for the benefit of the Reinsurer. The Company has, on
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September 28, 2006, deposited the sum of $35 million to the Collateral Account.
The Collateral Account shall be held as collateral security for the payment to
the Reinsurer of amounts due the Reinsurer under the terms of this Agreement,
shall remain in full force and effect until payment in full in cash of such
amounts, and shall be released to the Company and/or the Reinsurer in accordance
with the terms of the Cash Collateral Pledge Agreement.
ARTICLE X.
TERMINAL ACCOUNTING AND SETTLEMENT
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1. Terminal Accounting. In the event that this Agreement is terminated in
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accordance with Article VIII, Paragraph 3, or the liability of the Reinsurer
with respect to
13
reinsurance hereunder is otherwise terminated in accordance with Article VIII,
Paragraph 2, a "Terminal Accounting and Settlement" will take place.
2. Terminal Accounting Date. The Terminal Accounting and Settlement shall
------------------------
occur within fifteen (15) Business Days following the Termination Date.
3. Settlement. The Terminal Accounting and Settlement will be calculated by
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the parties, as applicable, and will consist of the following:
(i) In the event this Agreement is terminated pursuant to Article
VIII, Paragraph 2 (i) (termination of all liabilities) prior to the twenty
fifth (25th) anniversary of the Coverage Effective Date or pursuant to
Article VIII, Paragraph 2 (iv) (twenty-fifth anniversary), a settlement as
provided in Article VII, Paragraph 3, computed as of the Termination Date;
(ii) in the event that this Agreement is terminated pursuant to
Article VIII, Paragraph 2 (ii) (recapture), payment by the Company to the
Reinsurer or a payment by the Reinsurer to the Company as appropriate of an
amount determined in accordance with Article VI; and
(iii) in the event the Agreement is terminated pursuant to Article
VIII, Paragraph 3 (nonpayment of premium), payment by the Company to the
Reinsurer of an amount equal to the Economic Loss to the Reinsurer
resulting from such termination, or payment by the Reinsurer to the Company
of an amount equal to the Economic Gain to the Reinsurer resulting from
such termination. In such event, all calculations of Economic Loss (or
Gain) will be made in good faith by the Reinsurer and shall be binding on
the Company.
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If the calculation of the Terminal Accounting and Settlement produces an
amount owing to the Company, such amount will be paid by the Reinsurer to the
Company. If the calculation of the Terminal Accounting and Settlement produces
an amount owing to the Reinsurer, such amount will be paid by the Company to the
Reinsurer, in accordance with the procedures for Periodic Settlements. In the
event that the Company fails to pay to the Reinsurer amounts due under this
Article X within two (2) Business Days of the completion of the Terminal
Settlement and Accounting calculation, the Reinsurer shall be entitled to deduct
the amounts due from the Collateral Account in accordance with Article IX.
ARTICLE XI.
DISPUTE RESOLUTION
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1. General. Disputes and differences between the Company and the Reinsurer
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relating to this Agreement, including the validity and effectiveness hereof, but
not including any dispute subject to Article XI, Section 3 or Article XV,
Section 5, on which an agreement cannot be reached will be decided by
arbitration. The arbitrators shall construe this Agreement from the standpoint
of practical and equitable principles, and the customs and practices of the
insurance and reinsurance business, rather than from the standpoint of a purely
legal document. The parties intend that the arbitrators will make their decision
with a view to effecting the intent of the parties to this Agreement.
2. Method. Arbitration under this Article XI shall be conducted before a
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panel of three arbitrators. The arbitrators must be disinterested, neutral, and
impartial present or former officers of life insurance or reinsurance companies,
other than the parties to this Agreement or any entity affiliated with either
party, or other professionals with significant experience in the life insurance
or reinsurance business, PROVIDED THAT any such professional shall not have
provided services to either party within the preceding five (5) years. One of
the arbitrators will
15
be appointed by the Reinsurer, another by the Company, and the two arbitrators
thus selected will select a third arbitrator before arbitration begins. If
either party fails to select an arbitrator within thirty (30) days after the
date of a written request to do so, the other party may select an arbitrator for
it. Should the two party-appointed arbitrators fail to choose a third arbitrator
within thirty (30) days of the appointment of the second arbitrator, the parties
shall appoint the third arbitrator pursuant to the XXXXX-U.S. Umpire Selection
Procedure. The decision of a majority of the arbitration panel shall be final
and binding. The arbitration panel shall render its award in writing within
forty-five days of the close of the arbitration proceedings. Judgment upon the
award may be entered in any court having jurisdiction pursuant to the Federal
Arbitration Act. The costs of arbitration, including the fees of the
arbitrators, will be shared equally by the parties unless the arbitrators decide
otherwise. Any counsel fees incurred by a party in the conduct of arbitration
will be paid by the party incurring the fees.
3. Legal Action. Notwithstanding any other provision of this Agreement, in
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the event that the Reinsurer terminates the Agreement as a result of the
Company's failure to pay any amounts due under the Agreement, the Reinsurer
specifically retains the right to bring legal action to recover unpaid amounts,
plus actual and consequential damages, including, without limitation, any losses
resulting from hedging positions entered into in connection with the Agreement.
ARTICLE XII.
INSOLVENCY
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Insolvency. In the event of the insolvency of the Company, any payments due
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to the Company from the Reinsurer pursuant to the terms of this Agreement will
be made directly to the Company or its liquidator, receiver or statutory
successor. The reinsurance will be payable by the Reinsurer in accordance with
the terms of this Agreement without diminution because of
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such insolvency of the Company. The liquidator, receiver or statutory successor
of the Company will give the Reinsurer written notice of the pendency of a claim
against the Company on the Reinsured Contracts within a reasonable time after
such claim is filed in the insolvency proceeding. During the pendency of any
such claim, the Reinsurer may investigate such claim and interpose in the
Company's name (or in the name of the Company's liquidator, receiver or
statutory successor), in the proceeding where such claim is to be adjudicated,
any defense or defenses which the Reinsurer may deem available to the Company or
its liquidator, receiver or statutory successor. The expense thus incurred by
the Reinsurer will be chargeable, subject to court approval, against the Company
as a part of the expense of liquidation to the extent of a proportionate share
of the benefit which may accrue to the Company solely as a result of the defense
undertaken by the Reinsurer.
ARTICLE XIII.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
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The Company represents, warrants and covenants as follows:
1. Organization, Standing and Authority of the Company. The Company is an
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insurance company duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on the operations of its business as they
are now being conducted. The Company (or the applicable predecessor to the
Company) held all requisite licenses or certificates of authority required to
issue the Reinsured Contracts when such Reinsured Contracts were issued.
2. Authorization. The Company has all requisite corporate power and
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authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery by the Company of this Agreement, and the performance
by the Company of its obligations under this Agreement, have been duly
authorized by all necessary corporate action. This
17
Agreement, when duly executed and delivered by the Company, subject to the due
execution and delivery by the Reinsurer, will be a valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
3. No Conflict or Violation. The execution, delivery and performance of
------------------------
this Agreement and the consummation of the transactions contemplated hereby in
accordance with the respective terms and conditions hereof will not (a) violate
any provision of the Certificate of Incorporation or Bye-laws of the Company, or
(b) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, or any
agreement with, or condition imposed by, any governmental or regulatory body,
foreign or domestic, binding upon the Company.
4. Intermediaries and Financial Advisors. No reinsurance intermediary or
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broker or other advisor has acted directly or indirectly as such for, or is
entitled to any compensation from, the Company in connection with this
Agreement.
5. Reliance. It is expressly understood and agreed that neither the
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Reinsurer nor any of its affiliates is undertaking to provide the Company or any
of its affiliates with any advice relating to investment, legal, regulatory,
accounting or tax matters. In furtherance thereof, the Company acknowledges and
agrees that (a) it and its affiliates have relied and will continue to rely on
the advice of its and their own investment, legal, regulatory, tax and
accounting advisors for all matters relating to the Agreement or the
transactions contemplated thereby and otherwise and (b) neither it, nor any of
its affiliates or advisors, has received, or has relied upon, the advice of the
Reinsurer or any of its affiliates or advisors regarding investment, legal,
regulatory, tax or accounting matters. The Company represents and warrants that
it, along with such independent investment, accounting, tax and legal advisers
as it deems necessary, has performed an
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independent evaluation of the matters relating to the Agreement, and has
independently determined whether the Agreement meets statutory, tax and
financial accounting requirements applicable to the Company. The Reinsurer has
made no representations, warranties or covenants as to statutory, tax and
financial accounting matters.
6. Approvals of Governmental Authorities. No consent, waiver, license,
-------------------------------------
approval, order or authorization of, or registration, filing or declaration
with, or notices to, any person, entity or Governmental Authority is required to
be obtained, maintained, made or given by or with respect to the Company in
connection with (i) the execution and delivery of this Agreement by the Company,
or (ii) the consummation by the Company of the transactions contemplated hereby.
7. Investigations. The Company will notify the Reinsurer immediately, in
--------------
writing, of any and all investigations of the Company or its directors,
principal officers or shareholders conducted by any Governmental Authority,
other than routine investigations by insurance regulators.
8. Reinsured Contracts. The Reinsured Contracts have been filed and
-------------------
approved by the applicable regulatory authorities as required by applicable law,
rule or regulation, and all Reinsured Contracts are in compliance with
applicable tax laws and federal or state laws governing the offering or sale of
securities.
9. Actions and Proceedings. The Company expressly acknowledges that there
-----------------------
are no (a) outstanding orders, decrees or judgments by or with any Governmental
Authority or (b) actions, suits, arbitrations or legal, administrative or other
proceedings (including, without limitation, any conservation, rehabilitation,
liquidation or similar proceeding) pending or, to the knowledge of the Company,
threatened against the Company, at law or in equity, or before or by
19
any Governmental Authority or before any arbitrator of any kind, which would, in
the case of (a) or (b), preclude or prohibit the execution or performance of
material obligations of the Company under this Agreement.
10. Documents True and Complete. The Company represents and warrants that
---------------------------
it has provided to the Reinsurer true, complete and correct copies of documents
and financial statements, including, but not limited to, the Company SAP
Statements. The Company further represents and warrants that all factual
information that it provided to the Reinsurer is complete and accurate as of the
date of the document in which such information is contained and that any
assumptions made in providing this information were based upon informed judgment
and are consistent with sound actuarial principles. The Company also
acknowledges that the Reinsurer has relied on this information and the foregoing
representations in entering into this Agreement.
11. No Material Changes. The Company expressly acknowledges that it is not
-------------------
aware of any omissions, errors, changes or discrepancies that would have the
effect of making the documentation and latest financial statements that have
been provided to the Reinsurer inaccurate in any material respect.
12. Tax Status. The Company is subject to U.S. taxation under Subchapter L
----------
of Chapter 1 of the Code.
13. Third Party Reinsurance on Reinsured Risks. The Company represents and
------------------------------------------
warrants that there are no reinsurance arrangements that the Company has entered
into whereby the Company cedes risks relating to the GMDB benefits under the
Reinsured Contracts, other than this Agreement.
20
ARTICLE XIV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REINSURER
----------------------------------------------------------
The Reinsurer represents, warrants and covenants as follows:
1. Organization, Standing and Authority of the Reinsurer. The Reinsurer is
-----------------------------------------------------
a long-term insurance company duly organized, validly existing and in good
standing under the laws of Bermuda, and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
the operations of its business as they are now being conducted.
2. Authorization. The Reinsurer has all requisite corporate power and
-------------
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery by the Reinsurer of this Agreement, and the
performance by the Reinsurer of its obligations under this Agreement, have been
duly authorized by all necessary corporate action. This Agreement, when duly
executed and delivered by the Reinsurer, subject to the due execution and
delivery by the Company, will be a valid and binding obligation of the
Reinsurer, enforceable against the Reinsurer in accordance with its terms.
3. No Conflict or Violation. The execution, delivery and performance of
------------------------
this Agreement and the consummation of the transactions contemplated hereby will
not (a) violate any provision of the Memorandum of Association, Bye-laws or
other charter or organizational document of the Reinsurer, or (b) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, or any agreement with,
or condition imposed by, any governmental or regulatory body, foreign or
domestic, binding upon the Reinsurer.
4. Approvals of Governmental Authorities. Other than the Reinsurer's
-------------------------------------
obligations as a long-term insurer under Bermuda law, no consent, waiver,
license, approval, order or
21
authorization of, or registration, filing or declaration with, or notices to,
any person, entity or Governmental Authority is required to be obtained, made or
given by or with respect to the Reinsurer in connection with (i) the execution
and delivery of this Agreement by the Reinsurer, or (ii) the consummation by the
Reinsurer of the transactions contemplated hereby.
5. Tax Election. The Reinsurer has submitted to the U.S. Internal Revenue
------------
Service an election to be subject to U.S. federal income tax pursuant to the
provisions of section 953(d) of the Internal Revenue Code of 1986, as amended
(the "Code"), and has entered into such agreements or undertakings as were
----
required in order for such election to become effective. Notwithstanding the
foregoing, if the Reinsurer should revoke or otherwise lose its US taxpayer
status then the Reinsurer will reimburse the Company for any applicable US
federal excise tax payable with respect to the reinsurance premiums received by
the Reinsurer under this Agreement after the effective date of the Reinsurer's
revocation or loss of its US taxpayer status, to the extent that such revocation
or loss is the sole cause of the Company's liability for such tax.
6. FATCA. The Reinsurer certifies that it (i) has an election in place
-----
under Section 953(d) of the Internal Revenue Code of 1986, as amended, (ii) is
not a specified insurance company within the meaning of Treasury Regulation
(S) 1.1471-5(e)(1)(iv), and (iii) is not licensed to do business in any state.
The Reinsurer will provide the Company with an IRS Form W-9 certifying that it
is a U.S. person in accordance with Sections 1471 - 1474 of the US Internal
Revenue Code and applicable Treasury Regulations (collectively, "FATCA"),
-----
(i) upon execution of this Indemnity Retrocession Agreement, (ii) promptly upon
reasonable demand by the Company and (iii) promptly upon learning that any such
information previously provided by the Reinsurer has become obsolete or
incorrect.
22
If the Company does not receive such information on a timely basis, or such
other appropriate certification that the Reinsurer is not subject to withholding
under FATCA, the Company will notify the Reinsurer of its failure to receive
such information or certification. The Reinsurer will then have at least 60 days
from its receipt of such notice to provide such information or certification to
the Company. If the Reinsurer does not provide such information or certification
to the Company by the end of such 60-day period, the Company may withhold
appropriate FATCA tax until such time as the Reinsurer shall have provided such
information or certification to the Company.
7. Tax Status. The Reinsurer is subject to U.S. taxation under Subchapter L
----------
of Chapter 1 or Subpart F of Part III of Subchapter N or Chapter 1 of the Code.
8. Keepwell Agreement. The Keepwell Agreement is in full force and effect
------------------
and is a valid and binding obligation of the Reinsurer and the Bank, except to
the extent enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Neither the Reinsurer nor the Bank is in default as to any
obligations in the Keepwell Agreement.
ARTICLE XV.
DAC TAX
-------
1. DAC Tax Election. The Company and the Reinsurer hereby agree to the
----------------
following pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations (the
"Regulations") issued under Section 848 of the Code. The terms used in this
-----------
Article are defined by reference to Regulation Section 1.848-2 in effect at the
date hereof. The term "net consideration" as used in
23
this Article will refer to net consideration as defined in Regulation Section
1.848-2(f) in effect at the date hereof.
2. Tax Return. Each party shall attach a schedule to its federal income tax
----------
return that identifies this Agreement as a reinsurance agreement for which the
joint election under Regulation Section 1.848-2(g)(8) has been made, and shall
file its respective federal income tax returns in a manner consistent with the
provisions of Regulation Section 1.848-2 in effect on the date hereof.
3. Capitalization of Expenses. The party with net positive consideration
--------------------------
under 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 Section 848(c)(1) of the Code.
4. Information. Each party agrees to exchange information pertaining to the
-----------
amount of net consideration under this Agreement each year to ensure
consistency. The parties also agree to exchange information which may otherwise
be required by the Internal Revenue Service. The Reinsurer shall provide the
Company by the first day of May in each year its calculation of the net
consideration for the preceding calendar year. Such calculation shall be
accompanied by a statement signed by an officer of the Reinsurer stating that
the Reinsurer will report such net consideration in its tax return for the
preceding calendar year. The Company may contest such calculation by providing
an alternative calculation to the Reinsurer in writing within 30 days after the
Company's receipt of the Reinsurer's calculation. If the Company does not so
notify the Reinsurer, the Company shall report the net consideration as
determined by the Reinsurer in the Company's tax return for the previous
calendar year. If the Company contests the Reinsurer's calculation of the net
consideration, the parties will act in good faith to reach an
24
agreement as to the correct amount within 30 days after the date the Company
submits its alternative calculation. Each party shall report such corrected
amount in its respective tax returns for the preceding calendar year, if the
parties have agreed to the Company's alternative calculation.
5. Disputes. If during the 30 day period after the date the Company submits
--------
its alternative calculation the Company and the Reinsurer are unable to reach
agreement, they shall within 10 days following the expiration of such 30 day
period mutually agree to select a nationally recognized accounting firm (the
"Third Party Accountant") to promptly review this Agreement and the calculations
----------------------
of the Company and the Reinsurer, which review shall commence no later than five
(5) days after the selection of the Third Party Accountant, for the purpose of
calculating the net consideration under this Agreement. In making such
calculation, the Third Party Accountant shall consider only those items or
amounts in the Reinsurer's calculation as to which the Company has disagreed.
The Third Party Accountant shall deliver to the Company and the Reinsurer, as
promptly as practicable (but no later than 30 days after the commencement of
their review), a report setting forth such calculation, which calculation shall
result in a net consideration between the amount thereof shown in the
Reinsurer's calculation and the amount thereof in the Company's calculation.
Such report shall be final and binding upon the Company and the Reinsurer. The
fees, costs and expenses of the Third Party Accountant shall be borne equally by
the Company and the Reinsurer.
6. Duration of Election. This election shall be effective for the taxable
--------------------
year of each party that includes the Coverage Effective Date, and for all
subsequent years during which this Agreement remains in effect.
25
ARTICLE XVI.
MISCELLANEOUS
-------------
1. Headings and Schedules. Headings used herein are not a part of this
----------------------
Agreement and shall not affect the terms hereof. The attached Schedules and
Appendix A are part of this Agreement.
2. Notices. All notices and communications hereunder shall be in writing
-------
and shall be deemed given if received three (3) days after mailing, or if by
telefax or by hand, when received, and if by overnight mail, on the next day.
Any written notice shall be by either certified or registered mail, return
receipt requested, or overnight delivery service (providing for delivery
receipt) or delivered by hand. All notices or communications with the Reinsurer
under this Agreement shall be addressed as follows:
Catalyst Re Ltd.
Clarendon Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxxxxxxx: Secretary
Telephone: 000-000-0000
Facsimile: 000-000-0000
All notices and communications with the Company under this Agreement shall be
directed to:
MetLife Insurance Company USA
1095 Avenue of the Americas
Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxx
Email Address: xxxxxx@xxxxxxx.xxx
------------------
3. Severability. If any term or provision of this Agreement shall be held
------------
void, illegal, or unenforceable, the validity of the remaining portions or
provisions shall not be affected thereby.
26
4. Governing Law. This Agreement shall be governed by the laws of the State
-------------
of New York, without reference to the conflict of laws rules thereof. The
parties agree that the Federal courts in the State of New York, or the state
courts of such state, have jurisdiction to hear any matter relating to
compelling arbitration, enforcing the judgment of an arbitral panel or deciding
any matter subject to Article XI, section 3, and the parties hereby consent to
such jurisdiction. The parties hereby waive, to the fullest extent permitted by
law, any objection it may now or hereafter have to the laying of such venue, or
any claim that a proceeding has been brought in an inconvenient forum. THE
COMPANY AND THE REINSURER HEREBY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
5. Amendments and Successors. This Agreement may be amended only by written
-------------------------
agreement of the parties. Any change or modification to this Agreement shall be
null and void unless made by amendment to this Agreement and signed by both
parties. The provisions of this Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company and the
Reinsurer.
6. Entire Agreement. This Agreement, including the Schedules and Appendix
----------------
attached hereto, and the Cash Collateral Pledge Agreement constitute the entire
agreement between the parties with respect to the reinsurance hereunder. There
are no understandings between the parties with respect to the reinsurance
hereunder other than as expressed in this Agreement and the Cash Collateral
Pledge Agreement.
7. Assignment. This Agreement may not be assigned by any party without the
----------
prior written consent of the other party, and any purported assignment without
such consent shall be null and void; PROVIDED, HOWEVER, THAT the Reinsurer shall
have the right to assign the rights
27
under this Agreement by way of novation to a reinsurer that is (i) under common
control with the Reinsurer, (ii) subject to a keepwell agreement issued by the
Bank in favor of such reinsurer in a form substantially similar to the Keepwell
Agreement and (iii) a U.S. taxpayer.
8. Confidentiality. The Company and the Reinsurer agree that the terms and
---------------
conditions of this Agreement are confidential and will not disclose either
verbally or by any means, unless written consent to such disclosure has been
provided by the other party, any aspect of the contract including a general
description of the transaction to any non-affiliated third party except (a) to
its attorneys, auditors and regulators on a confidential basis and (b) to the
extent required by applicable laws and regulations or by any subpoena or similar
legal process or required or requested by any government or regulatory authority
or stock exchange having authority or jurisdiction. The Company and the
Reinsurer agree to continue to be bound by the terms of the Confidentiality
Agreement dated by and between the parties, which is attached as Schedule D
----------
hereto and incorporated herein by reference. Notwithstanding the foregoing, each
party to this Agreement, and each of their employees, representatives and other
agents, are hereby expressly authorized to disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this presentation and all materials of any kind
(including opinions or other tax analyses) that are provided to any such persons
relating to such tax treatment and structure. This authorization of tax
disclosure is retroactively effective to the commencement of the first
discussions between the parties to this Agreement regarding the transactions
contemplated herein.
9. Counterparts; Fax Signatures. This Agreement may be executed in
----------------------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same
28
agreement. The facsimile signature of any of the parties hereto may be relied
upon and shall have the same effect as the original signature of such party.
29
ARTICLE XVII.
EXECUTION
---------
In witness of the above, this Agreement is executed in duplicate on the dates
indicated below.
ATTEST: METLIFE INSURANCE COMPANY USA
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------------- -----------------------------------
Name: Xxxx Xxxxxx Name: Xxxxxxx Xxxxx
Title: Assistant Vice President Title: Senior Vice President
Date: December 2, 2014 Date: December 2, 2014
ATTEST: CATALYST RE LTD.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- -----------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Legal Secretary Title: Director
Date: December 5, 2014 Date: December 5, 2014
30
Schedule A - Periodic Settlements Report
Schedule B - Reinsurance Accounting Report
Schedule C - Reinsured Contracts
Schedule D - Confidentiality Agreement
Appendix A - Formulas, Schedules and Calculations
SCHEDULE A
PERIODIC SETTLEMENTS REPORT
---------------------------
FROM REINSURER TO COMPANY
-------------------------
Accounting Period Start Date:
-----------------------------------------
Accounting Period End Date:
-----------------------------------------
Date Report Completed:
-----------------------------------------
A) Benefit Allowance balance from prior Accounting Period =
B) Reinsured Claims paid for prior Accounting Period =
C) R\\t\\ for current Accounting Period (as defined in Appendix A) =
D) Actual days in current Accounting Period =
E) Benefit Allowance Increase Amount for current Accounting Period (as
defined in Appendix A) =
F) Benefit Allowance balance for current Accounting Period
((A-B)*(1+C*(D/360)) + E) =
G) Total of reported Reinsured Risks for current Accounting Period (from
Schedule B) =
H) Proxy Total Account Value for the current Accounting Period (as defined in
Appendix A) =
1. Reinsurance Premiums (.001245 * H) =
2. Reinsured Claims (Minimum of F and G) =
3. Net Amount Due (1 - 2) =
SCHEDULE B
REINSURANCE ACCOUNTING REPORT
-----------------------------
FROM COMPANY TO REINSURER
Accounting Period: _________
Date Report Completed: _________
Reinsured Risks Paid During the Prior Accounting Period:
Account Death Benefit
Annual Value in excess of
Date- Step-up Less Account Value
of- Date of State of Death Surrender Less Surrender Reinsured
Name SSN Death Issue Residence Benefit Charge Charge Risk
Aggregate
Totals
SCHEDULE C
REINSURED CONTRACTS
-------------------
Individual variable annuity contracts issued by the Company (or any predecessor
of the Company) and in-force as of the Coverage Effective Date having the
following codes and issue dates:
MICC SUMMARY
------------
COMPANY PRODUCT COUNT ACCOUNT VALUE ROP
--------- ----------- ------ ------------- -----------
MICC ASSET MGR 16 104,445 73,243
MICC MARQUIS 610 27,412,026 16,402,226
MICC PA(S)/PADV 1,068 11,118,147 5,965,204
MICC PIONANNVALU 28 1,283,969 868,646
MICC PIONEER XXX 44 894,348 621,667
MICC PIONEERFLEX 78 5,023,755 3,417,376
MICC PIONEERPLUS 135 4,586,813 2,973,497
MICC PORT A XTRA 42 295,230 198,051
MICC PORT ACCESS 133 2,879,152 1,901,063
MICC PORT ARCH 3 113 746,803 518,623
MICC PORT ARCH L 41 463,615 285,075
MICC PORT II 52 1,210,715 842,170
MICC PORT PLUS 509 23,666,764 14,205,198
MICC PREM ADV 2 243 7,280,717 3,492,625
MICC PREM ADV 3 21 954,290 627,171
MICC PREM ADV L 120 3,308,476 2,070,013
MICC PREM ADV2S2 102 5,338,057 3,242,857
MICC PRIMELITE 2 10,933 216,851,239 127,788,075
MICC SCUD ADV ST 2 0 -
MICC XXXXXXX ADV 24 192,765 119,729
MICC XXXXXXX XXX 128 6,821,384 4,539,131
MICC UAA 10 191,214 118,486
MICC VINT ACCESS 69 1,651,710 1,043,943
MICC XXXX XX NEW 91 3,940,263 2,364,094
MICC VINT XTRA 5 131,665 53,388
MICC VINTAGE 3 92 583,706 234,356
MICC VINTAGE II 15 926,882 313,356
MICC VINTAGE L 502 11,263,892 7,267,932
MICC VINTXTRANEW 181 15,608,703 9,654,409
------ ------------ -----------
15,407 354,730,749 211,201,604
------ ------------ -----------
MLAC SUMMARY
------------
COMPANY PRODUCT COUNT ACCOUNT VALUE ROP
--------- ----------- ------ ------------- -----------
MLAC ASSET MGR 96 10,614,431 8,199,422
MLAC MARQUIS 2,054 219,066,979 184,072,167
MLAC PA(S)/PADV 4,532 335,919,165 281,542,135
MLAC PIONANNVALU 78 4,512,458 4,058,183
MLAC PIONEER XXX 91 6,902,865 6,017,500
COMPANY PRODUCT COUNT ACCOUNT VALUE ROP
--------- ----------- ------ -------------- -------------
MLAC PIONEERFLEX 39 2,155,377 1,996,943
MLAC PIONEERPLUS 282 29,460,184 24,805,038
MLAC PORT A XTRA 155 13,730,806 10,354,974
MLAC PORT ACCESS 184 18,005,325 15,507,191
MLAC PORT ARCH 3 614 45,719,102 37,992,636
MLAC PORT ARCH L 32 6,824,837 5,926,422
MLAC PORT II 87 9,317,022 8,078,078
MLAC PORT PLUS 312 23,647,224 20,290,437
MLAC PREM ADV 2 1,281 125,945,402 94,497,836
MLAC PREM ADV 3 6 298,339 287,291
MLAC PREM ADV L 160 11,629,758 10,179,977
MLAC PREM ADV2S2 153 28,419,724 23,869,501
MLAC PRIMELITE 2 32,048 1,893,855,343 1,641,007,664
MLAC SCUD ADV ST 2 80,173 71,120
MLAC XXXXXXX ADV 60 17,013,585 16,657,063
MLAC XXXXXXX XXX 157 17,403,955 14,737,707
MLAC VINT ACCESS 118 18,391,734 16,592,097
MLAC XXXX XX NEW 84 6,192,943 5,528,378
MLAC VINT XTRA 687 83,983,760 60,465,427
MLAC VINTAGE 3 2,431 210,847,627 174,885,470
MLAC VINTAGE II 195 15,704,312 12,254,652
MLAC VINTAGE L 243 26,850,685 24,221,405
MLAC VINTXTRANEW 168 27,588,124 23,518,819
------ ------------- -------------
46,349 3,210,081,239 2,727,615,535
------ ------------- -------------
SCHEDULE D
CONFIDENTIALITY AGREEMENT
-------------------------
APPENDIX A
----------
PROXY TOTAL For each Accounting Period T (where T = 1 to 15) during the
ACCOUNT VALUE Premium Payment Period, the Proxy Total Account Value will
equal:
$4,896,935,000 * (Alpha0t + Alpha1t xtBeta1t),
where Alpha0t, Alpha1t, and Beta1t are constants fixed and
specified in SCHEDULE 1, and
1 12t
Xt=--- SIGMA Sn,
12 n=(t-1)x12+1
S\\n\\ is the closing value of the index basket on the last
business day of sequential calendar month N (where N = 0 to
180), where
SPXn EUROn FTSEn NIKKn
Sn = 0.8400 x ---- + 0.0744 x ----- + 0.0408 x ----- + 0.0448 x -----
SPXo EUROo FTSEo NIKKo
SPX\\n\\ is the closing value of the Standard and Poor's 500
Index (Bloomberg Ticker "SPX") on the last business day of
month N,
EURO\\n\\ is the closing value of Dow Xxxxx EURO STOXX 50 Price
Index (Bloomberg Ticker "SX5E") on the last business day of
month N,
FTSE\\n\\ is the closing value of FTSE 100 Index (Bloomberg
Ticker "UKX") on the last business day of month N,
NIKK\\n\\ is the closing value of Nikkei-225 Stock Average
Index (Bloomberg Ticker "NKY") on the last business day of
month N, and,
with the following values predetermined
Date 03/31/2006 04/28/2006 05/31/2006 06/30/2006
N 0 1 2 3
-------- ------------- ------------ ------------ ------------
SPX\\n\\ 1,294.83 1,310.61 1,270.09 1,270.20
EURO\\n\\ 3,853.74 3,839.90 3,637.17 3,648.92
FTSE\\n\\ 5,964.60 6,023.10 5,723.80 5,833.40
NIKK\\n\\ 17,059.66 16,906.23 15,467.33 15,505.18
BENEFIT ALLOWANCE The Benefit Allowance C\\t\\ as of the end of each
Accounting Period T is defined by the formula:
Ct = Ct + (Ct-1 - ACPt-1)(1 + rt dayst / 360),
where C\\0\\ = 0 and C\\t\\ is the Benefit Allowance
Increase Amount for Accounting Period T (defined below),
ACP\\t\\ = MIN (C\\T\\, AC\\t\\), is the total of Reinsured
Claims paid with respect to such Accounting Period T, with
AC\\t\\ being the total of reported Reinsured Risks
occurring during Accounting Period t,
R\\t\\ is a rate offered by the Bank on cash deposits made
on the Periodic Settlement date for Accounting Period T-1
and maturing on the Periodic Settlement date for Accounting
Period T, and
DAYS\\t\\ is the number of actual calendar days between the
Periodic Settlement date for Accounting Period T-1 and the
Periodic Settlement date for Accounting Period T.
BENEFIT ALLOWANCE For Accounting Period T, within the Premium Payment Period,
INCREASE AMOUNT the Benefit Allowance Increase Amount will be determined by
the formula:
Ct = $4,896,935 x (a0t + a1t x Max[0,a2t yt b2t - xt]b1t)
where A\\1t\\, and B\\1t\\ are constants fixed and specified
in SCHEDULE 2,
X\\t\\ is as defined under Proxy Total Account Value, and
where
1 12t
Yt = ---- SIGMA Max [So,...,Sn]
12 n=(t-1)x12+1
After the Premium Payment Period, the Benefit Allowance
Increase Amount will be zero.
SCHEDULE 1
----------
Accounting Period
-----------------------
t First Day Last Day A\\0t\\ A\\1t\\ B\\1t\\
--------- ---------- ---------- --------- -------- -------
1 04/01/2006 03/31/2007 0.1776 0.8163 0.7650
2 04/01/2007 03/31/2008 0.1212 0.7946 0.7280
3 04/01/2008 03/31/2009 0.1082 0.7204 0.7260
4 04/01/2009 03/31/2010 0.1016 0.6268 0.7350
5 04/01/2010 03/31/2011 0.0991 0.5252 0.7503
6 04/01/2011 03/31/2012 0.0955 0.4248 0.7650
7 04/01/2012 03/31/2013 0.0707 0.3449 0.7506
8 04/01/2013 03/31/2014 0.0591 0.2628 0.7546
9 04/01/2014 03/31/2015 0.0549 0.1952 0.7724
10 04/01/2015 03/31/2016 0.0461 0.1494 0.7786
11 04/01/2016 03/31/2017 0.0309 0.1230 0.7521
12 04/01/2017 03/31/2018 0.0247 0.0973 0.7496
13 04/01/2018 03/31/2019 0.0200 0.0769 0.7487
14 04/01/2019 03/31/2020 0.0146 0.0631 0.7339
15 04/01/2020 03/31/2021 0.0136 0.0512 0.7407
SCHEDULE 2
----------
Accounting Period
-------------------------
t First Day Last Day a\\0t\\ a\\1t\\ a\\2t\\ b\\1t\\ b\\2t\\
----- ------------ ------------ -------- ------- ------- ------- -------
1 04/01/2006 03/31/2007 0.0011 5.3213 1.0526 1.7675 0.8480
2 04/01/2007 03/31/2008 0.0195 4.4697 1.0428 1.5692 0.8364
3 04/01/2008 03/31/2009 0.0193 4.1429 1.0430 1.5513 0.8779
4 04/01/2009 03/31/2010 0.0251 3.6671 1.0413 1.5249 0.8911
5 04/01/2010 03/31/2011 0.0334 2.9683 1.0225 1.3635 0.9080
6 04/01/2011 03/31/2012 0.0335 2.4816 1.0076 1.2839 0.9317
7 04/01/2012 03/31/2013 0.0309 2.0203 1.0057 1.2250 0.9299
8 04/01/2013 03/31/2014 0.0302 1.6495 1.0024 1.2122 0.9323
9 04/01/2014 03/31/2015 0.0295 1.3451 1.0094 1.2673 0.9286
10 04/01/2015 03/31/2016 0.0281 1.1319 1.0023 1.2650 0.9318
11 04/01/2016 03/31/2017 0.0279 0.9381 0.9794 1.2102 0.9512
12 04/01/2017 03/31/2018 0.0239 0.7409 0.9799 1.1563 0.9505
13 04/01/2018 03/31/2019 0.0235 0.6430 0.9528 1.0797 0.9573
14 04/01/2019 03/31/2020 0.0226 0.5393 0.9325 1.0103 0.9604
15 04/01/2020 03/31/2021 0.0203 0.4351 0.9484 1.0341 0.9508
