EXHIBIT 10.6
FIRST AMENDMENT TO
AMENDED AND RESTATED REINSURANCE AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REINSURANCE AGREEMENT
(this "First Amendment"), dated this 26th day of July, 2004, is made by and
between COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY, a life insurance company
domiciled in the State of Texas ("Ceding Company") and ALLSTATE LIFE INSURANCE
COMPANY, a life insurance company domiciled in the State of Illinois
("Reinsurer").
RECITALS
WHEREAS, Ceding Company and Reinsurer entered into an Amended and
Restated Reinsurance Agreement, effective as of June 1, 2004 (the "Agreement");
and
WHEREAS, Ceding Company and Reinsurer desire to make certain amendments
to the Agreement as more particularly described herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration and for the mutual
covenants set forth below, the parties hereto, intending legally to be bound,
hereby agree as follows:
1. This First Amendment shall be effective as of July 1, 2004.
2. The parties hereby amend the Agreement by adding the following
provisions to the Agreement:
ARTICLE XVI
TRUST
A. TRUST. At any time after the occurrence of any of the
following events, Ceding Company shall have the right, upon
delivery of written notice to Reinsurer, to require that
Reinsurer establish a trust reasonably acceptable to Ceding
Company (the "Trust") and deposit assets, which qualify as
admissible assets of Reinsurer under statutory accounting
principles and the laws of the State of Texas, therein having a
fair market value equal to the amount of the Statutory Reserves
of the Policies:
(1) if Reinsurer's RBC ratio falls between 125%-150% of the NAIC
Company Action Level RBC ("CAL RBC"); provided, however, if
Reinsurer's Statutory Reserves ceded pursuant to the
Agreement and the Amended and Reinstated Reinsurance
Agreement, dated as of June 1, 2004 between
Ceding Company and Reinsurer ("Ceded Statutory Reserves")
are less than $200 million the provisions of Article XVI(A)
will not be triggered; or
(2) if Reinsurer's RBC ratio falls below 125% of CAL RBC, then
the provisions of Article XVI(A) shall be triggered
regardless of Reinsurer's Ceded Statutory Reserves; and
(3) Reinsurer's obligation to maintain the Trust shall remain in
effect only for such period as the events listed in either
(1) or (2) above remains in effect.
B. TRUST. Upon the receipt of Ceding Company's notice to
require the establishment of a trust pursuant to Article XVI(A)
hereof, and without further action by Reinsurer, Reinsurer will
be deemed to have transferred and assigned to the Trust assets of
Reinsurer having an aggregate market value as of the effective
date of such notice equal to the aggregate Statutory Reserves
established by Ceding Company as of such date with respect to the
Policies (without giving effect to the reinsurance under this
Agreement), together with all interest, dividend, or other
investment income accrued on such assets from the date of
Reinsurer's receipt of such notice until the date of the Trust's
receipt of such assets. Reinsurer shall cooperate with Ceding
Company in effecting the creation and funding of the Trust
pursuant to Article XVI(A) hereof, including without limitation
by promptly transferring amounts to the Trust described in the
preceding sentence and by executing and delivering such other
documents, instruments and certificates effectuating the
establishment, funding, and maintenance of the Trust described in
this Article and reasonably requested by the Ceding Company.
Reinsurer shall maintain the Trust assets at a minimum level
equal to Statutory Reserves, and Ceding Company shall provide all
approvals and take any other action necessary to reduce the Trust
assets upon Reinsurer's request.
ARTICLE XVII
NOVATION; REPLACEMENT
At the option of Reinsurer, Reinsurer may at any time (i) assume
the Policies on a novation basis pursuant to an assumption
reinsurance agreement to be entered into by Ceding Company and
Reinsurer at such time having terms mutually agreeable to the
parties or (ii) replace the Policies pursuant to replacement
offers made to the owners of such Policies. Reinsurer will be
responsible for paying all costs and obtaining all approvals. The
parties hereto shall cooperate in good faith with each other in
effecting any assumption or replacement under this Article.
3. Capitalized terms used but not defined herein shall have the
meaning given to them in the Agreement.
4. Unless expressly modified by this First Amendment, the terms and
conditions of the Agreement remain unchanged and in full force
and effect.
5. This First Amendment shall be binding on the parties hereto,
including their affiliates, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first set forth above.
COLUMBIA UNIVERSAL LIFE INSURANCE ALLSTATE LIFE INSURANCE COMPANY
COMPANY
By: /s/ By: /s/
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Name: Xxxxx X. Xxxx Name: Xxxxxx X. Xxxxx
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Title: Treasurer Title: Group Vice President and Controller
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