Common use of Collateral Requirements Clause in Contracts

Collateral Requirements. If the amount of capital and surplus of any ADRUS member has been reduced by 50% or more of the amount of capital and surplus as stated in such ADRUS member’s most recent prior annual statutory statement filed with its state of domicile, such ADRUS member shall deposit in trust with a trustee (which shall not be an affiliate of such ADRUS member), and thereafter at all times maintain in such trust, assets at least equal in value to such ADRUS member’s proportionate amount of the reserves required to be maintained from time to time by ADRUS under sound actuarial principles and accepted statutory accounting practices, with respect to reserves required for liabilities incurred by ADRUS members under this Agreement on or after July 1, 2006. Such ADRUS member may alternatively post a letter of credit to satisfy such obligations. The trust or letter of credit arrangements, and all documentation relating thereto, must be satisfactory in form and substance to Insurer in its good faith discretion. The trust shall be terminated and the assets returned to the ADRUS member, or the letter of credit returned for cancellation, if the ADRUS member’s amount of capital and surplus increases by 10% of the amount of capital and surplus as stated in such ADRUS member’s most recent prior annual statutory statement filed with its state of domicile. The parties acknowledge that the collateral obligations under this provision predicated upon a reduction in surplus shall not be applicable if the ADRUS member has already provided collateral or taken other lawful actions that allow Insurer to receive full reserve credit with respect to the reinsurance ceded under this Agreement. All provisions of the Agreement not in conflict with the provisions of this Amendment will continue unchanged.

Collateral Requirements. If the amount of capital and surplus of any ADRUS member has been reduced by 50% or more of the amount of capital and surplus as stated in such ADRUS member’s most recent prior annual statutory statement filed with its state of domicile, such ADRUS member shall deposit deposite in trust with a trustee (which shall not be an affiliate of such ADRUS member), and thereafter at all times maintain in such trust, assets at least equal in value to such ADRUS member’s proportionate amount of the reserves required to be maintained from time to time by ADRUS under sound actuarial principles and accepted statutory accounting practices, with respect to reserves required for liabilities incurred by ADRUS members under this Agreement on or after July 1, 2006. Such ADRUS member may alternatively post a letter of credit to satisfy such obligations. The trust or letter of credit arrangements, and all documentation relating thereto, must be satisfactory in form and substance to Insurer in its good faith discretion. The trust shall be terminated and the assets returned to the ADRUS member, or the letter of credit returned for cancellation, if the ADRUS member’s amount of capital and surplus increases by 10% of the amount of capital and surplus as stated in such ADRUS member’s most recent prior annual statutory statement filed with its state of domicile. The parties acknowledge that the collateral obligations under this provision predicated upon a reduction in surplus shall not be applicable if the ADRUS member has already provided collateral or taken other lawful actions that allow Insurer to receive full reserve credit with respect to the reinsurance ceded under this Agreement. All provisions of the Agreement not in conflict with the provisions of this Amendment will continue unchanged.