Exhibit 10.45
MATERIAL IN THIS DOCUMENT HAS
BEEN OMITTED PURSUANT TO A
CONFIDENTIALITY REQUEST. OMITTED
MATERIALS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
[XL RE LOGO]
ANNUITY AND LIFE REASSURANCE LTD.
XXXXXXXXXX XXXXX
0 XXXXXXXX XXXXXX
XXXXXXXX XX 11
BERMUDA
RETROCESSION AGREEMENT
OLD MUTUAL IMMEDIATE ANNUITIES
LR00001A00
27 MARCH 2001
1
RECITALS
INTRODUCTION
This Agreement is between ANNUITY AND LIFE REASSURANCE LTD., a company
incorporated in Bermuda and whose registered office is at Xxxxxxxxxx Xxxxx, 0
Xxxxxxxx Xxxxxx, Xxxxxxxx XX 11, Bermuda (hereinafter, "the Retrocessionaire")
And XL RE LTD, a company incorporated in Bermuda and whose registered office is
at Xxxxxx Xxxxx, 00 Xxxx Xxxxxx, PO Box HM 1066, Xxxxxxxx XX EX, Bermuda
(hereinafter, "XL Re")
The Agreement Number is LR0000lA00
2
MASTER AGREEMENT
1 INTRODUCTION
1.1 This Agreement is made between the Parties identified in the Recitals.
1.2 This Agreement consists of the Recitals, the Master Agreement and the
Schedules.
1.3 XL Re agrees to retrocede, and the Retrocessionaire agrees to accept,
the Business Covered by this Agreement on the terms and conditions of
this Agreement.
2 DEFINITIONS
2.1 The following definitions are used in this Agreement and are defined
below:
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Account The accounts to be submitted to the Retrocessionaire by XL Re in accordance
with clause 7.
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Administration Expense An amount equal to 0.625 basis points (quarterly equivalent of 2.5 basis points
Allowance per annum) of the value of the Assets at the previous Pre-Payment Date.
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Agreements The terms and conditions set out in this document and the Recitals and the
Schedules attached to this agreement.
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Appointed Actuary An actuary appointed by either the Retrocessionaire or XL Re in accordance
with the relevant legislation governing the appointment of an actuary in
Bermuda.
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Assets The Assets as described in clause 4.
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Base Rate The base rate publicly quoted as such by Barclays Bank plc, London, UK.
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Benefit Payments The payments made by XL Re under the terms of the Reinsurance Agreement.
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Business Covered The Retrocessionaire's Share of the closed portfolio of immediate annuity
policies as described in the Reinsurance Agreement.
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Business Day Any day of the week excluding Saturdays and Sundays and any other day
officially recognised as a bank holiday in the United Kingdom or Bermuda.
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Completion Date 31 May 2000
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Custody Expense An amount equal to 0.75 basis points (quarterly equivalent of 3 basis points
Allowance per annum) of the value of the Assets at the previous Pre-Payment Date.
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3
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Distributable Surplus A Distributable Surplus as defined in clause 5.
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Distributable Surplus 5 days after receiving notice from XL Re's Appointed Actuary of a Distributable
Payment Surplus.
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Effective Date 17 December 1999.
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Further Capital 5 days after receiving notice from XL Re's Appointed Actuary of a Further
Payment Date Capital Requirement.
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Further Capital A Further Capital Requirement as defined in clause 5.
Requirement
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GBP The lawful currency for the time being of the United Kingdom.
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Initial Capital L 9,000,000.
Requirement
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Investment Expense The actual investment expenses paid by XL Re to its investment managers in
Charges respect of the Assets but not exceeding 25 basis points per annum.
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Investment Income Investment Income determined in accordance with US GAAP.
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Late Payment Interest The yearly rate of 2% above the Base Rate or any comparable rate in use should
Rate the Base Rate cease to be published.
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Liability Outgo The Liability Outgo as defined in the Reinsurance Agreement.
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Maximum Surplus 1% of the Assets at the relevant Pre-Payment Date.
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Minimum Retention 25%
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Parties The signatories to this Agreement as specified in the Recitals and 'Party'
shall mean any one of them as the context may indicate.
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Pre-Payment Date The Pre-Payment Date as defined in the Reinsurance Agreement.
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Reinsurance Agreement The Reinsurance Agreement, appended to this Agreement in Schedule 1, between
Old Mutual Life Assurance Company Limited and XL Re.
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Retrocessionaire Annuity and Life Reassurance Ltd.
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4
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Retrocessionaire's L l,381,102
Initial Capital
Requirement
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Retrocessionaire's 15%
Share
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Schedules The Schedules attached to this Agreement.
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Security Agreement The Security Agreement, appended to this Agreement in Schedule 2, which was
executed between Old Mutual Life Assurance Company Limited and XL Re in
accordance with the Reinsurance Agreement.
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Surplus A Surplus as defined in clause 5.
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XL Re XL Re Ltd.
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2.2 Headings in this Agreement are inserted for convenience only and shall
not be taken into account in its interpretation.
2.3 Where applicable, the provisions of clause 2.1 shall impose substantive
obligations on the Parties as provided in the provision concerned.
2.4 Any reference to:
i) the singular includes plural and vice versa;
ii) a natural person includes legal persons and vice versa;
iii) a gender includes other genders; and
iv) a clause, paragraph or schedule, unless the context otherwise
requires, is a reference to a clause or paragraph of, or
Schedule to, this Agreement.
2.5 Words and expressions defined in any sub-clause shall, for the purposes
of the clause of which that sub-clause forms part, bear the meaning
assigned to such words and expressions in that sub-clause.
2.6 A document in the "agreed form" is a reference to a document in a form
approved and for the purposes of identification initialled by or on
behalf of each Party.
5
3 RETROCESSION
3.1 XL Re agrees to retrocede and the Retrocessionaire agrees to accept the
Business Covered with effect from the Effective Date according to the
terms of this Agreement.
3.2 The Retrocessionaire hereby agrees to be liable according to the terms
of this Agreement and will follow the fortunes and settlements of XL Re
in respect of the Business Covered, except that:
3.2.1 The Retrocessionaire does not indemnify and shall not be liable for
any extracontractual damages or liability of any kind whatsoever of XL
Re's resulting from, but not limited to: negligent, reckless or
intentional wrongs; fraud; oppression; bad faith; or strict liability.
3.2.2 XL Re will advise the Retrocessionaire of its intention to contest,
compromise, or litigate benefit payments involving annuities reinsured
hereunder. The Retrocessionaire may pay its Retrocessionaire's Share
of the Unusual Expenses of such contests, in addition to its share of
benefit payments, or it may choose not to participate. Unusual
Expenses exclude routine investigative and administrative expenses,
including salaries of home office personnel and interpleader expenses.
If the Retrocessionaire chooses not to participate, it will discharge
its liability by payment to XL Re of the full amount of its liability,
prior to any contests, on the annuity reinsured hereunder. Any
decision by the Retrocessionaire not to participate must be
communicated to XL Re within 60 days after receipt from XL Re of their
advice to contest, compromise, or litigate benefit payments hereunder.
3.3 The Retrocessionaire's liability in respect of the Business Covered
will commence on the Effective Date and liability will cease as
contemplated in clause 10.1.
3.4 The reinsurance of the Business Covered, as contemplated in clause 3.1,
is a retrocession of a closed book and is limited solely to the
Business Covered as defined in this Agreement and shall not apply to
any other business of XL Re.
3.5 After taking into account all retrocession agreements for the Business
Covered, XL Re agrees to retain a proportion of the liability of no
less than the Minimum Retention.
4 ASSETS
4.1 XL Re will maintain a segregated portfolio of Assets in accordance with
the provisions of the Security Agreement throughout the duration of
this Agreement.
4.2 All Assets and any Investment Income arising on those Assets will
remain with XL Re throughout the duration of this Agreement. The Assets
will be managed in accordance with the Statement of Investment Policy
Guidelines and Objectives as shown in Schedule 3 to this Agreement, as
amended from time to time.
4.3 The Retrocessionaire shall be credited with the Retrocessionaire's
Share of the Investment Income arising from the Assets.
6
4.4 The Retrocessionaire shall be debited with the Retrocessionaire's Share
of the Benefit Payments, Investment Expenses, Administration Expense
Allowances, and Custody Expense Allowances at each Pre-Payment Date.
4.5 The Retrocessionaire shall pay to XL Re the Retrocessionaire's Share of
any Further Capital Requirement as defined in Clause 5.3.
4.6 The Retrocessionaire shall be paid the Retrocessionaire's Share of any
Distributable Surplus as defined in Clause 5.4.
5 ACTUARIAL VALUATIONS
5.1 At each and every Pre-Payment Date, XL Re's Appointed Actuary will
conduct an Actuarial Valuation of the Business Covered in accordance
with the provisions of the Security Agreement.
5.2 The value of the Liability Outgo shall be compared with the value of
the Assets at the relevant Pre-Payment Date to determine the extent of
any Surplus, if the value of the Assets exceeds the value of the
Liability Outgo, or, a Further Capital Requirement, if the value of the
Liability Outgo exceeds the value of the Assets.
5.3 Should there be a Further Capital Requirement at any Pre-Payment Date
then the Retrocessionaire will be required to make a payment to XL Re
at the Further Capital Payment Date to meet the Retrocessionaire's
Share of the Further Capital Requirement.
5.4 Should there be a Surplus at any Pre-Payment Date then part or all of
the Surplus may be declared as a Distributable Surplus and released
From the Assets. The amount of the Distributable Surplus will be
determined at the sole discretion of XL Re's Appointed Actuary save
that, should the Surplus exceed the Maximum Surplus, then the
Distributable Surplus will be no less than the amount by which the
Surplus exceeds the Maximum Surplus. The Retrocessionaire will receive
the Retrocessionaire's Share of the Distributable Surplus at the
Distributable Surplus Date.
6 INITIAL CAPITAL REQUIREMENT
6.1 At the Effective Date of this Agreement, XL Re was required to increase
the amount of Assets by the Initial Capital Requirement.
6.2 At the Completion Date of this Agreement the Retrocessionaire's Initial
Capital Requirement is due from the Retrocessionaire and payable to XL
Re.
7 ADMINISTRATION
7.1 XL Re shall on the completion of each Actuarial Valuation prepare and
deliver an Account in such format as the Retrocessionaire may
reasonably require. If the Retrocessionaire disagrees with the Account
prepared, such dispute shall be resolved mutatis mutandis in accordance
with the provisions of clause 11.
7
7.2 Responsibility for the costs associated with the administration of the
Business Covered rests solely with XL Re. This includes, but is not
restricted to, maintaining appropriate records, verifying that benefits
are being paid in accordance with the Reinsurance Agreement and the
provision of information to the Retrocessionaire in accordance with
clause 7.1 and/or clause 8, as the case may be.
7.3 All payments made by XL Re are binding on the Retrocessionaire,
provided any such payments are in respect of the Business Covered and
are made strictly in accordance with the relevant terms of the
Reinsurance Agreement and do not violate the terms of this Agreement.
7.4 All payments due to or from the Retrocessionaire will be settled in
cash in GBP and transferred, by means of electronic funds transfer.
8 INFORMATION
8.1 XL Re shall, upon request from the Retrocessionaire from time to time,
provide the Retrocessionaire with such information during normal
business hours in respect of the Business Covered as the
Retrocessionaire may reasonably request and in such format as the
Retrocessionaire may reasonably require.
8.2 Except as may be impermissible at law, the Retrocessionaire may appoint
representatives to inspect, during normal business hours, any relevant
information under clause 7.1 or this clause 8 and such representatives
may make copies (at the cost of the Retrocessionaire) of any such
relevant documents and information, including without limitation any
such information stored on any computer or in any other electronic
form.
9 LATE PAYMENT INTEREST
Any amounts due by either XL Re or the Retrocessionaire under this
Agreement, which are outstanding after the due date for payment
thereof, will bear interest at the Late Payment Interest Rate from the
due date to the date of payment (both days inclusive), and which
interest shall be capitalised monthly in arrears.
10 TERM AND TERMINATION
10.1 This Agreement takes effect from the Effective Date and, unless
terminated pursuant to the remaining provisions of this clause 10,
shall remain in force until the natural expiry of the Business Covered.
10.2 XL Re or the Retrocessionaire may terminate this Agreement with
immediate effect by written notice to the other Party on or at any time
after the performance of the whole or any material part of this
Agreement being prohibited or rendered impossible in consequence of any
law, regulation or decision of a regulatory authority; in which event
the Parties shall use their reasonable endeavours to reach agreement on
the continuance of this Agreement on whatever basis or the basis upon
which the retrocession arrangement contemplated by this Agreement will
be terminated. If the Parties are unable to reach agreement within 30
Business Days of the date upon which this Agreement becomes prohibited
or rendered impossible, such dispute shall be determined, mutatis
mutandis, in accordance with clause 11.
8
10.3 XL Re may terminate this Agreement with immediate effect by written
notice to the Retrocessionaire on or at any time after the
Retrocessionaire passes a resolution for its winding up, a court of
competent jurisdiction making an order for the Retrocessionaire's
winding up or dissolution, the making of an administration order in
relation to the Retrocessionaire, the appointment of a receiver over,
or an encumbrancer taking possession of or selling, all or
substantially all of the assets of the Retrocessionaire, the
Retrocessionaire making an arrangement or composition with its
creditors generally or making an application to a court of competent
jurisdiction for protection from its creditors generally, upon which
event the provisions of clause 10.4 shall apply hereto.
10.4 If this Agreement is terminated in accordance with the provisions of
clause 10.3 the Retrocessionaire's liability under this Agreement in
respect of the Business Covered shall be calculated pro rata up to and
including the date of termination.
11 DISPUTE RESOLUTION
11.1 If the Retrocessionaire or its Appointed Actuary does not approve any
calculation performed by XL Re or XL Re's Appointed Actuary under
clause 5 (or any other dispute which is to be determined in accordance
with this clause 11) then the remaining provisions of this clause 11
shall apply.
11.2 If the Retrocessionaire or its Appointed Actuary does not approve any
one or more of the calculations performed by XL Re or its Appointed
Actuary, the Retrocessionaire shall deliver a notice in writing to XL
Re, specifying the calculation of which it does not approve and setting
out in reasonable detail, the basis of the objection. Where a dispute
is required to be determined elsewhere in this Agreement in accordance
with this clause 11, either Party shall be entitled to deliver a notice
to the other Party, setting out the details of the dispute in
reasonable detail.
11.3 XL Re and the Retrocessionaire shall, within 10 Business Days of
delivery of the notice referred to in clause 11.2 attempt, in good
faith, to resolve the dispute.
11.4 If the respective Appointed Actuaries of XL Re and the Retrocessionaire
are unable to reach agreement within the time period contemplated in
clause 11.3, XL Re and the Retrocessionaire shall agree upon an
independent actuary. If XL Re and the Retrocessionaire are unable to
reach agreement on the identity of the independent actuary within a
period of 10 Business Days of expiry of the period referred to in
clause 113, such independent actuary shall be appointed by the
President, for the time being, of the Institute of Actuaries in England
and Wales.
11.5 XL Re and the Retrocessionaire shall make all reasonable endeavours to
procure that the independent actuary performs the disputed calculation
within 15 Business Days of his appointment. Any calculation undertaken
by the independent actuary shall be in his capacity as an expert and
not as an arbitrator or quasi-arbitrator and his decision shall be
final and binding on XL Re and the Retrocessionaire.
9
11.6 All other disputes and differences between the Reinsurer and the
Retrocessionaire on which an agreement cannot be reached will be
decided by arbitration, regardless of the insolvency of either party,
unless the conservator, receiver, liquidator, or statutory successor is
specifically exempted from an arbitration proceeding by the Governing
Law in accordance with clause 13. Either party may initiate arbitration
by providing written notification to the other party. Such written
notice shall contain a brief statement of the issue(s), the failure on
behalf of the parties to reach amicable agreement and the date of
demand for arbitration. The arbitrators will regard this Agreement from
the standpoint of practical business and equitable principles rather
than that of strict law. The arbitrators shall be solely responsible
for determining what shall be considered and what procedure they deem
appropriate and necessary in the gathering of such facts or data to
decide such dispute. Both parties agree that the decision of the
arbitrators is final and binding and that no appeal shall be made from
that decision. Should either party fail to comply with the decision of
the arbitrators, the other party shall have the right to seek and
receive the assistance of an appropriate court to enforce the decision
of the arbitrators. The costs of the arbitration are to be borne
equally by both parties unless the arbitrators decide otherwise.
11.7 An arbitration panel consisting of three arbitrators will be formed in
accordance with the provisions of clauses 11.7.1 to 11.7.3 and from
that point on all other matters whether procedural or factual will be
decided solely at the discretion of the arbitration panel. Members of
the arbitration panel must be, or have been, officers of life insurance
or reinsurance companies other than the two parties to this Agreement
or any company owned by, or affiliated with, either party.
11.7.1 One of the arbitrators is to be appointed by XL Re, another by the
Retrocessionaire, and they shall select a third before arbitration
begins. The arbitrators picked by the parties shall be contacted by
the party that so chose the arbitrator. They may share the notice of
arbitration letter, this clause of this Agreement and briefly explain
the nature of the dispute, such as the types of policies involved and
the reinsurance issues in dispute, so that the candidate may make an
informed decision as to his/her technical qualifications to serve, but
no more than that. They should in no way be "canvassing" the candidate
for his/her sympathies with their side of the dispute, nor take any
action that would compromise the candidate's impartiality. Should one
party fail to comply with the notice to arbitrate and fail to select
an arbitrator within the time allotted below, the other party shall
have the right to appoint such arbitrator on their behalf. The
appointments shall be made in the following manner: the Reinsurer and
the Retrocessionaire shall each present an initial list of five
prospective arbitrators to the other party within 25 calendar days of
the postmark on the mailing of the notification initiating the
arbitration. The Reinsurer and the Retrocessionaire shall select one
arbitrator each from the list supplied by the other party. Should the
selected arbitrator decline to serve, another name shall be selected
from the respective list the entire process of selection of the first
two arbitrators shall be accomplished within 45 calendar days of the
postmark on the mailing of the notification initiating the
arbitration. The party who initiated the list will submit as many
additional names within 5 calendar days, as necessary, so that at all
times there will be a pool of five names from which the other party
may make its selection.
10
11.7.2 The two arbitrators, once selected, shall then select the third
arbitrator from the remaining eight names on the two lists within 20
calendar days of the second arbitrator's date of appointment. Should
the two arbitrators be unable to agree on a choice for the third
arbitrator, the remaining eight names shall be placed in a pool and the
final arbitrator shall be drawn at random from such pool by the two
arbitrators within 5 additional calendar days from the expiry of the
date such third arbitrator should have been appointed. If the
prospective arbitrator so chosen shall decline to serve as the third
arbitrator, another prospective arbitrator shall be randomly selected
until the original pool is exhausted. The parties shall continue to
replace the pool within 5 calendar days from the date the last name is
exhausted, with an additional eight names until an arbitrator is found.
11.7.3 Once the panel is selected, the party initiating the arbitration will
submit in writing it's understanding of the dispute and the outstanding
issues surrounding such dispute, their attempt(s) to rectify such
dispute, and their proposed solution to settle the dispute within 20
calendar days after the final arbitration panel member has been
selected. The other party shall be provided with a copy of this initial
statement and shall respond in writing with it's understanding of the
dispute within 30 calendar days after the final arbitration panel
member has been selected.
12 NOTICES
12.1 Any notice, request, instruction or other document (notices etc),
mentioned in this Agreement must be made in writing. Writing includes
facsimile and other electronic means. Notices etc, must be sent to the
address of the relevant Parties given in the Recitals, unless another
address has been agreed in writing between the Parties.
12.2 For the purposes of this Agreement, notices etc, are deemed to have
been served:
12.2.1 At the time of delivery, if they have been delivered by hand during
office hours, or
12.2.2 48 hours after posting or 7 days if overseas, if they have been sent
by post, or
12.2.3 12 hours after transaction confirmation, if they have been sent by
facsimile or other electronic means.
12.3 However, if service occurs on a weekend or public holiday, the above
notice periods do not start until the next Business Day.
13 GOVERNING LAW AND JURISDICTION
13.1 This Agreement is governed by, and shall be construed in accordance
with, Bermudan law.
13.2 Except as contemplated in clause 11, the courts of Bermuda shall have
exclusive jurisdiction to settle any dispute arising from or connected
with this Agreement.
11
13.3 The Parties agree that the documents which start any legal proceedings
and any other documents required to be served in relation to any such
proceedings may be served in accordance with the provisions of clause
12. These documents may, however, be served in any other manner allowed
by law. This clause applies to all proceedings wherever started.
14 COSTS
Except where this Agreement provides otherwise, each Party shall pay
its own costs relating to the negotiation, preparation, execution and
performance by it of this Agreement and of each document referred to in
it.
15 AMENDMENTS
No variation in this Agreement will be effective unless evidenced in
writing and duly signed on behalf of each Party. Variations sent by
instantaneous means of communication are also effective provided they
are capable of being shown by means of permanent or retrievable record
to have been agreed by each Party.
16 GENERAL
16.1 Each Party warrants to the other that it has the power, authority and
legal right to sign and perform this Agreement and that it has been
duly authorised by all necessary actions of its directors and
constitutes valid and binding obligations on it in accordance with this
Agreement.
16.2 The failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not impair or constitute a
waiver of the right or remedy or an impairment of or a waiver of other
rights or remedies. No single or partial exercise of a right or remedy
provided by this Agreement or by law prevents further exercise of the
right or remedy or the exercise of another right or remedy.
16.3 The Parties rights and remedies contained in this Agreement are
cumulative and not exclusive of rights or remedies provided by law.
17 ENTIRE AGREEMENT
17.1 This Agreement constitutes the entire agreement and supersedes any
previous agreements between the Parties relating to the subject matter
of this Agreement.
17.2 The Parties acknowledge that they have not relied on or been induced to
enter into this agreement by a representation other than the warranties
or otherwise set out in this Agreement.
17.3 Neither Party is liable to the other for a representation that is not
set out in this Agreement.
17.4 Nothing in this clause 17 shall have the effect of limiting or
restricting any liability arising as a result of fraud, wilful
misconduct or wilful concealment.
12
18 ASSIGNMENT
Neither Party shall assign or transfer any of its rights under this
Agreement in whole or in part without the express written consent of
the other Party.
19 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original and all of which
together evidence the same agreement.
13
EXECUTED BY THE PARTIES
SIGNATORIES
Signed at Hamilton, Bermuda for and on behalf of XL Re Ltd
Date
XL
Re
/s/ not legible Ltd March 30, 2001
----------------------------------------
________________________________________ __________________________________
Signed at Hamilton, Bermuda for and on behalf of Annuity and Life Reassurance
Ltd.
Date
/s/ Xxxxxxx X. Xxxxxx June 13, 2001
----------------------------------------
________________________________________ __________________________________
00
XXXXXXXX 0
Xxxxxxxxxxx Xxxxxxxxx - XX00000X00
15
OLD MUTUAL LIFE ASSURANCE COMPANY LIMITED
0 XXXXXXX XXX
XXXX
XXXXXXXXX XX00 0XX
XXXXXX XXXXXXX
REINSURANCE AGREEMENT
IMMEDIATE ANNUITIES
LT00023A99
21st DECEMBER 1999
RECITALS
INTRODUCTION
This Agreement is between OLD MUTUAL LIFE ASSURANCE COMPANY LIMITED, a company
incorporated in the United Kingdom and whose registered office is at 0 Xxxxxxx
Xxx, Xxxx, Xxxxxxxxx, XX00 0XX, Xxxxxx Xxxxxxx (hereinafter, "the Cedant")
And XL MID OCEAN REINSURANCE LTD, A company incorporated in Bermuda and whose
registered office is at Xxxxxx Xxxxx, 00 Xxxx Xxxxxx, PO Box HM 1066, Xxxxxxxx
XX EX, Bermuda (hereinafter, "XL Mid Ocean")
The Agreement Number is LT00023A99
The Cedant conducts life assurance and annuity business
It is intended that XL Mid Ocean should provide 100% reinsurance of the Business
Covered and to maintain such reinsurance following transfer of the Business
Covered.
- 2 -
MASTER AGREEMENT
1. INTRODUCTION
1.1 This Agreement is made between the Parties identified in the Recitals.
1.2 This Agreement consists of the Recitals, the Master Agreement and the
Schedules.
1.3 XL Mid Ocean agrees to reinsure, and the Cedant agrees to cede, the
Business Covered by this Agreement on the terms and conditions of this
Agreement.
2. DEFINITIONS
2.1 The following definitions are used in this Agreement and are defined
below:
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Account The account to be submitted by the Cedant to XL Mid Ocean reflecting the
Pre-Payment Due, in accordance with clause 9.
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Accrued Investment Return The amount (gross of tax) of any interest, dividends or other income and
nominal capital received by the Cedant in respect of the Agreed Assets that
would accrue to Mid Ocean if title to the Agreed Assets had been transferred to
XL Mid Ocean at the close of business on the Business Day prior to the Transfer
Date.
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Act The United Kingdom's Insurance Companies Act of 1982.
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Adjusted Accrued Investment The Accrued Investment Return as adjusted by virtue of the acquisition and/or
Return disposal of Agreed Assets in the period between the Transfer Date and the
Deferred Premium Payment Date pursuant to the Trading Instructions Letter.
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Adjusted Agreed Assets The Agreed Assets as adjusted in the period between the Transfer Date and the
Deferred Premium Payment Date pursuant to the Trading Instructions letter.
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Adjustment Premium [***]
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Adjustment Premium Payment 10 Business days after delivery of the Policy File.
Date
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Agreed Assets The bonds listed in Schedule `A' of this Agreement.
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Agreement The terms and conditions set out in this document and the Recitals and the
Schedules attached to this agreement.
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Annuitant A holder of a Policy.
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[***] THE INFORMATION CONTAINED IN THIS PORTION OF THE EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT.
- 3 -
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Appointed An actuary appointed by either the Cedant in accordance with the Act or XL
Actuary Mid Ocean in accordance with the relevant legislation governing the appointment
of an actuary in Bermuda.
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Approved Bond Dealers (1) Greenwich NatWest (3) HSBC
000 Xxxxxxxxxxx Xxxxxx Xxxxxxxx Xxxxx
Xxxxxx, XX0X 0XX 00 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX00 0XX
(2) Warburg Dillon Read (4) Barclays Capital
0 Xxxxxxxx Xxxxxx 0 Xxxxx Xxxxxxxxx
Xxxxxx, XX0X 0XX Xxxxxx Xxxxx
Xxxxxx, XX00 0XX
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Base Rate The base rate publicly quoted as such by Barclays Bank plc.
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Business Covered The closed portfolio of Policies as at the Transfer Date and as listed in the
Policy File.
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Business Day Any day of the week excluding Saturdays and Sundays and any other day
officially recognized as a bank holiday in the United Kingdom or Bermuda.
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Cedant Old Mutual Life Assurance Company Limited.
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Deferred Premium The value of the Agreed Assets, which Agreed Assets will be valued by the
Approved Bond Dealers in accordance with the provisions of clause 6.1, the
payment of which is due on the Transfer Date but which shall be delivered on
the Deferred Premium Payment Date as contemplated in clause 7.2, free of any
Encumbrance (as defined in clause 8.2).
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Deferred Premium The date on which the Adjusted Agreed Assets are delivered to a custodian
Payment Date appointed by XL Mid Ocean from Lloyds TSB plc, as contemplated in clause 3.
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Deposit Premium The amount of L100.
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Deposit Taker A registered bank nominated for that purpose by XL Mid Ocean in the United
Kingdom.
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Expected Benefit The projected benefit payments from the Business Covered over any relevant
Payments Pre-Payment Period, excluding any allowance for mortality, from a relevant
Pre-Payment Date, gross of any tax.
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- 4 -
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GBP The lawful currency for the time being of the United Kingdom.
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Interest Rate The yearly rate of 1% above the Base Rate or any comparable rate in use should
the Base Rate cease to be published.
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Late Payment Interest Rate The yearly rate of 2% above the Base Rate.
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Liability Outgo The expected future liability payments from the Business Covered.
-------------------------------------------------------------------------------------------------------------------
Parties The signatories to this Agreement as specified in the Recitals and 'Party'
shall mean any one of them as the context may indicate.
-------------------------------------------------------------------------------------------------------------------
Policy or Policies The annuity contract or contracts issued by the Cedant to individuals, in force
and in payment at the Transfer Date, (but not in respect of any individual who
has died before the Transfer Date and of whose death the Cedant has notice
before the date of delivery of the Policy File).
-------------------------------------------------------------------------------------------------------------------
Policy Conditions The terms and conditions applicable to each Policy as at the Transfer Date.
-------------------------------------------------------------------------------------------------------------------
Policy File The compact disc recording all the Policies to be delivered by the Cedant to XL
Mid Ocean pursuant to clause 9.5.
-------------------------------------------------------------------------------------------------------------------
Pre-Payment Date The first pre-payment date is the first Business Day following the Deferred
Premium Payment Date. The second pre-payment date is 1 April 2000. Subsequent
pre-payment dates will follow at intervals equal to the Pre-Payment Period.
Should any Pre-Payment Date fall on a non-Business Day, then the Pre-Payment
Date will be the nearest preceding Business Day.
-------------------------------------------------------------------------------------------------------------------
Pre-Payment Date The Pre-Payment Due is an amount due and payable by XL Mid Ocean in respect of
any relevant Pre-Payment Period, being the sum of the Expected Benefit Payments
over a relevant Pre-Payment Period less the current balance on the Pre-Payment
Fund as at any relevant Pre-Payment Date, other than the first Pre-Payment Due
contemplated in clause 9.1.
-------------------------------------------------------------------------------------------------------------------
Pre-Payment Fund [***]
-------------------------------------------------------------------------------------------------------------------
Pre-Payment Period The first pre-payment period will be from the Transfer Date to 31 March 2000.
Subsequent pre-payment periods will be periods of 3 months in duration
thereafter, ending on the last Business Day of the last month of any such 3
month period.
-------------------------------------------------------------------------------------------------------------------
Required Amount The Required Amount as defined in the Security Agreement.
-------------------------------------------------------------------------------------------------------------------
[***] THE INFORMATION CONTAINED IN THIS PORTION OF THE EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT.
- 5 -
-------------------------------------------------------------------------------------------------------------------
Schedules The Schedules attached to this Agreement.
-------------------------------------------------------------------------------------------------------------------
Security Agreement The Security Agreement, in the agreed form, to be executed between the
Parties on the Deferred Premium Payment Date granting a fixed charge over
the Agreed Assets in favour of the Cedant.
-------------------------------------------------------------------------------------------------------------------
Subsequent Investment Return Any Adjusted Accrued Investment Return received by the Cedant after the
Deferred Premium Payment Date.
-------------------------------------------------------------------------------------------------------------------
Trading Instructions Letter An undertaking by the Cedant and XL Mid Ocean regarding the trading
instructions of XL Mid Ocean entered into by the Parties on the date of
this Agreement.
-------------------------------------------------------------------------------------------------------------------
Transfer Date 17 December 1999.
-------------------------------------------------------------------------------------------------------------------
Transfer Interest Rate [***]
-------------------------------------------------------------------------------------------------------------------
Transfer Mortality Basis [***]
-------------------------------------------------------------------------------------------------------------------
Transfer Premium [***]
-------------------------------------------------------------------------------------------------------------------
Transfer Reserve The net present value of the Liability Outgo calculated as at the Transfer Date
as more fully contemplated in clause 6.3.
-------------------------------------------------------------------------------------------------------------------
Warranty Side Letter A deed between OMLA Holdings Limited, Old Mutual plc and XL Mid Ocean entered
into on the date of this Agreement pursuant to which OMLA Holdings Limited
(whose obligations are in turn guaranteed by Old Mutual plc) grants various
warranties and undertakings in favour of XL Mid Ocean.
-------------------------------------------------------------------------------------------------------------------
XL Mid Ocean XL Mid Ocean Reinsurance Ltd.
-------------------------------------------------------------------------------------------------------------------
[***] THE INFORMATION CONTAINED IN THIS PORTION OF THE EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT.
- 6 -
2.2 Headings in this Agreement are inserted for convenience only and shall
not be taken into account in its interpretation.
2.3 Where applicable, the provisions of clause 2.1 shall impose substantive
obligations on the Parties as provided in the provision concerned.
2.4 Any reference to:-
(i) the singular includes plural and vice versa;
(ii) a natural person includes legal persons and vice versa;
(iii) a gender includes other genders; and
(iv) a clause, paragraph or schedule, unless the context otherwise
requires, is a reference to a clause or paragraph of, or
Schedule to, this Agreement.
2.5 Words and expressions defined in any sub-clause shall, for the purposes
of the clause of which that sub-clause forms part, bear the meaning
assigned to such words and expressions in that sub-clause.
2.6 A document in the "agreed form" is a reference to a document in a form
approved and for the purposes of identification initialled by or on
behalf of each Party.
3. APPOINTMENT OF CUSTODIAN
XL Mid Ocean undertakes to use all reasonable efforts to procure the
appointment (in its sole and absolute discretion) of a custodian in the
United Kingdom in respect of the Adjusted Agreed Assets as soon as
reasonably possible after the Transfer Date, but in any event, by not
later than 17 January 2000, or such later date as may be agreed between
the Parties in writing.
4. SECURITY ARRANGEMENTS
4.1 [***]
4.2 On the Deferred Premium Payment Date and against compliance by the
Cedant with its obligations set out in clause 7.2, XL Mid Ocean shall
enter into the Security Agreement.
5. REINSURANCE CESSION
5.1 The Cedant agrees to cede the Business Covered and XL Mid Ocean agrees
to accept by way of 100% reinsurance of the Business Covered with
effect from the Transfer Date according to the terms of this Agreement.
5.2 XL Mid Ocean hereby agrees to be liable as reinsurer according to the
terms of this Agreement and will follow the fortunes and settlements of
the Cedant in respect of the Business Covered.
[***] -- THE INFORMATION CONTAINED IN THIS PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
- 7 -
5.3 XL Mid Ocean's liability in respect of the Business Covered will
commence on the Transfer Date and liability will cease as contemplated
in clause 15.1.
5.4 The reinsurance of the Business Covered, as contemplated in clause 5.1,
is reinsurance of a closed book and is limited solely to the Business
Covered as defined in this Agreement and shall not apply to any
policies issued by the Cedant at any time which are not Policies and
listed in the Policy File, and they will not become cessions under this
Agreement.
5.5 For the avoidance of doubt, where any increase in payment in relation
to any Policy is not recorded in the Policy File and/or any attached
information to the Policy File, such increase shall not be covered
under this Agreement.
6. DETERMINATION PROVISIONS
6.1 DEFERRED PREMIUM
6.1.1 The value of the Agreed Assets is the bid value of the Agreed
Assets, being the average of the valuations provided by the
Approved Bond Dealers at the close of business on the Business
Day immediately prior to the Transfer Date.
6.1.2 XL Mid Ocean and the Cedant undertake to co-operate, in good
faith, to procure that the Approved Bond Dealers value the
Agreed Assets in accordance with the provisions of this clause
6.1.
6.1.3 The average of the valuations provided by the Approved Bond
Dealers in accordance with this clause 6.1 will be final and
binding on the Parties.
6.2 THE TRANSFER INTEREST RATE
6.2.1 In respect of the Transfer Interest Rate, the internal rate of
return will be based on the bid values of the Agreed Assets as
at the close of business on the Business Day immediately prior
to the Transfer Date.
6.2.2 The Transfer Interest Rate will be calculated by a duly
authorised representative of the Cedant. The Cedant undertakes
to procure that the Transfer Interest Rate is determined
timeously for it to comply with its obligations as
contemplated in clause 7.3.
6.2.3 The Transfer Interest Rate is subject to approval by a duly
authorised representative of XL Mid Ocean. If XL Mid Ocean
fails in writing to approve the calculation contemplated in
clause 6.2.2 within 10 Business Days of receipt of the
calculation from the Cedant such dispute will be determined in
accordance with the provisions of clause 6.6. If XL Mid Ocean
fails to object in writing to the calculation within the time
period contemplated by this clause 6.2.3, XL Mid Ocean shall
be deemed to have approved same.
6.3 TRANSFER RESERVE
6.3.1 For the purposes of determining the Transfer Reserve, the
Liability Outgo will be calculated using the Transfer
Mortality Basis, discounted by the Transfer Interest Rate.
6.3.2 The Transfer Reserve shall be calculated by the Cedant's
Appointed Actuary. The Cedant undertakes to procure that such
Appointed Actuary shall perform
- 8 -
such calculation not later than 10 Business Day following
delivery of the Policy File to XL Mid Ocean and forthwith
thereafter, deliver a copy of the calculation, together with
all relevant working papers, to XL Mid Ocean's Appointed
Actuary.
6.3.3 The calculation of the Transfer Reserve by the Cedant's
Appointed Actuary is subject to approval by XL Mid Ocean's
Appointed Actuary. If XL Mid Ocean's Appointed Actuary does
not approve the calculation of the Transfer Reserve within 10
Business Days of receipt of the calculation from the Cedant's
Appointed Actuary, such dispute will be determined in
accordance with the provisions of clause 6.6. If XL Mid Ocean
fails to object in writing to the calculation within the time
period contemplated by this clause 6.3.3, XL Mid Ocean shall
be deemed to have approved the same.
6.4 ADJUSTMENT PREMIUM
6.4.1 The Adjustment Premium will be calculated by the Cedant's
Appointed Actuary. The Cedant undertakes to procure that its
Appointed Actuary performs such calculation within the time
period contemplated in clause 6.3.2.
6.4.2 The Adjustment Premium is subject to approval by XL Mid
Ocean's Appointed Actuary and the Cedant undertakes to procure
that its Appointed Actuary delivers to XL Mid Ocean's
Appointed Actuary all relevant working papers of its Appointed
Actuary in respect of his calculation of the Adjustment
Premium. If XL Mid Ocean's Appointed Actuary does not approve
the calculation by the Cedant's Appointed Actuary within 10
Business Days of receipt of the calculation, such dispute will
be determined in accordance with the provisions of clause 6.6.
If XL Mid Ocean fails to object in writing to the calculation
within the time period contemplated by this clause 6.4.2, XL
Mid Ocean shall be deemed to have approved same.
6.5 EXPECTED BENEFIT PAYMENTS
6.5.1 The Cedant undertakes to procure that its Appointed Actuary
performs the calculation in respect of any Expected Benefit
Payments as soon as reasonably possible in relation to any
Pre-Payment Date (other than in respect of the first
Pre-Payment Due contemplated in clause 11.l), but in any
event not less than 30 Business Days prior to any relevant
Pre-Payment Date.
6.5.2 The Cedant shall procure that its Appointed Actuary delivers a
copy of the calculation (and all relevant working papers) of
any Expected Benefit Payments performed to XL Mid Ocean or its
Appointed Actuary within the time period contemplated in
clause 6.5.1.
6.6 DISPUTE RESOLUTION
6.6.1 If XL Mid Ocean or its Appointed Actuary does not approve any
calculation performed by the Cedant or the Cedant's Appointed
Actuary under any of clauses 6.2, 6.3, 6.4 and 6.5 (or any
other dispute which is to be determined in accordance with
this clause 6.6) then the remaining provisions of this clause
6.6 shall apply.
6.6.2 If XL Mid Ocean or its Appointed Actuary does not approve any
one or more of the calculations performed by the Cedant or its
Appointed Actuary, XL
- 9 -
Mid Ocean shall deliver a notice in writing to the Cedant,
specifying the calculation of which it does not approve and
setting out in reasonable detail, the basis of the objection.
Where a dispute is required to be determined elsewhere in this
Agreement in accordance with this clause 6.6, either Party
shall be entitled to deliver a notice to the other Party,
setting out the details of the dispute in reasonable detail.
6.6.3 The Cedant and XL Mid Ocean shall, within 10 Business Days of
delivery of the notice referred to in clause 6.6.2 attempt, in
good faith, to resolve the dispute.
6.6.4 If the Cedant and XL Mid Ocean are unable to resolve the
dispute within the time period contemplated in clause 6.6.3,
such dispute shall be referred to the respective Appointed
Actuaries of the Cedant and XL Mid Ocean, who shall further
attempt to resolve the dispute amicably within 10 Business
Days of expiry of the period referred to in 6.6.3.
6.6.5 If the respective Appointed Actuaries of the Cedant and XL Mid
Ocean are unable to reach agreement within the time period
contemplated in clause 6.6.4, the Cedant and XL Mid Ocean
shall agree upon an independent actuary. If the Cedant and XL
Mid Ocean are unable to reach agreement on the identity of the
independent actuary within a period of 10 Business Days of
expiry of the period referred to in clause 6.6.4, such
independent actuary shall be appointed by the President, for
the time being, of the Institute of Actuaries in England and
Wales.
6.6.6 The Cedant and XL Mid Ocean shall make all reasonable
endeavours to procure that the independent actuary performs
the disputed calculation within 15 Business Days of his
appointment. Any calculation undertaken by the independent
actuary shall be in his capacity as an expert and not as an
arbitrator or quasi-arbitrator and his decision shall be final
and binding on the Cedant and XL Mid Ocean.
6.6.7 In the event any one of the matters contemplated in clauses
6.2, 6.3, 6.4 or 6.5 become the subject matter of a dispute to
be determined in accordance with the provisions of this clause
6.6 and as a result thereof the Cedant or XL Mid Ocean (as the
case may be) shall not be able to make payment of the
Adjustment Premium on the Adjustment Premium Payment Date, the
Adjustment Premium Payment Date shall be the date upon which
the dispute is settled or determined (as the case may be) in
accordance with this clause 6.6.
7. REINSURANCE PREMIUM
7.1 On the date of signature of this Agreement, the Cedant shall pay the
Deposit Premium to XL Mid Ocean.
7.2 On the Deferred Premium Payment Date, the Cedant shall deliver the
Adjusted Agreed Assets and the Adjusted Accrued Investment Returns to
XL Mid Ocean's appointed custodian as contemplated in clause 3.
7.3 On the Adjustment Premium Payment Date, the Adjustment Premium shall be
paid in cash (in GBP) by 12 noon by means of electronic transfer by
Cedant (if the Adjustment Premium is a positive figure) or by XL Mid
Ocean (if the Adjustment Premium is a negative figure).
- 10 -
7.4 The Cedant shall from time to time pay to XL Mid Ocean any Subsequent
Investment Returns forthwith upon receipt of the same from time to time
by the Cedant.
8. CONTRACTUAL WARRANTIES
8.1 Each of the Agreed Assets is, and each of the Adjusted Agreed Assets
will be:
8.1.1 legally and beneficially owned solely by the Cedant free from
any Encumbrance (as defined in clause 8.2); and
8.1.2 in the possession or under the control of the Cedant.
8.2 For purposes of this clause 8, "Encumbrance" means a mortgage, charge,
pledge, lien, option, restriction, right of first refusal, right of
pre-emption, third-party right or interest, other encumbrance or
security interest of any kind, or another type of preferential
arrangement (including without limitation, a title transfer or
retention arrangement) having similar effect.
9. ADMINISTRATION
9.1 XL Mid Ocean shall procure the creation of the Pre-Payment Fund with
the Deposit Taker as soon as reasonably practicable, but in any event
not later than the Business Day preceding the Deferred Premium Payment
Date.
9.2 The Business Covered will continue to be administered by the Cedant in
accordance with the business standards of the Cedant as at the Transfer
Date.
9.3 Without limiting the provisions of clause 12.1, the Cedant shall, on
each Pre-Payment Date (other than in respect of the first Pre-Payment
Due as contemplated in clause 11.1) deliver to XL Mid Ocean the
information specified in Schedule 'B' and all relevant documents
reasonably requested in relation thereto in respect of the Business
Covered.
9.4 The Cedant shall not later than 5 Business Days before any Pre-Payment
Date prepare an Account in such format as XL Mid Ocean may reasonably
require. If XL Mid Ocean disagrees with the Account prepared, such
dispute shall be resolved mutatis mutandis in accordance with the
provisions of clause 6.6.
9.5 The Cedant shall deliver the Policy File to XL Mid Ocean's Appointed
Actuary as soon as reasonably possible after the Transfer Date, but in
any event not later than 31 January 2000. If within 10 Business Days of
delivery of the Policy File to XL Mid Ocean's Appointed Actuary, XL Mid
Ocean or its Appointed Actuary disputes any information recorded on the
Policy File, such dispute shall be determined, mutatis mutandis, in
accordance with the provisions of clause 6.6.
10. AMENDMENTS
The Cedant shall notify XL Mid Ocean, in writing, on the last Business
Day of each calendar quarter of any amendment, pursuant to Policy
Conditions, to any Policy that has occurred in that preceding calendar
quarter. No other amendment whatsoever shall increase or extend the
liability, potential liability or exposure of XL Mid Ocean under this
Agreement.
- 11 -
11. PRE-PAYMENTS DUE AND ANNUITY PAYMENTS
11.1 Subject to the Cedant having complied in all respects with its
obligation under clause 7.2, the first Pre-Payment Due is an amount of
[***], which amount shall be paid by XL Mid Ocean into the Pre-Payment
Fund, in cash, by close of business on the Business Day next following
the Deferred Premium Payment Date.
11.2 Responsibility for the costs associated with the administration of the
Business Covered rests solely with the Cedant. This includes, but is
not restricted to, maintaining appropriate Policy records, verifying
that benefits are being paid in accordance with the Policy Conditions
and the provision of information to XL Mid Ocean in accordance with
clause 9 and/or clause 12, as the case may be.
11.3 All payments made by the Cedant are binding on XL Mid Ocean, provided
any such payment is in respect of the Business Covered and are made
strictly in accordance with the relevant terms applicable to any Policy
and in accordance with the Policy Conditions and do not violate the
terms of this Agreement.
11.4 On each and every Pre-Payment Date, the Pre-Payment Due will be settled
in cash in GBP and transferred, by means of electronic funds transfer,
into (or out of in the case of negative amounts) the Pre-Payment Fund.
11.5 [***]
11.6 The Cedant undertakes to use all reasonable efforts to ensure that it
is advised of the death of any Annuitant and shall, in any event,
inform XL Mid Ocean on the first Business Day of the month following
each calendar quarter after the date of signature of this Agreement of
the death of an Annuitant since the last such advice. The Cedant will
include an adjustment in respect of any overpaid Pre-Payments Due made
by XL Mid Ocean in the next available Account, together with interest
at the Interest Rate.
11.7 No ex-gratia or compromise payment made by the Cedant (and no payment
above the binding award limit of an Insurance Ombudsman or his
equivalent) will be binding on XL Mid Ocean unless XL Mid Ocean gives
its prior written consent, which consent shall not be unreasonably
withheld.
11.8 In addition to clause 11.7, if an annuity payment is proposed on an
ex-gratia or compromise basis to an Annuitant, XL Mid Ocean will not be
liable for that payment, unless the Cedant gives XL Mid Ocean all
information known to it regarding any such payment and continues to
keep XL Mid Ocean fully informed, to the extent reasonably practicable,
of all developments relating to the payment as soon as is practicably
possible.
[***] -- THE INFORMATION CONTAINED IN THIS PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
- 12 -
12. INFORMATION
12.1 The Cedant shall, upon request from XL Mid Ocean from time to time,
provide XL Mid Ocean with such information during normal business hours
in respect of the Business Covered as XL Mid Ocean may reasonably
request from the Cedant and in such format as the Cedant may reasonably
require.
12.2 Except as may be impermissible at law, XL Mid Ocean may appoint
representatives to inspect, during normal business hours, any relevant
information under clause 9 or this clause 12 and such representatives
may make copies (at the cost of XL Mid Ocean) of any such relevant
documents and information, including without limitation any such
information stored on any computer or in any other electronic form.
13. MAJOR BUSINESS CHANGES
13.1 This Agreement is made on the basis of the Cedant's current business
standards and general terms and conditions as disclosed to XL Mid Ocean
prior to commencement of this Agreement.
13.2 No business administered under any standards other than the Cedant's
business standards as at the Transfer Date is accepted by XL Mid Ocean
under this Agreement, unless those new or differing business standards
have been agreed to in writing by XL Mid Ocean in advance.
13.3 This clause 13 only applies to changes which may increase or extend the
liability, potential liability or the exposure of XL Mid Ocean in
respect of the Business Covered.
14. LATE PAYMENT INTEREST
Any amounts due by either the Cedant or XL Mid Ocean under this
Agreement, which are outstanding after the due date for payment
thereof, will bear interest at the Late Payment Interest Rate from the
due date to the date of payment (both days inclusive), and which
interest shall be capitalised monthly in arrears.
15. TERM AND TERMINATION
15.1 This Agreement takes effect from the Transfer Date and, unless
terminated pursuant to the remaining provisions of this clause 15,
shall remain in force until the natural expiry of all the Policies
constituting the Business Covered.
15.2 This Agreement will terminate immediately if the Cedant fails or
neglects to deliver the Adjusted Agreed Assets to XL Mid Ocean's
custodian on the Deferred Premium Payment Date. To the extent this
Agreement has been implemented in part or in full, the Parties shall be
restored, so far as same is reasonably possible, to their status quo
ante. If any dispute arises between the Parties in respect of the
termination of this Agreement in terms of this clause 15.2, such
dispute shall be determined, mutatis mutandis, in accordance with
clause 6.6.
15.3 The Cedant or XL Mid Ocean may terminate this Agreement with immediate
effect by written notice to the other Party on or at any time after the
performance of the whole or any material part of this Agreement being
prohibited or rendered impossible in consequence of any law, regulation
or decision of a regulatory authority; in which event the Parties shall
use their reasonable endeavours to reach agreement on the continuance
of this Agreement on whatever basis or the basis upon which the
reinsurance arrangement contemplated by this Agreement will be
terminated. If the
- 13 -
Parties are unable to reach agreement within 30 Business Days of the
date upon which this Agreement becomes prohibited or rendered
impossible, such dispute shall be determined, mutatis mutandis, in
accordance with clause 6.6.
15.4 The Cedant may terminate this Agreement with immediate effect by
written notice to XL Mid Ocean on or at any time after XL Mid Ocean
passes a resolution for its winding up, a court of competent
jurisdiction making an order for XL Mid Ocean's winding up or
dissolution, the making of an administration order in relation to XL
Mid Ocean, the appointment of a receiver over, or an encumbrancer
taking possession of or selling, all or substantially all of the assets
of XL Mid Ocean, XL Mid Ocean making an arrangement or composition with
its creditors generally or making an application to a court of
competent jurisdiction for protection from its creditors generally,
upon which event the provisions of clause 15.5 shall apply hereto.
15.5 If this Agreement is terminated in accordance with the provisions of
clause 15.4:
15.5.1 XL's liability under this Agreement in respect of the Business
Covered shall be calculated pro rata up to and including the
date of termination; and
15.5.2 XL Mid Ocean shall pay an amount equal to the Required Amount
to the Cedant.
16. NOTICES
16.1 Any notice, request, instruction or other document (notices etc),
mentioned in this Agreement must be made in writing. Writing includes
facsimile and other electronic means. Notices etc, must be sent to the
address of the relevant Parties given in the Recitals, unless another
address has been agreed in writing between the Parties.
16.2 For the purposes of this Agreement, notices etc, are deemed to have
been served:
16.2.1 At the time of delivery, if they have been delivered by hand
during office hours, or
16.2.2 48 hours after posting or 7 days if overseas, if they have
been sent by post, or
16.2.3 12 hours after transaction confirmation, if they have been
sent by facsimile or other electronic means.
16.3 For the purposes of this clause 16, the Parties' respective facsimile
numbers are:
16.3.1 XL Mid Ocean : 001 000 000 0000, or such substituted number as
may be notified to the Cedant in writing from time to time,
marked for the attention of President and Chief Executive
Officer;
16.3.2 the Cedant : x00(0) 0000 000000, or such substituted number as
may be notified to the XL Mid Ocean in writing from time to
time, marked for the attention of : The Deputy Chief
Executive.
16.4 However, if service occurs on a weekend or public holiday, the above
notice periods do not start until the next Business Day.
- 14 -
17. GOVERNING LAW AND JURISDICTION
17.1 This Agreement is governed by, and shall be construed in accordance
with, English law.
17.2 Except as contemplated in clause 6.6, the courts of England shall have
exclusive jurisdiction to settle any dispute arising from or connected
with this Agreement.
17.3 The Parties agree that the documents which start any legal proceedings
and any other documents required to be served in relation to any such
proceedings may be served in accordance with the provisions of clause
16. These documents may, however, be served in any other manner allowed
by law. This clause applies to all proceedings wherever started.
18. COSTS
Except where this Agreement provides otherwise, each Party shall pay
its own costs relating to the negotiation, preparation, execution and
performance by it of this Agreement and of each document referred to in
it.
19. AMENDMENTS
No variation in this Agreement will be effective unless evidenced in
writing and duly signed on behalf of each Party. Variations sent by
instantaneous means of communication are also effective provided they
are capable of being shown by means of permanent or retrievable record
to have been agreed by each Party.
20. GENERAL
20.1 Each Party warrants to the other that it has the power, authority and
legal right to sign and perform this Agreement and that it has been
duly authorised by all necessary actions of its directors and
constitutes valid and binding obligations on it in accordance with this
Agreement.
20.2 The failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not impair or constitute a
waiver of the right or remedy or an impairment of or a waiver of other
rights or remedies. No single or partial exercise of a right or remedy
provided by this Agreement or by law prevents further exercise of the
right or remedy or the exercise of another right or remedy.
20.3 The Parties rights and remedies contained in this Agreement are
cumulative and not exclusive of rights or remedies provided by law.
21. ENTIRE AGREEMENT
21.1 This Agreement, the Warranty Side Letter and the Trading Instructions
Letter constitute the entire agreement and supersede any previous
agreements between the Parties relating to the subject matter of this
Agreement and such Letters.
21.2 The Parties acknowledge that they have not relied on or been induced to
enter into this agreement by a representation other than the warranties
or otherwise set out in this Agreement.
- 15 -
21.3 Neither Party is liable to the other (in equity, contract or tort,
under the Xxxxxxxxxxxxxxxxx Xxx 0000 or in any other way) for a
representation that is not set out in this Agreement.
21.4 Nothing in this clause 21 shall have the effect of limiting or
restricting any liability arising as a result of fraud, wilful
misconduct or wilful concealment.
22. ASSIGNMENT
Neither Party shall assign or transfer any of its rights under this
Agreement in whole or in part without the express written consent of
the other Party.
23. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original and all of which
together evidence the same agreement.
EXECUTED BY THE PARTIES
SIGNATORIES
Signed at Xxxxxxxx, Bermuda for and on behalf of XL Mid Ocean Reinsurance Ltd on
the day of December 1999
Date
/s/ not legible 21st December 1999
------------------------------------
Date
/s/ not legible 21st December 1999
------------------------------------ ---------------------------------------
Signed at London, United Kingdom for and on behalf of Old Mutual Life Assurance
Company Limited on the 21St day of December 1999
Date
/s/ not legible 21st December 1999
------------------------------------
Date
/s/ not legible 21st December 1999
------------------------------------
- 16 -
SCHEDULE 'A' - AGREED ASSETS
STOCK TITLE NOMINAL AMOUNT
GBP
Abbey National 6.5% 21/10/2030 750,000
Abbey National plc 10-3/4% 1/12/2006 3,290,000
AEGON 6.125% 31/2031 3,000,000
Alliance & Leicester 6.5% 9/9/2015 3,740,000
AMP Int'l Fin Services 7.125% 6/8/2009 3,500,000
Anglian Water 6.375% BDS 15/01/2029 2,650,000
Annington 0% 7/12/2022 7,000,000
Annington Finance 8% 02/10/21 2,500,000
Argyll Group 8.125% 4/10/2002 1,500,000
Asda 6.625% 17/07/2015 2,000,000
ASDA Group 10-7/8% 20/4/2010 500,000
Asda Prop 10-5/16% 1/10/2011 500,000
Asda Properties 9.125% 31/12/2020 1,000,000
Aust (Commonwealth) 11-3/8% 26/10/15 860,000
Austral & N.Z. Bank 12-5/8% 16/5/2001 2,000,000
Australia 9-1/2% 14/10/2012 Br 55,000
Australia 9-1/2% 14/10/2012 Rg 161,000
Autolink M6A FSA 8.39% 15/6/2022 1,000,000
BAA 6.375% 04/08/2028 Plc 2,350,000
Bank America Corp 6.125% 2010 1,250,000
Bank Xxx Gemeenten 5.375% 07/06/20021 2,500,000
Bank of American Credit Cards Corp 7.125% 15/09/2002 1,500,000
Bank of Ireland 9.75% 21/03/2005 300,000
Bank of West Aust 9% 20/12/2006 2,500,000
Barclays Bank 12% 15/7/2010 3,160,000
Bayerische Vereinsbank 8-5/8% 15/06/05 2,750,000
Xxxxxxxxxx Xxxxxxxxx 0-0/0% 5/1/2006 1,850,000
BMW 6.375% 22/05/2009 2,560,000
BOC 12-1/4% 2/10/2012-17 1,800,000
Bradford & Bingley 7-5/8% 30/12/99 270,000
Bradford & Bingley 8-3/8% 29/12/2006-11 3,000,000
Bristol & West 10-3/4% 22/6/2018 1,500,000
Bristol & West B.S 10-7/8% 30/9/2000 760,000
British Columbia 7.5% 31/12/2003 1,000,000
British Energy 6.202% 11/06/2016 1,580,000
British Land 8-7/8% 24/9/2035 291,500
British Telecom 5.75% 7/12/2028 4,800,000
Brixton Estates 10-3/4% 31/12/2025 150,000
Brixton Estates 11-1/4% 31/12/2023 1,929,500
Brixton Estates 9-1/2% 31/12/2026 801,400
Cable & Wireless 10-3/8% 27/3/2002 550,000
Cadbury Schweppes 8% 2000 1,400,000
Cambridge Water 13% 31/12/2004 100,000
Canary Wharf Finance 5% 22/10/2027 2,000,000
Cap & Co 9-7/8 31/12/2027 2,000,000
Capital Shopping Centre 6.875% 5/3/2013 1,500,000
Care Homes No 2 5.75% 15/02/2023 2,000,000
Care Homes No 1 8% 9/4/2021 2,000,000
Carlsberg 7% 26/02/2013 2,000,000
- 17 -
Carlton Communication 7.625% BDS 06/06/07 650,000
Catalyst Health (AMBAC) 5.87% 31/12/2030 1,500,000
Citigroup 60.25% 02/09/2019 3,500,000
City Greenwitch Rail Link 9-3/8 11/10/2020 500,000
City of Salford 7% 25/01/2019 200,000
Coca Cola 6.5% 07/06/2021 1,500,000
Commercial Union 10-3/4% 20/3/2002 1,250,000
Commercial Union 9-1/2% 20/6/2016 1,495,000
Commerzbank 6.625% 30/08/2019 1,000,000
Commerzbank 7.875% 7/12/2007 2,000,000
Consols 2-1/2% (1923) 5/4/2069 (51.00) 12,410,000
Consols 4% (1957) 1/2/2069 (79.00) 500,000
Co-op Wholesale Society 7-5/8 31/12/2018 1,850,000
Coventry 8-1/4% 5/1/2026 1,000,000
Daimler Benz 7% 25/02/2000 600,000
Denmark ( Kingdom of ) 5.875% 28/06/2004 1,500,000
Denmark (Kingdom of) 13% 31/12/2005 2,130,000
Derwent Vally 10.125% 31/07/19 1,500,000
Xxxxxxxx Xx 7.75% 7/12/07 2,000,000
Xxxxxxxx Xx 7-5/8% 31/12/2003 100,000
ECSC 6.875% 25/1/2019 700,000
EIB 6% 7/12/2028 3,000,000
Enterprise Inns plc 6% 2/3/2014 1,500,000
European Investment Bank 5% 15/04/2039 1,500,000
Export Import Bank of Japan 8% 5/2/2007 500,000
Xxxxxx Xxx 5.375% 7/12/2028 2,000,000
Finland 11.5 2009 960,000
Fitzwilton 9-3/4% 11/10/2006 1,000,000
Fresh class(A) 8.639(11.126)% 5/10/2049 3,000,000
General Electric 5.25% 07/12/2028 2,150,000
General Electric capital Corp 6.25% 01/09/2009 1,400,000
Xxxxxx Grp 10% 18/02/2018 1,000,000
Granchester 7-3/8 30/04/2020 500,000
Great Portland Est 9-1/2% 31/3/2016 1,000,000
Greenalls 10-1/2% 23/6/2017 1,500,000
Guardian Royal Exchange 6.625% 21/8/2023 4,500,000
Halifax 13.625% 29/06/2049 250,000
Halifax (Leeds Perm B.S.) 10-1/2% 16/02/2018 930,000
Halifax B.S. 11% 17/1/2014 380,000
Helaba 9% 6/9/2004 850,000
HMC MBIA 7.181% 30/09/2027 1,000,000
Housing Ass Fund 8-1/4% 07/06/2027 3,700,000
Housing Securities 8 3/8% 25/1/2019 575,000
HSBC Midland Bank 6.5% 07/07/2023 1,000,000
Iceland 14-1/2% 31/1/2016 1,177,000
Iceland 8 3/4% 12/05/2003 747,000
III Group 6.875% 09/03/2023 3,200,000
III Group plc 5.75% 3/12/20320 1,000,000
International Finance Corp 5.5% 7/6/2021 1,000,000
Intl Bk Recon & Dev 4.875% 7/12/2028 1,000,000
Ireland 12 1/2% 12/10/2008 1 276,317
Ireland 12 1/2% 12/10/2008 2 2,925,000
Italy (Republic of) 6% 04/08/2028 3,040,000
Italy 10.5% 28/04/2014 1,000,000
J Xxxxxxx Xxxxxx 0 0/0% XX 0/0/00 000,000
- 00 -
Xxxxx Financial Mun. 5.75% 09/08/2019 2,000,000
Japanese Finance Municipal Enterprise 8.375% 07/12/2006 1,000,000
Xxxx Xxxxx 10 1/4% 6/5/2006 1,000,000
Xxxx Xxxxx 10-1/2% 23/1/2014 2,000,000
Keystone I.T. 11-3/8% 1/10/2010-15 136,250
KFW International 6% 07/12/2028 4,250,000
Kingfisher Plc 6.875% 23/03/2010 2,250,000
Land Securities 10-3/4% 31/07/04 830,000
Lb.Sch.Holstein 8% 28/12/06 1,300,000
LCR Finance 4.5% 7/12/2038 6,000,000
LGS Investments 8.75% 22/05/2020 1,300,000
Lloyds (TSB) 10-5/8% 21/10/2008 1,605,000
Lloyds Bank 9-5/8% 6/4/2023 1,600,000
Local Authority Bond 8-1/8% 31/01/14 1,600,000
London & Manchester 8 1/8% 30/11/2004 875,000
Lynton 10-1/4% 31/7/2017 1,500,000
Mansfield Brewery 6.875% 28/02/2028 1,000,000
MEPC 8-3/4% 0712/2006 520,000
Mutual Group 7.25% 12/01/2004 2,100,000
Mutual Sec 7.3917 30/9/2012 800,000
Mutual Sec 7.5873 30/9/2022 500,000
Nat West Bank 8-1/8% 29/12/06-11 2,700,000
National Grid 5.875% 2024 4,750,000
National Power Plc 8.375% 02/08/06 1,000,000
Nationwide B.S. 10-1/2% 30/07/2002-07 3,000,000
Natwest 6.5% 07/09/2021 1,100,000
NB Housing Assn 6.625% 30/09/2038 2,000,000
NBH Assoc (FSA) 8 5/8% 26/09/2016-20 500,000
NEC Finance Plc 13.625 30/09/2016 360,000
New Zealand (BEARER) 11.25% 04/05/2008 235,000
New Zealand (REG) 11-1/4 4/5/2008 575,000
Newcastle 11 1/4% 30/9/2017 250,000
Newport Borough 8-7/8% 10/04/2019 1,000,000
Nippon T&T 7.375% 02/12/2003 1,650,000
Nordic Investment Bank 5.25% 26/11/2019 2,000,000
Northavon inv 8.12% 5/10/2026 1,500,000
Northern Counties FSA 9-1/8% 31/1/2025 3,000,000
Northern Ireland Electricity 6.875% 18/9/2018 1,950,000
Northern Rock 6.375 2/12/2019 2,500,000
Northumbrian Water 6.875% 06/02/2023 1,500,000
Xxxxxx Kontrollbank 5.75% 7/12/2028 2,450,000
Pavilion Housing AMBAC 5-1/2% 24/4/27 2,000,000
Peabody (AMBAC) 10-1/4% 17/8/2023 1,450,000
PHF Sec No 7.1825% 10/07/2025 1,200,000
Portugal (Rep of) (BR) 9% 20/05/2016 535,000
Portugal (Rep of) (REG) 9% 20/05/2016 2,000,000
Powergen 6.25% 29/04/2024 1,600,000
Powergen 8-1/2% 03/07/2006 500,000
Province Of Quebec 8-5/8 04/11/11 1,041,000
Prodential 5.875% 11/05/2029 2,961,000
Pub Master Finance 7.369% 30/06/2022 1,000,000
Punch Taverns 7.274% 15/04/2022 500,000
Quadrant Housing Trust AMBAC 4.94%-7.93% 10/2/2033 2,500,000
Railtrack 7 3/8% 18/11/2022 2,425,000
Rank 8.75% 28/07/2003 2,100,000
- 19 -
Roadchef 7.418% 31/10/2023 2,000,000
Rodamco Jersey 6.25% 24/06/2024 4,500,000
Royal Bank of Scotland 10-1/2% 1/3/2013 3,130,000
S. W Water 10-5/8% 05/02/2012 2,400,000
Sainsbury 8-1/4% 22/12/2000 2,950,000
Sanctuary Housing 8-3/8 1/9/2031 2,000,000
Xxxx Metropol Prop 10-1/4% 15/8/2016 1,276,000
Xxxx & South Energy 5.875% 22/09/2022 3,500,000
Sec Trust Scotland 12% 30/9/2013 218,440
Xxxxxx Xxxxx Water 6.125% 26/02/2024 3,000,000
Shaftesbury Plc 8-1/2% 31/03/24 750,000
Siemens 6.875% 24/2/2000 1,000,000
Slough Estates 11-1/4% 31/12/2019 400,000
Slough Estates 12-3/8% 31/12/2009 1,650,000
Smithkline Xxxxxxx 8-3/8% 29/12/2000 700,000
SNCB 9-3/8% 21/02/2020 500,000
Soc Gen De Belgique 11.31% 1/5/07 440,000
South Somerset Homes (AMBAC) 5.955 2034 2,000,000
Southern Water 6.842% 26/3/2008 3,100,000
Spain (Kingdom of) 5.25% 06/04/2029 1,760,000
Statoil 6.125% 27/11/2028 2,790,000
Stirling Water (MBIA) 5.822% 26/09/2026 1,000,000
Summit Finance Law AMBAC 6.484% 31/03/2028 1,000,000
Swiss Bank 8.75% 20/06/2005 2,000,000
Takare 11.8% 30/6/2014 500,000
Tesco 6% 14/12/2029 2,000,000
Tesco 8.75% 20/2/2003 1,210,000
Thames Water 6.75% 16/11/2028 2,500,000
Thistle Hotels 7-7/8% 20/06/2022 1,000,000
Tiara Securities 5.9% 10/07/2027 2,000,000
Tokyo Elec Power 11% 05/06/2001 1,000,000
Town Centre 10-1/2% 01/04/21 1,000,000
Toyota Motor Finance 7.25 29/12/99 650,000
Transcanada Pipe 16-1/2% 1/9/2007 1,250,000
Treasury 2-1/2% (1975) 1/4/2069 (49.75) 15,128,674
Treasury 3% 29/12/2069 (60.00) 1,367,000
Treasury 6% 7/12/2028 4,330,000
Treasury 7 1/2% 7/12/2006 500,000
Treasury 8% 07/12/2015 280,000
Treasury 9% 13/10/2008 145,000
Treasury Principle Strip 0% 07/06/2021 6,647,500
Trust Union Finance 8.125% 30/11/08 250,000
Tussauds Finance 7.078% 15/3/2020 1,000,000
Tyseley Finance FSA 6.675% 30/07/2018 1,700,000
UBS 7.375% 26/11/2004 920,000
UBS 8% 08/01/2007 580,000
Unique Public Finance 6.542% 30/03/2021 1,000,000
University of Greenwich (AMBAC) 6.367% 31/07/2028 650,000
Varsity Funding FSA 6.4175-8.7195% 24/07/2026 500,000
Vaux 9-7/8% 26/09/2015 250,000
Vodafone Grp 7-7/8% 6/11/2001 2,350,000
Welcome Break (Class A3) 7.95% 1/9/2015 1,500,000
Wellington Pub Co. 6.735% 15/01/2029 2,500,000
Welsh Water 7-5/8% 21/03/2014 1,000,000
Wessex Water 5.875% 30/03/2009 500,000
- 20 -
West Deutsche LB 8-1/2% 2/6/03 1,050,000
Westland 12-3/8% 30/9/2008 500,000
Wolverhampton & Xxxxxx 6.5% 18/06/2019 500,000
Woolwich B.S. 10-1/8% 21/12/2012 1,930,000
Yorkshire Water 6.875% 23/4/2010 3,000,000
- 21 -
SCHEDULE 'B' - DATA REQUIREMENTS
The following information should be provided by the Cedant to XL Mid
Ocean as at the Transfer Date and then on each Pre-Payment Date:
In force policy listing ANNUITANT'S NAME
DATE OF BIRTH (1)
JOINT ANNUITANT'S NAME
DATE OF BIRTH (2)
CURRENT ANNUITY AMOUNT
ANNUITY AMOUNT AT ISSUE
FREQUENCY
IN ADVANCE/ARREARS
ESCALATION RATE
REDUCTION IN BENEFIT ON REVERSION
GUARANTEE OUTSTANDING
FIRST OR JOINT ANNUITANT BEING PAID
NEXT PAYMENT DUE DATE
REMAINING TERM
POLICY NUMBER
Schedule of Deaths notified since the previous Pre-Payment Date,
together with copies of Death Certificates.
Schedule of Reversions notified since the previous Pre-Payment Date.
Pre-Payment Due and supporting calculations, including a summary of
actual payments made over the previous Pre-Payment Period.
- 22 -
DATED 2000
___________________________________________________
OLD MUTUAL LIFE ASSURANCE COMPANY LIMITED (1)
AND
XL MID OCEAN REINSURANCE LTD (2)
-------------------------
SECURITY AGREEMENT
-------------------------
XXXXXX XXXX
CONTENTS
CLAUSE PAGE
1 Definitions and interpretation.......................................... 1
2 Covenant and charge..................................................... 4
3 Delivery of additional Collateral and improved Collateral............... 4
4 Return of Collateral.................................................... 5
5 Rounding, minimum transfers and information............................. 6
6 Exchange and substitution of Collateral................................. 6
7 Appointment of new Custodian or Sub-Custodian........................... 6
8 Dispute Resolution...................................................... 6
9 Power of sale........................................................... 7
10 Application of Cash Collateral.......................................... 7
11 Further assurance....................................................... 8
12 Power of attorney....................................................... 8
13 Receiver................................................................ 8
14 Effectiveness of Collateral............................................. 8
15 Subsequent interests and accounts....................................... 9
16 Representations and warranties relating to the Chargor.................. 9
17 Negative pledge......................................................... 10
18 Costs and expenses...................................................... 10
19 The transferred Collateral.............................................. 10
20 Currency conversion..................................................... 10
21 Notices................................................................. 10
22 successors.............................................................. 11
23 Client money rules...................................................... 11
24 Valuation agent......................................................... 11
25 Law and jurisdiction.................................................... 11
26 Amendments.............................................................. 11
27 Counterparts............................................................ 11
28 Third Party Rights...................................................... 11
Annex 1 Notice to Custodian/Deposit Taker.................................... 13
Annex 2 Custodian Agreement.................................................. 14
Annex 3 The Accounts ........................................................ 15
THIS SECURITY AGREEMENT is made on 2000
BETWEEN:
(1) OLD MUTUAL LIFE ASSURANCE COMPANY LIMITED (No. 943621) whose registered
address is Xxxxxxx Xxxxx, 0 Xxx Xxxxxx, Xxxxxx XX0X 0XX (the "SECURED
PARTY"); and
(2) XL MID OCEAN REINSURANCE LTD a company incorporated under the laws of
Bermuda whose principal place of business is Xxxxxx Xxxxx, 00 Xxxx
Xxxxxx, PO Box HM 1066, Xxxxxxxx XX EX, Bermuda (the "CHARGOR").
IT IS AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Security Agreement
"ACCOUNTS" means the designated accounts of the Chargor with the
Custodian, each sub-custodian, investment manager and any other
relevant person under the Custodian Agreement in which the Non-Cash
Collateral and Cash Collateral (other than the balance of the Pre-
Payment Fund from time to time) subject to this Security Agreement are
held and as specified in Annex 3;
"ADJUSTED ASSET REGULATIONS" means the Asset Regulations except that
(i) any admissibility percentage applicable for determining admissible
assets set out in Part II of Schedule 12 to the Asset Regulations shall
be deemed not to exceed 5 per cent., and (ii) the application of any
such admissibility percentage shall not give rise to any admissibility
limit of less than GBP one million; and (iii) the aggregate admissible
value of Non-GBP Assets will not exceed 20% of the Required Amount; and
(iv) the aggregate admissible value of Unhedged Non-GBP Assets will not
exceed one per cent of the Required Amount; and (v) Currency Hedge
Assets shall be deemed to be assets for the purposes of efficient
portfolio management provided that such assets hedge a Non-GBP Asset
back into GBP. For the avoidance of doubt Currency Hedge Assets
contained within the Collateral shall be aggregated with all other
Collateral to determine whether individual counterparty limits have
been exceeded;
"APPOINTED ACTUARY" shall have the meaning set out in the Reinsurance
Agreement;
"ASSET REGULATIONS" means the Insurance Companies Regulations 1994 and
all other relevant regulations and professional guidance from time to
time relating to the valuation and/or admissibility of the long term
business assets of United Kingdom insurance companies provided that,
for the purpose of this definition, references to long term business
amount in such regulations and guidance shall be deemed to be
references to the Required Amount;
"BANKING DAY" means any day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency
deposits) in (i) London and Bermuda and (ii) in the case of a delivery
of Permitted Collateral (a) the location of the account into which such
delivery is to be made, and (b) either, in the case of a delivery of
Cash, the principal financial centre of the currency of such Cash or,
in the case of a delivery of Non-Cash Assets, the location of the
account out of which such delivery shall be made, and, if different,
the place where the delivery will be registered (if applicable);
"BUSINESS COVERED" shall have the meaning set out in the Reinsurance
Agreement;
"CALL AMOUNT" means on any Valuation Date the GBP amount (rounded
pursuant to clause 5.1) by which the Required Amount exceeds the
aggregate Value (calculated as at the close of business on the Banking
Day immediately preceding the Valuation Date) of the Collateral held by
the Custodian on behalf of the Secured Party on such date;
"CASH" means any Deposits denominated in GBP and such other currency or
currencies as may from time to time be agreed in writing between the
parties together with the balance from
1
time to time of the Pre-Payment Fund;
"CASH COLLATERAL" means Collateral comprising Cash;
"COLLATERAL" means all the assets whether Cash or Non-Cash which stand
to the credit of the Accounts from time to time delivered pursuant to
this Security Agreement together with all Proceeds, interest earned on
Cash Collateral (which interest shall accrue for the benefit of the
Chargor at such rate(s) as shall be agreed between the Chargor and the
Custodian and the Custodian and Sub-Custodian in accordance with the
Custodian's and/or Sub-Custodian's (as the case may be) normal
practice), substitutions for and additions to the foregoing and which
have not been redelivered to the Chargor;
"COLLATERAL RIGHTS" means all rights, powers and remedies of the
Secured Party provided by this Security Agreement or by law;
"CURRENCY HEDGE ASSETS" means a foreign exchange contract (or such
other financial instrument as may from time to time be agreed between
the parties thereto) the effect of which is to forward sell either EURO
or USD and to forward purchase GBP, at a rate and future date
determined when such contract is entered into;
"CUSTODIAN" means the bank or other custodian chosen by the Chargor (in
its absolute discretion) which will hold the Collateral on behalf of
the Secured Party;
"CUSTODIAN AGREEMENT" means the agreement between the Chargor and the
Custodian substantially in the form of Annex 2;
"DEFERRED PREMIUM PAYMENT DATE" shall have the meaning given to it in
the Reinsurance Agreement;
"DEPOSIT" means each credit balance from time to time on an Account and
all rights, benefits and proceeds in respect thereof;
"EURO" means the lawful currency widely adopted in the European Common
Currency Area and, wherever mentioned in this Security Agreement, shall
also include any successor thereto;
"EVENT OF DEFAULT" means in relation to the Chargor:
(i) the passing of a resolution for its winding up, a court of
competent jurisdiction making an order for the Chargor's
winding up or dissolution, the making of an administration
order in relation to the Chargor, the appointment of a
receiver over, or an encumbrancer taking possession of or
selling, all or substantially all of the assets of the
Chargor, the Chargor making an arrangement or a composition
with its creditors generally or making an application to a
court of competent jurisdiction for protection from its
creditors generally or any analogous proceedings being
undertaken or occurring under the courts of any other relevant
jurisdiction; or
(ii) any breach by the Chargor of (A) clause 15 (Term and
Termination) of the Reinsurance Agreement, (B) any provision
of the Reinsurance Agreement which is not capable of remedy or
(C) any provision of the Reinsurance Agreement which, being
capable Of remedy, is not remedied within 30 Banking Days of
such breach; or
(iii) any breach by the Chargor of any provision of this Security
Agreement;
"GBP" means the lawful currency of the United Kingdom and, wherever
mentioned in this Security Agreement, shall also include any successor
currency thereto;
"GBP ASSET" means an asset which is denominated in GBP;
"HEDGED NON-GBP ASSETS" means the Non-GBP Assets in respect of which
Currency Hedge Assets are held which have the effect of removing the
exposure of those Non-GBP Assets to
2
future changes in the exchange rates of the Euro or USD against GBP;
"LIBOR" means the six monthly London Inter-Bank Offered rate of
Barclays Bank plc;
"LIABILITY REGULATIONS" means the Insurance Companies Regulations 1994
and all other relevant regulations and professional guidance from time
to time relating to the valuation of liabilities of the long term
business of United Kingdom insurance companies;
"NON-CASH ASSETS" means such GBP Assets or such Non-GBP Assets as shall
accord with the criteria set out in the Adjusted Asset Regulations;
"NON-CASH COLLATERAL" means Collateral comprising Non-Cash Assets;
"NON-GBP ASSETS" means an asset which is denominated in EURO or an
asset which is denominated in USD;
"Obligations" means all obligations owing to the Secured Party by the
Chargor under the Reinsurance Agreement and this Security Agreement,
whether present or future, actual or contingent;
"PERMITTED COLLATERAL" means collectively Cash and Non-Cash Assets;
"PRE-PAYMENT FUND" shall have the meaning given to it in the
Reinsurance Agreement;
"PROCEEDS" means all principal, interest, dividends and other payments
and distributions of cash or other property paid or distributed in
connection with all Non-Cash Collateral and all rights privileges and
other securities of every kind distributed with respect thereto or in
exchange therefor. For the avoidance of doubt, Proceeds will not
include any item of property acquired by the Secured Party upon any
disposition or liquidation of Collateral;
"REINSURANCE AGREEMENT" means the Reinsurance Agreement between the
Secured Party and the Chargor dated 20 December 1999;
"REQUIRED AMOUNT" means, on any Valuation Date, 100% of the net present
value of the future projected annuity cash flows (calculated as at the
close of business on the day immediately preceding the Valuation Date)
such amount to be determined by the Valuation Agent in the context of
the Business Covered only and in accordance with the Liability
Regulations in respect of the relevant block of Business Covered. To
the extent that a resilience reserve, when calculated in respect of
such block of Business Covered, would exceed GBP five million, then any
such excess over GBP five million shall be included for the purposes of
this calculation;
"RETURN AMOUNT" means, on any Valuation Date, the GBP amount (rounded
pursuant to clause 5.2) by which the aggregate Value (calculated as at
the close of business on the Banking Day immediately preceding the
Valuation Date) of the Collateral held by the Custodian on behalf of
the Secured Party exceeds the then current Required Amount;
"SUB-CUSTODIAN" means the bank or other sub-custodian chosen by the
Custodian (in its absolute discretion) which will hold the Collateral
on behalf of the Custodian for the Secured Party;
"SUB-CUSTODIAN AGREEMENTS" means the agreements between the Custodian
and the Sub-Custodians;
"UNHEDGED NON-GBP ASSETS" means Non-GBP Assets other than Hedged
Non-GBP Assets:
"USD" means the lawful currency of the United States of America and,
wherever mentioned in this Security Agreement, shall also include any
successor thereto;
"VALUATION AGENT" means an actuary who would, if the Chargor were a
life insurance company subject to the Insurance Companies Act 1982
(United Kingdom) be entitled to be appointed as
3
an actuary to an insurance company in the terms of section 19 of such
Act;
"VALUATION DATE" means (i) the Deferred Premium Payment Date and (ii)
the final Banking Day in each calendar quarter during the term of the
Reinsurance Agreement and (iii) each Banking Day on which the Call
Amount or the Return Amount exceeds GBP 2 million; and
"VALUE" means in relation to any Collateral on any date, the admissible
value of such Collateral as determined by the Valuation Agent on such
date in accordance with the Adjusted Asset Regulations provided that,
in determining "VALUE", the Valuation Agent shall only include such
part(s) of the Pre-Payment Fund and the Accounts in respect of which
the requirements of clause 2.4 have been met.
1.2 In this Security Agreement, any reference to (a) a "CLAUSE" is, unless
otherwise stated, a reference to a clause hereof and (b) "THIS SECURITY
AGREEMENT" and the "REINSURANCE AGREEMENT" is a reference to this
Security Agreement or (as the context requires) the Reinsurance
Agreement as amended, varied or supplemented from time to time. Clause
headings are for ease of reference only. Terms used but not defined
herein shall bear the respective meanings ascribed to them in the
Reinsurance Agreement.
2 COVENANT AND CHARGE
2.1 The Chargor shall discharge each of the Obligations in the manner
provided for in the Reinsurance Agreement and this Security Agreement
and pay to the Secured Party when due and payable and in the manner
provided for in the Reinsurance Agreement and this Security Agreement
each sum owing by the Chargor to the Secured Party in respect of the
Obligations.
2.2 On the Deferred Premium Payment Date, the Chargor shall transfer to the
Accounts, Permitted Collateral, having an aggregate Value at least
equal to the Required Amount.
2.3 The Chargor charges with full title guarantee and by way of first fixed
charge all of the Collateral the balance from time to time of the
Pre-Payment Fund and all of its rights under the Custodian Agreement
(insofar as the same relate to the Collateral) in favour of the Secured
Party as security for the payment and discharge of all of the
Obligations.
2.4 The Chargor shall deliver a notice to (and use its reasonable
endeavours to procure acknowledgement from) the Custodian and any other
relevant person under the Custodian Agreement and each relevant Deposit
Taker of the security interest over each of the Accounts and (as the
context requires) the Pre-Payment Fund, in the form set out in Annex 1.
2.5 The Chargor hereby agrees that the security provided by the terms of
the covenant and charge in this Security Agreement shall be a
continuing security for each of its Obligations and shall not be
satisfied by any intermediate payment or satisfaction of the whole of
any part of the Obligations.
2.6 The Chargor hereby waives any right it may have of first requiring the
Secured Party to proceed against or claim payment from any other person
or enforce any guarantee or security before enforcing this Security
Agreement.
2.7 Where any discharge (whether in respect of the security constituted by
this Security Agreement, any other security or otherwise) is made on
the faith of any payment, security or other disposition which is
avoided or any amount paid pursuant to any such discharge or
arrangement must be repaid on bankruptcy or liquidation (or otherwise)
of the Chargor, the security constituted by this Security Agreement and
the liability of the Chargor under this Security Agreement shall
continue as if there had been no such discharge or arrangement.
3 DELIVERY OF ADDITIONAL COLLATERAL AND IMPROVED COLLATERAL
3.1 If a Call Amount exists on a Valuation Date, the Chargor shall by 12
p.m. London time on the second Banking Day following such Valuation
Date, at the cost and expense of the Chargor,
4
arrange for the delivery to the Accounts of further Permitted
Collateral with a Value as at the relevant Valuation Date of not less
than the Call Amount (and which, for the avoidance of doubt, shall be
subject to the charge in clause 2 of this Agreement).
3.2 If the Collateral (including, without limitation, the Pre-payment Fund)
has, on any day (the "Relevant Day"), an average Standard & Poor's
rating of below A (such rating to be of (i) the relevant asset(s) in
respect of Non-Cash Assets and (ii) the Custodian and Deposit Taker(s)
in respect of Cash), the Chargor shall (notwithstanding that the Call
Amount is equal to or less than zero on the Relevant Day) deliver
Permitted Collateral to the Account. Such Permitted Collateral shall be
delivered on the second Banking Day following the Relevant Day and
shall ensure that the average Standard & Poor's rating of the
Collateral (including, without limitation, the Pre-payment Fund) after
delivery is equal to or greater than A. If a Return Amount exists after
such delivery, the provisions of clause 4 shall apply.
4 RETURN OF COLLATERAL
4.1 If a Return Amount exists on a Valuation Date, the Chargor may at any
time, by giving written notice (a "REQUEST FOR RETURN") to the Secured
Party and the Custodian, require the Secured Party to comply with the
provisions of clause 4.2 or 4.3.
4.2 If a Return Amount exists on a Valuation Date, and the Secured Party
receives a Request for Return, by 10 a.m. London time, the Secured
Party shall, by 12 p.m., London time, on the second Banking Day
following the date of receipt of the Request for Return, at the cost
and expense of the Chargor, arrange with the Custodian for the
redelivery of a portion of the Collateral having a Value as at the
relevant Valuation Date, equal to the Return Amount (rounded pursuant
to clause 5.2) to the Chargor, whereupon that portion of the Collateral
shall be released from the security interest constituted by this
Security Agreement.
4.3 If a Return Amount exists on a Valuation Date, and the Secured Party
receives a Request for Return after 10 a.m. London time, the Secured
Party shall by close of business on the third Banking Day following the
date of receipt of the Request for Return at the cost and expense of
the Chargor, arrange with the Custodian for the redelivery of a portion
of the Collateral having a Value as at the relevant Valuation Date,
equal to the Return Amount (rounded pursuant to clause 5.2) to the
Chargor, whereupon that portion of the Collateral shall be released
from the security interest constituted by this Security Agreement.
4.4 When all Obligations have been paid, discharged and performed in full,
the Secured Party will, upon the request and at the reasonable expense
of the Chargor, release the security interest created pursuant to
clause 2 and procure that the Custodian shall redeliver all Collateral
(together with any interest each pursuant to clause 8) to the Chargor.
Any such release shall be conditional upon no security, disposition or
payment to the Secured Party by the Chargor being void, set aside or
ordered to be refunded pursuant to any law relating to insolvency or
for any other reason whatsoever and, if such condition is not
fulfilled, the Secured Party will be entitled to enforce this Security
Agreement as if such release had not occurred.
4.5 Any notice given by the Chargor in accordance with clause 4.1 shall
specify:
4.5.1 the Value of the Collateral in the Accounts as of the close of business
on the Banking Day immediately preceding the relevant Valuation Date;
4.5.2 the Return Amount;
4.5.3 any other information necessary for the effective redelivery of
Collateral in accordance with clause 4.2 or 4.3; and
4.5.4 the type of Collateral the Chargor wishes to have returned (where more
than one type of Permitted Collateral has been delivered to the
Accounts pursuant to this Security Agreement).
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5 ROUNDING, MINIMUM TRANSFERS AND INFORMATION
5.1 All Call Amounts shall be rounded up to the nearest integral multiple
of GBP 1,000,000.
5.2 All Return Amounts shall be rounded down to the nearest integral
multiple of GBP 1,000,000.
5.3 The Chargor will procure that the Valuation Agent will notify each
party within 5 Banking Days following a Valuation Date (each such day
being a "Notification Date") of the existence of a Call Amount or a
Return Amount (if any) as the case may be.
5.4 On each Notification Date, on the first Banking Day of each month and
on the First Banking Day after which the aggregate market value of
assets exchanged out of the Collateral since the last such account
exceeds 5% of the Required Amount as at the last such account and from
time to time at the reasonable request of the Secured Party, the
Chargor will provide to the Secured Party an account detailing all
Collateral then held in the Accounts in a form and content
substantially similar to the list of Agreed Assets as set out in
Schedule A to the Reinsurance Agreement (but including, in addition,
the market value of those assets) and such other details as may be
agreed between the parties from time to time. Where the Secured Party
requests additional information, the Chargor shall not unreasonably
deny access to the Valuation Agent if the Secured Party so requests the
Valuation Agent to provide such information.
5.5 At the reasonable request of the Secured Party and at reasonable
intervals, the Chargor will provide to the Secured Party evidence in a
form satisfactory to the Secured Party, that the Collateral is not
subject to any Encumbrance other than the charge hereby created.
6 EXCHANGE AND SUBSTITUTION OF COLLATERAL
6.1 The Chargor may from time to time sell or dispose of all or any part of
the Collateral and replace such Non-Cash Collateral with Cash
Collateral or Non-Cash Collateral of equal Value provided only that
such sale or disposal is carried out on a delivery against payment
basis, save in the case of any Currency Hedge Assets where payment is
not made against delivery but is due in accordance with the terms of
such Currency Hedge Asset
6.2 The Chargor may from time to time sell or dispose of all or any part of
the Collateral and replace such Cash Collateral with Non-Cash
Collateral of equal Value.
7 APPOINTMENT OF NEW CUSTODIAN OR SUB-CUSTODIAN
In the event that the Chargor shall appoint a new Custodian, or in
event that the Chargor becomes aware of the appointment of any new
Sub-Custodian, the Chargor shall give written notice of such
appointment to the Secured Party as soon as is reasonably practicable
thereafter.
8 DISPUTE RESOLUTION
8.1 If the Secured Party or its Appointed Actuary does not approve any
calculation performed by the Chargor or the Valuation Agent under this
Security Agreement (or any other dispute which is to be determined in
accordance with this clause 8) then the remaining provisions of this
clause 8 shall apply.
8.2 If the Secured Party or its Appointed Actuary does not approve any one
or more of the calculations performed by the Chargor or the Valuation
Agent, the Secured Party shall deliver a notice in writing to the
Chargor, specifying the calculation of which it does not approve and
setting out in reasonable detail, the basis of the objection. Where a
dispute is required to be determined elsewhere in this Security
Agreement in accordance with this clause 8, either party shall be
entitled to deliver a notice to the other party, setting out the
details of the dispute in reasonable detail.
6
8.3 The Chargor and the Secured Party shall, within ten (10) Banking Days
of delivery of the notice referred to in clause 8.2 attempt, in good
faith, to resolve the dispute.
8.4 If the Chargor and the Secured Party are unable to resolve the dispute
within the time period contemplated in clause 8.3, such dispute shall
be referred to the respective Appointed Actuaries of the Chargor and
the Secured Party, who shall further attempt to resolve the dispute
amicably within ten (10) Banking Days of expiry of the period referred
to in clause 8.3.
8.5 If the respective Appointed Actuaries of the Chargor and the Secured
Party are unable to reach agreement within the time period contemplated
in clause 8.4, the Chargor and the Secured Party shall agree upon an
independent actuary. If the Chargor and the Secured Party are unable to
reach agreement on the identity of the independent actuary within a
period of ten (10) Banking Days of expiry of the period referred to in
clause 8.4, such independent actuary shall be appointed by the
President, for the time being, of the Institute of Actuaries in England
and Wales.
8.6 The Chargor and the Secured Party shall use all reasonable endeavours
to procure that the independent actuary perform the disputed
calculation within fifteen (15) Banking Days of his appointment. Any
calculation undertaken by the independent actuary shall be in his
capacity as an expert and not as an arbitrator or quasi-arbitrator and
his decision shall be final and binding on the Chargor and the Secured
Party.
8.7 In the event that any of the matters contemplated in clauses 3.1 or 4.1
becomes the subject matter of a dispute to be determined in accordance
with the provisions of this clause 8, and as a result thereof, the
Chargor or the Secured Party (as the case may be) shall not be able to
make payment of a Call Amount or a Return Amount within the period
required after the relevant Valuation Date, the Valuation Date shall be
the date upon which the dispute is settled or determined (as the case
may be) in accordance with this clause 8.
9 POWER OF SALE
9.1 If at any time an Event of Default has occurred and is continuing, the
Secured Party shall be entitled, without prior notice to the Chargor or
prior authorisation from any court, to sell or otherwise dispose of in
any manner permitted by law, all or any part of the Collateral. The
Secured Party shall be entitled to apply the proceeds of such sale or
other disposal in paying the costs of that sale or disposal and in or
towards the discharge of the Obligations. The Secured Party shall be
entitled to treat any Cash Collateral as if it were the proceeds of
such sale or other disposal.
9.2 The power of sale or other disposal in clause 9.1 shall operate as a
variation and extension of the statutory power of sale under s101 of
the Law of Property Xxx 0000 and the Secured Party may exercise any
power available to it by virtue of this Security Agreement or
available to a secured creditor. The restrictions contained in s93 and
s103 of the Law of Property Act 1925 shall not apply to this Security
Agreement or to any exercise by the Secured Party of its right to
consolidate mortgages or its power of sale.
9.3 In favour of a purchaser of all or any part of the Collateral, a
certificate in writing by an officer, attorney or agent of the Secured
Party that any power of sale or other disposal has arisen and is
exercisable shall be conclusive evidence of that fact and no purchaser
shall be concerned to enquire whether any power exercised or purported
to be exercised by the Secured Party has become exercisable or whether
any Obligation remains due.
10 APPLICATION OF CASH COLLATERAL
In respect of Cash Collateral, the Secured Party may at any time after
an Event of Default with respect to the Chargor has occurred and is
continuing, without prior notice to the Chargor, apply or appropriate
the Cash Collateral in or towards the payment or discharge of any
amounts payable by the Chargor with respect to any Obligation in such
order as the Secured Party sees fit; or set off all or any part of any
amount payable by the Chargor with respect to any Obligation against
any obligation of the Secured Party to repay any amount to the Chargor
in respect of
7
the Permitted Collateral; and for these purposes the Secured Party
shall be entitled to make any currency conversions or effect any
transaction in currencies which it thinks fit and to do so at such
times and rates as it thinks proper.
11 FURTHER ASSURANCE
On demand by the Secured Party, the Chargor shall promptly upon notice
from the Secured Party execute all documents and do or procure all
things (including the delivery, transfer, assignment or payment of all
or part of the Collateral to the Custodian or Sub-Custodian on behalf
of the Secured Party) that the Secured Party may reasonably specify for
the purpose of (a) exercising the Collateral Rights when the relevant
Collateral Rights become exercisable or (b) securing and perfecting its
security over or title to all or any part of the Collateral or (c)
enabling the Secured Party to vest all or part of the Collateral in its
name or in the name(s) of its nominee(s), agent or any purchaser when
the Collateral Rights become exercisable.
12 POWER OF ATTORNEY
The Chargor, by way of security, irrevocably appoints the Secured Party
as its attorney and in its name, on its behalf and as its attorney to
execute, deliver and perfect all documents and do all things in the
name of the Chargor or the Secured Party (as the attorney may decide)
that the Secured Party may consider to be requisite for (a) carrying
out any obligation imposed on the Chargor under this Security Agreement
or (b) exercising any of the Collateral Rights. The Chargor shall
ratify and confirm all things done and all documents executed by the
Secured Party in the exercise of that power of attorney.
13 RECEIVER
13.1 If at any time, an Event of Default has occurred and is continuing, the
Secured Party may by writing (acting through an authorised officer of
the Secured Party) without notice to the Chargor appoint one or more
persons to be receiver of the whole or any part of the Collateral (each
such person being (a) entitled to act individually as well as jointly
and (b) for all purposes deemed to be the agent of the Chargor).
13.2 In addition to the powers of the Secured Party conferred by clause 13,
each person appointed pursuant to clause 13.1 shall have, in relation
to the part of the Collateral in respect of which he is appointed, all
the powers (as varied and extended by the provisions hereof) conferred
by the lnsolvency Xxx 0000 and the Law of Property Xxx 0000 on
mortgagors and mortgagees in possession, administrators, receivers and
administrative receivers appointed under those Acts (whether or not
such person is such).
14 EFFECTIVENESS OF COLLATERAL
14.1 The collateral constituted by this Security Agreement and the
Collateral Rights shall be cumulative, in addition to and independent
of every other security which the Secured Party may at any time hold
for the Obligations or any rights, powers and remedies provided by law.
No prior security held by the Secured Party over the whole or any part
of the Collateral shall merge into the Collateral hereby constituted.
14.2 This Security Agreement shall remain in full force and effect as a
continuing arrangement:
14.2.1 unless and until the Secured Party discharges it; or
14.2.2 unless terminated by agreement between the parties.
14.3 No failure on the part of the Secured Party to exercise, or delay on
its part in exercising, any Collateral Right shall operate as a waiver
thereof, nor shall any single or partial exercise of a Collateral Right
preclude any further or other exercise of that or any other Collateral
Right. The obligations of the Chargor under this Security Agreement
shall not be affected by any act,
8
omission or circumstance which, but for this provision, might operate
to release or otherwise exonerate the Chargor from its obligations
hereunder.
14.4 If, at any time, any provision of this Security Agreement is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Security Agreement nor of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
14.5 In relation to any share in a company which is for the time being part
of the Collateral, the rights attached to such share shall be
exercisable by the Secured Party only for the purpose of preserving the
value of such share or of realising it, and unless there is an Event of
Default with respect to the Chargor, shall be exercisable only in
accordance with the Chargor's instructions or otherwise in its
interests.
15 SUBSEQUENT INTERESTS AND ACCOUNTS
15.1 If the Secured Party at any time receives notice of any subsequent
mortgage, assignment, charge or other interest affecting all or any
part of the Collateral, all payments which would otherwise have been
made by the Chargor to an Account shall thereafter be treated as having
been credited to a new account of the Chargor and not as having been
applied in reduction of the Obligations as at the time when the
Secured Party received notice.
15.2 All monies received, recovered or realised by the Secured Party under
this Security Agreement (including the proceeds of any conversion of
currency) may in its discretion be credited to and held in any suspense
or impersonal account pending their application from time to time in or
towards the discharge of any of the Obligations.
16 REPRESENTATIONS AND WARRANTIES RELATING TO THE CHARGOR
16.1 The Chargor represents and warrants to the Secured Party that:
16.1.1 the Collateral is beneficially owned by the Chargor free from any
mortgage, charge, pledge, lien, option, restriction, right of first
refusal, right of pre-emption, third-party right or interest, other
encumbrance or security interest of any kind, or another type of
preferential arrangement having similar effect ( "ENCUMBRANCE") other
than the security interest granted under clause 2;
16.1.2 it has the power to grant a security interest in any Collateral it
transfers to the Secured Party under this Security Agreement and all
the necessary corporate authority has been obtained and action taken
for the Chargor to grant a security interest in any Collateral it
transfers to the Secured Party under this Security Agreement and
execute and deliver and perform the covenants and obligations contained
in this Security Agreement;
16.1.3 upon the transfer of any Collateral by the Chargor to the Secured
Party, the Secured Party shall have a valid security interest in such
Collateral;
16.1.4 the performance by the Chargor of any of its obligations contained in
this Security Agreement will not result in the creation of any
Encumbrance on any Collateral transferred to the Secured Party other
than the security interest created under this Security Agreement; and
16.1.5 it is not unable to pay its debts within the meaning of s123 of the
Insolvency Xxx 0000, s162 of the Xxxxxxxxx Xxxxxxxxx Xxx 0000 or
otherwise and that it has not and will not become unable to pay its
debts within the meaning of either section or otherwise in consequence
of its entering into, or doing any act or thing contemplated or
permitted or required to be done by it under this Security Agreement
and the assets of the Chargor are now and will remain immediately after
the date hereof greater than its liabilities (taking into account the
actuarial value of its contingent and prospective liabilities) for the
purposes of s123(2) and s241 of the Insolvency Xxx 0000.
9
17 NEGATIVE PLEDGE
17.1 The Chargor covenants that it will not during the subsistence of this
Security Agreement, except with the prior written consent of the
Secured Party create, grant or permit to exist any Encumbrance, as
defined in clause 16.1.1, other than the charge hereby created, on or
over all or any part of the Collateral or any interest therein; or
18 COSTS AND EXPENSES
All the Secured Party's costs and expenses (including legal fees and
any value added tax) incurred in connection with (a) the enforcement of
the Collateral hereby constituted or (b) the exercise of any Collateral
Right, shall be reimbursed to the Secured Party by the Chargor on
demand on a full indemnity basis together with interest from the date
the same were incurred to the date of payment at LlBOR plus 2% per
annum.
19 THE TRANSFERRED COLLATERAL
19.1 All calls or other payments which may become due in respect of the
Collateral transferred to the Secured Party shall be paid by the
Chargor, and any failure on the part of the Chargor to make such
payment will result in the Secured Party having the right to elect to
make such payment on behalf of the Chargor and demand immediate
repayment by the Chargor of such payment to itself (and such payment
shall be so repayable by the Chargor), provided that (for so long as
the value of the Collateral is equal to or greater than the Required
Amount), the Secured Party, by written notice to the Chargor, has given
the Chargor a reasonable period of time to discharge any such calls or
other payments.
19.2 At any time after the occurrence of an Event of Default and without any
further consent or authority on the part of the Chargor, the Secured
Party may exercise, at its discretion (in the name of the Chargor or
otherwise) in respect of any of the Collateral transferred to it, any
voting rights and any powers or rights which may be exercised by the
person or persons in whose name or names such Collateral is registered
or who is the bearer or holder of them.
19.3 The Secured Party shall have no liability to perform or fulfil any
obligation of the Chargor in respect of the Collateral transferred to
the Secured Party.
20 CURRENCY CONVERSION
For the purpose of or pending the discharge of any of the Obligations,
the Secured Party may convert any money received, recovered or realised
or subject to application by it under this Security Agreement from one
currency to another, as the Secured Party may think fit and any such
conversion shall be effected at Barclays Bank plc's spot rate of
exchange for the time being far obtaining such other currency with the
first currency.
21 NOTICES
21.1 Any notice or demand to be served by one person on another pursuant to
this Security Agreement may be served by leaving it at the address
specified on page 1 hereof (or such other address as such person may
previously have specified in writing) or by letter posted by prepaid
first-class past to such address (which shall be deemed to have been
served on the tenth day following the date of posting), or by fax to
the fax number specified on page 1 hereof (or such other number as such
person may previously have specified) (which shall be deemed to have
been received when transmission has been completed).
21.2 The Chargor hereby irrevocably appoints NacRe International Limited as
its agent to receive service of any notice or demand to be served on
it pursuant to this Security Agreement. The registered address of NacRe
International Limited is Xxx Xxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxx XX0X
0XX.
21.3 For the purposes of this clause 21, the parties' respective facsimile
numbers are:
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21.3.1 XL Mid Ocean: 001 000 000 0000 or such other facsimile number as may be
notified to the Secured Party in writing from time to time;
21.3.2 the Secured Party: + 00 (0) 0000 000 000 or such other facsimile number
as may be notified to the Secured Party in writing from time to time;
and
21.3.3 NacRe International Limited: + 00 (0) 000 000 0000, or such other
facsimile number as may be notified to the Secured Party in writing
from time to time.
22 SUCCESSORS
This Security Agreement shall remain in effect despite any amalgamation
or merger (however effected) relating to the Secured Party and
references to the Secured Party shall be deemed to include any assignee
or successor in title of the Secured Party and any person who, under
the laws of its jurisdiction of incorporation or domicile, has assumed
the rights and obligations of the Secured Party hereunder or to which
under such laws the same have been transferred.
23 CLIENT MONEY RULES
23.1 Each party hereby agrees that:
23.1.1 the Secured Party is not treating the Chargor as a client as defined in
the Financial Services (Client Money) Regulations 1991 (the "RULES");
and
23.1.2 money transferred to the Secured Party pursuant to this Security
Agreement will not be subject to the protections conferred by the Rules
to which the Secured Party is subject.
24 VALUATION AGENT
The Chargor shall procure that all calculations carried out by the
Valuation Agent shall be determined in a commercially reasonable
manner.
25 LAW AND JURISDICTION
This Security Agreement shall be governed by English law and the
English courts shall have non-exclusive jurisdiction to settle any
dispute which may arise from or in connection with it.
26 AMENDMENTS
No amendment, modification or waiver in respect of this Security
Agreement will be effective unless in writing (including writing
evidenced by facsimile transmission) and executed by each of the
parties or confirmed by an exchange of telexes or electronic messages
on an electronic messaging system.
27 COUNTERPARTS
This Security Agreement may be executed in one or more counterparts and
by the different parties on separate counterparts, each of which when
executed shall be an original, but all the counterparts together shall
constitute one and the same instrument.
28 THIRD PARTY RIGHTS
A person that is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce a term of this
Agreement, provided that this clause 28 does not affect any right or
remedy of a third party which exists or is available apart from that
Act.
11
ANNEX 1
NOTICE TO CUSTODIAN/DEPOSIT TAKER
To:
Copy to: OLD MUTUAL LIFE ASSURANCE COMPANY LIMITED
We refer to (i) the Security Agreement (the "SECURITY AGREEMENT") dated 20
December 1999 entered into by us in favour of OLD MUTUAL LIFE ASSURANCE COMPANY
LIMITED of Xxxxxxx Xxxxx, 0 Xxx Xxxxxx, Xxxxxx ("OLD MUTUAL") and (ii) the
Reinsurance Agreement (the "REINSURANCE AGREEMENT") dated 20 December 1999
entered into between us and Old Mutual, a copy of each such agreement is annexed
to this notice. Terms defined in the Security Agreement shall have the same
meanings in this notice.
Notice is hereby given by us to you that, by and pursuant to the Security
Agreement, we have charged in favour of the Secured Party all of the Collateral
and the Pre-Payment Fund.
We hereby instruct that you shall accept instructions from OLD MUTUAL in
relation to the [Collateral][Pre-Payment Fund] to OLD MUTUAL in accordance with
the provisions of the Security Agreement and the Reinsurance Agreement.
Yours faithfully
_______________________________________________
For and on behalf of
XL MID OCEAN REINSURANCE LTD.
Date _______________________
Acknowledged by
_______________________________________________
Date _______________________
13
ANNEX 2
CUSTODIAN AGREEMENT
14
ANNEX 3
THE ACCOUNTS
(1) XL Mid Ocean - Old Mutual XLR F0802252
Type: Pounds Sterling Cash Transfer Account
(2) XL Mid Ocean - OM Mutual XLR F0802262
Fixed Income Portfolio
15
SCHEDULE 2
Security Agreement
16
SCHEDULE 3
Statement of Investment Policy Guidelines and Objectives
17
XL MID OCEAN REINSURANCE LTD. ATTACHMENT A.
STATEMENT OF INVESTMENT POLICY
GUIDELINES AND OBJECTIVES
Sterling Fixed income Portfolio
A. INVESTMENT OBJECTIVE
The basic objective is to attain the highest total return
consistent with a reasonable degree of risk by investing in
fixed income securities. Success in achieving that objective
will be measured by comparing the risk and after-fee return of
the Portfolio to a custom index consisting of: 81% XXXXXXX
XXXXX XXXXXXXX NON-GILTS INDEX, 10+ YEARS, 9% XXXXXXX XXXXX
XXXXXXXX NON-GILTS INDEX, 1-10 YEARS AND 10% XXXXXXX XXXXX UK
ALL GILTS INDEX (THE "BENCHMARK INDEX").
WESTERN ASSET MANAGEMENT COMPANY LIMITED (hereinafter the
"Investment Manager") and XL MID OCEAN REINSURANCE LTD
(hereinafter the "Client") will review the appropriateness of
the benchmark annually against the liability profile.
B. STATEMENT OF PURPOSE
The purpose of these Guidelines is to:
- Establish the investment objective and performance
standards of the Portfolio;
- Ensure that the Investment Manager has the capability
to evaluate the risks of all financial instruments in
which the Portfolio is invested;
- Prevent the Investment Manager from exposing the
Portfolio to excessive overall levels of risk,
exposure to inappropriate risk sources, or
disproportionate exposure to any one risk source.
Set out reporting requirements and risk controls required by the
Appointed Actuary to the Fund.
C. INVESTMENT GUIDELINES
The Investment Manager will manage a diversified fixed income
portfolio consistent with the Investment Objectives and
Statement of Purpose outlined above and in compliance with the
Guidelines stated below. Use of derivative securities in the
management of the Portfolio should not expose the Portfolio to
risks that would be considered inappropriate under these
Guidelines if accessed with physical securities.
The Guidelines are divided into two parts being those
associated with market driven risks and those for controlling
event-driven risks.
MARKET-DRIVEN RISKS are systematic risks that are priced more
or less continuously in active markets. They are defined by
their linkage to a single fundamental risk source that is
readily observed. Examples include:
- Interest rate risk (level and yield curve)
- Credit risk (spread to Gilts of varying
credit qualities)
- Sector risk (spread of various sector yields
to Gilts)
Market-driven risks are best controlled by measuring and
limiting portfolio sensitivity thereto.
EVENT-DRIVEN RISKS are distinctive risks associated with
particular securities or markets. Their important features are
that the status of the underlying risk is not readily proxied
by price movements in active markets and, while the
probability of the event risk being realized in any period
tends to be low, the consequences of realization tend to be
large. Examples of event-driven risks include individual
issues downgrade/default risk, etc.
Event-driven risks are best controlled by diversification
requirements.
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1. MARKET RISKS:
(a) Sources of market risk to which portfolio
exposure is appropriate are as follows:
- Level and shape of the UK yield
curve
- Yield spread between Gilts and
various qualities of non-government
debt
(b) The investment Manager at all times must be
able to identify all such sources of risk to
which the Portfolio in aggregate is exposed.
This requirement applies to both physical
and derivative securities. The purchase of
securities with exposure to sources of risk
other than those listed above is allowed
only with the prior written consent of the
Client.
(c) The Investment Manager shall maintain an
awareness of the range of values that can be
assumed by the various sources of market
risk to which the Portfolio is exposed. In
addition, the Investment Manager shall
maintain an awareness of the likelihood that
any given source of market risk will assume
a given value within a year. The range and
likelihood of values described above shall
be based on reasonable empirical evidence.
(d) The Investment Manager shall STRESS TEST the
sensitivity of the Portfolio to changes in
the value of relevant risk sources across
the full range of likely values the risk
sources may assume. Futures, options,
forward contracts and other derivative
instruments will be included in this
analysis of Portfolio risk exposures. The
Investment Manager will manage the Portfolio
so that its stress-test sensitivity to an
adverse change in market conditions is
expected to be no more than a 2% decline in
principal value relative to the Benchmark
Index over any one-year period, based on a
statistical confidence of two standard
deviations.
(e) On a prospective basis, the Investment
Manager will manage the TRACKING ERROR of
the Portfolio with respect to the Benchmark
Index. The tracking error of the Portfolio
is the annualized standard deviation of the
difference between the returns of the
Portfolio and the returns of the Benchmark
Index. The prospective annualized tracking
error for the Portfolio should not exceed
100 basis points, based on a statistical
confidence of one standard deviation.
(f) The Investment Manager will ensure that the
Client's Portfolio shall be invested at all
times such that, under the Actuarial
Resilience Test (as advised by the Appointed
Actuary), the excess of the Portfolio value
over the Liabilities will exceed L2.5
million.
The maximum effective duration of the Portfolio will never be
more than +/-5% of the effective duration of the Benchmark
Index.
Procedures for demonstrating compliance with these market risk
guidelines will be established in cooperation with the Client.
2. EVENT-DRIVEN RISKS:
The following guidelines relate to diversification standards
to control event-driven risks such as default and counter
party risks.
(a) ELIGIBLE SECURITIES
The Investment Manager will have full discretion to
manage the Portfolio subject to the following
maturity, credit and diversification and
marketability guidelines:
2
(i) Funds may be invested in Sterling
denominated fixed income
instruments. Such instruments may
be interest bearing or discounted,
fixed or floating rate, convertible
or non-convertible, collateralized
(subject to restrictions stated
elsewhere) or non-collateralized
and may also include so-called zero
coupon, stripped or partly paid
securities so long as partly paids
are not used to leverage the
Portfolio. In the case of Mortgage
Pass-Through Securities (GNMA,
FNMA, FHLMC, Savings and Loan and
Banks), which may be purchased for
immediate settlement or for "to be
announced" ("TBA") forward
settlement, all underlying debt
must have been issued on or after
July 18, 1984 and, in the case of
US Collateralized Mortgage
Obligations (CMO's), that they have
been issued on or after July 18,
1984 and there is an opinion from
counsel stating that such
obligations will be considered debt
for tax purposes;
(ii) Investment in financial futures and
OTC and exchange traded options
shall be permitted as part of and
in conjunction with overall
Portfolio strategy provided such
instruments are not used to
leverage the Portfolio. However, no
futures or options on futures
positions will be established in
the portfolio that would create an
interest rate risk exposure or
other risk exposure outside the
normal range established for the
account.
(iii) Private Placements: Securities
defined under Rule 144A of the
Securities Act of 1933 shall be
permitted. No Investments will be
made in directly placed Private
Placements.
(v) Investment in Structured Notes is
permissible provided that:
- the purchased security is
freely transferable;
- the securities are offered
pursuant to an indenture
and not pursuant to a loan
agreement;
- the terms of the debt
instrument have not been
initiated by the
Investment Manager
directly with the issuer;
and
- it has the indicia of a
security rather than a
loan.
(vi) Investments will not be made in
securities that result in a
deduction of withholding tax from
interest payments, unless the
after-tax total return on such
investments is superior to other
investment opportunities.
(b) CREDIT QUALITY:
Holdings are subject to the following limitations:
(i) Cash equivalents (fixed income
instruments maturing in one year or
less at the time of issuance) shall
be rated A1 / P1: or, where a
short-term rating is not available,
then an A OR HIGHER by Standard &
Poor's or Xxxxx'x Investors
Service: or, in the case of non-US
instruments, the equivalent in the
best judgement of the Investment
Manager,
(ii) Fixed income instruments with an
effective duration of one year or
less shall meet the credit quality
requirements as outlined in 2 (b)
(iii),(iv) and (v);
(iii) Longer-term instruments of
non-governmental issuers must have
a minimum rating at the time of
purchase of B3/B- or higher by
S&P and Xxxxx'x Investors Service
or the equivalent in the best
judgement of the Investment
Manager;
(iv) Securities with a credit rating
between Baa1/BBB+ and Baa3/BBB- may
be purchased provided that
immediately following such purchase
the aggregate market value of such
rated securities DOES NOT EXCEED
20% of the portfolio;
(v) Securities with a credit rating
below Baa3/BBB- may be purchased
provided that immediately following
such purchase the aggregate market
value of securities rated BELOW
Baa3/BBB- DOES NOT EXCEED 10% of
the total portfolio;
3
(iv) The AVERAGE CREDIT QUALITY of the
Portfolio will never fall below
AA-. The average credit quality of
the portfolio shall be calculated
using Salomon Yield Book or a
similar fixed income analytic
system.
(v) In the event of a SPLIT RATING, the
lower rating will apply.
(vi) If there is a DOWNGRADE IN THE
CREDIT RATING of securities held in
the Portfolio below the above
minimum ratings then the Investment
Manager shall notify the Client in
writing and shall liquidate the
securities as soon as practicable.
(c) CONCENTRATION:
Holdings are subject to the following limitations:
(i) The maximum investment in the
securities of ANY ONE ISSUER with a
credit rating above Baa3/BBB-
shall not exceed 5% of the market
value of the Portfolio at the time
of purchase with the exception of
issues from the UK Treasury and
direct agencies of the UK
Government.
(ii) Non-agency issued mortgage-backed
securities are permitted without
limitation if credit enhancement
has been obtained resulting in a
rating of Baa3/BBB- or better by
Xxxxx'x Investors Service and/or
Standard & Poor's. Securities
without such credit enhancement are
subject to the credit restrictions
outlined above.
(iii) The maximum investment in the
securities of ANY ONE ISSUER with a
credit rating BELOW INVESTMENT
GRADE shall not exceed 1% of the
market value of the Portfolio at
the time of purchase.
(iv) The maximum investment in any
outstanding SINGLE ISSUE shall not
exceed 5% of the market value of
the Portfolio at the time of
purchase except for issuers listed
in 2(c) (i) and (ii) above.
(d) MARKETABILITY AND TRADING:
All holdings will be in issues of sufficient size and
actively enough traded to facilitate transactions at
minimum cost and accurate market valuations.
(e) COUNTER PARTIES:
All futures, forward foreign exchange contracts,
options and unlisted option contracts may only be
entered into with Counter parties with a credit
rating of A or higher by Standard & Poor's and
Xxxxx'x Investors Service or Thomson BankWatch. In
the event of a split rating, the lowest rating will
apply.
If a counter party is put on a negative credit watch
by one of the rating agencies such that a downgrade
would result in such counter party being rated at
less than single A, trading must be suspended. Prior
to entering into a Swap transaction an International
Swap and Derivatives Association Master Agreement,
1992 version (ISDA 1992), must be executed with the
counter party.
The maximum net exposure to any one counter party
shall not exceed the amount the Investment Manager
deems prudent in relation to the total Portfolio
under management.
4
(f) NO LEVERAGE:
At no time will the Portfolio be leveraged either
through the use of partly-paids or the use of long
futures or options positions without the Portfolio
having sufficient cash or cash equivalents, defined
as being of one year duration or less, to fund the
securities expected to be delivered under the
contract.
(g) PROHIBITED INVESTMENTS:
Purchases in the following United States investments
are prohibited:-
(i) Interests in partnerships or
trusts;
(ii) Residual interests in real estate
mortgage investment conduits
("REMIC's");
(iii) Any "pass through" certificate
unless all underlying debt was
issued on or after July 18, 1984;
(iv) Cash settlement options and
forwards if no U.S. exchange traded
future on the same property exists;
(v) Options and forwards on indices,
which are not traded on U.S.
exchanges;
(vi) Collateralized mortgage obligations
(CMO's), unless issued with an
opinion of counsel stating that
such obligations will be considered
debt for tax purposes;
(vii) United States real property
interests, including equity in and
convertible debt obligations of
United States real property holding
corporations the sale of which
would be subject to U.S. tax;
(viii) Any tangible personal property;
(ix) Any debt obligation the interest on
which does not qualify as
"portfolio interest" or is
otherwise subject to US.
withholding tax;
(x) Any investment which does not
qualify as a stock, security or
commodity for purposes of Section
864(b)(2) of the U.S. Internal
Revenue Code of 1986, as amended;
and
(xi) Uncovered option writing.
(h) PROHIBITED TRANSACTIONS:
Entering into the following transactions in the
United States is prohibited:-
(i) Repurchase agreements;
(ii) Swap agreements other than interest
rate swaps used as xxxxxx;
(iii) Loans; and
(iv) Trading in any investment which
does not qualify as a stock,
security or commodity for purposes
of Section 864(b)(2) of the U.S.
Internal Revenue Code of 1986, as
amended
D. PERFORMANCE STANDARD
Performance will be measured over rolling three-year periods.
The performance objectives for this Portfolio are:
(1) earn an annualized RISK-ADJUSTED TOTAL RETURN, net of
investment management fees and trading costs, that
exceeds the Benchmark Index. The risk-adjusted total
return will be initially measured using the
Modigliani & Modigliani ("M(2)") method using monthly
data;
(2) earn an annualized total return, net of Investment
management fees and trading costs, of 65 basis points
or more over the Benchmark Index; and
E. DATA REQUIREMENTS
The following information must be provided to the Client:
1. A monthly report outlining the exposure created, and
the rationale behind all futures, options and other
derivative positions and trades is to be received by
the 10th business day after the month end.
5
2. A quarterly report to include a summary of portfolio
holdings and analytics on diversification and risk
measures is to be received by the 10th business day
after the quarter end.
3. A written confirmation from the Investment Manager
confirming compliance with the investment Guidelines
is to be received by the 10th business day after the
quarter end.
4. The Investment Manager will also provide the Client
with such other additional reporting information as
will be reasonably requested from time to time by the
Client.
F. PERSONNEL / STYLE
Continuity in personnel is vitally important to a successful
investment management programme. It is understood that any
change in "key" personnel, investment management philosophy,
style or approach Will be discussed in detail with the Client.
G. TERMINATION
Reasons for termination may include, but are not limited to,
the following:
1. Not adhering to the stated Investment Guidelines.
2. Performance results consistently below the
performance objectives.
3. Changes in personnel, structure, style, and/or
approach, which might be deemed to affect the overall
risk tolerance characteristics or reduce the
potential return of the Portfolio.
H. INVESTMENT POLICY AMENDMENTS
If any item, guideline or constraint within this Statement of
Investment Policy proves to be too restrictive in practice, it
is the INVESTMENT MANAGER'S RESPONSIBILITY to prepare a
modification and/or amendment to the specific item in writing
for consideration by the Client.
ACCEPTED AND AGREED THIS 10TH DAY OF APRIL, 2000.
/s/ [ILLEGIBLE]
--------------------------
By:
For: WESTERN ASSET MANAGEMENT COMPANY LIMITED
6
IN WITNESS WHEREOF this Security Agreement has been executed as a Deed by the
parties on the date specified above.
EXECUTED AS A DEED BY )
Xxxxxxx X. Xxxxxxx and )
________________ for and )
on behalf of )
OLD MUTUAL LIFE ASSURANCE )
COMPANY LIMITED ) /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Director
/s/ not legible
---------------------------------
Director/Company Secretary
EXECUTED AS A DEED BY )
Xxxx X. Xxxxxxxx and )
Xxxxxx X. Xxxxxxx for and )
on behalf of )
XL MID OCEAN )
REINSURANCE LTD. ) /s/ Xxxx X. Xxxxxxxx
---------------------------------
Authorized Signatory
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
Authorized Signatory
12
