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EXHIBIT 10.1
Amendment Number 1 to the
Automatic Variable Annuity Reinsurance Agreement
(Referred to as the Agreement)
Between
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
of Largo, Florida
(referred to as the Reinsured)
and
WMA LIFE INSURANCE COMPANY LIMITED
of ▇▇▇▇▇▇▇▇, Bermuda
(referred to as the Reinsurer)
Effective January 1, 1999
Article II, DEFINITIONS, "Recapture Fee", "Reinsurance Fee" and "Reinsurance Fee
Accrual Rate", is added to read as follows:
"RECAPTURE FEE" is that amount the Reinsured agrees to pay the
Reinsurer if it elects to recapture Reinsured Policies.
"REINSURANCE FEE" is an amount due and payable to the Reinsured on any
amount not otherwise paid and settled within two (2) weeks after
receipt by Reinsurer of the quarterly report, from its respective
calendar quarter-end to the date such amount is paid and settled.
"REINSURANCE FEE ACCRUAL RATE" means an effective annual rate of nine
percent (9%).
Article III, LIABILITY, Paragraphs 3 and 4, are revised to read as follows:
3. On an ongoing basis the liability of the Reinsurer, reinsurance
premiums, benefits and other items due to or from each party shall be
accounted for on the basis of the quarterly reports prepared by the
Reinsured in the form of Schedules C1 and C2 and sent to Reinsurer via
facsimile transmission or such other medium mutually acceptable to both
parties. Also included will be any adjustments made necessary by
changes in reinsurance effective during the previous quarter, or
changes due to any agreed upon errors on a previous report.
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During 1999, payment of any amount due to be paid by the Reinsurer or
the Reinsured shall be determined on a net basis and shall be paid, in
United States currency, (i) not later than December 30, 1999, for
settlement with regard to Reinsured Policies issued after December 31,
1998 and before October 1, 1999, including any applicable Reinsurance
Fee, and (ii) within two (2) weeks after receipt by Reinsurer of the
quarterly report for all other Reinsured Policies. During year 2000 and
thereafter, payment of any amount due to be paid by the Reinsurer or
the Reinsured shall be paid within two (2) weeks after receipt by
Reinsurer of the quarterly report for all Reinsured Policies.
4. The settlement, as shown in Schedule C1 and C2 will include interest on
premiums received, net transfers, mortality and expense charges, and
asset based allowances as shown in Schedule E1, and interest on
commission and expense allowances, and interest on benefits from the
Fixed Account, as shown in Schedule D1 accruing from the fifteenth
(15th) of the month to the end of its respective calendar quarter. The
interest rate(s) used will be the Settlement Interest Rate of the month
named on the Schedules D1 and E1. A Reinsurance Fee shall accrue, at
the Reinsurance Fee Accrual Rate, on any amount not settled within two
(2) weeks after receipt by Reinsurer of the quarterly report, from its
respective calendar quarter-end to the date such amount is paid and
settled.
Article XII, REINSURANCE RESERVES, Paragraph's 6 and 7, are revised to read as
follows:
6. The Letter(s) of Credit in favor of the Reinsured will be an amount
which:
(i) through December 30, 1999, must equal or exceed the
reinsurance credits taken or reasonably estimated to be taken
by the Reinsured in connection with this Agreement under
Exhibit 8, and under Exhibit 11, Part 1, Column 4, Line 4c,
and any other liabilities held for the Reinsured Policies
issued prior to January 1, 1999, and reported on the
Reinsured's statutory financial statements; and
(ii) after December 30, 1999, must equal or exceed the reinsurance
credits taken or reasonably estimated to be taken by the
Reinsured in connection with this Agreement under Exhibit 8,
and under Exhibit 11, Part 1, Column 4, Line 4c, and any other
liabilities held for the Reinsured Policies, and reported on
the Reinsured's statutory financial statements.
Subject to the approval of the State of Ohio Department of Insurance,
the amount of the Letter of Credit may be reduced by the quota share
percentage of the excess of the Separate Account Value over the
Separate Account Statutory Reserve. Should the reinsurance credit not
be allowed, as a result of this reduction in any applicable
jurisdiction, the Letter of Credit will be restored to the value that
it would have been without this reduction.
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7. The Letter(s) of Credit shall be substantially in the form set forth in
Exhibit B or in such other form as the Ohio Insurance Department or
other applicable state Insurance Department may require or permit. The
terms of the Letter(s) of Credit shall provide that: it is not
conditioned on the delivery of any other documents or materials; it is
irrevocable without the consent of the Reinsured; it is automatically
renewable as provided in Exhibit B; and its initial term is for a
period of not less than one (1) year. Such Letter(s) of Credit may be
drawn upon at any time, notwithstanding any other provisions in this
Agreement, but shall be utilized by the Reinsured or its successors
only for one or more of the following reasons:
(i) through December 30, 1999, to fund an account on behalf of the
Reinsured in an amount at least equal to the deduction, for
reinsurance ceded, from the Reinsured's reserves and
liabilities for Reinsured Plans issued prior to January 1,
1999, as specified in Paragraph 6 of this Article; and
(ii) after December 30, 1999, to fund an account on behalf of the
Reinsured in an amount at least equal to the deduction, for
reinsurance ceded, from the Reinsured's reserves and
liabilities for all Reinsured Plans, as specified in Paragraph
6 of this Article; and
(iii) to pay any other amounts the Reinsured claims are due under
this Agreement.
Article XIV, RECAPTURE, Paragraph 1, is revised to read as follows:
1. With the exception of the provision in Article IX,
Annuitization, business reinsured under this Agreement will
not be eligible for recapture, except the Reinsured reserves
the right to recapture:
(i) any business that has been in force thirty-five (35)
years after the policy issue date; or
(ii) Reinsured Policies issued from January 1, 1999,
through September 30, 1999 if (a) the Reinsured
provides the Reinsurer a ten (10) day notice of
recapture by December 20, 1999, and (b) the Reinsurer
fails to settle and pay amounts due, including
applicable Reinsurance Fees, with regard to such
policies upon the latter of December 30, 1999, or ten
(10) days following notice thereof. Upon recapture in
accordance with this provision, the Reinsured must
pay the Reinsurer a Recapture Fee equal to the
settlement amounts due the Reinsured, including
applicable Reinsurance Fees; the Reinsured may offset
the Recapture Fee against amounts due with regard to
the recaptured business.
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Furthermore, should a state regulatory body rule that this
Agreement is not valid for any reason, and there is no
remedial action available to correct the situation, the
Reinsured reserves the right to recapture that portion of the
business that was reinsured. Any adjustment in values as a
result of recapture will be agreed upon at the time of the
recapture. If agreement cannot be reached, any claims will be
settled in accordance with the provision of Article XVII,
Arbitration.
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Except as expressed herein, all terms, covenants and provisions of the
Automatic Variable Annuity Reinsurance Agreement not in conflict with
the provisions of this amendment shall remain unaltered and in full
force and effect.
In witness of the above, the Reinsured and the Reinsurer, by their
respective officers have executed this amendment in duplicate at the
dates and places indicated and shall be effective as of January 1,
1999.
WESTERN RESERVE LIFE WMA LIFE INSURANCE
ASSURANCE CO. OF OHIO COMPANY LIMITED
at St. Petersburg, Fl at Duluth, Georgia
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on November 12 , 1999. on November 15 , 1999.
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By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: VP and Managing Actuary Title: Vice President
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: EVP Title: Vice President
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