EXHIBIT (g)(1)
AUTOMATIC REINSURANCE AGREEMENT
between
AIG LIFE INSURANCE COMPANY
(a corporation organized under the laws of the state of Delaware,
having its principal place of business in New York, New York;
hereinafter referred to as the CEDING COMPANY)
and
AXA CORPORATE SOLUTIONS LIFE REINSURANCE COMPANY
(a corporation organized under the laws of the state of Delaware,
having its principal place of business in New York, New York;
hereinafter referred to as the REINSURER)
Effective Date of this Agreement: January 31, 2001
(hereinafter referred to as the EFFECTIVE DATE)
Agreement No. 2000-35
Table of Contents
PREAMBLE................................................................... 1
Article I Scope of Agreement......................................... 1
Article II Commencement and Termination of Liability.................. 3
Article III Oversights and Clerical Errors............................. 4
Article IV Net Amount at Risk........................................... 5
Article V Reinsurance Premiums....................................... 6
Article VI Reinsurance Administration................................. 7
Article VII Settlement of Claims......................................... 10
Article VIII Reinsurance Credit........................................... 12
Article IX Recapture Privileges......................................... 13
Article X Inspection of Records...................................... 14
Article XI Insolvency................................................. 15
Article XII Negotiation.................................................. 16
Article XIII Arbitration.................................................. 17
Article XIV Right to Offset Balances Due................................. 18
Article XV Policy Form and Program Changes.............................. 19
Article XVI Confidentiality.............................................. 21
Article XVII Miscellaneous................................................ 22
A. Notifications........................................... 22
B. Assignment.............................................. 22
C. Severability............................................ 22
D. Applicable Law.......................................... 22
E. Currency................................................ 22
Article XVIII Entire Agreement............................................. 23
Article XIX DAC Tax...................................................... 24
Article XX Duration of Agreement........................................ 25
Article XXI Special Termination or Settlement............................ 26
Article XXII Execution of Agreement....................................... 28
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedules and Exhibits
Schedule A Plans of Reinsurance
Schedule B Investment Funds
Schedule C Required Data and Suggested Data Layout
Exhibit I 1994 Variable Annuity MGDB Mortality Table
Exhibit II Reinsurance Premiums
Exhibit III Benefit Limitation Rules
Exhibit IV Confidentiality and Non-Disclosure Agreement
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
PREAMBLE
This Agreement is an indemnity reinsurance agreement solely between the CEDING
COMPANY and the REINSURER. The acceptance of reinsurance hereunder shall not
create any right or legal relation whatever between the REINSURER and the
annuitant, owner, beneficiary or any other party under any policies of the
CEDING COMPANY which may be reinsured hereunder. The CEDING COMPANY shall be
and remain solely liable to such parties under such policies reinsured
hereunder.
Article I
Scope of Agreement
A. On and after the EFFECTIVE DATE of this Agreement, the CEDING COMPANY shall
automatically reinsure with the REINSURER and the REINSURER shall
automatically accept, its share of the MNAR (defined in Article IV), in
excess of the CEDING COMPANY'S retention (defined in Paragraph B below),
generated prior to termination of the REINSURER'S liability (defined in
Article II), by the Guaranteed Minimum Death Benefit (GMDB) provisions
within the variable annuity policy forms and endorsements issued by the
CEDING COMPANY and reinsured hereunder (defined in Schedule A).
B. The CEDING COMPANY will have a combined first dollar retention of annual
aggregate VNAR claims (defined in Article IV) under this Agreement and the
companion Agreement known as No. 2000-35NY with the CEDING COMPANY'S
affiliate, American International Life Assurance Company of New York, by
GMDB design (Basic Benefit and each Optional Enhanced Benefit as described
in Schedule A) in the amount of ten (10) basis points of the average
aggregate account value inforce, calculated as described in Paragraph D
below, multiplied by the REINSURER'S Quota Share Percentage (defined in
Schedule A), over each respective calendar year of coverage.
C. The REINSURER'S combined maximum aggregate VNAR (defined in Article IV)
liability under this Agreement and Agreement No. 2000-35NY, by GMDB design,
in any one calendar year shall not exceed two hundred and forty (240) basis
points in excess of the CEDING COMPANY'S retention, defined in Paragraph B,
above, of the average aggregate account value inforce, calculated as
described in Paragraph D below, multiplied by the REINSURER'S Quota Share
Percentage over each respective calendar year of coverage. /
D. The first dollar retention and excess of first dollar liability caps will be
applied on a monthly basis where the basis point limit retention is divided
by 12 and applied to the average aggregate account value by GMDB design. The
average aggregate account value for the month will be determined using the
beginning-of-month and end-of-month values. At the end of each calendar
year, there will be a true-up to the average aggregate annual account value
for the year if required. This average shall be calculated by way of a
trapezoidal rule as shown in Exhibit III.
Note: Aggregate values are by GMDB design across all products reinsured
hereunder and under Reinsurance Agreement No. 2000-35NY.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 1
Article I, Scope of Agreement
(Continued)
E. The REINSURER'S maximum MNAR liability on any individual life reinsured
hereunder and under Agreement No. 2000-35NY, shall be limited to one-million
dollars ($ 1,000,000) multiplied by the REINSURER'S Quota Share Percentage.
F. This Agreement covers only the CEDING COMPANY'S contractual liability for
claims paid under variable annuity policy forms and endorsements specified
in Schedule A and supported by investment funds specified in Schedule B and
its Amendments, that were submitted to the REINSURER in accordance with the
terms of this Agreement set forth in Article XV.
G. For purposes of clarification and certainty, any reference in this Agreement
to restoring a party to the position that that party would have occupied, or
any similar phrase, shall be deemed to mean restoring the party to the
position that that party would have occupied under the terms of this
Agreement, and not to the position that that party occupied prior to the
execution of this Agreement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 2
Article II
Commencement and Termination of Liability
A. On reinsurance ceded under the terms of this Agreement, the liability of the
REINSURER shall commence simultaneously with that of the CEDING COMPANY.
B. The liability of the REINSURER for all reinsured policies under this
Agreement may terminate in accordance with
1. the Duration of Agreement provisions set forth within Article XX, or
2. the termination provisions set forth within Article VI, Administration,
and within Article XXI, Special Termination or Settlement, or
3. the Recapture Privileges set forth within Article IX.
C. For an individual contract, the liability of the REINSURER under this
Agreement will terminate either in accordance with Paragraph B, above, or
upon the earliest of the following occurrences defined in the policy(ies)
reinsured hereunder:
1. the date the owner elects to annuitize;
2. surrender or termination of the policy (including 1035 exchanges);
3. the death of the owner or annuitant where such death triggers the
payment of a contractual death benefit, or the later of the death of the
spouse when spousal continuance has been elected, (or as specified under
Article VI, Paragraph H);
4. attainment of maximum annuitization age (i.e. the month following the
Annuitant's 90th birthday).
D. If the GMDB on a qualified policy reinsured hereunder is removed by
endorsement, the reinsurance hereunder shall immediately terminate.
E. The REINSURER shall be liable to reimburse claims only on those deaths where
the Policy Issue Date and the actual date of death are on or after the
EFFECTIVE DATE, in accordance with Article VII.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 3
Article III
Oversights and Clerical Errors
A. Should either the CEDING COMPANY or the REINSURER fail to comply with any of
the terms of this Agreement, and if such noncompliance is shown to be the
unintentional result of a misunderstanding, oversight or clerical error on
the part of either the CEDING COMPANY or the REINSURER, then this Agreement
shall remain in full force and effect, but both the REINSURER and the CEDING
COMPANY shall be restored to the positions they would have occupied had no
such noncompliance, oversight, misunderstanding or clerical error occurred.
Such conditions are to be reported and corrected promptly after discovery.
B. If the CEDING COMPANY or the REINSURER discovers that the CEDING COMPANY did
not cede reinsurance on a policy it should have reinsured under this
Agreement, the CEDING COMPANY will take prompt, reasonable and necessary
steps to ensure that similar oversights do not recur. In such event, this
Agreement shall remain in full force and effect, but both the REINSURER and
the CEDING COMPANY shall be restored to the positions they would have
occupied had the CEDING COMPANY ceded such reinsurance at the original date.
If the REINSURER receives no evidence that the CEDING COMPANY has taken
reasonable action to remedy such a situation within 180 days of its
discovery, the REINSURER reserves the right to limit its liability to
reported policies only.
C. If the CEDING COMPANY or the REINSURER discovers that the CEDING COMPANY did
not declare a policy form it should have declared under this Agreement, the
CEDING COMPANY will take prompt, reasonable and necessary steps to ensure
that similar oversights do not recur. In such event, this Agreement shall
remain in full force and effect, but both the REINSURER and the CEDING
COMPANY shall be restored to the positions they would have occupied had the
CEDING COMPANY declared the policy form at the original date. If the
REINSURER receives no evidence that the CEDING COMPANY has taken action to
remedy such a situation within 180 days of its discovery, the REINSURER
reserves the right to limit its liability on the undeclared policy forms
only.
D. The provisions of this Article may not be used to supersede or void the
termination provisions set forth in Article VI, Paragraph F.
E. Any negligent or deliberate acts or omissions by the CEDING COMPANY
regarding the insurance or reinsurance provided are the responsibility of
the CEDING COMPANY and its liability insurer, if any, but not that of the
REINSURER. The previous sentence does not negate the REINSURER'S liability
under Article VII, Settlement of Claims, of this Agreement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 4
Article IV
Net Amount at Risk
A. The mortality net amount at risk for each variable annuity contract
reinsured hereunder shall be calculated as of the first day of each calendar
month and shall be equal to the following:
MNAR (Mortality Net Amount at Risk) = VNAR where:
. VNAR (Variable Net Amount at Risk) = Maximum (a, b) multiplied by the
REINSURER'S Quota Share Percentage where:
a = (Contractual Death Benefit - Account Value)
b = 0
B. Definitions:
. Contractual Death Benefit is equal to "Death Benefit" as defined in the
Variable Annuity policy forms as listed in Schedule A.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 5
Article V
Reinsurance Premiums
A. The reinsurance premium is a monthly YRT rate which is applied to the
average MNAR over the reporting period on a life-by-life basis, and is equal
to one-twelfth (1/1 2th) of one-hundred percent (100%) of the 1994 Variable
Annuity MQDB Mortality Table (Exhibit I) which is the 1994 GAM Basic Table
increased by ten percent (10%) for margins and contingencies, without
projection. The reinsurance premium is subject to minimum and maximum
asset-based premium rate levels that vary by a defined premium class based
on variable annuity product, if applicable, and underlying GMDB design.
B. The minimum and maximum reinsurance premium rates, expressed in terms of
basis points, are set forth in Exhibit II, and are calculated on an
aggregate basis by premium class, as described in the following paragraph:
The CEDING COMPANY shall calculate, for each premium class, the REINSURER'S
Quota Share Percentage of the greater of the average aggregate GMDB value
and the average aggregate account value for the reporting month. This value
shall be applied to the annualized minimum and maximum reinsurance premium
rates per premium class on a 1/1 2/,h/ basis.
The Reinsurance Premium due to the REINSURER for the month, for each premium
class, shall be the greater of the YRT rate, as described above, and the
minimum asset- based premium, but no greater than the maximum asset-based
premium calculated as described above. The total Reinsurance Premium due for
the month is the sum of the premiums calculated for each premium class.
C. The YRT rate and the minimum/maximum asset-based premium rates shall be
based on the oldest person of a multiple life status.
D. For Spousal Continuances, the new reinsurance premium rate applied shall be
based off the attained age of the surviving spouse at the time of election
of spousal continuance. After the new business facility expires, as
described under Article XX, the REINSURER reserves the right to declare new
rates.
E. The total reinsurance premium due and payable in any month shall at least
equal one thousand five hundred dollars ($1,500), in combination with
Agreement No. 2000-35NY.
F. The reinsurance premium structure described above shall remain in effect as
long as the death benefit design, contract fees, mortality and expense
charges, administration fees and surrender charges in effect at the
inception of this Agreement remain unchanged.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 6
Article VI
Reinsurance Administration
A. Within thirty (30) days of the end of each calendar month (the "Due Date"),
the CEDING COMPANY shall provide to the REINSURER:
1. the seriatim electronic data,
2. the Summary Statement, and
3. the reinsurance premium payment due
(altogether referred to as the "Remittance"), as defined and in the manner
described below.
B. The CEDING COMPANY acknowledges the importance of timely submissions of
credible data, as defined herein, to enable the REINSURER to manage
effectively the risk associated with the products reinsured hereunder.
Therefore, by the Due Date for each calendar month, the CEDING COMPANY will
take the necessary steps to furnish the REINSURER with the seriatim
electronic data as detailed in Schedule C, for each policy form specified in
Schedule A, valued as of the last day of that month. The CEDING COMPANY
shall provide the REINSURER with the file format and record layout of the
seriatim electronic data and shall keep the REINSURER informed of any
changes to the file format as they may occur. The data provided shall
constitute a component of the Remittance provided both of the following
conditions are met:
1. the file contains correct data for all the policies reinsured, and
2. each record contains all of the applicable data elements set forth in
Schedule C.
The CEDING COMPANY shall promptly notify the REINSURER when it becomes aware
of any deficiency in its seriatim electronic data and/or its associated
reporting process. For its part, if the REINSURER becomes aware of any
deficiency in the CEDING COMPANY'S seriatim electronic data and/or its
associated reporting process, the REINSURER shall promptly notify the CEDING
COMPANY of the deficiency. The CEDING COMPANY shall initiate the cure for
the deficiency within thirty (30) days after either notice (the "Cure
Period"), to be effectuated as promptly as possible.
Any error or incomplete item that does not materially affect the REINSURER'S
ability to manage its risk associated with the reinsured policies shall not
cause the seriatim electronic data provided by the CEDING COMPANY to fail to
constitute the seriatim electronic data component of a Remittance.
C. Additionally, by the Due Date for each calendar month, the CEDING COMPANY
will furnish the REINSURER with a Summary Statement containing the following:
1. reinsurance premiums due to the REINSURER summarized separately for each
premium class as shown in Exhibit II;
2. benefit claim reimbursements due to the CEDING COMPANY in total and, if
applicable, broken down by MNAR components;
3. month end date for the period covered by the Summary Statement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 7
Article VI, Reinsurance Administration
(Continued)
D. If the net balance is due the REINSURER, the amount due shall be remitted
with the Summary Statement. If the net balance is due the CEDING COMPANY,
the REINSURER shall remit the amount to the CEDING COMPANY within ten
(10) days of receipt of the Summary Statement.
E. Furthermore, the REINSURER will use the summary data in Schedule C to
calculate and monitor both its maximum annual aggregate MNAR liability and
the CEDING COMPANY'S retention throughout the calendar year. Upon the
receipt of the final report for the calendar year, the REINSURER will
"true-up" benefit claim reimbursements, if necessary, for that calendar year.
F. The submission of the Remittance is a condition precedent to the liability
of the REINSURER under this Agreement. In the event the CEDING COMPANY does
not make the Remittance in accordance with the provisions of this Article,
the REINSURER may exercise the following rights:
1. The REINSURER reserves the right to charge interest if the CEDING
COMPANY fails to remit to the REINSURER the premium component of a
Remittance within thirty (30) days of the Due Date. The interest rate
charged shall be based on the ninety-(90) day Federal Government
Treasury Xxxx as first published by the Wall Street Journal in the month
following the Due Date of the Remittance plus one hundred (100) basis
points. The method of calculation shall be simple interest (360-day
year).
The REINSURER reserves the right to charge interest on the associated
premium, if the CEDING COMPANY fails to submit to the REINSURER the
seriatim data component of a Remittance that fulfills the requirements
set forth in Paragraph B of this Article, within thirty (30) days of the
end of the Cure Period. Interest shall be calculated in accordance with
the procedure described above in this Paragraph F1.
2. The REINSURER will have the right to terminate this Agreement if the
premium component of a Remittance otherwise due the REINSURER from the
CEDING COMPANY is not remitted within sixty (60) days of the Due Date,
by giving sixty (60) days written notice of termination to the CEDING
COMPANY. As of the close of the last day of this sixty-(60) day notice
period, the REINSURER'S liability for all risks reinsured associated
with the defaulted Remittances under this Agreement will terminate
unless such Remittances have been made. If all Remittances in default
are received by the REINSURER within the sixty-(60) day notice period,
the Agreement will remain in effect.
The REINSURER will have the right to terminate this Agreement if the
CEDING COMPANY fails to submit to the REINSURER the seriatim data
component of a Remittance that fulfills the requirements set forth in
Paragraph B of this Article, within sixty (60) days of the end of the
Cure Period. Termination shall be effected in accordance with the
procedure described above in this Paragraph F2.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 8
Article VI, Reinsurance Administration
(Continued)
Receipt by the REINSURER of a partial submission, such as reinsurance
premiums without accompanying seriatim electronic data or vice versa, does
not constitute a Remittance and thus does not cure a delinquency or a
default under this Agreement.
G. The CEDING COMPANY reserves the right to charge interest, calculated in
accordance with the method set forth in Paragraph F1, above, on claims not
paid within thirty (30) days of the time period set forth in Article VI,
Paragraph D, above.
H. Spousal Continuations: The above provisions of this Article VI,
notwithstanding, the REINSURER reserves the right to terminate the
reinsurance on any new Spousal Continuations if the CEDING COMPANY is unable
to provide accurate and timely reporting of spousal continuations,
including, but not limited to, identification of policies continuing under
the Spousal Continuation election upon death of the policy owner and
accurate calculation of the MNAR described in Article IV. The REINSURER must
provide the CEDING COMPANY with ninety (90) days written notice of its
intent to terminate the provisions of this Agreement with respect to new
Spousal Continuations, provided that if the CEDING COMPANY substantially
cures its reporting failures during this 90-day notification period, the
REINSURER may not terminate its obligations as provided above in this
Paragraph H. Should such termination occur, the REINSURER'S liability for
the MNAR under individual policies shall terminate upon death of the policy
owner.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 9
Article VII
Settlement of Claims
A. The claims that are eligible for reimbursement are only those that the
CEDING COMPANY is contractually required to pay on deaths that occur on or
after the EFFECTIVE DATE and subject to the retention of the CEDING COMPANY
and benefit limitations as described in Article I.
B. In the event the CEDING COMPANY'S administrator, DVFS, receives sufficient
documentation to verify the death of the owner or annuitant triggering the
payment of a death benefit, the claim settlements made by the CEDING COMPANY
shall be unconditionally binding on the REINSURER. In every case of claim,
copies of the documents shall be provided to the REINSURER and deemed as
sufficient. The GMDB will be valued for reinsurance purposes as of the date
of death regardless of when the claim was reported. All claims will be
settled individually. Each will, for reinsurance purposes, be valued as of
the date of death.
C. Where the beneficiary of the policy is the owner's spouse, and where the
spouse elects to continue the policy in their own name, the REINSURER agrees
to pay the MNAR upon the death of the owner, calculated as set forth in
Article IV, and valued as of the date of death. Such payment shall not
affect the REINSURER'S future liability on the policy, calculated as set
forth in Article IV.
D. Within thirty (30) days of the end of each calendar month, the CEDING
COMPANY shall notify the REINSURER of the reinsured contractual death
benefits paid in that month, based on the net amount at risk definition set
forth in Article IV, and the REINSURER shall reimburse the CEDING COMPANY,
as provided in Article VI, for the reinsured benefits.
E. Settlements by the REINSURER shall be in a lump sum regardless of the mode
of payment made by the CEDING COMPANY.
F. With respect to Extra-Contractual Damages, in no event will the REINSURER
participate in punitive or compensatory damages or statutory penalties which
are awarded against the CEDING COMPANY as a result of an act, omission or
course of conduct committed solely by the CEDING COMPANY in connection with
the insurance reinsured under this Agreement.
The parties recognize that circumstances may arise in which equity would
require the REINSURER, to the extent permitted by law, to share
proportionately in certain assessed situations in which the REINSURER was an
active party and directed, consented to, or ratified the act, omission or
course of conduct of the CEDING COMPANY which ultimately resulted in the
assessment of the extra-contractual damages. In such situations, the
REINSURER and the CEDING COMPANY shall share such damages so assessed in
equitable proportions.
If the REINSURER declines to be party to the contest, compromise or
litigation of a claim, it will pay its full share of the amount reinsured,
as if there had been no contest, compromise or litigation. In addition, the
REINSURER will pay its proportionate share of covered expenses incurred to
the date it notifies the CEDING COMPANY that it declines to be a party to
the contest, compromise or litigation of a claim.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 10
Article VII, Settlement of Claims
(Continued)
G. In no event will the REINSURER be liable for expenses incurred in connection
with a dispute or contest arising out of conflicting or any other claims of
entitlement to policy proceeds or benefits, provided the REINSURER makes
payment of the amount of reinsurance to the CEDING COMPANY, as described in
the above paragraph.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 11
Article VIII
Reinsurance Credit
A. The reserves held by the REINSURER in its statutory financial statements
will be greater than or equal to those required by the state where the
statement is filed. It is the intention of both the REINSURER and the CEDING
COMPANY that the CEDING COMPANY qualify for reinsurance reserve credit in
the states in which the REINSURER is currently authorized for the
reinsurance ceded hereunder. The REINSURER, at its sole cost and expense,
shall do all that is necessary to comply with all the Insurance laws and
regulations of the states in which the CEDING COMPANY is admitted, to enable
the CEDING COMPANY to take reserve credit for the reinsurance ceded
hereunder, including delivery of any reports required thereunder.
B. In the event that the CEDING COMPANY is unable to qualify for reinsurance
reserve credit solely because the REINSURER is not authorized in a state,
the REINSURER shall, within ninety (90) days of the date the CEDING COMPANY
notifies the REINSURER of its inability to qualify for reinsurance reserve
credit, take any necessary actions, at its sole cost and expense, to insure
that the CEDING COMPANY qualifies for reinsurance reserve credit as
described in Paragraph A, above. If a Letter of Credit is obtained by the
REINSURER, the amount of such Letter of Credit shall be subject to quarterly
adjustment, such adjustment to be made on a quarterly basis following
notification by the CEDING COMPANY to the REINSURER of quarterly and reserve
adjustments.
C. Notwithstanding any other provision of this Agreement, the CEDING COMPANY or
any successor by operation of law of the CEDING COMPANY, including without
limitation, any liquidator, rehabilitator, receiver or conservator of the
CEDING COMPANY, may draw upon such letters of credit at anytime (including,
but not limited to the receipt of notice of non-renewal of such letters of
credit) for any one or more of the following purposes, such withdrawal to be
applied without diminution because of the insolvency of the REINSURER:
1. To reimburse the CEDING COMPANY for the REINSURER'S share under this
Agreement of premiums returned to owners of policies due to
cancellations of policies reinsured under this Agreement.
2. To reimburse the CEDING COMPANY for the REINSURER'S share under this
Agreement of benefits or losses paid by the CEDING COMPANY under
policies reinsured under this Agreement.
3. To pay any other amounts which the CEDING COMPANY claims as due under
this Agreement.
The CEDING COMPANY agrees to return to the REINSURER any amounts drawn down
on such letters of credit which are in
excess of the actual amounts required for 1 or 2, or in the case of 3 above,
any amounts that are subsequently determined not to
be due.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 12
Article IX
Recapture Privileges
A. The CEDING COMPANY may recapture existing reinsurance in force in accordance
with the rules set forth in this Article IX.
B. The CEDING COMPANY will notify the REINSURER of its intent to recapture at
least ninety (90) days prior to any recaptures.
C. No recapture will be made unless reinsurance has been in force for fifteen
(15) years, as measured from the EFFECTIVE DATE, unless the parties mutually
agree to a shorter period of time.
D. Recapture will only be available provided the total carryforward, upon
release of treaty reserves, is in a positive position. The total
carryforward is defined as the sum of the carryforwards of this Agreement
and the complementary Agreement No. 2000-35NY, that reinsures the same
variable annuity policy forms specified in Schedule A.
E. The carryforward for each Agreement is defined as the relevant period's
reinsurance premium, minus all reinsurance claims paid under this Agreement
in the relevant period, minus a two-and-one-half (2.5) basis point annual
expense allowance applied against the average aggregate Account Value during
such period, minus the increase (or plus the decrease as the case may be) in
treaty reserves during such period, plus the previous period's loss
carryforward. The carryforward amount is accumulated at the ninety (90) day
Federal Government Treasury Xxxx rate as published in the Wall Street
Journal on the first business day of the current period plus two percent
(2%). Each period utilized for purposes of this paragraph shall be an annual
period measured from the anniversary date of this Agreement, except that the
final period shall be the most recent anniversary date to the date of
notification of recapture.
F. Upon election, recapture shall occur ratably over a thirty-six (36) month
period (i.e., the initial quota share percentage reduces 2.78% times the
initial quota share percentage each month). It is irrevocable once elected.
G. The CEDING COMPANY and the REINSURER agree to exchange carryforward
calculations each year-end to ensure ongoing agreement on the position of
the carryforward.
H. The above provisions of the Agreement notwithstanding, recapture may also
occur in accordance with the terms set forth in Article XXI, Special
Termination or Settlement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 13
Article X
Inspection of Records
A. The REINSURER, or its duly appointed representatives, shall have the right
annually, upon reasonable advance notice, and for reasonable purposes, to
inspect at the office of the CEDING COMPANY or its Third Party Administrator
(DVFS) all records referring to reinsurance ceded to the REINSURER.
B. Relating to the business reinsured hereunder, the CEDING COMPANY, or its
duly appointed representatives, shall have the right annually, upon
reasonable advance notice, and for reasonable purposes, to inspect at the
office of the REINSURER all records referring to reinsurance ceded from the
CEDING COMPANY.
C. Notwithstanding the preceding provisions, if undisputed balances due from
the REINSURER under this Agreement have not been paid for the two (2) most
recent reported calendar quarters, the REINSURER shall not have access to
any of the CEDING COMPANY'S records relating to this Agreement without the
specific consent of the CEDING COMPANY.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 14
Article XI
Insolvency
A. In the event of the insolvency of the CEDING COMPANY, this reinsurance shall
be payable directly to the CEDING COMPANY, or to its liquidator, receiver,
conservator or statutory successor immediately upon demand on the basis of
the liability of the CEDING COMPANY without diminution because of the
insolvency of the CEDING COMPANY or because the liquidator, receiver,
conservator or statutory successor of the CEDING COMPANY has failed to pay
all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the CEDING COMPANY shall
give written notice to the REINSURER of the pendency of a claim against the
CEDING COMPANY which would involve a possible liability on the part of the
REINSURER, indicating the policy or bond reinsured, within a reasonable time
after such claim is filed in the conservation or liquidation proceeding or
in the receivership. It is further agreed that during the pendency of such
claim the REINSURER may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses that it may deem available to the CEDING COMPANY or its
liquidator, receiver, conservator, or statutory successor. The expense thus
incurred by the REINSURER shall be chargeable, subject to the approval of
the Court, against the CEDING COMPANY as part of the expense of conservation
or liquidation to the extent of a pro rata share of the benefit which may
accrue to the CEDING COMPANY solely as a result of the defense undertaken by
the REINSURER.
B. Where two or more Reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of the Agreement as though such
expense had been incurred by the CEDING COMPANY.
C. The reinsurance shall be payable by the REINSURER to the CEDING COMPANY or
to its liquidator, receiver, conservator, or statutory successor, except
where the REINSURER with the consent of the direct insured or insureds has
voluntarily assumed such policy obligations of the CEDING COMPANY as direct
obligations of the REINSURER to the payees under such policies and in
substitution for the obligations of the CEDING COMPANY to the payees. Then,
and in that event only, the CEDING COMPANY, with the prior approval of the
certificate of assumption on New York risks by the Superintendent of
Insurance of the State of New York, is entirely released from its obligation
and the REINSURER pays any loss directly to payees under such policy.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 15
Article XII
Negotiation
A. Within ten (10) days after one of the parties has given the other the first
written notification of a specific dispute, each party will appoint a
designated officer to attempt to resolve the dispute. The officers will meet
at a mutually agreeable location as early as possible and as often as
necessary, in order to gather and furnish the other with all appropriate and
relevant information concerning the dispute. The officers will discuss the
problem and will negotiate in good faith without the necessity of any formal
arbitration proceedings. During the negotiation process, all reasonable
requests made by one officer to the other for information will be honored.
The designated officers will decide the specific format for such discussions.
B. If the officers cannot resolve the dispute within thirty (30) days of their
first meeting, the parties will agree to submit the dispute to formal
arbitration, as set forth in Article XIII. However, the parties may agree in
writing to extend the negotiation period for an additional thirty (30) days.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 16
Article XIII
Arbitration
A. Any and all disputes or differences arising out of this Agreement, including
its formation and validity, shall be submitted to binding arbitration. Any
arbitration shall be based upon the Procedures for the Resolution of U.S.
Insurance and Reinsurance Disputes dated September 1999 (the "Procedures"),
as supplemented by the paragraphs below.
B. The Panel shall consist of three Disinterested arbitrators, one to be
appointed by the Petitioner, one to be appointed by the Respondent and the
third to be appointed by the two Party-appointed arbitrators. The third
arbitrator shall serve as the umpire, who shall be neutral. The arbitrators
and umpire shall be persons who are current or former officers or executives
of an insurer or reinsurer. Within thirty days of the commencement of the
arbitration proceeding each Party shall provide the other Party with the
identification of its Party-appointed arbitrator, his or her address
(including telephone, fax and e-mail information), and provide a copy of the
arbitrator's curriculum vitae. If either Party fails to appoint an
arbitrator within that thirty-day period, the non - defaulting Party will
appoint an arbitrator to act as the Party-appointed arbitrator for the
defaulting Party. The umpire shall be appointed by the two Party-appointed
arbitrators as soon as practical (but no later than 30 days) after the
appointment of the second arbitrator. The Party-appointed arbitrators may
consult, in confidence, with the Party who appointed them concerning the
appointment of the umpire.
C. Where the two Party-appointed arbitrators have failed to reach agreement on
an umpire within the time specified in paragraph B, each Party shall propose
to the other in writing, within seven (7) days thereafter, eight (8) umpire
candidates from the XXXXX-U.S. Certified Arbitrators List in effect at the
time of the commencement of the arbitration. The umpire will then be
selected in accordance with 1 6.7(b)-(e) of the Procedures. (Unless the
Parties agree otherwise, the XXXXX-U.S. Umpire Questionnaire Form in effect
at the time of the commencement of the arbitration shall be used.)
D. The arbitration shall take place in New York, New York.
E. Unless prohibited by law, the Supreme Court of the State and County of New
York and the United States District Court for the Southern District of New
York shall have exclusive jurisdiction over any and all court proceedings
that either Party may initiate in connection with the arbitration, including
proceedings to compel, stay, or enjoin arbitration or to confirm, vacate,
modify, or correct an Arbitration Award.
F. For purposes of this Article, the terms "Arbitration Award,"
"Disinterested," "Notice of Arbitration," "Panel," "Party" (or "Parties"),
"Petitioner," "Respondent," and "Response" shall have the meanings set forth
in article 2 of the Procedures (Definitions).
G. In the event of any conflict between the Procedures and this Article, this
Article, and not the Procedures, will control.
H. This Article shall survive the expiration or termination of this Agreement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 17
Article XIV
Right to Offset Balances Due
The CEDING COMPANY and the REINSURER shall have, and may exercise at any time,
the right to offset any undisputed balance or balances due one party to the
other, its successors or assignees, against undisputed balances due to the
other party under this Agreement or under any other Agreements or Contracts
previously or subsequently entered into between the CEDING COMPANY and the
REINSURER. This right of offset shall not be affected or diminished because of
the insolvency of either party to this Agreement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 18
Article XV
Policy Form and Program Changes
A. The CEDING COMPANY may amend, substitute, add or delete variable investment
funds to the investment options supporting the annuity policy form as
described in the policy form general provisions. No such change shall be
made by the CEDING COMPANY without prior notification to the REINSURER and
without changes being declared effective by the Securities and Exchange
Commission (SEC), if necessary. The REINSURER will approve or disapprove of
the fund change within thirty (30) days of the date on which it receives
notification.
The CEDING COMPANY agrees to maintain at all times a satisfactory selection
of core investment options with overall risk profile characteristics similar
to those listed in Schedule B at inception of the Agreement.
Should any such change result in a material change in the underlying risk,
the REINSURER shall have the right to modify, for that product line only,
any of the terms of this Agreement in order to restore, to the extent
possible, the risk profile of the business reinsured hereunder to its
original position when priced by the REINSURER at inception of the Agreement
or upon subsequent amendment thereto, as applicable. The REINSURER shall
within thirty (30) days of the date on which notification was received,
provide the CEDING COMPANY with notice of its intent to revise the terms of
this Agreement. The CEDING COMPANY shall have the right to approve or
disapprove of the changes proposed by the REINSURER. If both parties are not
able to reach a mutually satisfactory agreement on revised terms, then
notwithstanding Article IX, the CEDING COMPANY shall have the right of
immediate termination of this Agreement for new and inforce business
affected by the change. The CEDING COMPANY shall provide the REINSURER with
written notification of its intent to terminate. The date of termination
shall be the date that the revised terms would have become effective.
B. The CEDING COMPANY shall also give the REINSURER advance notice of any other
changes to any policy forms reinsured hereunder, such as the annuity product
design and/or death benefit design, any fees and charges, or the addition of
any riders. The REINSURER shall, within thirty (30) days of the date on
which notification was received, provide the CEDING COMPANY with notice of
its approval of such change or its intent to revise the terms of this
Agreement.
Should any such change affect new business to be reinsured under this
Agreement and result in a material change in the underlying risk, the
REINSURER shall have the right to modify, for that new business only, any of
the terms of this Agreement in order to restore, to the extent possible, the
risk profile of the business reinsured hereunder to its original position
when priced by the REINSURER at inception of the Agreement or upon
subsequent amendment thereto, as applicable. The REINSURER shall, within
thirty (30) days of the date on which notification was received, provide the
CEDING COMPANY with notice of its intent to revise the terms of this
Agreement. The CEDING COMPANY shall have the right to approve or disapprove
of the changes proposed by the REINSURER. If both parties are not able to
reach a mutually satisfactory agreement on revised terms, then the CEDING
COMPANY shall have the right of immediate termination of this Agreement for
new business only. The CEDING COMPANY shall
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 19
Article XV, Policy Form and Program Changes
(Continued)
provide the REINSURER with written notification of its intent to terminate.
The date of termination shall be the date that the revised terms would have
become effective.
Should any such change affect inforce policies reinsured under this
Agreement and result in a material change in the underlying risk, the
REINSURER shall have the right to modify, for that product line only, any of
the terms of this Agreement in order to restore, to the extent possible, the
risk profile of the business reinsured hereunder to its original position
when priced by the REINSURER at inception of the Agreement or upon
subsequent amendment thereto, as applicable. The REINSURER shall, within
thirty (30) days of the date on which notification was received, provide the
CEDING COMPANY with notice of its intent to revise the terms of this
Agreement. The CEDING COMPANY shall have the right to approve or disapprove
of the changes proposed by the REINSURER. If both parties are not able to
reach a mutually satisfactory agreement on revised terms, then
notwithstanding Article IX, the CEDING COMPANY shall have the right of
immediate termination of this Agreement for inforce business affected by
said change only. The CEDING COMPANY shall provide the REINSURER with
written notification of its intent to terminate. The date of termination
shall be the date that the revised terms would have become effective.
C. The above paragraphs notwithstanding, neither party, acting unreasonably,
will withhold agreement to revised terms for the sole purpose of terminating
this Agreement.
D. The CEDING COMPANY agrees to provide the REINSURER with all general
policyholder communications produced by the CEDING COMPANY as though the
REINSURER were a policyholder in the CEDING COMPANY'S state of domicile.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 20
Article XVI
Confidentiality
A. This Agreement incorporates the confidentiality agreement previously agreed
to between the parties on November 18, 1998 (the "Confidentiality
Agreement") a copy of which is attached hereto as Exhibit IV. All matters
with respect to this Agreement require the utmost good faith of both
parties. Both the CEDING COMPANY and the REINSURER shall, in accordance with
the terms of the Confidentiality Agreement, hold confidential and not
disclose or make competitive use of any shared Confidential Information of
the other party (as such term is defined in the Confidentiality Agreement),
unless otherwise agreed to in writing, or unless the information otherwise
becomes publicly available by means other than by either party or their
agents, or unless the disclosure is required for retrocession purposes, has
been mandated by law, or is duly required by external auditors.
B. The REINSURER will treat all personal policyholder information received from
the CEDING COMPANY as confidential information and will use good faith
efforts to keep such information private and secure, in accordance with the
CEDING COMPANY'S commitment to its policyholders and in accordance with
federal and state privacy laws. The CEDING COMPANY recognizes that the
REINSURER may need to share certain information with auditors, regulators
and retrocessionaires in the normal course of conducting business.
C. Should either party disclose any confidential information to another party,
it shall require such other party to execute a confidentiality agreement
satisfactory to the party whose confidential information is being disclosed.
A satisfactory confidentiality agreement shall be in substantial conformity
with the document shown in Exhibit IV.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 21
Article XVII
Miscellaneous
A. Notifications. Any notice or communication given pursuant to this
Reinsurance Agreement must be in writing and either 1) delivered by
overnight express, with a delivery receipt required, or 2) sent by
Registered or Certified Mail, Postage Prepaid, Return Receipt Requested, as
follows:
If to CEDING
COMPANY: AIG SunAmerica Life Assurance Company
1 999 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Senior Vice President & Chief
Actuary
If to REINSURER: AXA Corporate Solutions Life Reinsurance Company
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Comely, Reinsurance Treaty Officer
Unless otherwise stated, all notices and other communications required or
permitted under this Reinsurance Agreement that are addressed as provided in
this Section will be deemed given as of the date of receipt, as indicated by
the delivery receipt. Any party from time-to-time may change its address,
but no such notice of change will be deemed to have been given until it is
actually received by the party sought to be charged with the contents
thereof.
B. Assignment. This Agreement shall be binding to the parties and their
respective successors and permitted assignees. This Agreement may not be
assigned by either party without the written consent of the other. Such
consent shall not be unreasonably withheld. However, this Agreement may be
held or assigned to an affiliate of the CEDING COMPANY, a company otherwise
related to the CEDING COMPANY, or a successor in interest of the CEDING
COMPANY without further consent required.
C. Severability. If any provision of this Agreement is determined to be invalid
or unenforceable, such determination will not affect or impair the validity
or the enforceability of the remaining provisions of this Agreement.
D. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
E. Currency. All financial transactions under this Agreement shall be made in
U. S. dollars.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 22
Article XVIII
Entire Agreement
This Agreement shall constitute the entire Agreement between the parties with
respect to business reinsured hereunder. There is no understanding between the
parties other than as expressed in this Agreement and any change or
modification to this Agreement shall be null and void unless made by Amendment
or Addendum to the Agreement and signed by both parties.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 23
Article XIX
DAC Tax
Treasury Regulation Section 1.848-2(g)(8) Election
The CEDING COMPANY and the REINSURER hereby agree to the following pursuant to
the Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29,
1992, under Section 848 of the Internal Revenue Code 1986, as amended. This
election shall be effective for 1993 and all subsequent taxable years for which
this Agreement remains in effect.
A. The term "party" will refer to either the CEDING COMPANY or the REINSURER as
appropriate.
B. The terms used in this Article are defined by reference to Treasury
Regulations Section 1.848-2 in effect as of December 29,1992.
C. The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deduction limitation
of IRC Section 848(c)(1).
D. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency. The
parties also agree to exchange information, which may be otherwise required
by the IRS.
E. The CEDING COMPANY will submit to the REINSURER by April 1st of each year, a
schedule of its calculation of the net consideration for the preceding
calendar year. This schedule will be accompanied by a statement signed by an
officer of the CEDING COMPANY stating that the CEDING COMPANY will report
such net consideration in its tax return for the preceding calendar year.
F. The REINSURER may contest such calculation by providing an alternate
calculation to the CEDING COMPANY in writing within thirty (30) days of the
REINSURER'S receipt of the CEDING COMPANY'S calculation. If the REINSURER
does not notify the CEDING COMPANY, the REINSURER will report the net
consideration as determined by the CEDING COMPANY in the REINSURER'S tax
return for the previous calendar year.
G. If the REINSURER contests the CEDING COMPANY'S calculation of the net
consideration, the parties will act in good faith to reach an agreement as
to the correct amount within thirty (30) days of the date the REINSURER
submits its alternate calculation. If the REINSURER and CEDING COMPANY reach
agreement on an amount of net consideration, each party shall report such
amount in their respective tax returns for the previous calendar year.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 24
Article XX
Duration of Agreement
A. This Agreement shall be unlimited as to its duration but may be reduced or
terminated as provided in this Article, below.
B. This Agreement shall be applicable to new business for a minimum of two
(2) years after the EFFECTIVE DATE subject to a limit of three-billion
dollars ($3,000,000,000) of total new annuity business received by the
CEDING COMPANY and by the CEDING COMPANY'S affiliate under Agreement
No. 2000-35NY, divided by the REINSURER'S Quota Share Percentage. Any time
on or after the second anniversary of this Agreement, and upon
one-hundred-eighty (180) days' written notice, or anytime on or after
attainment of three-billion dollars ($3,000,000,000) of total new business,
either the CEDING COMPANY or the REINSURER may cancel this Agreement for new
business unilaterally or the parties may amend the terms of reinsurance for
new business by mutual agreement. The Agreement may be renewed thereafter,
subject to mutually accepted terms. Additional purchase payments made after
the close of this Agreement are covered hereunder for policies issued during
the period this Agreement was open for new business.
C. In accordance with the terms of this Article XX, the Agreement has closed
for new business as of January 31, 2003. New policies issued on or after
February 1, 2003, shall not be reinsured hereunder.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 25
Article XXI
Special Termination or Settlement
It is hereby mutually agreed that in addition to the termination provisions
hereof, the following shall apply:
Section I -Termination:
A. Either party may terminate this Agreement upon forty-five (45) days notice
in the event that:
1. The other party should at any time (whether voluntarily or otherwise)
become insolvent, or suffer a substantial impairment of capital, or
become the subject of any liquidation, rehabilitation, receivership,
supervision, conservation, or bankruptcy action or proceeding (whether
judicial or otherwise) or of a proposed Scheme of Arrangement, or be
acquired or controlled (whether directly or indirectly) by any other
company or organization, or
2. There is a severance of free and unfettered communication and/or normal
commercial and/or financial intercourse between the United States of
America and the country in which the REINSURER is incorporated or has
its principal office as a result of war, currency regulations, or any
circumstances arising out of political, financial or economic emergency.
3. Any law or regulation of any Federal or State of any jurisdiction in
which the CEDING COMPANY is doing business should render illegal the
arrangements made herein.
B. In the event that the REINSURER'S Standard & Poor's and/or AM Best rating
drops below a Standard & Poor's rating of A and/or AM Best rating of A-, the
CEDING COMPANY may request, and the REINSURER shall provide, as described in
Article VIII, a letter of credit that meets the applicable requirements for
reinsurance reserve credit in the amount of the reserves maintained on the
risks reinsured under this Agreement. If the REINSURER fails to provide the
letter of credit within ten (10) days of receipt of the CEDING COMPANY'S
request, the CEDING COMPANY may terminate this Agreement.
Termination under A or B shall be effected by written notice of cancellation.
The CEDING COMPANY will specify whether the termination results in a recapture
of all ceded business (i.e. clean-cut) or termination of new business only
(i.e. run-off). If the CEDING COMPANY elects termination for new business only
(run-off), it may request, and the REINSURER shall provide, as described in
Article VIII, a letter of credit that meets the applicable requirements for
reinsurance reserve credit in the amount of the reserves maintained on the
risks reinsured under this Agreement.
Section II-Settlement
The mode of payment will be a lump sum payable in cash, based on Section III,
within 60 days of termination.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 26
Article XXI, Special Termination or Settlement
(Continued)
Section III - Payment
Settlement upon termination (clean-cut) of this Agreement shall be determined
in accordance with the Loss Carryforward (LCF) formula found in Article IX,
Recapture Privileges.
If the LCF position is positive, an Early Recapture Fee shall be withheld by
the REINSURER that is equal to the LCF amount.
If the LCF position is negative, the Settlement due the REINSURER from the
CEDING COMPANY shall be equal to an amount that brings the LCF position to zero.
LCF position = Loss Carryforward Gain or Loss after release of treaty reserves
as of the termination date specified in the written notice of cancellation.
This article shall survive the termination of this Agreement.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 27
Article XXII
Execution of Agreement
This Agreement may be executed by the parties in separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts together shall constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof signed by less than both,
but together signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the
EFFECTIVE DATE.
AIG LIFE INSURANCE COMPANY
Attest:
AXA CORPORATE SOLUTIONS LIFE REINSURANCE COMPANY
Xxxxxxx X. Xxxxxxxx, Senior Vice President
By: --------------------------------
Xxxxx X. Xxxxxx, Assistant Vice President
Xxxxx Comely, Assistant Vice President
Attest:
AIG Agreement No. 2000-35-DB
Effective January 31, 2001 Page 28
Schedule A
Plans of Reinsurance
REINSURER'S Quota Share Percentage: 100% in excess of the CEDING COMPANY'S
retention set forth in Article I
Issue Dates:
New Policies issued on or after January 31, 2001
GMDB Reinsured:
1. Basic Benefit for issue ages up to 85: 7-Year Ratchet less a
proportional reduction for withdrawals;
2. Optional Enhanced Benefit for issue ages up to 80: Greater of Basic
Benefit and Annual Ratchet less a proportional reduction for withdrawals;
3. Optional Enhanced Benefit for issue ages up to 75: Greater of Basic
Benefit and Equity Assurance Plan* rider, less a proportional reduction
for withdrawals;
4. Optional Enhanced Benefit for issue ages up to 75: Greater of Basic
Benefit, Annual Ratchet and Equity Assurance Plan* rider, less a
proportional reduction for withdrawals.
*Rollup Benefit under the Equity Assurance Plan (EAP):
Provides for a varying percentage of Rollup death benefit for all premiums,
adjusted for withdrawals, that are paid prior to the year following the 85th
birthday of the contractholder, based on the number of complete years, not to
exceed 10, from the date of receipt of each premium to the earlier of the date
of death or the first contract anniversary following the 85/th/ birthday of the
contractholder. The interest rates vary with the duration of the policy as
follows:
Roll up Percentage If death occurs during the
------------------ -----------------------------------------------------
0% / per annum 1st through 24th month from date of Premium payment
2% / per annum 25th through 48th month from date of Premium payment
4% / per annum 49th through 72nd month from date of Premium payment
6% / per annum 73rd through 96th month from date of Premium payment
8% / per annum 97th through 120th month from date of Premium payment
10% / per annum More than 120 months from date of Premium payment
(for a maximum of
10 years)
Continued...
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedule A
Plans of Reinsurance
(Continued)
Spousal Continuance
Provided that the CEDING COMPANY can report Spousal Continuances (SCs), as
described in Article VI, Paragraph H, the REINSURER will cover SCs under
this Agreement and will treat them as new issues to the extent that, at time
of continuance, the attained age of the surviving spouse satisfies the issue
age restrictions and benefit limitations under the Related Policy Forms
covered by this Agreement.
D. Related Policy Forms:
AIG Life Policies:
------------------
. To be provided Base Policy (Ovation Advisor)
. 12APR797 Annual Ratchet Rider
. 12EAP97A Equity Assurance Plan
. 12EAP97E Enhanced Equity Assurance Plan
Al Life Policies:
-----------------
. To be provided Base Policy (Ovation Advisor)
. 22APR797 Annual Ratchet Rider
. 22EAP97A Equity Assurance Plan
. 22EAP97E Enhanced Equity Assurance Plan
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedule B
Investment Funds
Ovation Advisor
---------------
Fund Manager Fund Name Fund Status
------------ ------------------------ -----------
Alliance Money Market
Growth
Growth and Income
International
U.S. Gov't/High Grd Sec.
North American Gov't
Income
Global Dollar Government
Utility Income
Global Bond
Premier Growth
Total Return
Worldwide Privatization
Technology
Quasar
Real Estate Investment
High Yield
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedule C
Required Data and Suggested Data Layout
Page 1 of 3
Field Description Comments
----------------- --------
Annuitant's ID: Last Name
First Name
Middle Name
Sex M or F
Date of Birth YYYYMMDD
Social Security No. / Social
Insurance No.
Joint Annuitant's ID: If Applicable
Last Name
First Name
Middle Name
Sex M or F
Date of Birth YYYYMMDD
Social Security No. / Social
Insurance No.
Owner's ID:
Last Name
First Name
Middle Name
Sex M or F
Date of Birth YYYYMMDD
Social Security No. / Social
Insurance No.
Joint Owner's ID: If Applicable
Last Name
First Name
Middle Name
Sex M or F
Date of Birth YYYYMMDD
Social Security No. / Social
Insurance No.
Policy Number
Policy Issue Date YYYYMMDD
Policy Issue Status NI=True New Issue, SC=Spousal
Continuance,
EX=1035 Exchange
Tax Status Qualified (Q), or Non-qualified (N)
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedule C
Required Data and Suggested Data Layout
Page 2 of 3
Field Description Comments
----------------- --------
GMDB/EEDB SECTION (if applicable)
Mortality Risk Definition Indicator AV = VNAR; CV = VNAR + SCNAR
Death Claim Trigger A = Annuitant, O = Owner, 1 = 1st to
die, 2 = 2nd to die
(e.g., A2 = payable upon death of
second of joint annuitants)
Current Ratchet Value If Applicable
Current Reset Value If Applicable
Current Rollup Value If Applicable
Current Return of Premium Value If Applicable
Minimum Guaranteed Death Benefit
Contract Death Benefit Greater of Account Value and Minimum
Guaranteed Death Benefit
Mortality Risk VNAR Max [Contractual Death Benefit -
Account Value), 0]
SCNAR Surrender Charge, if applicable
EEMNAR Contract Value less In-Force Premium
Net Premiums
Gain Percentage 70%, 50% or 30%
Termination Date of the Rider YYYYMMDD
GMIB SECTION (if applicable)
GMIB Indicator Y = benefit elected, N = benefit not
elected, NA=not applicable
Income Benefit Elected 01 = option 1, 02 = option 2, etc.
Expiration of Waiting Period YYYYMMDD
GMIB Annuitization Date YYYYMMDD - actual date
Most Recent GMIB Step-up / Reset Date YYYYMMDD, if applicable
Cancellation Date YYYYMMDD, if applicable
Pricing Cohort Indicator
IBB Amount
GMIB IBNAR Amount Calculated using an individual life
annuity form with 10 years
certain
Treasury Rate Used in IBNAR calculation
GMAB SECTION (if applicable)
GMAB Indicator Y = benefit elected, N = benefit not
elected, NA=not applicable
Accumulation Benefit Elected 01 = option 1, 02 = option 2, etc.
Maturity Date YYYYMMDD
Most Recent GMAB Step-up / Rollover YYYYMMDD, if applicable
Date
Cancellation Date YYYYMMDD, if applicable
Pricing Cohort Indicator
GMAB Guaranteed Value Current Value
GMAB NAR Max [ (GMAB Guaranteed Value - Account
Value), 0 ]
Account Value Current total value
Surrender Charge If reinsured
Cumulative Deposits Total premiums
Cumulative Withdrawals Total withdrawals
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Schedule C
Required Data and Suggested Data Layout
Page 3 of 3
Field Description Comments
----------------- --------
Funding Vehicle Values:
"MorningStar" designations (US)
Aggressive Growth
Balanced
Corporate Bond
Government Bond
Growth
Growth and Income
High Yield Bond
International Bond
International Stock
Money Market
Specialty Fund
Fixed Account
Dollar Cost Averaging
Note: total of funding vehicles should equal account value.
Termination Information:
Termination Date YYYYMMDD, If applicable
Reason for termination Death (D), Annuitization (A), 1035
(I), Other (O). Exchange (X), GMIB Election
Cause of Death If applicable. Use your Cause of
translation Death code,and provide
Summary Information: For reconciliation purposes (may be
paper summary)
Total number of records Monthly aggregate information by
GMIB Design, GMAB Design, and
Pricing Cohort (if applicable)
Total of each dollar field Monthly aggregate information by
GMIB Design, GMAB Design, and
Pricing Cohort (if applicable)
Note: All values to nearest dollar
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Exhibit I
1994 Variable Annuity MGDB Mortality Table
(applied age last birthday at attained age)
Age Male Qx Female Qx Age Male Qx Female Qx
--- -------- --------- --- -------- ---------
1 0.000587 0.000519 60 0.010029 0.005636
2 0.000433 0.000358 61 0.011312 0.006460
3 0.000350 0.000268 62 0.012781 0.007396
4 0.000293 0.000218 63 0.014431 0.008453
5 0.000274 0.000201 64 0.016241 0.009611
6 0.000263 0.000188 65 0.018191 0.010837
7 0.000248 0.000172 66 0.020259 0.012094
8 0.000234 0.000158 67 0.022398 0.013318
9 0.000231 0.000154 68 0.024581 0.014469
10 0.000239 0.000159 69 0.026869 0.015631
11 0.000256 0.000169 70 0.029363 0.016957
12 0.000284 0.000185 71 0.032169 0.018597
13 0.000327 0.000209 72 0.035268 0.020599
14 0.000380 0.000239 73 0.038558 0.022888
15 0.000435 0.000271 74 0.042106 0.025453
16 0.000486 0.000298 75 0.046121 0.028372
17 0.000526 0.000315 76 0.050813 0.031725
18 0.000558 0.000326 77 0.056327 0.035505
19 0.000586 0.000333 78 0.062629 0.039635
20 0.000613 0.000337 79 0.069595 0.044161
21 0.000642 0.000340 80 0.077114 0.049227
22 0.000677 0.000343 81 0.085075 0.054980
23 0.000717 0.000344 82 0.093273 0.061410
24 0.000760 0.000344 83 0.101578 0.068384
25 0.000803 0.000346 84 0.110252 0.075973
26 0.000842 0.000352 85 0.119764 0.084432
27 0.000876 0.000364 86 0.130583 0.094012
28 0.000907 0.000382 87 0.143012 0.104874
29 0.000935 0.000403 88 0.156969 0.116968
30 0.000959 0.000428 89 0.172199 0.130161
31 0.000981 0.000455 90 0.188517 0.144357
32 0.000997 0.000484 91 0.205742 0.159461
33 0.001003 0.000514 92 0.223978 0.175424
34 0.001005 0.000547 93 0.243533 0.192270
35 0.001013 0.000585 94 0.264171 0.210032
36 0.001037 0.000628 95 0.285199 0.228712
37 0.001082 0.000679 96 0.305931 0.248306
38 0.001146 0.000739 97 0.325849 0.268892
39 0.001225 0.000805 98 0.344977 0.290564
40 0.001317 0.000874 99 0.363757 0.313211
41 0.001424 0.000943 100 0.382606 0.336569
42 0.001540 0.001007 101 0.401942 0.360379
43 0.001662 0.001064 102 0.422569 0.385051
44 0.001796 0.001121 103 0.445282 0.411516
45 0.001952 0.001186 104 0.469115 0.439065
46 0.002141 0.001269 105 0.491923 0.465584
47 0.002366 0.OO1371 106 0.511560 0.488958
48 0.002618 0.001488 107 0.526441 0.507867
49 0.002900 0.001619 108 0.536732 0.522924
50 0.003223 0.001772 109 0.543602 0.534964
51 0.003598 0.001952 110 0.547664 0.543622
52 0.004019 0.002153 111 0.549540 0.548526
53 0.004472 0.002360 112 0.550000 0.550000
54 0.004969 0.002589 113 0.550000 0.550000
55 0.005543 0.002871 114 0.550000 0.550000
56 0.006226 0.003241 115 1.000000 1.000000
57 0.007025 0.003713
58 0.007916 0.004270
59 0.008907 0.004909
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Exhibit II
Reinsurance Premiums
Reinsurance
Premiums
---------------- Guaranteed
Benefit (Product) Issue Ages Minimum Maximum* Maximum
----------------- ---------- ------- -------- ----------
Base GMDB
Enhanced GMDB 1
Enhanced GMDB 2
Enhanced GMDB 3
--------
* The current maximum premium rate shall be in effect for a minimum of twenty
(20) years from the EFFECTIVE DATE. Thereafter, it may be increased based on
expected experience but not beyond the stated guaranteed maximum rates shown.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
Exhibit III
Benefit Limitations Rules
Trapezoidal Rule
Average Aggregate Account Value inforce in calendar year Z equals:
AV(Jan3)\\|\\
-------------
24
A V(Feb\\E\\) + j V(Mar\\B\\) + j K(4?r,) + A V(May\\B\\)
---------------------------------------------------------
12
yj K(J^\\5\\) + A V(Jul\\B\\) + AV(Aug\\B\\) + A V(Sep\\B\\)
------------------------------------------------------------
12
^K(Oc^) + ^KCiVov^) + ^V(Dec\\B\\)
----------------------------------
12
24
where A V(Monthe) is equal to the beginning of month aggregate account value of
the Related Policy Forms listed in Schedule A and AV(MonthE) is equal to the
end-of-month aggregate account value of the Related Policy Forms listed in
Schedule A.
For partial calendar years AV(MonthB) for months prior to the EFFECTIVE DATE
should be set equal to zero.
Note: Where stated in this Agreement, the calculation described above shall
apply to the sum of the values reported under this Agreement and
Agreement No. 2000-35NY.
AIG Agreement No. 2000-35-DB
Effective January 31, 2001
