Common use of Basis of Recapture Clause in Contracts

Basis of Recapture. Recapture shall be based upon terms to be negotiated by the parties at the time of termination. The following general principles shall be followed in negotiating the basis of recapture: (a) the consideration to be paid shall reflect the present value of projected profits on the reinsurance of such Contracts; (b) the profit projection shall reflect the cost of all significant risks, primarily those associated with stock market movement and volatility, interest rate movement and the differences in the movements of the Funds versus the stock market; and (c) the taxes to be incurred by the Company and the Reinsurer upon the transfer of Reinsurance Obligations under the Agreement. Notwithstanding the foregoing, if the ground for recapture is the Reinsurer's failure under Section 11.3 to pay an amount due the Company, or the Reinsurer's insolvency or failure to maintain the ratio set forth in Subsection 11.4(d), the foregoing principles shall not apply and the Company shall recapture upon payment by the Reinsurer of an amount equal to the Reinsurance Reserves Obligation as of the date of Recapture.