Common use of Limitations Relating to Strategies and Instruments Clause in Contracts

Limitations Relating to Strategies and Instruments. In addition to the limitations relating to counterparties and the other limitations set forth below, the Company shall comply with the limitations specifically applicable to the strategies of hedging, income generation and replication. (a) Hedging. The Company may engage in hedging transactions, provided that the hedge continues to be effective according to the Company’s approved evaluation procedures described herein (see Section III. B. of this Plan) and the Company complies with the following quantitative limitations: • The aggregate statement value6 of options, swaptions, caps, floors and warrants purchased by the Company and used in hedging transactions shall not exceed 7.5% of the Company’s admitted assets. • The aggregate statement value of options, swaptions, caps and floors written by the Company for hedging transactions shall not exceed 3% of the Company’s admitted assets. • The aggregate potential exposure7 of collars, swaps, forwards and futures used in hedging transactions and options, swaptions, caps and floors written by the Company shall not exceed 6.5% of the insurer’s admitted assets.

Limitations Relating to Strategies and Instruments. In addition to the limitations relating to counterparties and the other limitations set forth below, the Company shall comply with the limitations specifically applicable to the strategies of hedging, income generation and replication. (a) Hedging. The Company may engage in hedging transactions, provided that the hedge continues to be effective according to the Company’s approved evaluation procedures described herein (see Section III. B. of this Plan) and the Company complies with the following quantitative limitations: • The aggregate statement value6 value8 of options, swaptions, caps, floors and warrants purchased by the Company and used in hedging transactions shall not exceed 7.5% of the Company’s admitted assets. • The aggregate statement value of options, swaptions, caps and floors written by the Company for hedging transactions shall not exceed 3% of the Company’s admitted assets. • The aggregate potential exposure7 exposure9 of collars, swaps, forwards and futures used in hedging transactions and options, swaptions, caps and floors written by the Company shall not exceed 6.5% of the insurer’s admitted assets.