EXHIBIT 10(q)
This Reinsurance Agreement ("Agreement")
is made between
LONDON LIFE REINSURANCE COMPANY
of Pennsylvania
(hereinafter referred to as the "Reinsurer")
and
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY
of New York
(hereinafter referred to as "First Golden")
The following articles, including the
Schedules, will form
the entire Agreement
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TABLE OF CONTENTS
A. RECITALS................................................................3
B. REINSURANCE COVERAGE....................................................3
C. PAYMENTS BY FIRST GOLDEN................................................4
D. PAYMENTS BY REINSURER...................................................5
E. TERMS OF REINSURANCE....................................................6
1 Amounts Due to First Golden or Reinsurer.............................6
2 Reports and Payment Dates............................................6
3 Offset...............................................................6
4 Liability and Payment................................................7
5 Contested Claims.....................................................7
6 Reinsurance Premium Rates............................................7
F. UNUSUAL EXPENSES AND ADJUSTMENTS........................................8
G. RESERVE CREDIT..........................................................8
H. ERRORS AND OVERSIGHTS...................................................8
I. AUDIT OF RECORDS AND PROCEDURES.........................................8
J. ARBITRATION.............................................................8
K. INSOLVENCY..............................................................9
L. AGREEMENT...............................................................9
M. ASSIGNMENT..............................................................10
N. IMPROPER SOLICITATION OF CONTRACT OWNERS................................10
O. DAC TAX - SECTION 1.848-2(G)(8) ELECTION................................10
P. EFFECTIVE DATE..........................................................11
Q. DURATION OF AGREEMENT...................................................11
R. REPRESENTATIONS. WARRANTIES AND COVENANTS OF FIRST GOLDEN...............12
S. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE REINSURER..............13
T. MISCELLANEOUS...........................................................13
U. EXECUTION...............................................................16
SCHEDULE I - PREMIUM RATES....................................................17
SCHEDULE II - THE CONTRACT....................................................18
SCHEDULE III - FUND PROSPECTUS................................................19
SCHEDULE IV - MONTHLY PERIODIC REPORTS........................................20
SCHEDULE V - ARBITRATION SCHEDULE.............................................21
SCHEDULE VI - LIST OF ELIGIBLE FUNDS..........................................23
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A. RECITALS
===========
1. First Golden has issued or will issue Group and Individual Deferred
Variable Annuity Contracts (the "Contracts", and each a "Contract"), in the
forms attached as Schedule II. The Contracts provide for a guaranteed
minimum death benefit in accordance with and subject to the terms of the
Contracts and the Fund Prospectuses, which are attached as Schedule III
(this benefit is hereafter referred to as the "GMDB").
2. Capitalized terms used but not defined in this Agreement shall have the
meanings as defined in the Contract.
3. The parties have agreed that First Golden will, on and subject to the terms
and conditions hereinafter set out, reinsure with the Reinsurer, on an
indemnity coinsurance basis, a Quota Share of the Net Amount at Risk of the
Contracts. For purposes of this Agreement, the Quota Share percentage shall
be 100%.
B. REINSURANCE COVERAGE
=======================
1. The Reinsured Obligation of any given Contract shall be the Quota Share of
the Net Amount at Risk (NARR) of that Contract upon First Golden's receipt
of due proof of death of the Contractholder and shall be zero at any other
time, except as outlined in part e. below.
a. Net Amount at Risk (NARr)
NARr = Maximum [ 0, Guaranteed Death Benefit - Accumulation Value ]
+ Termination Charge
b. Guaranteed Death Benefit
The guaranteed death benefit amount for the total contract determined
based on the death benefit option as defined in the applicable
contracts as outlined in Schedule II.
c. Accumulation Value
The accumulation value is equal to the accumulation value for the
entire contract, including both fixed and variable separate account
funds. The accumulation value for variable funds is based on market
value. The accumulation value for the fixed funds is based on market
value adjusted book value.
d. Termination Charge
The termination charge equals the total of the sum of any surrender
charge, any charge for premium taxes, and any annual per policy
administrative charges incurred but not yet deducted, as defined in the
applicable contracts included in Schedule II, which would be imposed at
contract termination.
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e. Continuation
1.) Spousal
Upon spousal election of policy continuation at contractholder
death, the contract continues with the spouse becoming the owner
and measuring life. The rates to be applied following the
effective date of continuation will be the rates currently in
effect for new business. The Reinsurer will be responsible for
both the Reinsured Obligation, if any, upon First Golden's
receipt of due proof of death of the contractholder as well as
the Reinsured Obligation, if any, due upon First Golden's receipt
of due proof of death of the surviving spouse.
2.) Non-Spousal
Upon non-spousal continuation at contractholder death, the
Reinsurer will be responsible for the Reinsured Obligation, if
any, upon First Golden's receipt of due proof of death of the
contractholder. The Reinsurer's liability will cease upon payment
of this Reinsured Obligation.
2. The Reinsured Obligations will be reinsured with the Reinsurer
automatically. First Golden hereby cedes to the Reinsurer and the Reinsurer
hereby accepts all Reinsured Obligations.
3. Reinsurance shall not be in force and binding respecting any Contract
unless the issuance and delivery of such Contract constituted the doing of
business lawfully permitted in the state of New York in which First Golden
was properly licensed and the Contract was issued on or after January 1st ,
2000.
4. The liability of the Reinsurer with respect to the Reinsured Obligations of
each Contract shall begin simultaneously with the liability of First
Golden, but in no event prior to the effective date of this Agreement. The
Reinsurer's liability for reinsurance will terminate when First Golden's
liability terminates with the exception of non-spousal continuation, as
outlined in B.1.e above.
5. Annually, within 30 days following the end of any calendar year period,
First Golden will provide, in writing, information to the Reinsurer
regarding changes made to the terms of the Contract Forms and/or
Prospectuses covered under this Agreement including any fund related
changes, occurring over the prior year. At such time, the Reinsurer may
elect to change premium rates as outlined in Section E.6.
6. This Agreement reinsures First Golden only for Reinsured Obligations
payable under the Contracts and in no event shall the Reinsurer have any
liability or make any payment hereunder on account of other amounts awarded
to Contractholders, including but not limited to punitive, exemplary,
aggravated, consequential and/or exemplary damages.
C. PAYMENTS BY FIRST GOLDEN
===========================
Upon the execution of this Agreement, First Golden shall pay the Reinsurer fifty
percent (50%) of the reinsurance premium due on reinsured business written from
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January 1st, 2000 to the effective date of the Agreement, accumulated at 6.5%
per annum, payable fifteen (15) days after this Agreement has been duly executed
by both parties. The payment will be calculated for each month prior to the
effective date of this Agreement per the calculation specified below. Each so
calculated prior monthly premium payment will be accumulated to the effective
date of this Agreement at the stated rate of interest.
Subject to the terms of this Agreement, First Golden shall pay to the Reinsurer
the monthly reinsurance premiums for the Reinsured Contracts, payable fifteen
(15) days after the end of each month (i.e. payable in arrears). The monthly
reinsurance premium for a Reinsured Contract shall be the Quota Share of the sum
of (i) the fixed portion of the monthly reinsurance premium ("Fixed Portion")
plus (ii) the variable portion of the monthly reinsurance premium ("Variable
Portion"). The Fixed Portion shall be the Fixed Reinsurance Premium Rate in
effect for that Contract in accordance with Schedule I, or variation(s) thereof,
at the end of that month times one half of the sum of (iii) the portion of the
Account Value in the fixed subaccounts of such Contract on the first day of the
month and (iv) the portion of the Account Value in the fixed subaccounts of such
Contract on the last day of the month. The Variable Portion shall be the
Variable Reinsurance Premium Rate in effect for that Contract in accordance with
Schedule I, or variation(s) thereof, at the end of that month times one half of
the sum of (v) the portion of the Account Value in the variable subaccounts of
such Contract on the first day of the month and (vi) the portion of the Account
Value in the variable subaccounts of such Contract on the last day of the month.
"Month" as used in this paragraph shall mean calendar month.
D. PAYMENTS BY REINSURER
========================
1. Subject to the terms of this Agreement, the Reinsurer shall pay to First
Golden, payable fifteen (15) days after the end of each calendar month, the
claim amount equaling the Reinsured Obligations paid during that calendar
month on the Reinsured Contracts, if any.
2. The Reinsurer shall not be responsible for claims incurred by First Golden
prior to the effective date of this Agreement. For purposes of Section D.2,
incurred shall mean the date of First Golden's receipt of due proof of
death of the contractholder and not the actual date of the contractholder's
death.
3. First Golden will calculate and report the claim amount to the Reinsurer
along with the monthly reports. Upon the Reinsurer's request, the Company
shall provide to the Reinsurer any information for calculating the claims
or any portion thereof as the Reinsurer may reasonably require to assess
and satisfy itself as to the validity of such claims. In the event the
Reinsurer requests such information, then notwithstanding any other
provision of this Agreement, the Reinsurer shall be entitled within 15 days
from the date of the provision by First Golden of such requested
information to contest any such claim or portion thereof that the Reinsurer
considers to be invalid or excessive.
4. The amount payable by the Reinsurer in the event of a reduced settlement,
if the Reinsurer agrees to take part in the settlement, shall be
proportional to the reinsured portion of the claim.
5. Expenses incurred by the full-time employees of First Golden and any
routine investigation costs are borne entirely by First Golden. Expenses
incurred by the full-time employees of the Reinsurer are borne entirely by
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the Reinsurer. Extraordinary costs incurred by First Golden in respect of
any claim shall be charged to the Reinsurer and First Golden in the
respective proportions that the portion of the claim payable by First
Golden is of the total of such portion plus the Obligation in respect of
the claim that is reinsured hereunder, provided, in the case of a contested
claim, that the Reinsurer has agreed previously to participate in the
settlement of the claim in accordance with the procedure described in
Paragraph E.5.
6. Subject to the receipt by the Reinsurer of reasonable advance (fifteen (15)
days) written notice from First Golden of estimated claims under the
Contract, the Reinsurer will take such steps as are reasonably required to
fund the immediate payment of such claims.
E. TERMS OF REINSURANCE
=======================
1 AMOUNTS DUE TO FIRST GOLDEN OR REINSURER
------------------------------------------
Except as otherwise specifically provided herein, all payments to/or by
the Reinsurer or First Golden shall be determined on a net basis as of
the last day of the calendar month to which such amount is
attributable. All amounts shall be due and accrued as of such date. The
payment of such amounts shall be submitted in accordance with the
provisions of Paragraph E.2. All settlements of account between the
Reinsurer and First Golden shall be made in cash or its equivalent.
2 REPORTS AND PAYMENT DATES
---------------------------
a) Not later than fifteen (15) days after the end of each calendar month,
First Golden shall submit Monthly Reports by electronic or other
suitable means in accord with Schedule IV to the Reinsurer.
b) Not later than fifteen (15) days after the end of each calendar
quarter, First Golden shall submit Quarterly Reports by electronic or
other suitable means in accord with Schedule IV to the Reinsurer.
c) Not later than fifteen (15) days after the receipt of any Monthly
Report, any net amounts indicated in such Monthly Report as being due
to First Golden shall be paid by the Reinsurer and any net amounts
indicated as being due to the Reinsurer shall be paid by First Golden.
d) Not later than thirty (30) days after the end of each calendar year,
First Golden shall provide to the Reinsurer a listing of changes made
to the contract forms and/or funds (including additions, deletions,
revisions, and manager changes) over the past year.
In the event that actual numbers are not available, reasonable
estimates will be used and appropriate adjustments will be made within
30 days or on the next report and payment date set forth above,
whichever is sooner.
3 OFFSET
--------
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against
either First Golden or the Reinsurer with respect to this Agreement are
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deemed mutual debts or credits, as the case may be, and shall be set
off, and only the balance shall be allowed or paid. This offset
provision, to the extent permitted by law, shall not be modified or
reconstrued due to the insolvency, liquidation, rehabilitation,
conservatorship, or receivership of either party.
4 LIABILITY AND PAYMENT
-----------------------
Unless the Reinsurer has made the election provided in Paragraph E.5 to
participate in the contest, compromise or litigation of a claim, and
subject to Paragraph D.2, the Reinsurer will accept the decision of
First Golden on payment of any claim. The Reinsurer will pay Reinsured
Obligations attributable to the Contract.
5 CONTESTED CLAIMS
------------------
First Golden will provide notice to the Reinsurer of its intention to
contest, compromise, or litigate a claim (including interpleader
actions) under the Contract. Within fifteen (15) days after receipt of
such notice, the Reinsurer may elect to participate in contesting the
claim by submitting a notice of such election to First Golden. The
Reinsurer shall be deemed to have elected to not participate in such
contest if it fails to make such election within fifteen (15) business
days after delivery by First Golden of notice. If the Reinsurer elects
not to participate in such contest, it may discharge its liability by
payment to First Golden of the Reinsured Obligation relating to such
claim. First Golden and the Reinsurer agree to cooperate in the
prosecution of any claim contest in which the Reinsurer elects to
participate. If the Reinsurer agrees with First Golden to dispute or
compromise a claim, First Golden agrees to give copies to the Reinsurer
of all other pertinent documents received later so that the Reinsurer
may follow up on the contestation.
6 REINSURANCE PREMIUM RATES
---------------------------
The reinsurance premium rates applicable to any Contract or deposit
shall remain in force from the date such Contract is issued or such
deposit is made until Contract termination by maturity, death (except
in the case of spousal continuation), surrender, annuitization, or
termination of reinsurance coverage in the case of non-spousal
continuation. In the event that First Golden makes changes that
materially affect the risks underlying the Contracts, First Golden
shall notify the Reinsurer in writing within 30 days of the end of the
calendar year in which the change occurred. The Reinsurer then shall
notify First Golden of any change in reinsurance premium rate no later
than 30 days after receipt of such notice. The new reinsurance premium
rates, effective on the date of the premium rate change, may be applied
to subsequent new issues and to any inforce contracts effected by the
material change. The revised premium rates shall reasonably reflect the
increase or decrease in risk attributable to the material changes.
For new business, the Reinsurer reserves the right to change premium
rates upon one hundred eighty (180) days notice to First Golden.
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F. UNUSUAL EXPENSES AND ADJUSTMENTS
===================================
The Reinsurer shall not participate in any expenses, usual or otherwise,
incurred by First Golden in administering, defending or investigating a claim
except as otherwise specifically provided by this Agreement.
G. RESERVE CREDIT
=================
The Reinsurer shall establish adequate net reinsurance reserves pursuant to the
requirements of any regulatory authority having jurisdiction over First Golden
and comply with any other statutory requirements necessary for First Golden to
take full statutory credit for reinsurance ceded up to the full amount that
First Golden would have established for the risks reinsured under this
Agreement.
H. ERRORS AND OVERSIGHTS
========================
If either First Golden or the Reinsurer shall fail to perform an obligation
under this Agreement and such failure shall be the result of an error,
oversight, delay, omission or misunderstanding (collectively, an "error") on the
part of First Golden or the Reinsurer, such error shall be corrected by
restoring both First Golden and the Reinsurer to the positions they would have
occupied had no such error occurred and the reinsurance provided hereunder shall
not be invalidated. The party first discovering such error or act resulting from
the error will notify the other party in writing promptly upon discovery
thereof, and the parties shall act to correct such error within thirty (30) days
of receipt of such notice. This Section, however, shall not be construed as a
waiver by either party of its right to enforce the terms of this Agreement in
the event the failure to perform an obligation is determined to be the result of
something other than an "error".
I. AUDIT OF RECORDS AND PROCEDURES
==================================
Upon 7 days written notice, the Reinsurer and First Golden each shall have the
right to examine, at the office of the other, during the normal business hours
of the party being audited, all records and procedures relating to reinsurance
under this Agreement. The expenses of any such audit shall be born by the party
initiating the audit. The information obtained by the auditing party shall be
treated as confidential material and proprietary to the other party and shall be
used only for purposes relating to the reinsurance under this Agreement. The
terms of this Section shall survive termination of this Agreement.
J. ARBITRATION
==============
If First Golden and the Reinsurer cannot mutually resolve a dispute that arises
out of or relates to this Agreement, the dispute shall be decided through
arbitration as set forth in Schedule V. The arbitrators shall be impartial and
shall base their decision on the terms and conditions of this Agreement. In the
event that an interpretation of the terms and conditions of this Agreement does
not explicitly or by reasonable implication dispose of an issue in dispute
between the parties, then the arbitrators may base their decision on the customs
and practices of the insurance and reinsurance industry rather than solely on a
strict interpretation of applicable law. There shall be no appeal from the
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arbitrators' decision. Any court having jurisdiction over the subject matter and
the parties may reduce the arbitrators' decision to judgment.
The obligations of the parties to arbitrate disputes hereunder pursuant to this
Section shall survive the termination of this Agreement.
K. INSOLVENCY
=============
1. The portion of any risk or obligation assumed by the Reinsurer shall be
payable by the Reinsurer on the basis of the liability of First Golden
without diminution because of the insolvency of First Golden. In the event
of insolvency and the appointment of a conservator, liquidator, or
statutory successor of First Golden, such portion shall be payable to such
conservator, liquidator, or statutory successor immediately upon demand,
with reasonable provision for verification, on the basis of claims allowed
against First Golden by any court of competent jurisdiction or by any
conservator, liquidator, or statutory successor of First Golden having
authority to allow such claims, without diminution because of such
insolvency or because such conservator, liquidator, or statutory successor
has failed to pay all or a portion of any claims.
2. First Golden's conservator, liquidator, or statutory successor shall give
the Reinsurer written notice of the pendency of a claim against First
Golden, within a reasonable time after such claim is filed. The Reinsurer
may interpose, at its own expense, in the proceeding where such claim is to
be adjudicated, any defense or defenses that Reinsurer may deem available
to First Golden, or its conservator, liquidator, or statutory successor.
3. Any expense incurred by the Reinsurer pursuant to paragraph K.2, above,
shall be payable subject to court approval out of the estate of First
Golden as part of the expense of conservation or liquidation to the extent
of the Reinsurer's quota share of the benefit that may accrue to First
Golden in conservation or liquidation, solely as a result of the defense
undertaken by the Reinsurer. Where two or more Reinsurers are participating
in the same claim and a majority interest elects to interpose defense to
such claim, the expense shall be apportioned in accordance with the terms
of this Agreement as though such expense had been incurred by First Golden.
4. This reinsurance shall be payable directly by the Reinsurer to First Golden
or First Golden's conservator, liquidator, or statutory successor, except
as expressly required otherwise by applicable insurance law.
L. AGREEMENT
============
1. This Agreement constitutes the entire agreement between First Golden and
the Reinsurer with respect to the business being reinsured hereunder; it
supersedes any prior oral or written agreements with respect to the
business being reinsured hereunder other than as expressed in this
Agreement. Any change or modification to this Agreement shall be null and
void unless made by amendment to the Agreement signed by both First Golden
and the Reinsurer.
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2. This is an agreement for indemnity reinsurance solely between First Golden
and the Reinsurer. No third party may benefit from any right of any kind in
respect of this agreement. The acceptance of reinsurance hereunder shall
not create any right or legal relationship whatever between the Reinsurer
and the Contractholder or any beneficiary under any Contract reinsured
hereunder, and First Golden shall be and remain solely liable to such
Contractholder or beneficiary under any such Contract.
M. ASSIGNMENT
=============
Rights or obligations arising under this Agreement may not be assigned by either
First Golden or the Reinsurer, without the prior written consent of the other
party. Such consent will not be withheld unreasonably.
N. IMPROPER SOLICITATION OF CONTRACT OWNERS
===========================================
The parties agree not to contact the owners of the Contracts for the purpose of
soliciting surrender of the Contracts. However, First Golden specifically
reserves the right to allow conversion of the Contracts reinsured under this
Agreement to other programs to meet the changing business needs in the
marketplace of First Golden. To the extent First Golden offers such a conversion
program, First Golden will offer to the Reinsurer the opportunity to reinsure
the death benefits of the new program.
O. DAC TAX - SECTION 1.848-2(G)(8) ELECTION
===========================================
First Golden and the Reinsurer hereby agree to the following pursuant to Section
1.848-2(g)(8) of the Income Tax Regulations issued December 1992, under Section
848 of the Internal Revenue Code of 1986, as amended. This election shall be
effective for all subsequent taxable years for which this Agreement remains in
effect.
1. The term "party" will refer to either First Golden or the Reinsurer as
appropriate.
2. The terms used in this Article are defined by reference to Regulation
Section 1.848-2(g)(8) in effect December 1992.
3. The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified Contract acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1).
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
5. The Reinsurer will submit a schedule to First Golden by May 1 of each year
of its calculation of the net consideration for the preceding calendar
year. This schedule of calculations will be accompanied by a statement
signed by an officer of the Reinsurer stating that Reinsurer will report
such net consideration in its tax return for the preceding calendar year.
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6. First Golden may contest such calculation by providing an alternative
calculation to the Reinsurer in writing within thirty (30) days of First
Golden's receipt of the Reinsurer's calculation. If First Golden does not
so notify the Reinsurer, First Golden will report the net consideration as
determined by the Reinsurer in First Golden's tax return of the previous
calendar year.
7. If First Golden contests the Reinsurer'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 First Golden
submits its alternative calculation. If First Golden and the Reinsurer
reach agreement on an amount of net consideration, each party shall report
such amount in their respective tax returns for the previous calendar year.
P. EFFECTIVE DATE
=================
The effective date of this Agreement is November 1, 2000.
Q. DURATION OF AGREEMENT
========================
1. Except as otherwise provided herein, this Agreement shall be unlimited in
duration.
2. This Agreement may be terminated with respect to new Contracts at any time
by either company by giving one hundred eighty (180) days' written notice
of termination to the other company. The day the notice is deemed given per
Section T.2 will be the first day of the one hundred eighty (180) day
period.
3. First Golden shall have the right to terminate this Agreement and recapture
all reinsurance hereunder if the Reinsurer fails to pay, when due, any
amounts due under this Agreement, provided that First Golden has given at
least sixty (60) days prior written notice of its intent to terminate for
that reason. The Reinsurer may avoid termination pursuant to this Paragraph
Q.3 by paying all amounts that are delinquent and then due, including any
interest owing thereon on or before the termination date specified in the
written notice. In the event First Golden terminates and recaptures
reinsurance pursuant to this Paragraph Q.3, the Reinsurer shall pay First
Golden cash or cash equivalent equaling the statutory liability of the
business reinsured hereunder at the time of recapture.
4. First Golden shall have the right to terminate this Agreement and recapture
existing inforce business after fifteen (15) years from the effective date
of this Agreement. If First Golden terminates and recaptures reinsurance
pursuant to this Paragraph Q.4, the Reinsurer and First Golden agree to
negotiate the terms of the recapture of eligible reinsured Contracts in
good faith recognizing both parties' business interests. Under no
circumstance, under this paragraph Q.4, will the Reinsurer pay an amount to
First Golden.
5. The Reinsurer shall have the right to terminate this Agreement if First
Golden fails to pay, when due, reinsurance premiums due under this
Agreement, provided that the Reinsurer has given at least sixty (60) days
prior written notice of its intent to terminate for that reason. First
Golden may avoid termination pursuant to this Paragraph Q.5 by paying all
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reinsurance premiums that are delinquent and then due, including any
interest owing thereon on or before the termination date specified in the
written notice. In the event Reinsurer terminates this Agreement pursuant
to this Paragraphs Q.5, the Reinsurer shall thereafter be relieved of all
liability under this Agreement, including any and all liability for any
Reinsured Obligation that as of such termination date was not yet due and
payable under the terms of this Agreement.
6. Except as specifically provided otherwise, the termination of this
Agreement or of the reinsurance in effect under this Agreement shall not
extend to or affect any of the rights or obligations of First Golden and
the Reinsurer applicable to any period prior to the effective date of such
termination. In the event that, subsequent to the termination of this
Agreement, an adjustment is made that is necessary with respect to any
accounting hereunder, a supplementary accounting shall take place. Any
amount owed to either party by reason of such supplementary accounting
shall be paid promptly upon the completion thereof.
7. This Agreement shall automatically terminate if, at the end of any
accounting period contemplated under this Agreement, all coverage under the
Contracts has terminated.
R. REPRESENTATIONS. WARRANTIES AND COVENANTS OF FIRST GOLDEN
============================================================
1. First Golden is a life insurance company duly organized, validly existing
and in good standing under the laws of the state of New York.
2. First Golden has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery by First Golden of this Agreement, and the performance by First
Golden of its obligations under this Agreement, have been duly authorized
by all necessary corporate action. This Agreement, when duly executed and
delivered by First Golden, subject to the due execution and delivery by the
Reinsurer, will be a valid and binding obligation of First Golden,
enforceable against First Golden in accordance with its terms.
3. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby in accordance with the
respective terms and conditions hereof will not (a) violate any provision
of the Articles of Incorporation or Bylaws of First Golden, or (b) violate
any order, judgment, injunction, award or decree of any court, arbitrator
or governmental or regulatory body against, or binding upon, or any
agreement with, or condition imposed by, any governmental or regulatory
body, foreign or domestic, binding upon First Golden.
4. No consent, waiver, license, approval, order or authorization of, or
registration, filing or declaration with, or notices to, any person, entity
or governmental authority is required to be obtained, made or given by or
with respect to First Golden in connection with (i) the execution and
delivery of this Agreement by First Golden, or (ii) the consummation by
First Golden of the transactions contemplated hereby.
5. To the best of First Golden's knowledge, the Contracts comply in all
material respects with all laws and regulations that are applicable in the
relevant jurisdictions governing the Contracts, and benefits thereunder are
payable in accordance with the terms of such Contracts.
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S. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE REINSURER
=============================================================
1. The Reinsurer is a life insurance company duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
2. The Reinsurer has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery by the Reinsurer of this Agreement, and the performance by the
Reinsurer of its obligations under this Agreement, have been duly
authorized by all necessary corporate action. This Agreement, when duly
executed and delivered by the Reinsurer, subject to the due execution and
delivery by First Golden, will be a valid and binding obligation of the
Reinsurer, enforceable against the Reinsurer in accordance with its terms.
3. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (a) violate
any provision of the Articles of Incorporation, Bylaws or other charter or
organizational document of the Reinsurer, or (b) violate any order,
judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, or any agreement
with, or condition imposed by, any governmental or regulatory body, foreign
or domestic, binding upon the Reinsurer.
4. No consent, waiver, license, approval, order or authorization of, or
registration, filing or declaration with, or notices to, any person, entity
or governmental authority is required to be obtained, made or given by or
with respect to the Reinsurer in connection with (i) the execution and
delivery of this Agreement by the Reinsurer, or (ii) the consummation by
the Reinsurer of the transactions contemplated hereby.
T. MISCELLANEOUS
================
1. HEADINGS AND SCHEDULES. Headings used herein are not a part of this
Agreement and shall not affect the terms. The attached Schedules are a part
of this Agreement.
2. NOTICES. All notices and communications hereunder shall be in writing and
shall be delivered by either certified or registered mail, return receipt
requested, or overnight delivery service (providing for delivery receipt)
or delivered by hand (or by email in the case of the monthly and quarterly
reports). Such notices and communications shall be deemed given three (3)
days after mailing, or if sent by telefax or delivered by hand (or by email
in the case of the monthly and quarterly reports), when received, and if by
overnight mail, on the next day.
All notices or communications with the Reinsurer under this Agreement shall
be addressed as follows:
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London Life Reinsurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President, Life & Annuity
Fax: (▇▇▇)-▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
All notices and communications with First Golden under this Agreement shall
be addressed as follows:
First Golden American Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Changes in notice addresses or recipients may be made by the Reinsurer or
First Golden, by following the procedure specified in this section.
3. SEVERABILITY; GOVERNING LAW. If any term or provision of this Agreement
shall be held void, illegal, or unenforceable, the validity of the
remaining portions or provisions shall not be affected thereby. This
Agreement shall be governed by the laws of the the State of New York,
without giving effect to principles of conflicts of law thereof.
4. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the parties
hereto in any number of counterparts, and by each of the parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
5. CURRENCY AND INTEREST. All payments and accounts shall be made in US
Dollars, and all fractional amounts shall be rounded to the nearest whole
dollar. Any payment not made when due and payable hereunder, shall from the
date such payment was due bear interest at a rate equal to the 3 month US
Treasury rate in effect on such date plus 100 bps. In the event any payment
due hereunder is not made within three months of the date it is due and
payable, the rate will be reset every 3 months to the US Treasury rate in
effect on each 3 month anniversary of the date such payment was due, until
such payment is made.
6. INTERPRETATION. For purposes of this Agreement, the words "hereof",
"herein", "hereby", and other words of similar import refer to this
Agreement as a whole unless otherwise indicated. Whenever the words
"include", "includes", or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Whenever
the singular is used herein, the same shall include the plural, and
whenever the plural is used herein, the same shall include the singular,
where appropriate.
7. SURVIVAL OF REPRESENTATIONS. WARRANTIES AND AGREEMENTS. The Reinsurer or
First Golden, as the case may be, has the right to rely fully upon the
representations, warranties, covenants and agreements of First Golden or
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the Reinsurer, as the case may be, contained in this Agreement. All
representations and warranties made by First Golden or the Reinsurer in
this Agreement shall survive the execution and delivery hereof.
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U. EXECUTION
============
IN WITNESS WHEREOF THE SAID
===========================
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
========================================================
and
LONDON LIFE REINSURANCE COMPANY OF PENNSYLVANIA,
================================================
have by their respective officers executed this Agreement in duplicate on the
dates shown below.
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- --------------------------
Title: Assistant Vice President Title: Senior Vice President
---------------------------- --------------------------
Date: December 21, 2000 Date: December 21, 2000
---------------------------- --------------------------
LONDON LIFE REINSURANCE COMPANY
By: ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Witness: Duc ▇▇▇▇ ▇▇
---------------------------- -------------------------
Title: Senior Vice President Title: Director ALM
---------------------------- -------------------------
Date: December 29, 2000 Date: December 29, 2000
---------------------------- -------------------------
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SCHEDULE I - PREMIUM RATES
==========================
The Reinsurance Premium Rate, expressed in basis points per annum and applied at
a rate of 1/12th per month to the Quota Share of the Accumulation Value, shall
vary depending on the investment type (variable or fixed) and death benefit
option as follows:
-------------------------------------------------------
| | Variable | Fixed |
|--------------------------------|----------|---------|
| Annual Ratchet Enhanced Death | 29 bps | 11 bps |
| Benefit Option | | |
|--------------------------------|----------|---------|
| Standard Death Benefit Option | 19 bps | 7 bps |
-------------------------------------------------------
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SCHEDULE II - THE CONTRACT
==========================
FORM NAME AND TYPE FORM NUMBER
------------------ -----------
Deferred Combination Variable and Fixed Annuity Contract FG-IA-1000-12/95
Deferred Combination Variable and Fixed Annuity Certificate FG-CA-1000-08/97
NOTE:
The attached forms are the most recent specimen forms available. The forms
do not reflect the addition of several new funds added with the October 2,
2000 Prospectus (Schedule III - DVA Plus). The funds are reflected in
Schedule VI.
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SCHEDULE III - FUND PROSPECTUS
===============================
Incorporated by reference to the prospectus for The GCG Trust last updated on
Form N-1 and filed with the Securitites and Exchange Commission on December 1,
2000 (File Numbers: 33-23512, 811-5629) .
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SCHEDULE IV - MONTHLY PERIODIC REPORTS
======================================
MONTHLY PERIODIC REPORTS
Monthly reports to be sent electronically or by other suitable means within 15
days following each month end:
(a) Inventory and Transaction Report in an electronic format to be provided on
a seriatim basis for each contract:
1. Contract Number
2. Issue Date
3. Sex
4. Date of Birth
5. Beginning Account Value
6. Beginning Death Benefit
7. Premium Production
8. Amount purchased for each Contract
9. Terminations for each Contract - Death and Total Withdrawals
10. Ending Account Value
11. Ending Death Benefit
12. Reinsurance Premium Rate
13. Reinsurance Premium Amount
14. Net Asset Value of each fund (Beginning and End of Month)
(b) Claim Report which includes information for each death:
1. Contract Number
2. Contract Issue Date
3. Date of Birth
4. Death Benefit
5. Account Value
6. Claim Amount
7. Copy of the death certificate
(c) Reinsurance premium report showing, for each reinsurance premium rate group,
(i) total beginning reinsured account value (ii) ending reinsured account value
(iii) reinsurance premium rate (iv) reinsurance premium due.
Quarterly Reports to be sent electronically or by other suitable means within 15
days following each quarter end:
(a) Statutory Reserve Report which includes account value, death benefit and
reserve level information grouped by year of birth, sex and month of issue.
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SCHEDULE V - ARBITRATION SCHEDULE
=================================
To initiate arbitration, either First Golden or the Reinsurer shall notify the
other party in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The party to which the notice is sent shall
respond to the notification in writing within ten (10) days of its receipt.
The arbitration hearing shall be before a panel of three arbitrators, each of
whom must be a present or former officer of an insurance or reinsurance company.
An arbitrator may not be a present or former officer, attorney, or consultant of
First Golden or the Reinsurer or either's affiliates.
First Golden and the Reinsurer shall each name five (5) candidates to serve as
an arbitrator. First Golden and the Reinsurer shall each choose one candidate
from the other party's list, and these two candidates shall serve as the first
two arbitrators. If one or more candidates so chosen shall decline to serve as
an arbitrator, the party that named such candidate shall add an additional
candidate to its list, and the other party shall again choose one candidate from
the list. This process shall continue until two arbitrators have been chosen and
have accepted. First Golden and the Reinsurer shall each present their initial
lists of five (5) candidates by written notification to the other party within
twenty-five (25) days of the date of the mailing of the notification initiating
the arbitration. Any subsequent additions to the list that are required shall be
presented within ten (10) days of the date the naming party receives notice that
a candidate that has been chosen declines to serve.
The two arbitrators shall then select the third arbitrator from the eight (8)
candidates remaining on the lists of First Golden and the Reinsurer within
fourteen (14) days of the acceptance of their positions as arbitrators. If the
two arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to First Golden and the Reinsurer. First Golden and the Reinsurer
shall take turns striking the name of one of the remaining candidates from the
initial eight (8) candidates until only one candidate remains. If the candidate
so chosen shall decline to serve as the third arbitrator, the candidate whose
name was stricken last shall be nominated as the third arbitrator. This process
shall continue until a candidate has been chosen and has accepted. This
candidate shall serve as the third arbitrator. The first turn at striking the
name of a candidate shall belong to the party that is responding to the other
party's initiation of the arbitration. Once chosen, the arbitrators are
empowered to decide all substantive and procedural issues by a majority of
votes.
It is agreed that each of the three arbitrators should be impartial regarding
the dispute and should resolve the dispute on the basis described in the
"ARBITRATION" section of this Agreement. Therefore, at no time will either First
Golden or the Reinsurer contact or otherwise communicate with any person who is
to be or has been designated as a candidate to serve as an arbitrator concerning
the dispute, except upon the basis of jointly drafted communications provided by
both First Golden and the Reinsurer to inform those candidates actually chosen
as arbitrators of the nature and facts of the dispute. Likewise, any written or
oral arguments provided to the arbitrators concerning the dispute shall be
coordinated with the other party and shall be provided simultaneously to the
other party or shall take place in the presence of the other party. Further, at
no time shall any arbitrator be informed that the arbitrator has been named or
chosen by one party or the other.
The arbitration hearing shall be held on the date fixed by the arbitrators. In
no event shall this date be later than six (6) months after the appointment of
the third arbitrator. As soon as possible, the arbitrators shall establish
prearbitration procedures as warranted by the facts and issues of the particular
case. In establishing such procedures the arbitrators shall make provision for
reasonable pre-hearing examinations of officers, employees or agents of the
parties and for the production of relevant documentation. At least ten (10) days
prior to the arbitration hearing, each party shall provide the other party and
the arbitrators with a detailed statement of the facts and arguments it will
present at the arbitration hearing. The arbitrators may consider any relevant
evidence; they shall give the evidence such weight as they deem it entitled to
after consideration of any objections raised concerning it. The party initiating
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the arbitration shall have the burden of proving its case by a preponderance of
the evidence. Each party shall be entitled to call as witnesses any officers,
employees or agents of the other party and such other party shall do everything
reasonable to ensure the attendance and cooperation of any such witness. Each
party may examine any witnesses who testify at the arbitration hearing. Within
twenty (20) days after the end of the arbitration hearing, the arbitrators shall
issue a written decision that sets forth their findings and any award to be paid
as a result of the arbitration, except that the arbitrators may not award
punitive or exemplary damages. In their decision, the arbitrators shall also
apportion the costs of arbitration, which shall include, but not be limited to,
their own fees and expenses, on such basis as they consider appropriate having
regard to the relative merits of the positions of the parties to the
arbitration, the conduct of the parties and the reasonableness of any settlement
offers put forward in writing by either party to the other in an effort to
resolve such dispute and any other factors that the arbitrators consider
appropriate.
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SCHEDULE VI - LIST OF ELIGIBLE FUNDS
====================================
THE GCG TRUST THE PIMCO VARIABLE INSURANCE TRUST
------------- ----------------------------------
Liquid Asset Series PIMCO High Yield Bond Fund
Limited Maturity Bond Series PIMCO StocksPLUS Growth and Income
Global Fixed Income Series
Fully Managed Series ING VARIABLE INSURANCE TRUST
Total Return Series ----------------------------
Asset Allocation Growth ING Global Brand Names Fund
Equity Income Series
Investors Series THE PRUDENTIAL SERIES FUND INC.
Value Equity Series -------------------------------
Rising Dividends Series Prudential ▇▇▇▇▇▇▇▇
Diversified Mid-Cap ▇▇ ▇▇▇▇▇▇▇▇ International Growth
Managed Global Series
Large Cap Value Series THE GALAXY VIP FUND
All Cap Series -------------------
Research Series Equity
Capital Appreciation Series Growth and Income
Growth and Income Small Company Growth
Capital Growth Series Asset Allocation
Strategic Equity Series High Quality Bond
Special Situations
Mid-Cap Growth Series FIXED INTEREST ALLOCATIONS
Small Cap Series --------------------------
Growth Series One Year Guarantee w/ MVA
Real Estate Series Three Year Guarantee w/ MVA
Hard Assets Series Five Year Guarantee w/ MVA
Developing World Series Seven Year Guarantee w/ MVA
Emerging Markets Series Ten Year Guarantee w/ MVA
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