AMENDED AND RESTATED
AUTOMATIC REINSURANCE AGREEMENT
Between
NEW ENGLAND LIFE INSURANCE COMPANY
and
EXETER REASSURANCE COMPANY, LTD.
AGREEMENT NO. 15890
THIS REINSURANCE AGREEMENT (the "Agreement") is effective as of April 1, 2001
and amended and restated as of July 1, 2004 by and between NEW ENGLAND LIFE
INSURANCE COMPANY ("Cedent"), a life insurance corporation organized and
existing under the laws of Massachusetts and having it's principal place of
business at Boston, MA, and EXETER REASSURANCE COMPANY, LTD. ("Reinsurer"), a
life insurance corporation organized and existing under the laws of Bermuda and
having its principal place of business at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇.
THE BACKGROUND OF THIS AGREEMENT is that the Reinsurer has heretofore assumed,
as of the date hereof, quota share portions of certain ceded annuity contract
liabilities on Riders, listed in the attached Schedules, (the "Reinsured
Contract(s)") issued by New England Life Insurance Company.
THIS AGREEMENT provides for the indemnity cession of a portion of the ceded
liabilities of the Cedents with respect to the Reinsured Contracts and binds the
Cedent and the Reinsurer and their successors and permitted assignees,
respectively. This Agreement shall not create any right or legal relation
whatever between the Reinsurer and any Cedent or any insured, owner, annuitant,
beneficiary or other party to any Reinsured Contract.
THEREFORE, in consideration of the promises set forth in this Agreement, the
parties agree as follows:
Page 1
ARTICLE I
SCOPE OF AGREEMENT
A. This Agreement shall be effective as of April 1, 2001 (the "Effective
Date") and amended and restated as of July 1, 2004 as described in Schedule
A. While this Agreement continues in effect, the Cedent shall cede and the
Reinsurer shall accept, as indemnity cessions hereunder, Reinsured
Contracts that are issued by the Cedent on and after April 1, 2001.
B. Guaranteed Minimum Death Benefit and Earnings Preservation Benefit
1. The indemnity cession shall be the share of the MNAR (defined in
Article IV) that is generated, prior to the termination of the
Reinsurer's liability (defined in Article II), by the Guaranteed
Minimum Death Benefit ("GMDB") and Earnings Preservation Benefit
("EPB") provisions of the Reinsured Contracts, as specified in
Schedule A.
2. This Agreement covers only the Cedent's contractual liability for
reinsured claims paid under variable annuity contract forms specified
in Schedule A.
C. Guaranteed Minimum Income Benefit
1. The indemnity cession shall be the share of the IBNAR (defined in
Article IV) that is generated prior to the termination of the
Reinsurer's liability (defined in Article II), by the Guaranteed
Minimum Income Benefit Rider (the "Income Program") provisions of the
Reinsured Contracts, as specified in Schedule A.
2. This Agreement covers only the Cedent's contractual liability for
reinsured claims that are realized upon annuitization under the
contractual terms of the Income Program within the variable annuity
contract forms specified in Schedule A.
D. Guaranteed Withdrawal Benefit
1. The indemnity cession shall be the share of the WBNAR (defined in
Article IV) that is generated prior to the termination of the
Reinsurer's liability (defined in Article II), by the Guaranteed
Withdrawal Benefit Rider (the "Withdrawal Program") provisions of the
Reinsured Contracts, as specified in Schedule A.
2. This Agreement covers only the Cedent's contractual liability for
reinsured claims paid under the variable annuity contract forms
specified in Schedule A.
E. There are no aggregate or individual claim limits applicable to the
benefits ceded.
Page 2
F. Spousal Continuances
Spousal continuances will be covered under this Agreement to the extent
provided by the insured contract.
Page 3
ARTICLE II
COMMENCEMENT AND TERMINATION OF LIABILITY
A. On liabilities ceded under the terms of this Agreement, the liability of
the Reinsurer shall commence simultaneously with that of the Cedent.
B. The liability of the Reinsurer for all ceded liabilities under this
Agreement may terminate in accordance with:
1. the Duration of Agreement provisions of this Agreement set forth in
Article XX;
2. the termination provisions set forth within Article VI;
3. the Recapture Privileges set forth in Article IX. or
4. the coverage provided by the contract terminates.
Page 4
ARTICLE III
ERRORS AND OMISSIONS
A. Any inadvertent errors or omissions on the part of one party occurring in
connection with this Agreement or any transaction hereunder shall not
relieve the other party from any liability to the first party that would
have otherwise attached had such error or omission not occurred, provided
that such error or omission is rectified as soon as practicable after
discovery thereof.
B. The Reinsurer assumes no liability under this Agreement for any damages,
fines, penalties, costs or expenses, or portion thereof, levied on or
assessed against the Cedent by any court or regulatory body on the basis of
negligence, oppression, malice, fraud, fault, wrongdoing or bad faith by
the Cedent in connection with any claim or for any act or omission that is
not consistent with the generally accepted practices and standards of the
life insurance industry applicable at the time of such act or omission,
unless the Reinsurer shall have received notice of and concurred with the
actions taken or not taken by the Cedent that led to the levy or
assessment, in which case the Reinsurer shall pay, as its share of such
levy or assessment, the proportional amount determined by the ratio of
reinsurance held by the Reinsurer to the total limit of liability under the
Reinsured Contracts.
C. Each party will indemnify and hold the other party, its affiliates,
directors, officers, employees and all other persons and entities acting on
behalf of or under the control of any of them harmless from and against any
and all claims, including reasonable attorneys fees and court costs, that
result from any negligent, dishonest, malicious, fraudulent or criminal act
or omission or arising out of or related to any incorrect representation,
warranty or obligation of this Agreement or any failure or breach of this
Agreement by the indemnifying party, its directors, officers, employees,
other representatives or any other person or entity acting on behalf of or
under the control of any of them.
D. In no event shall any party to this Agreement be liable to any other party
for punitive, indirect or consequential damages arising under this
Agreement for any cause whatsoever, whether or not such party has been
advised or could have foreseen the possibility of such damages.
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ARTICLE IV
NET AMOUNT AT RISK
GMDB AND EPB
------------
A. The MNAR (Mortality Net Amount at Risk) for each variable annuity contract
ceded hereunder shall be equal to the following:
MNAR = VNAR + SCNAR + EEMNAR
in which:
VNAR (Variable Net Amount at Risk) = Maximum (a, b) multiplied by the
Reinsurer's Percentage (defined in Schedule A) in which:
a = (Contractual Death Benefit - Account Value) and
b = 0
SCNAR (Surrender Charge Net Amount at Risk) = Surrender Charges multiplied
by the Reinsurer's Percentage
EEMNAR (Earnings Enhancement Mortality Net Amount at Risk) = x% * Maximum
(a, b) multiplied by the Reinsurer's Percentage where:
x% varies by issue age as described under the Death Benefits Ceded
section of Schedule A
a = (Contractual Death Benefit - Total Purchase Payments Not
Withdrawn)
b = 0
B. The death benefit and the surrender charges will be as described in the
variable annuity contract forms specified in Schedule A.
GMIB
----
C. The IBNAR (Income Benefit Net Amount at Risk) for each variable annuity
contract ceded hereunder shall be equal to the following:
IBNAR = Maximum [(IBB * (MAPR/SAPR) - Account Value), 0] * Reinsurer's
Percentage
where:
. The INCOME BENEFIT BASE (IBB) is as defined in Schedule A
. The MINIMUM ANNUITY PURCHASE RATE (MAPR) per $1000 is calculated
Page 6
using the following assumptions:
Mortality Table Annuity 2000 (Exhibit I)
Age Setback 7 Years
Mortality Improvement None
Unisex Blend: Sex distinct only
Interest Rate: 2.5% all years
Expenses: None
Premium Taxes: Applied by state of residence and market
Age: Attained age on exercise date
Frequency of payment Monthly
Annuity form:
1. Individual Basis: Limited to a Life Annuity with a Period Certain. The
number of years of Period Certain is as defined below:
Age at Annuitization Period Certain Years
-------------------- --------------------
Up to 79 10
80 9
81 8
82 7
83 6
84-85 5
2. Joint Basis: Limited to a Joint and 100% Survivor Annuity with 10-
Year Period Certain
. The SETTLEMENT ANNUITY PURCHASE RATE (SAPR) per $1000, which is used
at time of annuitization for reinsurance claims settlement shall be
equal to the fixed annuity purchase rate that the Cedent would provide
to an annuitant in the same class.
Annuity form:
1. Individual Basis: Limited to a Life Annuity with a Period Certain The
number of years of Period Certain is as defined below:
Age at Annuitization Period Certain Years
-------------------- --------------------
Up to 79 10
80 9
81 8
82 7
83 6
84-85 5
Page 7
2. Joint Basis: Limited to a Joint and 100% Survivor Annuity with 10-
Year Period Certain
D. Premium taxes will be applied on a consistent basis between the MAPR and
SAPR to calculate the IBNAR.
E. The IBNAR for each contract ceded hereunder shall be calculated as of the
last day of each calendar month prior to the termination of liability
contingencies set forth in Article II.
GWB
---
F. The WBNAR (Withdrawal Benefit Net Amount at Risk) for each variable annuity
contract ceded hereunder shall be equal to the following:
WBNAR = Maximum [(GWB Benefit Base - Account Value), 0] * Reinsurer's
Percentage (defined in Schedule A).
A claim is incurred when the Account Value equals zero and is paid out in
installments equal to the GWB Annual Benefit Payment (defined in Schedule
A) consistent with the reinsured contract.
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ARTICLE V
REINSURANCE PREMIUMS
A. The Cedent shall pay the Reinsurer an Initial Reinsurance Premium equal to
$894,146.
B. The total Reinsurance Premium for the business ceded hereunder is the sum
of the GMDB Reinsurance Premium, the EPB Reinsurance Premium, the GMIB
Reinsurance Premium, and the GWB Reinsurance Premium, each of which is
defined separately in this article.
C. The Reinsurance Premium rates and structure described above are subject to
change in accordance with the criteria described in Article XV.
GMDB Reinsurance Premium
------------------------
D. The GMDB Reinsurance Premium rates are expressed in terms of basis points
and are defined in Exhibit II.
E. The Cedent shall calculate, for each premium class, the Reinsurer's
Percentage of the average aggregate account value for the reporting month.
This value shall be applied to the GMDB Reinsurance Premium rates per
premium class on a 1/12th basis.
EPB Reinsurance Premium
-----------------------
F. The EPB Reinsurance Premium rates are expressed in terms of basis points,
and are defined in Exhibit II.
G. The Cedent shall calculate the Reinsurer's Percentage of the average
aggregate account value for the reporting month. This value shall be
applied to the annualized EPB reinsurance premium rates per premium class
on a 1/12th basis.
GMIB Reinsurance Premium
------------------------
H. The GMIB Reinsurance Premium rates are expressed in terms of basis points,
as set forth in Exhibit II, and shall be calculated on an aggregate basis.
I. The Cedent shall calculate, for each premium class, the Reinsurer's
Percentage of the average aggregate IBB value for the reporting month. This
value shall be applied to the annualized GMIB cession premium rates on a
1/12th basis.
GWB Reinsurance Premium
-----------------------
J. The GWB Reinsurance Premium rates are expressed in terms of basis points
and are defined in Exhibit II.
Page 9
K. The Cedent shall calculate the Reinsurer's Percentage of the Guaranteed
Withdrawal Amount for the reporting month. This value shall be applied to
the annualized GWB Reinsurance Premium rates per premium class on a
1/12th basis.
Page 10
ARTICLE VI
REINSURANCE ADMINISTRATION
A. Within thirty (30) days after the end of each calendar month, the Cedent
shall take all reasonable and appropriate steps to furnish the Reinsurer
with a seriatim electronic report, as detailed in Schedule B, for each
Reinsured Contract, valued as of the last day of that month.
Failure to provide this information as required shall constitute a material
breach within the scope of Article XX, Paragraph E.
B. Additionally, within thirty (30) days after the end of each calendar month
the Cedent shall furnish the Reinsurer with a separate Summary Statement
containing the following:
1. Reinsurance Premiums due to the Reinsurer summarized separately for
each premium class by GMDB, EPB, Income Program, and Withdrawal
Program, as shown in Exhibit II;
2. benefit claim recoverables due to the Cedent in total and, if
applicable, broken down by VNAR, SCNAR, and EEMNAR, Income Program,
and Withdrawal Program; and
3. the month end date for the period covered by the Summary Statement.
C. If the net balance is due to the Reinsurer, the Cedent shall remit the
amount due with the Summary Statement, but no later than thirty (30) days
after the month end date for the period covered by the Summary Statement.
If the net balance is due to the Cedent, the Reinsurer shall remit the
amount due to the Cedent within ten (10) days after receipt of the Summary
Statement.
D. The payment of Reinsurance Premiums is a condition precedent to the
liability of the Reinsurer under this Agreement. In the event that the
Cedent does not pay the Reinsurance Premiums in a timely manner, as defined
below, the Reinsurer may exercise the following rights:
1. The Reinsurer shall charge interest if Reinsurance Premiums are not
paid within thirty (30) days of the due date, as defined in Paragraph
C of this Article. The interest rate charged shall be based on the
ninety-(90) day federal Treasury ▇▇▇▇, as published in The Wall Street
Journal on the first business day in the month following the due date
of the Reinsurance Premiums, plus one hundred (100) basis points. The
method of calculation shall be simple interest (360-day year).
2. The Reinsurer may terminate this Agreement in the event that
Reinsurance Premium payments are more than sixty (60) days past due
after the due date, as described in Paragraph C of this Article, by
giving
Page 11
sixty (60) day written notice of termination to the Cedent. As of the
close of the last day of this sixty-(60) day notice period, the
Reinsurer's liability with respect to the ceded liabilities shall
terminate. If all Reinsurance Premiums that are the subject of a sixty
(60) day termination notice shall have been received by the Reinsurer
within the time specified, the termination notice shall be deemed
vacated and the Agreement shall remain in effect.
E. The Cedent will provide annually a listing of all portfolios in which the
sub-accounts of the underlying contracts are invested. The listing shall be
provided by May 31 in each calendar year.
Page 12
ARTICLE VII
SETTLEMENT OF CLAIMS
A. GMDB and EPB: The Reinsurer shall indemnify the Cedent under this Agreement
only for benefit claims that the Cedent paid as contractually required
under a Reinsured Contract with respect to deaths that occur on or after
the Effective Date.
GMIB: The Reinsurer shall indemnify the Cedent under this Agreement only
for benefit claims that the Cedent paid as contractually required under a
Reinsured Contract on or after the expiration of the waiting period and
upon annuitization under the terms of the Income Program where such events
occur, on the policies reinsured hereunder, on or after the Effective Date.
GWB: The Reinsurer shall indemnify the Cedent under this Agreement only for
benefit claims that the Cedent paid as contractually required under a
Reinsured Contract under the terms of the Withdrawal Program on or after
the Effective Date.
B. In the event that the Cedent provides satisfactory proof of claim liability
to the Reinsurer, benefit claim settlements made by a Cedent and accepted
by the Reinsurer shall be unconditionally binding on the Reinsurer. The
Cedent shall report all approved benefit claims in bordereau including
cause of death, as available, in such format as may be agreed to from time
to time.
C. GMDB and EPB: Within thirty (30) days after the end of each calendar month,
the Cedent shall notify the Reinsurer of the ceded contractual death
benefit claims paid in respect of Reinsured Contracts in that month, based
on the net amount at risk definition, set forth in Article IV, and the
Reinsurer shall indemnify the Cedent as provided in Article VI for the
ceded benefit claim liabilities.
GMIB: Within thirty (30) days of the end of each calendar month, the Cedent
shall notify the Reinsurer of the ceded contractual Income Program benefits
paid in respect of Reinsured Contracts in that month, based on the IBNAR
definition set forth in Article IV, and the Reinsurer shall indemnify the
Cedent as provided in Article VI for the ceded benefits.
GWB: Within thirty (30) days of the end of each calendar month, the Cedent
shall notify the Reinsurer of the ceded contractual Withdrawal Program
benefits paid in respect of Reinsured Contracts in that month, based on the
WBNAR definition set forth in Article IV, and the Reinsurer shall indemnify
the Cedent as provided in Article VI for the ceded benefits.
D. In no event will the Reinsurer be liable for expense incurred in connection
with a dispute or contest arising out of conflicting or any other claims of
entitlement to Reinsured Contract proceeds or benefits.
Page 13
E. Settlements hereunder by the Reinsurer shall be made in a lump sum
regardless of the mode of payment made by the Cedent.
Page 14
ARTICLE VIII
RESERVES
A. The Reinsurer shall hold and report in its statutory financial statements
reserves (the "Reserves") with respect to liabilities ceded under this
Agreement in amounts equal to or greater than those required by the state
in which its statement is filed.
B. If required by the Cedent, as a condition of securing ceded reinsurance
statement credit for a Cedent with respect to Reinsured Contracts, the
Reinsurer shall contractually require any subsequent reinsurers to hold and
report in their statutory financial statements reserves in amounts equal to
or greater than those that would have been required of the Reinsurer.
Page 15
ARTICLE IX
RECAPTURE PRIVILEGES
A. The Cedent may recapture existing cessions in force in accordance with the
following rules:
1. The Cedent shall notify the Reinsurer of its intention to recapture at
least ninety (90) days prior to any recapture.
2. The Cedent may not recapture a cession unless this Agreement shall
have been in force for fifteen (15) years, as measured from the
Effective Date until the date of recapture.
3. The recapture shall apply to all cessions in force under this
Agreement.
4. Recapture shall take place ratably over a thirty-six (36) month period
(i.e., each month, the initial percentage reduces 2.78% times the
initial percentage). The election to recapture shall be irrevocable.
Page 16
ARTICLE X
INSPECTION OF RECORDS
A. The Reinsurer and the Cedent and their employees and authorized
representatives, respectively, may audit, inspect and examine, during
regular business hours, at the home office of the other party, provided
that reasonable advance notice has been given, any and all books, records,
statements, correspondence, reports, and their related documents or other
documents that relate to Reinsured Contracts.
B. The audited, inspected or examined party shall provide a reasonable work
space for such audit, inspection or examination, cooperate fully and
disclose the existence of and produce any and all necessary and reasonable
materials requested by such auditors, investigators or examiners. Each
party will bear its own audit expenses.
C. All such information, including audit, inspection and examination reports
and analyses, shall be kept confidential as provided herein.
Page 17
ARTICLE XI
INSOLVENCY
A. In the event of the insolvency of the Cedent, any amount payable hereunder
shall be paid by the Reinsurer pursuant to the terms of this Agreement will
be made directly to the Cedent or its conservator, liquidator, receiver or
statutory successor. The reinsurance will be payable by the Reinsurer on
the basis of the liability of the Cedent under the Reinsured Contracts
without diminution because of such insolvency.
B. The conservator, liquidator, receiver or statutory successor of the Cedent
will give the Reinsurer written notice of the pendency of a claim against
the Cedent on any policy reinsured within a reasonable time after such
claim is filed in the insolvency proceeding.
C. During the pendency of any such claim, the Reinsurer may investigate such
claim and interpose in the Cedent's name or in the name of the Cedent's
conservator, liquidator, receiver or statutory successor, in the proceeding
where such claim is to be adjudicated, any defense or defenses which the
Reinsurer may deem available to the Cedent or its conservator, liquidator,
receiver or statutory successor. The expense thus incurred by the Reinsurer
will be chargeable, subject to court approval, against the Cedent as a part
of the expense of liquidation to the extent of a proportionate share of the
benefit that may accrue to the Cedent solely as a result of the defense
undertaken by the Reinsurer.
D. In the event of the Reinsurer's insolvency, as defined below, this
Agreement will be terminated with respect to all cessions that occurred on
or after the date of the insolvency. The liability of the Reinsurer
hereunder shall continue with respect to cessions that occurred prior to
the date of the insolvency and are subject to the payment of a Terminal
Accounting and Settlement.
E. Insolvency, for purposes of the preceding paragraph, is defined to be:
1. the filing of a voluntary petition for liquidation by or on behalf of
the Reinsurer;
2. any assignment for the benefit of creditors; or
3. the appointment of a conservator, liquidator, receiver or statutory
successor to conserve or administer the Reinsurer's properties or
assets
The effective date of such termination will be the date of the earliest of (1),
(2) or (3).
Page 18
ARTICLE XII
NEGOTIATION
A. Within ten (10) days after one of the parties shall have given to the other
a first written notice of a specific dispute, each party shall designate an
officer to seek a negotiated settlement. The designated officers shall
promptly meet at an agreed location and negotiate in good faith.
B. If the officers cannot resolve the dispute within thirty (30) days after
their first meeting, either party may commence arbitration proceedings. The
parties may, however, agree, at any time to forego or terminate
negotiations and proceed immediately to arbitration or to extend
negotiations for an additional time certain.
C. All rights shall be reserved to each party pending a settlement of a
dispute and no admissions, offers or other actions taken in such
negotiations in efforts to effect a voluntary settlement of the disputed
matter shall be admissible in any subsequent arbitration proceedings.
Page 19
ARTICLE XIII
ARBITRATION
A. All disputes and differences between the parties will be decided by
arbitration, regardless of the insolvency of either party, unless the
liquidator, receiver or statutory successor is specifically exempted from
an arbitration proceeding by applicable law.
B. Either party may initiate arbitration by providing written notification to
the other party that sets forth (a) a brief statement of the issue(s); (b)
the failure of the parties to reach agreement; and (c) the date of the
demand for arbitration.
C. The arbitration panel shall consist of three arbitrators who must be
impartial and each of whom must, at that time, either be accredited as an
arbitrator by ▇▇▇▇▇-US or be an active or former officer of a life
insurance or reinsurance companies other than the parties or their
affiliates.
D. Each party shall select an arbitrator within thirty (30) days from the date
of the demand. If either party shall refuse or fail to appoint an
arbitrator within the time allowed, the party that has appointed an
arbitrator may notify the other party that, if it has not appointed its
arbitrator within the following ten (10) days, the arbitrator will appoint
an arbitrator on its behalf. The two (2) arbitrators shall select the third
arbitrator, who must also be, at that time, accredited by ▇▇▇▇▇-US as an
Umpire, within thirty (30) days of the appointment of the second
arbitrator. If the two arbitrators fail to agree on the selection of the
third arbitrator within the time allowed, the Umpire Selection Procedures
of ▇▇▇▇▇-US, as in force at that time, shall be used to select the third
arbitrator.
E. The arbitrators shall interpret this Agreement as an honorable engagement
rather than merely as a legal obligation and shall consider equitable
principles as well as industry custom and practice regarding the applicable
insurance and reinsurance business. The arbitrators are released from
judicial formalities and shall not be bound by strict rules of procedure
and evidence.
F. The arbitrators shall determine all arbitration schedules and procedural
rules and may, in their discretion, use applicable ▇▇▇▇▇-US forms and
procedures. Organizational and other meetings will be held in New York, NY,
unless the arbitrators shall otherwise provide. The arbitrators shall
decide all matters by majority vote.
G. The decisions of the arbitrators shall be final and binding on both
parties. The arbitrators may, in their discretion, award costs and expenses
as they deem appropriate, including but not limited to legal fees and
interest. Judgment may be entered upon the final decisions of the
arbitrators in any court of competent jurisdiction. The arbitrators may not
award any exemplary or punitive damages.
Page 20
H. Unless the arbitrators shall provide otherwise, each party will be
responsible for (a) all fees and expenses charged by its respective
counsel, accountants, actuaries and other representatives in connection
with the arbitration and (b) one-half of the expenses of the arbitration,
including the fees of the arbitrators.
Page 21
ARTICLE XIV
RIGHT TO OFFSET BALANCES DUE
All moneys due either the Cedent or the Reinsurer under this Agreement shall be
offset against each other, dollar for dollar, regardless of any insolvency of
the other party.
Page 22
ARTICLE XV
CONTRACT AND PROGRAM CHANGES
A. The Cedent shall give the Reinsurer thirty (30) days prior written notice,
unless otherwise agreed to by the Cedent and the Reinsurer, of any accepted
changes to the Reinsured Contracts relating to a Cedent's annuity product
design and/or death benefit design, fees and charges, distribution systems
and/or methods or addition of any riders to any Reinsured Contract forms.
B. The Cedent shall provide to the Reinsurer a copy of each general
communication that the Cedent sends to contract holders in any state.
C. The Cedent shall simultaneously provide to the Reinsurer and any subsequent
retrocessionaires, a copy of any notice of any proposed change in the
investment options supporting Reinsured Contracts, and/or any other
accepted changes to the Reinsured Contracts related to a Cedent's annuity
product design and/or death benefit design, fees, charges, distributions
systems and/or methods or additions of any riders to any Reinsured Contract
forms.
Page 23
ARTICLE XVI
CONFIDENTIALITY
A. Each party shall maintain the confidentiality of all information, including
legally protected personal information pertaining to individuals, that is
provided to it by the other party in connection with this Agreement;
provided, however, that this obligation of confidentiality shall not apply
(a) if and to the extent that disclosure is required by applicable law or
any court, governmental agency or regulatory authority or by subpoena or
discovery request in pending litigation; (b) if the information is or
becomes available from public information (other than as a result of prior
unauthorized disclosure by the disclosing party); (c) if the information is
or was received from a third party not known by the disclosing party to be
under a confidentiality obligation with regard to such information; or (d)
if the information was in the possession of the disclosing party (having
received such information on a non-confidential basis) other than by reason
of the services performed pursuant to this Agreement; provided, further,
that legally protected information shall not be disclosed or used in
violation of applicable law.
B. In the event that either party becomes legally compelled to disclose any
such confidential information, such party will give prompt written notice
of that fact to the other party so that such other party may seek an
appropriate remedy to prevent such disclosure; provided, however, that this
provision shall not apply to information that is or otherwise becomes
available to the public or that was previously available to the public on a
non-confidential basis.
C. Information may be disclosed (duplicating is permitted for such disclosure)
to a party's directors, officers, employees, agents, affiliates (excluding
Reinsurance Group of America, Incorporated, as an affiliate of the Cedent)
and external advisors and their directors, officers, employees,
professional advisers, agents and rating agencies (collectively, the
"Representatives") and all such Representatives shall be advised of the
terms of this Agreement and each party shall be responsible for any breach
of the terms of this Agreement by its Representatives.
Page 24
ARTICLE XVII
OTHER PROVISIONS
A. Notice. Written notices under this Agreement shall be effective when
delivered to any party at the address provided herein:
1. If to the Cedent:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
New England Life Insurance Company
C/O Metropolitan Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇ Fax: (▇▇▇)▇▇▇-▇▇▇▇
2. If to the Reinsurer:
▇▇▇▇ ▇▇▇▇▇▇▇▇, C.A., Agent
Exeter Reassurance Company, Ltd.
C/O ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Management, Ltd.
Continental ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box HM 2461
▇▇▇▇▇▇▇▇ ▇▇ JX, Bermuda
Either party may change its address by giving the other party written
notice of its new address; provided, however, that any notice of a change
of address shall be effective only upon receipt.
B. Administrative Communications and Payment Remittances. Each party shall, by
written notice to the other, designate offices and depositaries for the
receipt of administrative communications and payment remittances.
Administrative communications and payments remittances shall be deemed
delivered only upon actual receipt by the designated office or depositary,
respectively.
C. Amendment and Non Waiver. Any change or modification of this Agreement
shall be null and void unless made by amendment to the Agreement and signed
by both parties. No waiver by either party of any default by the other
party in the performance of any promise, term or condition of this
Agreement shall be construed to be a waiver by such party of any other or
subsequent default in performance of the same or any other promise, term or
condition of this Agreement. No prior transactions or dealings between the
parties shall be deemed to establish any custom or usage waiving or
modifying any provision hereof. The failure of either party to enforce any
part of this Agreement shall not constitute a waiver by such party of its
right to do so, nor shall it be deemed to be an act of ratification or
consent.
D. Assignment. This Agreement shall be binding on the parties and their
respective successors and permitted assignees. This Agreement may not be
assigned by
Page 25
either party without the written consent of the other, which consent shall
not be unreasonably withheld.
E. Reinsured Contract Assignments. The Cedent may, in its discretion and
without the separate consent of the Reinsurer, accept a substitution of a
majority-owned affiliate of Metropolitan Life Insurance Company in lieu of
any Cedent as to any Reinsured Contract, whether by assumption reinsurance
or otherwise, with the Reinsured Contract continuing in force unchanged,
which substitution shall be binding on the Reinsurer.
F. Severability. In the event that any provision or term of this Agreement
shall be held invalid, illegal or unenforceable, all of the other
provisions and terms shall remain in full force and effect to the extent
that their continuance is practicable and consistent with the original
intent of the parties. In addition, if provisions or terms are held
invalid, illegal or unenforceable, the parties will attempt in good faith
to renegotiate the Agreement to carry out its original intent.
G. Survival. All provisions of this Agreement shall, to the extent necessary
to carry out the purposes of this Agreement or to ascertain and enforce the
parties' rights hereunder, survive its termination.
H. Choice of Law, Forum and Consent to Service. This Agreement is subject to
and is to be interpreted in accordance with the laws of the State of New
York without regard to the New York choice of law rules. While the parties
contemplate that all disputes will be decide through negotiation or
arbitration as provided herein, in the event of any legal proceedings, the
parties shall submit to the exclusive jurisdiction of courts of the State
of New York and the United States of America located in the City of New
York and shall abide by the final decision of such courts. Each party
hereby designates the Superintendent of Insurance of the State of New York
as its true and lawful attorney upon whom may be served any lawful process
in any action, suit or proceeding instituted by or on behalf of the other
party arising out of the Agreement. Process accepted by the Superintendent
on behalf of party shall be forwarded to that party at the address
specified herein.
I. Settlements. Claim settlements made by the Cedent in good faith, including
compromises, shall be unconditionally binding on the Reinsurer.
J. Payments. All reinsurance settlements and other payments will be effected
through off-setting balances, electronic funds transfers or as the parties
may otherwise agree to carry out the purposes of this Agreement.
K. Currency. All financial transactions under this Agreement shall be made in
U.S. dollars.
L. Intermediaries. Each party represents that all negotiations relative to
this Agreement and the transactions contemplated hereby, including any
subsequent Assumption Reinsurance Agreement with respect to the Reinsured
Contracts, have been carried out by the Cedent and the Reinsurer directly
and without the intervention of any
Page 26
person in such manner as to give rise to any valid claim by any other
person for a finder's fee, brokerage commission or similar payment.
M. Construction Rules. Each party represents that its has been represented by
and relied on the advice of counsel of its choice in the negotiation and
drafting of the Agreement. The parties affirm that their respective counsel
have had a substantial role in the drafting and negotiation of this
Agreement and, therefore, the rule of construction that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any Schedule attached hereto.
N. Authority. Each party represents that it has full power and authority to
enter into and to perform this Agreement and that the person signing this
Agreement on its behalf has been properly authorized and empowered to do
so. Each party further acknowledges that it has read this Agreement,
understands it and agrees to be bound by it.
O. Changes. In the event the Cedent's liability to make any payment is changed
due to a modification or cancellation of a Reinsured Contract, Reinsurer's
liability to make any such payment shall also be changed in the same
manner and to the same extent. In the event that the amount of liability
provided by a Reinsured Contract is increased or reduced because of a
misstatement of age or sex, the reinsurance liability of the Reinsurer
shall be increased or reduced by the same amount. Any adjustments for this
reason shall be made without interest.
P. Unreasonable Refusal of Agreement. Neither party, acting unreasonably, will
withhold agreement to any discretionary action for the sole purpose of
terminating this Agreement or otherwise frustrating its purpose.
Q. Independent Contractor. The parties shall be deemed to be independent
contractors, each with full control over its respective business affairs
and operations. This Agreement shall not be construed as a partnership or
joint venture and neither party hereto shall be liable for any obligations
incurred by the other party except as expressly provided herein.
R. Schedules, Exhibits and Captions. Schedules and Exhibits attached hereto
are incorporated into this Agreement. Captions are provided for reference
only.
S. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute
one and the same instrument.
T. The Cedent shall notify the Reinsurer in advance of entry into any
amendment to the Reinsurance Agreement and, in the event that such
amendment would materially change the ceded liabilities, the parties shall
modify the provisions of this Agreement to restore the Reinsurer to its
original position unless the parties shall agree otherwise.
Page 27
ARTICLE XVIII
ENTIRE AGREEMENT
This Agreement, together with Schedules A and B, and Exhibits I and II
supercedes all prior discussions and agreements between the parties and
constitutes their sole and entire agreement with respect to Reinsured Contracts
and there are no understandings between the parties other than as expressed
herein.
Page 28
ARTICLE XIX
DAC TAX
A. The parties will make a joint election, in accordance with Treas. Reg.
1.848-2(g)(8), issued December 28, 1992, under (S) 848 of the Internal
Revenue Code and the party with the net positive consideration under this
Agreement will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitations of (S) 848(c)(1) of the Code;
1. the election will take effect on the Effective Date and will remain in
effect for all subsequent years that this Agreement remains in effect;
and
2. each party shall attach a schedule to its federal income tax return
for its first taxable year ending after the election becomes effective
that identifies the agreements (including this Agreement) for which
joint elections have been made under this Regulation.
B. Pursuant to this joint election:
1. each party will exchange information pertaining to the amount of net
consideration under this Agreement to assure consistency or as may
otherwise be required by the Internal Revenue Service;
2. Cedent will submit its calculation of the "net consideration" as
defined under the above referenced regulation to Reinsurer not later
than May 1 for each and every tax year for which this Agreement is in
effect;
3. Reinsurer may challenge such calculation within ten (10) working days
of receipt of the Cedent's calculation; and
4. the parties will act in good faith to reach agreement as to the
correct amount of net consideration whenever there is disagreement as
to the amount of net consideration as determined under Treas. Reg.
1.848-2(f).
C. Each party represents and warrants that it is subject to U. S. taxation
under Subchapter L of Chapter 1 of the Code.
Page 29
ARTICLE XX
DURATION OF AGREEMENT
A. Cessions may be made while this Agreement is in force.
B. Either the Cedent of the Reinsurer may cancel this Agreement for future
cessions upon ninety (90) days prior written notice.
C. Except as otherwise provided herein, the Agreement shall be unlimited in
duration but may be reduced or terminated for future cessions.
D. This Agreement shall remain in force as provided herein until the
termination of the Cedent's liability on the Reinsured Contracts.
E. Either party may terminate this Agreement in the event that the other party
is in material breach of the terms or conditions of this Agreement provided
that the terminating party has notified the other party of the breach and
the other party has not initiated the cure of such breach within thirty
(30) days after such notice to be effectuated as promptly as possible.
F. In the event that a Cedent shall terminate a Reinsurance Agreement for the
cession of new annuity contract liabilities because, in its discretion,
after a good faith effort, it was unable to obtain regulatory credit for
reinsurance ceded to the Reinsurance Agreement, this Agreement shall
continue in effect, on a run-off basis, for all annuity contract
liabilities ceded by that Cedent prior to the Reinsurance Agreement
termination date; provided, however, that the Cedent has made a good faith
effort to obtain regulatory credit for reinsurance ceded to the Reinsurance
Agreement.
Page 30
ARTICLE XXI
NON-ADMITTED REINSURANCE
A. Security Requirement. In the event that the Cedent shall, at any time,
--------------------
notify the Reinsurer of its determination that security for reinsurance
recoverables hereunder is or may be necessary for the Cedent to obtain any
associated regulatory statement credit for reinsurance ceded to this
Agreement on account of the Reinsurer being neither admitted or accredited
as a reinsurer, the Reinsurer shall establish a trust ("the Trust") in
accordance with Section B of this Article or the Reinsurer shall provide a
letter of credit (an "LOC") in accordance with Section C of this Article.
B. Trust Agreement.
---------------
1. Except as may be provided in Section C of this Article, the Cedent and
the Reinsurer shall enter in to a Trust Agreement that complies with
regulations of the domiciliary state of the Cedent, establishing a
Trust Account for the benefit of the Cedent to cover the recoverables
and/or Statutory Reserves attributable to the Reinsured Policies. The
Trustee shall be a bank, acceptable to each party, that is organized
in the United States; that is regulated, supervised and examined by
federal or state banking regulatory authorities; and that meets any
other applicable regulatory financial condition standards. The bank
shall not be a parent, subsidiary or affiliate of the Cedent or
Reinsurer.
2. This Trust Agreement is intended to secure Annual Statement credit for
reinsurance ceded by the Cedent to the Reinsurer in accordance with
regulations of the domiciliary state of the Cedent and, in the event
that the parties fail to enter into the Trust Agreement and fund the
Trust Account, as provided herein, within five (5) working days after
this Agreement shall have been signed by both parties, this Agreement,
unless the parties otherwise provide, shall be null and void.
3. Assets having a value at least equal to 102% of the Statutory Reserves
attributable to the Reinsured Policies shall be deposited into the
Trust Account and maintained at all times until its dissolution.
Assets deposited in the Trust Account shall be valued according to
their current fair market value, as determined under the statutory
accounting rules of the domiciliary state of the Cedent, and shall
consist only of cash (United States legal tender) and such domiciliary
state statutorily permitted investments that are not issued by a
parent, subsidiary or affiliate of either party.
4. Prior to depositing assets with the Trustee, the Reinsurer shall
execute assignments, endorsements in blank or transfer legal title to
the Trustee of all shares, obligations or any other assets requiring
assignment in order that the Cedent or the Trustee, upon direction of
the Cedent, may, whenever, necessary, negotiate any such assets
without consent or signature from the Reinsurer of an
Page 31
other person or entity, other than the Trustee, in accordance with the
terms of the Trust Agreement.
5. Assets in the Trust Account, established hereunder, may be withdrawn
by the Cedent at any time, notwithstanding any other provisions of
this Agreement, and shall be utilized and applied by the Cedent or any
successor of the Company by operation of law, including without
limitation any liquidator, rehabilitator, receiver or conservator of
the Cedent, without diminution because of insolvency on the part of
the Ceding Company or the Reinsurer, only for the following purposes:
i. to reimburse the Cedent for the Reinsurer's share of premiums
returned to the owners of the Policies on account of
cancellations of such Policies;
ii. to reimburse the Cedent for the Reinsurer's share of benefits
claims paid by the Cedent under the terms and provisions of the
Policies;
iii. to fund an account with the Cedent in an amount at least equal to
the ceded reinsurance deduction from the Cedents Policy
liabilities hereunder, which amount shall include, but not be
limited to, reserves for benefit claims incurred (including
benefit claims incurred but not reported)
iv. to pay any other amounts that the Cedent claims to be due
hereunder
6. With the approval of the Cedent, the Reinsurer may withdraw from the
Trust Account all or any part of the assets contained therein and
transfer such assets to the Reinsurer; provided
i. the Reinsurer shall, at the time of such withdrawal, replace the
withdrawn assets with other qualified assets having a market
value equal to the market value of the assets withdrawn so as to
maintain the Trust Account at the required amount at all times;
or
ii. after such withdrawals and transfers, the market value of the
Trust Account is not less than 102% of the required amount.
The Cedent shall be the sole judge as to the application of this
provision, but shall not unreasonably or arbitrarily withhold its
approval.
7. The Cedent will return any amounts drawn on the LOC in excess of the
actual amounts required for subparagraphs (i), (ii) and (iv) of
paragraph 5 or, in the case of subparagraph (iii) of paragraph 5, any
amounts that are subsequently determined not to be due. The Cedent
will pay interest on amounts withdrawn in excess of the actual amount
required under subparagraph (iii) of paragraph 5 at a rate equal to
the "Prime Rate" published in The Wall Street Journal (currently the
base rate on corporate loans posted by at least 75% of the nation's 30
largest banks), which rate shall be adjusted on the last day of each
month; and
8. All of the foregoing provisions are to be applied without diminution
because of insolvency on the part of either party.
Page 32
C. Letters of Credit.
-----------------
1. The Reinsurer will provide an LOC that complies with regulations of
the domiciliary state of the Cedent.
2. The Reinsurer shall be the LOC applicant. The Trustee shall be a bank,
acceptable to each party, that is organized in the United States; that
is regulated, supervised and examined by federal or state banking
regulatory authorities; and that meets National Association of
Insurance Commissioners-Securities Valuation Office standards for
acceptable LOC issuance. The bank shall not be a parent, subsidiary or
affiliate of the Cedent or Reinsurer.
3. The LOC may be drawn at any time, notwithstanding any other provisions
herein and may be utilized by the Cedent or any successor by operation
of law, including without limitation any liquidator, rehabilitator or
receiver of the Cedent for the following purposes:
i. to reimburse the Cedent for the Reinsurer's share of Policy
premiums returned on account of cancellations;
ii. to reimburse the Cedent for the Reinsurer's share of benefit
claims paid by the Cedent under the terms and provisions of the
Policies;
iii. to fund an account with the Cedent in an amount at least equal to
the ceded reinsurance deduction from the Cedents Policy
liabilities hereunder, which amount shall include, but not be
limited to, reserves for benefit claims incurred (including
benefit claims incurred but not reported)
iv. to pay any other amounts that the Cedent claims to be due
hereunder
4. The Cedent will return any amounts drawn on the LOC in excess of the
actual amounts required for subparagraphs (i), (ii) and (iv) of this
paragraph or, in the case of subparagraph (iii) of this paragraph, any
amounts that are subsequently determined not to be due. The Cedent
will pay interest on amounts withdrawn in excess of the actual amount
required under subparagraph (iii) at a rate equal to the "Prime Rate"
published in The Wall Street Journal (currently the base rate on
corporate loans posted by at least 75% of the nation's 30 largest
banks), which rate shall be adjusted on the last day of each month;
and
(e) All of the foregoing provisions are to be applied without
diminution because of insolvency on the part of either party.
Page 33
ARTICLE XXII
CEDENT REPRESENTATIONS AND WARRANTIES
The Cedent represents and warrants, to the best of its knowledge, the
following:
1. Corporate Status. The Cedent is duly licensed, qualified or admitted
----------------
to do business and is in good standing in all jurisdictions in which
it is required to be so qualified, licensed or admitted to do business
by the laws thereof.
2. Authority. The Cedent has the full corporate power and authority to
---------
carry out and perform its undertakings and obligations under this
Agreement. This Agreement has been duly and validly signed and
delivered by the Cedent. The Cedent shall maintain in force all such
legal and regulatory authorizations as may be reasonably necessary or
appropriate for the performance of its obligations under this
Agreement.
3. Other Reinsurance. The Cedent maintains the right to enter into other
-----------------
reinsurance agreements affecting the Policies reinsured. However, the
Cedent will maintain net for it's own account at least a 10% quota
share of risk.
4. Tax Status. The Cedent represents and warrants that it is subject to
----------
U. S. taxation under Subchapter L of Chapter 1 of the Code.
Page 34
ARTICLE XXIII
REINSURER REPRESENTATIONS AND WARRANTIES
The Reinsurer represents and warrants, to the best of its knowledge, the
following:
1. Corporate Status. The Reinsurer is duly licensed, qualified or
----------------
admitted to do exempt insurance business and is in good standing in
Hamilton, Bermuda.
2. Authority. The Reinsurer has the full corporate power and authority to
---------
carry out and perform its undertakings and obligations under this
Agreement. This Agreement has been duly and validly signed and
delivered by the Reinsurer. The Reinsurer shall at maintain in force
all such legal and regulatory authorizations as may be reasonably
necessary or appropriate for the performance of its obligations under
this Agreement.
3. License Status. The Reinsurer is not an authorized insurer or
--------------
accredited reinsurer in Missouri. The Reinsurer shall notify the
Ceding Company within five (5) days after the date of any change in
its status.
4. Tax Status. The Reinsurer is subject to U.S. taxation under Subchapter
----------
L of Chapter 1 or Subpart F of Part II of Subchapter N or Chapter 1 of
the Internal Revenue Code.
Page 35
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first above written.
NEW ENGLAND LIFE INSURANCE COMPANY
By: /s/ Illegible
------------------------------------
Title: VP
EXETER REASSURANCE COMPANY, LTD.
By: /s/ Illegible
------------------------------------
Title: President
Schedule A Plans of Reinsurance
Schedule B Required Data and Suggested Layout
Exhibit I 1994 Variable Annuity MGDB Mortality Tables
Mortality Table - Income Program (Annuity 2000 Valuation)
Projection Scale G
Exhibit II Reinsurance Premiums
Page 36
SCHEDULE A
PLANS OF REINSURANCE
A. Reinsurer's Percentage:
Prior to July 1, 2004, 25% of the business described herein.
Effective, July 1, 2004, 100% of the business described herein.
B. Effective Date:
April 1,2001.
C. Death Benefits Ceded:
Guaranteed Minimum Death Benefits (GMDB)
----------------------------------------
. Principal Protection: Return of Premium - Added by amendment as
of July 1, 2004.
. Annual Step-Up Benefit: Maximum Anniversary Value to attained age
80; GMDB frozen thereafter.
. Greater of 5% Index and Annual Step-Up: Greater maximum
Anniversary Value to attained age 80 and 5% Rollup to attained
age 80; GMDB frozen thereafter.
Note: Withdrawals reduce the death benefit proportionately.
Earnings Preservation Benefits (EPB)
------------------------------------
. Before the contract anniversary immediately prior to the owner's
81st birthday, the EPB is,
40% of (a) - (b) for issue ages 0-69
25% of (a) - (b) for issue ages 70-79, where
(a) is the death benefit under the contract, and
(b) is the total Purchase Payments not withdrawn. For purposes of
calculating this value, partial withdrawals are first applied
against earnings in the contract (Earnings are equal to the
Account Value less Purchase Payments not withdrawn), and then
against Purchase Payments not withdrawn.
. On or after the contract anniversary immediately prior to the
owner's 81st birthday, the EPB is,
40% of (a) - (b) for issue ages 0-69
25% of (a) - (b) for issue ages 70-79, where
Page 37
SCHEDULE A
PLANS OF REINSURANCE
(PAGE 2 OF 4)
(a) is the death benefit under the contract anniversary
immediately prior to the owner's 81st birthday, increased by
subsequent Purchase Payments and reduced proportionately by the
percentage reduction in Account Value attributable to each
subsequent partial withdrawal; and
(b) is the total Purchase Payments not withdrawn. For purposes of
calculating this value, partial withdrawals are first applied
against earnings in the contract (Earnings are equal to the
Account Value less Purchase Payments not withdrawn), and then
against Purchase Payments not withdrawn.
Gain = (a) - (b) as defined above.
D. GMIB (Contractual Income Program Benefit) Ceded:
Income Benefit Base (IBB)
-------------------------
Version 1 - Greater of an Annual Ratchet to attained age 80 and a 6%
Rollup to attained age 80; frozen thereafter. The IBB is reduced
proportionately for withdrawals.
Version 2 - Greater of an Annual Ratchet to attained age 80 and a 5%
Rollup to attained age 80; frozen thereafter. The IBB is reduced
proportionately for withdrawals.
Waiting Period
--------------
Contractholders can elect to annuitize under the Income Program thirty
(30) days prior to their tenth (10th) or later contract anniversary
and also under one of the life annuity forms stated in Article IV.
Annuitization
-------------
Annuitization under the Income Program means that the annuitant is
receiving guaranteed fixed income payments based on the IBB and the
MAPR under one of the life annuity forms shown below under Paragraph
E.
Income Program Rider Election
-----------------------------
The contractholder can only elect the Income Program Rider at issue.
Once election is made, it is irrevocable.
Income Program Rider Cancellation
---------------------------------
The contractholder of the annuity can not cancel the Income Program
rider at any time.
Step-Up or Reset of IBB
-----------------------
Not Available.
Page 38
SCHEDULE A
PLANS OF REINSURANCE
(PAGE 3 OF 4)
E. Guaranteed Withdrawal Benefit (GWB) Ceded
GWB Benefit Base
----------------
. Benefit Base when account value reaches zero, paid out in equal
installments
. Initial Benefit Base = Initial Deposit x (1 + 5% Bonus Rate)
. Additional deposits increase the Benefit Base
. Withdrawals decrease the Benefit Base
. Benefit Base may be reset at an optional reset date
Guaranteed Withdrawal Amount
----------------------------
. Initial Guaranteed Withdrawal Amount = Initial Benefit Base
. Additional Deposits may increase the Guaranteed Withdrawal Amount
. Withdrawals do not decrease the Guaranteed Withdrawal Amount
. Guaranteed Withdrawal Amount may be reset at an optional reset
date
GWB Annual Benefit Payment
--------------------------
. The maximum income amount payable in a contract year.
. Equal to GWB Benefit Base x 5%
Page 39
SCHEDULE A
PLANS OF REINSURANCE
(PAGE 4 OF 4)
F. Reinsured Contracts:
NEW ENGLAND LIFE INSURANCE COMPANY
Deferred Annuity Contracts
--------------------------
Standard Contract (Standard Contract, 7-year surrender charge schedule)
B Plus Class Contract (Bonus Contract, 9-year surrender charge schedule)
L Class Contract (3-year surrender charge schedule)
C Class Contract (No surrender charges)
P Class Contract (9-year surrender charge schedule)
Form Numbers
------------
1. Death Benefit Rider (Greater of Annual Step-Up and 5% Annual
Increase), Form NEL-540 (05/01)
2. Death Benefit Rider (Annual Step-Up) Form NEL-550 (05/01)
3. Additional Death Benefit (EPB) Rider Form NEL-570 (05/01)
4. Guaranteed Minimum Income Benefit Form NEL-560 (05/01)
5. Guaranteed Minimum Income Benefit Form NEL-560-1 (03/03)
6. Guaranteed Withdrawal Benefit Form NEL-690-1 (7/04)
7. Death Benefit Rider (Principle Protection) Form NEL-530 (05/01)
Page 40
SCHEDULE B
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: Last Name If Applicable
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: Last Name If Applicable
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 NL = True New Issue, SC = Spousal
Continuance,
EX = 1035 Exchange
Tax Status Qualified (Q), or Non-qualified (N)
Page 41
SCHEDULE B
REQUIRED DATA AND SUGGESTED DATA LAYOUT
(PAGE 2 OF 3)
FIELD DESCRIPTION COMMENTS
----------------- --------
GMDB/EEB SECTION (If applicable)
-------------------------------
Mortality Risk Definition Indicator AV = VNAR; CV = VNAR + SCNAR
Death Claim Trigger A = Annuitant, 0 =
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
Effective Date of the Rider
Account Value as of the Effective Date of
the Rider
Mortality Risk VNAR Max [Contractual Death Benefit - Account Value), 0]
SCNAR Surrender Charge, if applicable
EEMNAR X% of Death Benefit less Net Purchase Payments
Earnings Death Benefit less Net Purchase Payments
Earnings CAP X% of Net Purchase Payments
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
GWB SECTION (if applicable)
--------------------------
GWB Indicator Y = benefit elected, N = benefit not elected, C =
rider cancelled
GWB Election Date YYYYMMDD
Total-GWB-Benefit-Base-Amt
Total-GWB-Guar-Withdrl-Amt
Total-GWB-▇▇▇-Benefit-Pymnt
Total-GWB-Rem-Ann-Bnft-Pymnt
Total-GWB-Rider-Charge
GWB-Optn-Reset-Date
Account Value Current total value
Surrender Charge If reinsured
Cumulative Deposits Total premiums
Cumulative Withdrawals Total withdrawals
Net Purchase Payments Total premiums less total withdrawals (proportional adjustment)
Deposits made in quarter of death dollar value
Quota Share ceded percentage
Page 42
SCHEDULE B
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 Exchange (X), GMIB Election (I), Other (O).
Cause of Death If applicable. Use your Cause of Death code, and provide translation
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
Page 43
EXHIBIT I
1994 VARIABLE ANNUITY MGDB MORTALITY TABLE
(APPLIED AGE LAST BIRTHDAY AT ATTAINED AGE)
ATTAINED AGE MALE QX FEMALE QX
------------ -------- ---------
1 0 000587 0.000519
2 0.000433 0.000358
3 0.000350 0.000268
4 0.000293 0.000218
5 0.000274 0.000201
6 0.000263 0.000188
7 0.000248 0.000172
8 0.000234 0.000158
9 0.000231 0.000154
10 0.000239 0.000159
11 0.000256 0.000169
12 0.000284 0.000185
13 0.000327 0.000209
14 0.000380 0.000239
15 0.000435 0.000271
16 0.000486 0.000298
17 0.000526 0.000315
18 0.000558 0.000326
19 0.000586 0.000333
20 0.000613 0.000337
21 0.000642 0.000340
22 0.000677 0.000343
23 0 000717 0.000344
24 0.000760 0.000344
25 0.000803 0.000346
26 0.000842 0.000352
27 0.000876 0.000364
28 0.000907 0.000382
29 0.000935 0.000403
30 0.000959 0.000428
31 0.000981 0.000455
32 0.000997 0.000484
33 0.001003 0.000514
34 0.001005 0.000547
35 0.001013 0.000585
36 0.001037 0.000628
37 0.001082 0.000679
38 0.001146 0.000739
39 0.001225 0.000805
40 0.001317 0.000874
41 0.001424 0.000943
42 0.001540 0.001007
43 0.001662 0.001064
44 0.001796 0.001121
45 0.001952 0.001186
46 0.002141 0.001269
47 0.002366 0.001371
48 0.002618 0.001488
49 0.002900 0.001619
50 0.003223 0.001772
51 0.003598 0.001952
52 0.004019 0.002153
53 0.004472 0.002360
54 0.004969 0.002589
55 0.005543 0.002871
56 0.006226 0.003241
57 0.007025 0.003713
58 0.007916 0.004270
59 0.008907 0.004909
60 0.010029 0.005636
61 0.011312 0.006460
62 0.012781 0.007396
63 0.014431 0.008453
64 0.016241 0.009611
65 0.018191 0.010837
66 0.020259 0.012094
67 0.022398 0.013318
68 0.024581 0.014469
69 0.026869 0.015631
70 0.029363 0.016957
71 0.032169 0.018597
72 0.035268 0.020599
73 0.038558 0.022888
74 0.042106 0.025453
75 0.046121 0.028372
76 0.050813 0.031725
77 0.056327 0.035505
78 0.062629 0.039635
79 0.069595 0.044161
80 0.077114 0.049227
81 0.085075 0.054980
82 0.093273 0.061410
83 0.101578 0.068384
84 0.110252 0.075973
85 0.119764 0.084432
86 0.130583 0.094012
87 0.143012 0.104874
88 0.156969 0.116968
89 0.172199 0.130161
90 0.188517 0.144357
91 0.205742 0.159461
92 0.223978 0.175424
93 0.243533 0.192270
94 0.264171 0.210032
95 0.285199 0.228712
96 0.305931 0.248306
97 0.325849 0.268892
98 0.344977 0.290564
99 0.363757 0.313211
100 0.382606 0.336569
101 0 401942 0.360379
102 0.422569 0.385051
103 0.445282 0.411515
104 0.469115 0.439085
105 0.491923 0.465584
106 0.511560 0.488958
107 0.526441 0.507867
108 0.536732 0.522924
109 0.543602 0.534964
110 0.547664 0.543622
111 0.549540 0.548526
112 0.550000 0.550000
113 0.550000 0.550000
114 0.550000 0.550000
115 1.000000 1.000000
PAGE 44
EXHIBIT I
MORTALITY TABLE - INCOME PROGRAM
2000 VALUATION (PER THOUSAND RATES)
(APPLIES AT ATTAINED AGE)
AGE MALE - QX'S FEMALE - QX'S
--- ----------- -------------
5 0.291 0.171
6 0.270 0.141
7 0.257 0.118
8 0.294 0.118
9 0.325 0.121
10 0.350 0.126
11 0.371 0.133
12 0.388 0.142
13 0.402 0.152
14 0.414 0.164
15 0.425 0.177
16 0.437 0.190
17 0.449 0.204
18 0.463 0.219
19 0.480 0.234
20 0.499 0.250
21 0.519 0.265
22 0.542 0.281
23 0.566 0.298
24 0.592 0.314
25 0.616 0.331
26 0.639 0.347
27 0.659 0.362
28 0.675 0.376
29 0.687 0.389
30 0.694 0.402
31 0.699 0.414
32 0.700 0.425
33 0.701 0.436
34 0.702 0.449
35 0.704 0.463
36 0.719 0.481
37 0.749 0.504
38 0.796 0.532
39 0.864 0.567
40 0.953 0.609
41 1.065 0.658
42 1.201 0.715
43 1.362 0.781
44 1.547 0.855
45 1.752 0.939
46 1.974 1.035
47 2.211 1.141
48 2.460 1.261
49 2.721 1.393
50 2.994 1.538
51 3.279 1.695
52 3.576 1.864
53 3.884 2.047
54 4.203 2.244
55 4.534 2.457
56 4.876 2.689
57 5.228 2.942
58 5.593 3.218
59 5.988 3.523
60 6.428 3.863
61 6.933 4.242
62 7.520 4.668
63 8.207 5.144
64 9.008 5.671
65 9.940 6.250
66 11.016 6.878
67 12.251 7.555
68 13.657 8.287
69 15.233 9.102
70 16.979 10.034
71 18.891 11.117
72 20.967 12.386
73 23.209 13.871
74 25.644 15.592
75 28.304 17.564
76 31.220 19.805
77 34.425 22.328
78 37.948 25.158
79 41.812 28.341
80 46.037 31.933
81 50.643 35.985
82 55.651 40.552
83 61.080 45.690
84 66.948 51.456
85 73.275 57.913
86 80.076 65.119
87 87.370 73.136
88 95.169 81.991
89 103.455 91.577
90 112.208 101.758
91 121.402 112.395
92 131.017 123.349
93 141.030 134.486
94 151.422 145.689
95 162.179 156.846
96 173.279 167.841
97 184.706 178.563
98 196.946 189.604
99 210.484 201.557
100 225.806 215.013
101 243.398 230.565
102 263.745 248.805
103 287.334 270.326
104 314.649 295.719
105 346.177 325.576
106 382.403 360.491
107 423.813 401.054
108 470.893 447.860
109 524.128 501.498
110 584.004 562.563
111 651.007 631.645
112 725.622 709.338
113 808.336 796.233
114 899.633 892.923
115 1000.000 1000.000
PAGE 45
EXHIBIT I
PROJECTION SCALE G
AGE MALE FEMALE
--- ---- ------
5 1.50% 1.50%
6 1.50% 1.50%
7 1.50% 1.50%
8 1.25% 1.40%
g 1.00% 1.30%
10 0.75% 1.20%
11 0.50% 1.10%
12 0.25% 1.00%
13 0.24% 0.90%
14 0.23% 0.80%
15 0.22% 0.70%
16 0.21% 0.60%
17 0.20% 0.50%
18 0.18% 0.50%
19 0.16% 0.50%
20 0.14% 0.50%
21 0.12% 0.50%
22 0.10% 0.50%
23 0.10% 0.55%
24 0.10% 0.60%
25 0.10% 0.65%
26 0.10% 0.70%
27 0.10% 0.75%
28 0.23% 0.85%
29 0.36% 0.95%
30 0.49% 1.05%
31 0.62% 1.15%
32 0.75% 1.25%
33 1.00% 1.45%
34 1.25% 1.65%
35 1.50% 1.85%
36 1.75% 2.05%
37 2.00% 2.25%
38 2.00% 2.25%
39 2.00% 2.25%
40 2.00% 2.25%
41 2.00% 2.25%
42 2.00% 2.25%
43 1.95% 2.20%
44 1.90% 2.15%
45 1.85% 2.10%
46 1.80% 2.05%
47 1.75% 2.00%
48 1.75% 2.00%
49 1.75% 2.00%
50 1.75% 2.00%
51 1.75% 2.00%
52 1.75% 2.00%
53 1.70% 1.95%
54 1.65% 1.90%
55 1.60% 1.85%
56 1.55% 1.80%
57 1.50% 1.75%
58 1.50% 1.75%
59 1.50% 1.75%
60 1.50% 1.75%
61 1.50% 1.75%
62 1.50% 1.75%
63 1.50% 1.75%
64 1.50% 1.75%
65 1.50% 1.75%
66 1.50% 1.75%
67 1.50% 1.75%
68 1.45% 1.75%
69 1.40% 1.75%
70 1.35% 1.75%
71 1.30% 1.75%
72 1.25% 1.75%
73 1.25% 1.70%
74 1.25% 1.65%
75 1.25% 1.60%
76 1.25% 1.55%
77 1.25% 1.50%
78 1.25% 1.50%
79 1.25% 1.50%
80 1.25% 1.50%
81 1.25% 1.50%
82 1.25% 1.50%
83 1.25% 1.50%
84 1.25% 1.50%
85 1.25% 1.50%
86 1.25% 1.50%
87 1.25% 1.50%
88 1.20% 1.45%
89 1.15% 1.40%
90 1.10% 1.35%
91 1.05% 1.30%
92 1.00% 1.25%
93 1.00% 1.25%
94 1.00% 1.25%
95 1.00% 1.25%
96 1.00% 1.25%
97 1.00% 1.25%
98 0.80% 1.00%
99 0.60% 0.75%
100 0.40% 0.50%
101 0.20% 0.25%
102 0.00% 0.00%
103 0.00% 0.00%
104 0.00% 0.00%
105 0.00% 0.00%
106 0.00% 0.00%
107 0.00% 0.00%
108 0.00% 0.00%
109 0.00% 0.00%
110 0.00% 0.00%
111 0.00% 0.00%
112 0.00% 0.00%
113 0.00% 0.00%
114 0.00% 0.00%
115 0.00% 0.00%
Page 46
EXHIBIT II
REINSURANCE PREMIUMS
A. GMDB PROGRAM
REINSURANCE PREMIUM
GMDB PROGRAM PRODUCTS COVERED (BASIS POINTS)
------------ ----------------------- -------------------
Principal Protection All Products 9.00
Annual Step-up to attained All Products sold prior 10.00
age 80 to May 1,2003
Annual Step-up to attained All Products sold after 20.00
age 80 April 30, 2003
Max (Annual Step-Up, 5% All Products sold prior 25.00
Rollup) to attained age 80 to May 1, 2003
Max (Annual Step-Up, 5% All Products sold after 35.00
Rollup) to attained age 80 April 30, 2003
Earnings Preservation All Products 25.00
Benefit
B. INCOME PROGRAM
REINSURANCE PREMIUM
INCOME PROGRAM PRODUCTS COVERED (BASIS POINTS)
-------------- ------------------------------ -------------------
Income Program Rider All Products sold prior to 35.00
February 15, 2003
Income Program Rider All Products sold after May 1, 45.00
2003 if GMDB program is Annual
Step or Max of Annual Step and
Rollup
Income Program Rider All other Products sold after 50.00
February 14, 2003
C. WITHDRAWAL PROGRAM
REINSURANCE PREMIUM
INCOME PROGRAM PRODUCTS COVERED (BASIS POINTS)
-------------- ------------------------------ -------------------
Withdrawal Program Rider All Products 50.00
Page 47