AMENDMENT TO VARIABLE ANNUITY EX-7c
GUARANTEED MINIMUM DEATH BENEFIT
REINSURANCE AGREEMENT
THIS AMENDMENT TO VARIABLE ANNUITY GUARANTEED MINIMUM DEATH BENEFIT
REINSURANCE AGREEMENT (the "Amendment") is made and entered effective as of
March 31, 2009, (the "AMENDMENT EFFECTIVE DATE"), by and between ▇▇▇▇▇▇▇
National Life Insurance Company, Lansing, Michigan (the "CEDING COMPANY"), and
Prudential Atlantic Reinsurance Company Limited (formerly known as Prudential
Atlantic Company Limited), Dublin, Ireland (the "REINSURER").
WITNESSETH:
WHEREAS, the CEDING COMPANY and the REINSURER are parties to that certain
Variable Annuity Guaranteed Minimum Death Benefit Reinsurance Agreement made and
entered into effective as of December 31, 2002, as amended (the "Agreement").
WHEREAS, Article VII of the Agreement provides that it is the intention of
the REINSURER and the CEDING COMPANY that the CEDING COMPANY qualifies for
reinsurance credit in the state of Michigan for reinsurance ceded under the
Agreement, and that the REINSURER agrees to secure its obligations under the
Agreement with a letter of credit or, alternatively, any other form of security
permitted pursuant to Michigan Insurance Code section 500.1105; and
WHEREAS, Michigan Insurance Code section 500.1105 permits reinsurers to
secure their obligations to a ceding insurer through the holding of funds in a
trust for the ceding insurer; and
WHEREAS, the CEDING COMPANY and the REINSURER desire that the REINSURER
secure its obligations under the Agreement through the holding of funds in a
trust for the ceding insurer; and in connection therewith, the CEDING COMPANY
and the REINSURER desire to amend Articles I and VII of the Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. DEFINED TERMS. Unless defined herein or the context otherwise requires,
capitalized terms appearing in this Amendment shall have the meaning ascribed to
such terms as set forth in the Agreement.
B. AMENDMENT TO AGREEMENT. The Agreement is hereby amended as set forth in
this Section B, effective as of the AMENDMENT EFFECTIVE DATE.
B.1. REVISION TO ARTICLE I OF THE AGREEMENT. Article I.B. of the
Agreement is hereby amended to add the following additional defined terms:
MICHIGAN INSURANCE CODE Act No. 218 of the Michigan Public Acts of 1956, as
amended, being ss. 500.100 et seq. of the Michigan
Compiled Laws.
QUALIFIED UNITED An institution that meets the requirements
STATES FINANCIAL of Section 500.1101 of the MICHIGAN INSURANCE CODE.
INSTITUTION
TRUST ACCOUNT As defined in Article VII, Paragraph C.
TRUSTEE As defined in Article VII, Paragraph C.
B.2. REVISION TO ARTICLE VII OF THE AGREEMENT. Article VII of the
Agreement is hereby amended by deleting the existing Article VII and
replacing it with the following new Article VII:
ARTICLE VII - RESERVES
A. It is the intention of both the REINSURER and the CEDING COMPANY that the
CEDING COMPANY qualifies for reinsurance credit in the state of Michigan
for reinsurance ceded hereunder. Without limiting the generality of the
immediately preceding sentence, the REINSURER shall, in conformity with all
applicable laws and regulations governing the REINSURER, take any and all
commercially reasonable steps within its control so that the CEDING COMPANY
may take full credit in its SAP financial statements for the business ceded
under this Agreement.
B. Without limiting the generality of the foregoing Paragraph A, it is agreed
that when the CEDING COMPANY establishes SAP RESERVES for the GMDB RISK
reinsured hereunder, as required by Michigan law, the CEDING COMPANY will
forward to the REINSURER a statement showing such reserves. The REINSURER
agrees to secure its obligations under this Agreement with a letter of
credit, through a trust for the benefit of the CEDING COMPANY, and/or any
other form of security permitted pursuant to Michigan Insurance Code
section 500.1105.
C. If all or any portion of the REINSURER'S obligations under this Agreement
are to be secured through a trust for the benefit of the CEDING COMPANY,
the REINSURER shall enter into a trust agreement with a QUALIFIED UNITED
STATES FINANCIAL INSTITUTION, as trustee (the "TRUSTEE"), pursuant to which
the TRUSTEE shall establish a trust account (the "TRUST ACCOUNT") for the
benefit of the CEDING COMPANY for the purpose of securing the REINSURER's
obligations to the CEDING COMPANY under this Agreement. During such time as
all or a portion of the REINSURER's obligations are secured through such
TRUST ACCOUNT:
1. The assets deposited in the TRUST ACCOUNT shall be valued according to
their current fair market value and shall consist only of cash (United
States legal tender), certificates of deposit issued by a United
States bank and payable in United States legal tender, and investments
of the types permitted by MICHIGAN INSURANCE CODE sections 500.901 to
500.947, or any combination of cash, certificates of deposit, or
investments specified in rule 500.1123 of Michigan's insurance
regulations, if the investments are issued by an entity that is not
the parent, subsidiary, or affiliate of either the REINSURER or the
CEDING COMPANY.
2. The REINSURER, before depositing assets with the TRUSTEE, shall
execute assignments or endorsements in blank or transfer legal title
to the TRUSTEE of all shares, obligations, or any other assets
requiring assignments, so that the CEDING COMPANY, or the TRUSTEE upon
the direction of the CEDING COMPANY, may, if necessary, negotiate the
assets without the consent or signature from the REINSURER or any
other entity.
3. All settlements of account between the CEDING COMPANY and the
REINSURER shall be made in cash or its equivalent.
4. The REINSURER and the CEDING COMPANY agree that the assets in the
TRUST ACCOUNT may be withdrawn by the CEDING COMPANY at any time,
notwithstanding any other provisions in this Agreement, and shall be
used and applied by the CEDING COMPANY or its successors in interest
by operation of law, including, without limitation, any liquidator,
rehabilitator, receiver, or conservator of the CEDING COMPANY, without
diminution because of insolvency on the part of the CEDING COMPANY or
the REINSURER, only for the following purposes:
a. To reimburse the CEDING COMPANY for the REINSURER's share of
annuity considerations returned to the owners of ANNUITY
CONTRACTS reinsured under this Agreement because of cancellation
of the ANNUITY CONTRACTS.
b. To reimburse the CEDING COMPANY for the REINSURER's share of
surrenders and benefits or losses paid by the CEDING COMPANY
pursuant to the provisions of the ANNUITY CONTRACTS reinsured
under this Agreement.
c. To fund an account with the CEDING COMPANY in an amount at least
equal to the deduction for reinsurance ceded from the CEDING
COMPANY's liabilities for ANNUITY CONTRACTS ceded under this
Agreement, apart from its general assets, in trust in favor of
the REINSURER for the uses and purposes specified in
subparagraphs C.4.a, b, and d of this Article VII as may remain
executory after withdrawal and for any period after the
termination of this Agreement. The account shall include, but not
be limited to, amounts for all of the following: (a) contract
reserves; (b) claims and losses incurred, including losses
incurred but not reported; (c) loss adjustment expenses; and (d)
unearned premium reserves.
d. To pay any other amounts the CEDING COMPANY claims are due under
this Agreement.
5. The REINSURER shall have the right to seek approval from the CEDING
COMPANY to withdraw from the TRUST ACCOUNT all or any part of the
trust assets and transfer the assets to the REINSURER, if either of
the following provisions is satisfied:
a. The REINSURER shall, at the time of withdrawal, replace the
withdrawn assets with other qualified assets that have a market
value equal to the market value of the assets withdrawn so as to
maintain, at all times, the deposit in the required amount.
b. After withdrawal and transfer, the market value of the TRUST
ACCOUNT is not less than 102% of the required amount.
The CEDING COMPANY shall not unreasonably or arbitrarily withhold its
approval.
6. The CEDING COMPANY shall return of any amount withdrawn in excess of
the actual amounts required under subparagraphs C.4.a, b, and c of
this Article VII, or, for purposes of subparagraph C.4.d of this
Article VII, any amounts that are subsequently determined not to be
due.
7. The CEDING COMPANY shall pay interest to the REINSURER, at a rate that
is not more than the prime rate of interest, on any amounts held by
the CEDING COMPANY pursuant to subparagraph C.4.c of this Article VII.
8. The CEDING COMPANY and the REINSURER agree that any arbitration panel
or court of competent jurisdiction may award any of the following:
a. Interest at a rate different from that provided in paragraph C.7
of this Article VII.
b. Court or arbitration costs.
c. Attorney fees.
d. Any other reasonable expenses.
C. EFFECT ON AGREEMENT. The execution of this Amendment shall not alter,
limit, restrict, abridge or otherwise amend or affect any of the rights of the
parties hereto as set forth in the Agreement except as explicitly set forth in
Section B of this Amendment. If there is a conflict between the provisions of
this Amendment and the provisions of the Agreement, the provisions of this
Amendment shall control.
D. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, which together shall be considered one and the same agreement and
each of which shall be deemed an original.
E. TITLES AND HEADINGS. All titles and headings to Sections of this
Amendment are inserted for the convenience of the parties, and shall not be used
in any way to modify, limit, construe, or otherwise affect this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed in duplicate on the dates indicated to be effective as of the AMENDMENT
EFFECTIVE DATE.
Prudential Atlantic Reinsurance Company ▇▇▇▇▇▇▇ National Life Insurance
Company Limited (formerly known as Prudential
Atlantic Company Limited)
By: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ Name ▇▇▇▇ ▇. ▇▇▇▇▇
Title: DIRECTOR Title: SVP & CHIEF ACTUARY
Date: 31 MARCH 2009 Date MARCH 31, 2009
Prudential Atlantic Reinsurance ▇▇▇▇▇▇▇ National Life Insurance Company
Company Limited (formerly known
as Prudential Atlantic Company
Limited)
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director Title SVP & Chief Actuary
Date: 31/3/09 Date: March 31, 2009
