VARIABLE ANNUITY GMDB REINSURANCE AGREEMENT
Between
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(Hereinafter called the "CEDING COMPANY")
Worcester, Massachusetts
and
RGA REINSURANCE COMPANY
(Hereinafter called the "REINSURER")
Chesterfield, Missouri
TABLE OF CONTENTS
ARTICLE PAGE
------- ----
Access to Records X 14
Arbitration XIV 17
Automatic Provisions IV 8
Currency XII 15
Definitions I 3
Effective Date, Term, and Termination III 6
Experience Refund VII 10
Insolvency XIII 16
Litigation IX 13
Miscellaneous XVII 19
Notices XVIII 20
Offset XV 18
Parties to the Agreement II 5
Premium Accounting V 8
Reinsurance Claim Settlement VI 9
Representations XVI 18
Reserves VIII 11
Unintentional Errors, Misunderstandings, or Omissions XI 15
SCHEDULES
A Description of Guaranteed Minimum Death Benefits (GMDBs)
B Investment Funds Subject to this Reinsurance Agreement
C-1 Limits and Rules of CEDING COMPANY
C-2 Limits and Rules of the REINSURER
D REINSURANCE PREMIUM RATES by Treaty Year
E MORTALITY RATE by Attained Age and Sex of INSURED LIFE
F ANNUAL MORTALITY IMPROVEMENT FACTOR
G REINSURER Quota Share of Risk
H CEDING COMPANY Reporting Format and Data Requirements
I DAC Tax
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 2
ARTICLE I - DEFINITIONS
A. DURATION OF AGREEMENT:
EFFECTIVE DATE means December 1, 2002.
ANNUAL VALUATION DATE means November 30.
BUSINESS DAY means any day that securities are traded on the New York Stock
Exchange.
MONTHLY VALUATION DATE means the last BUSINESS DAY of each month.
REINSURANCE TERM means 10 years measured from the EFFECTIVE DATE.
TERMINATION DATE means November 30, 2012.
ANNUAL VALUATION PERIOD means the period from December 1 until November 30.
B. CONTRACT DEFINITIONS:
VARIABLE ANNUITY CONTRACT means a written annuity contract issued by the CEDING
COMPANY to a contract owner in accordance with which CEDING COMPANY agrees to
provide specified benefits in accordance with specified terms and conditions.
INSURED LIFE means the oldest owner or annuitant, as specified in the VARIABLE
ANNUITY CONTRACT, upon whose death a claim may be due under this Agreement.
GMDB TYPE means one of the Guaranteed Minimum Death Benefits specified in the
VARIABLE ANNUITY CONTRACT and described in Schedule A.
ACCOUNT VALUE means for each ACTIVE CONTRACT, the sum of the invested assets in
the investment funds described in Schedule B.
GMDB AMOUNT means the CEDING COMPANY's minimum required payment, pursuant to a
VARIABLE ANNUITY CONTRACT, on the death of the INSURED LIFE.
NET AMOUNT AT RISK means, for each ACTIVE CONTRACT, the excess, if any, of the
GMDB AMOUNT over the ACCOUNT VALUE.
EXCLUDED CONTRACT means any VARIABLE ANNUITY CONTRACT that has (a) a GMDB
provision that is suspended due to change in owner or annuitant, (b) a GMDB
AMOUNT that is contractually set to the ACCOUNT VALUE, or (c) a spousal
continuation in conjunction with a death of an INSURED LIFE. Any EXCLUDED
CONTRACT shall be treated as such only on and after the date as of which it
satisfies any of the conditions identified as (a), (b), or (c) above.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 3
ACTIVE CONTRACT means a VARIABLE ANNUITY CONTRACT, other than an EXCLUDED
CONTRACT, that remains in effect and has not terminated due to death, lapse,
surrender or some other valid contingency and has not been annuitized.
C. REINSURED AMOUNT DEFINITIONS:
REINSURED NET AMOUNT AT RISK means the NET AMOUNT AT RISK multiplied by the
REINSURER's quota share of risk in accordance with Schedule G.
D. REINSURANCE PREMIUM DEFINITIONS:
REINSURANCE PREMIUM RATE means the numerical value provided in Schedule D.
MORTALITY RATE means a numerical value, provided in Schedule E, based on the
attained age and sex of the INSURED LIFE.
ANNUAL MORTALITY IMPROVEMENT FACTOR means a numerical value, provided in
Schedule F, for each ANNUAL VALUATION PERIOD.
MORTALITY IMPROVEMENT FACTOR means the product of all ANNUAL MORTALITY
IMPROVEMENT FACTORS from the inception of this Agreement at each ANNUAL
VALUATION DATE.
TERMINATION RATE means the percentage of ACTIVE CONTRACTS based on the number of
ACTIVE CONTRACTS at the beginning of each ANNUAL VALUATION PERIOD that terminate
for any reason, except death or admission into a nursing home that qualifies for
waiver of surrender charges under the terms of the VARIABLE ANNUITY CONTRACTS,
during each ANNUAL VALUATION PERIOD.
MONTHLY REINSURANCE PREMIUM means the sum, for each ACTIVE CONTRACT covered by
this Agreement, of the REINSURANCE PREMIUM RATE times the MORTALITY RATE times
the MORTALITY IMPROVEMENT FACTOR at the most recent ANNUAL VALUATION DATE times
the REINSURED NET AMOUNT AT RISK as of the MONTHLY VALUATION DATE.
REINSURANCE PREMIUM DUE DATE means the MONTHLY VALUATION DATE.
REMITTANCE DATE means the last BUSINESS DAY of the calendar month following the
REINSURANCE PREMIUM DUE DATE
E. REINSURANCE CLAIM DEFINITIONS:
GMDB CLAIM means the REINSURED NET AMOUNT AT RISK on the date that CEDING
COMPANY receives due proof of death.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 4
ANNUAL GMDB CLAIMS means the sum of all GMDB CLAIMS calculated on each ANNUAL
VALUATION DATE.
AGGREGATE GMDB CLAIMS means the sum of all GMDB CLAIMS calculated on the
TERMINATION DATE.
F. REINSURANCE CLAIM LIMIT DEFINITIONS:
MONTHLY CLAIM LIMIT means the sum, for each ACTIVE CONTRACT, of the MORTALITY
RATE times the REINSURED NET AMOUNT AT RISK, as calculated on each MONTHLY
VALUATION DATE.
ANNUAL CLAIM LIMIT means the sum of the most recent twelve MONTHLY CLAIM LIMITS,
as calculated on each ANNUAL VALUATION DATE.
G. REINSURANCE EXPERIENCE REFUND DEFINITIONS:
REINSURANCE PREMIUM BASE RATE means the REINSURANCE PREMIUM RATE for the first
year of this Agreement.
MONTHLY REINSURANCE BASE PREMIUMS means the sum, for each ACTIVE CONTRACT, of
the REINSURANCE PREMIUM BASE RATE times the MORTALITY RATE times the MORTALITY
IMPROVEMENT FACTOR at the most recent ANNUAL VALUATION DATE times the REINSURED
NET AMOUNT AT RISK as of the MONTHLY VALUATION DATE.
AGGREGATE REINSURANCE BASE PREMIUMS means the sum of all MONTHLY REINSURANCE
BASE PREMIUMS, as calculated on the TERMINATION DATE.
AGGREGATE REINSURANCE EXCESS PREMIUMS means the sum of all MONTHLY REINSURANCE
PREMIUMS less AGGREGATE REINSURANCE BASE PREMIUMS, as calculated on the
TERMINATION DATE.
ARTICLE II - PARTIES TO THE AGREEMENT
This Agreement shall be binding upon and shall inure solely to the benefit of
the CEDING COMPANY and the REINSURER. This Agreement shall not and is not
intended to create any legal relationship or confer any rights and obligations
between the REINSURER and any third party, including without limitation,
annuitants, contract owners, certificate owners, beneficiaries, applicants or
assignees under any ACTIVE CONTRACT.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 5
ARTICLE III - EFFECTIVE DATE, TERM AND TERMINATION
A. The Agreement covers VARIABLE ANNUITY CONTRACTS issued by the CEDING COMPANY
that:
(i) are among the GMDB TYPES identified in Schedule A;
(ii) have accounts invested in the investment funds described in
Schedule B;
(iii) are ACTIVE CONTRACTS on the EFFECTIVE DATE;
(iv) are in compliance with all of the other terms and provisions of this
Agreement
B. Subject to paragraphs C, D and F below, this Agreement will terminate on the
TERMINATION DATE.
C. The CEDING COMPANY shall have the option of terminating this Agreement with
ninety (90) days written notice to the REINSURER, after the occurrence of
any of the following:
1. REINSURER's A.M. Best Claim Paying Rating is reduced to a "B" or
lower. REINSURER must report any adverse change in A.M. Best Rating
to CEDING COMPANY within fifteen (15) days of the change;
2. An order appointing a receiver, conservator or trustee for
management of REINSURER is entered or a proceeding is commenced for
rehabilitation, liquidation, supervision or conservation of
REINSURER;
D. The REINSURER shall have the option of terminating this Agreement with
ninety (90) days written notice to the CEDING COMPANY after the occurrence
of any of the following:
1. The CEDING COMPANY fails to provide timely submissions of data in
accordance with Schedule H. The REINSURER must provide CEDING
COMPANY with Notice of Termination. If, during the ninety (90) days
following this notification, the REINSURER receives all data
submissions in arrears, this Agreement will remain in effect and
the notice of termination shall be deemed withdrawn. If the CEDING
COMPANY fails to provide the submission of data in accordance with
Schedule H as of the close of the last day of this ninety (90) day
notice period, the REINSURER's liability for all risks reinsured
associated with the withheld data under this Agreement will
terminate.
2. The CEDING COMPANY fails to pay premium on or before the REMITTANCE
DATE. In the event that the premiums are not paid by the REMITTANCE
DATE, the REINSURER shall have the right to terminate this
agreement by giving ninety (90) days written notice of termination
to the CEDING COMPANY. If all premiums in default and interest
owed in accordance with Article III, paragraph E are received by
the REINSURER within the ninety (90) day time period, this
Agreement will remain
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 6
ARTICLE III - EFFECTIVE DATE, TERM AND TERMINATION, (CONTINUED)
in effect and the notice of termination shall be deemed withdrawn.
If premiums remain in default as of the close of the last day of
this ninety (90) day notice period, the REINSURER's liability for
all risks reinsured associated with the defaulted premiums under
this Agreement will terminate.
E. Except as otherwise provided herein, upon termination of this Agreement, the
REINSURER shall have no reinsurance liability with respect to any VARIABLE
ANNUITY CONTRACTS. Not withstanding termination of reinsurance as provided
herein, the CEDING COMPANY shall continue to be liable to the REINSURER for
all unpaid reinsurance premiums earned by the REINSURER under this Agreement
and the REINSURER shall continue to be liable to the CEDING COMPANY for all
unpaid GMDB CLAIMS owed to the CEDING COMPANY under this Agreement. Such
amounts owed by either party are subject to a daily interest charge from the
REMITTANCE DATE until the date paid. The daily interest rate is equal to
1/365 times the sum of (1) the 3-month LIBOR rate as of the most recent
MONTHLY VALUATION DATE, as published in the Wall Street Journal, plus 1.00%.
F. The CEDING COMPANY may recapture all ACTIVE CONTRACTS under this Agreement
prior to the TERMINATION DATE if (a) the AGGREGATE GMDB CLAIMS do not exceed
the AGGREGATE REINSURANCE BASE PREMIUMS times 0.92, measured on the most
recent ANNUAL VALUATION DATE; and (b) the sum of the NET AMOUNT AT RISK for
all ACTIVE CONTRACTS is less than $750 million on the most recent ANNUAL
VALUATION DATE; and (c) the most recent ANNUAL VALUATION DATE is after
December 1, 2005. Such recapture is effective on the third MONTHLY VALUATION
DATE following written notification from the CEDING COMPANY to the REINSURER.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 7
ARTICLE IV - AUTOMATIC PROVISIONS
A. Subject to Article III, on the EFFECTIVE DATE of this Agreement, the CEDING
COMPANY shall cede and the REINSURER shall accept the ACTIVE CONTRACTS that
are covered under this Agreement.
B. This Agreement covers only the liability for GMDB CLAIMS payable and
determined in accordance with the strict terms stated in the VARIABLE
ANNUITY CONTRACT forms or benefit rider forms that were inforce prior to the
EFFECTIVE DATE.
C. This Agreement covers only the liability for GMDB CLAIMS paid under VARIABLE
ANNUITY CONTRACTs invested in Variable and Fixed investment funds described
on Schedule B. If the CEDING COMPANY intends to cede to the REINSURER a
liability with respect to a new or revised investment fund it must provide
written notice to the REINSURER of such intention together with a copy of
the new or revised investment fund, and a revised Schedule B, within thirty
(30) days of the fund's initial availability. The CEDING COMPANY may add
new or revise investment funds without REINSURER approval. The effective
date of reinsurance hereunder shall be the date REINSURER receives notice
of the new or revised fund, or such other earlier date as designated by
REINSURER.
D. This Agreement covers only the liability for GMDB CLAIMS where the date of
death of the INSURED LIFE is on or after the EFFECTIVE DATE and before or
on the TERMINATION DATE. Notwithstanding anything else in this Agreement,
the REINSURER'S liability shall not begin prior to the date of death.
ARTICLE V - PREMIUM ACCOUNTING
A. If reinsurance premiums are not paid by the REMITTANCE DATE, interest in
accordance with Article III, paragraph E will be assessed from the
REMITTANCE DATE. The payment of interest, however, shall not prohibit the
REINSURER from exercising its right to terminate the treaty for non-payment
of reinsurance premiums in accordance with Article III, paragraph D.2.
B. On or before the REMITTANCE DATE, the CEDING COMPANY shall forward to the
REINSURER its statement of account and data requirements as set forth in
Schedule H together with its remittance for the MONTHLY REINSURANCE PREMIUM
as shown therein as well as any premium adjustments from the prior period.
C. If the amounts due cannot be determined by the REMITTANCE DATE, the CEDING
COMPANY shall have ninety (90) days to determine the appropriate premium
and remit with interest in accordance with Article III, paragraph E.
D. If a VARIABLE ANNUITY CONTRACT ceases to be an ACTIVE CONTRACT prior to the
MONTHLY VALUATION DATE, the MONTHLY REINSURANCE PREMIUM is adjusted to
include premium from the prior MONTHLY VALUATION DATE to the 15th of the
month, using the REINSURED NET AMOUNT AT RISK on the prior MONTHLY
VALUATION DATE.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 8
ARTICLE VI - REINSURANCE CLAIM SETTLEMENT
A. The REINSURER shall not be responsible for any obligation of the CEDING
COMPANY to any party under any VARIABLE ANNUITY CONTRACTS issued by the
CEDING COMPANY under any VARIABLE ANNUITY CONTRACT. Reinsurance hereunder
is subject to the same terms and limitations stated in the VARIABLE ANNUITY
CONTRACTS, except as specifically stated otherwise in this Agreement. The
REINSURER only indemnifies the CEDING COMPANY for its liability for those
claims made and payable in accordance with such VARIABLE ANNUITY CONTRACTS.
B. On or before the REMITTANCE DATE, the CEDING COMPANY shall forward to the
REINSURER its statement of account and data requirements as set forth in
Schedule H, together with its request for reimbursement for GMDB CLAIMS as
shown therein. If requested by the REINSURER, the CEDING COMPANY shall
promptly provide the REINSURER with proof of claim, proof of claim payment
and any other claim documentation identified by the REINSURER, in
accordance with Schedule H.
C. For any calendar year, the REINSURER shall not be responsible for
reimbursement for any ANNUAL GMDB CLAIMS in excess of the ANNUAL CLAIM
LIMIT. If ANNUAL GMDB CLAIMS for any calendar year exceed the ANNUAL CLAIM
LIMIT, the request for reimbursement for GMDB CLAIMS shall be reduced so
that the sum of all such requests for reimbursement in that calendar year
does not exceed the ANNUAL CLAIM LIMIT.
D. If GMDB CLAIMS are not paid by the REMITTANCE DATE, interest calculated in
accordance with Article III, paragraph E will be assessed from the
REMITTANCE DATE and will continue until the GMDB CLAIMS are paid in full.
E. A final statement of accounts prepared by the CEDING COMPANY is due sixty
(60) days after the end of the REINSURANCE TERM is reached by all contracts
covered by this Agreement. On or before this date, the CEDING COMPANY shall
forward to the REINSURER its final statement of account as set forth in
Schedule H. Based on the statement of account, any amounts owed by either
party must be paid within thirty (30) days of receiving the statement of
accounts. If amounts owed are not paid within thirty (30) days of receiving
the statement of account, the amounts owed are subject to an interest
charge in accordance with Article III, paragraph E, assessed beginning
thirty (30) days after receiving the statement of account.
F. The CEDING COMPANY shall have six (6) months after the end of the REINSURANCE
TERM is reached by all contracts covered by this Agreement to submit to
REINSURER an amended final statement of account. Any amounts owed by either
the CEDING COMPANY or the REINSURER, based on the amended final statement
of account, must be paid within thirty (30) days of receipt of the amended
final statement. If the amount owed is not paid within thirty (30) days of
receiving the statement of account, the amount owed is subject to an
interest charge in accordance with Article III, Paragraph E.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 9
ARTICLE VII - EXPERIENCE REFUND
A. If on the TERMINATION DATE or the date of recapture in accordance with
Article III, paragraph F, the AGGREGATE REINSURANCE BASE PREMIUMS exceed
the AGGREGATE GMDB CLAIMS, an experience refund equal to 85% of the
AGGREGATE REINSURANCE EXCESS PREMIUMS is payable to the CEDING COMPANY by
the REINSURER. Such experience refund, if payable, shall be included in the
final statement of account and amended final statement of account, as
described in Article VI, paragraphs E and F. If the AGGREGATE REINSURANCE
BASE PREMIUMS do not exceed the AGGREGATE GMDB CLAIMS, no experience refund
is payable.
B. No reserve established or held by the REINSURER shall be subject to any right
of commutation, either during the duration of this Agreement or upon
expiration or termination of this Agreement, regardless of any insolvency
of either party. The reserve established and held by the REINSURER is not
an amount held on behalf of the CEDING COMPANY or a liability owed to the
REINSURER. Rather, it represents the amounts held by the REINSURER with
respect to the REINSURER'S current and anticipated performance of its own
obligations under this Agreement.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 10
ARTICLE VIII - RESERVES
A. The reserve held by the REINSURER for reinsurance of the variable annuity
death benefit will be determined in accordance with the current applicable
NAIC Actuarial Guidelines, as applied by the CEDING COMPANY for VARIABLE
ANNUITY CONTRACTS covered by this Agreement, with reasonable adjustments
for the non-proportional aspects of this Agreement.
B. It is the intention of both the REINSURER and the CEDING COMPANY that the
CEDING COMPANY qualifies for reinsurance credit in the states of
Massachusetts and Delaware for reinsurance ceded hereunder. The REINSURER
agrees to apply to the Massachusetts Division of Insurance for variable
authority and to either: (a) take all reasonable measures to obtain and
maintain such authority to the extent that such authority is required under
the laws of Massachusetts to assure that the CEDING COMPANY will be able to
take credit for the reinsurance hereunder as of December 31, 2002 and
beyond or, in the event that such measures are unsuccessful, (b) establish,
for the sole benefit of the CEDING COMPANY, a qualifying security as
defined in ▇▇▇▇▇▇▇▇▇ ▇, ▇, 2, 3 or 4 below. Notwithstanding the preceding,
with respect to the year ended December 31, 2002, the REINSURER shall have
fulfilled its obligations with respect to this paragraph if it applies to
the Massachusetts Division of Insurance for variable authority and either
receives such authority (retroactively effective to December 31, 2002) no
later than March 1, 2003 or establishes qualifying security as defined in
Paragraphs C, 1, 2, 3, or 4 below effective March 1, 2003.
C. If the measures undertaken by the Reinsurer do not result in the availability
of reinsurance credit as of December 31, 2002, or if REINSURER subsequently
becomes unauthorized in Massachusetts or Delaware, it will comply with
Massachusetts and Delaware Insurance Law relating to reinsurance credit for
non-authorized reinsurers, as promulgated in Massachusetts' and Delaware's
statutes on the EFFECTIVE DATE of this Agreement. Provision for statutory
reserves is satisfied by the REINSURER if either:
1. the funds (including any additional amounts legally required) are
in a trust that complies with the CEDING COMPANY's applicable
regulations, subject to withdrawal solely by, and under the
exclusive control of the CEDING COMPANY, held in a qualified
United States financial institution, as defined below, are at
least as great as the statutory reserves as of the ANNUAL
VALUATION DATE;
2. cash or marketable securities are transferred to the CEDING
COMPANY in an amount at least as great as the statutory reserves
as of the ANNUAL VALUATION DATE, with the actual investment
earnings on the proceeds owned by the REINSURER.
3. clean, irrevocable, unconditional letters of credit, in an amount
at least as great as the statutory reserves as of the ANNUAL
VALUATION DATE, issued or confirmed by a qualified United States
financial institution, meeting applicable standards of issuer
acceptability as of the dates of their issuance.
4. a combination of (1), (2) and (3), such that the sum is at least
as great as the statutory reserves.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 11
Any trust or letter of credit established pursuant to this Paragraph will
be established for the sole benefit of the CEDING COMPANY. All settlements
of account between the REINSURER and the CEDING COMPANY will be made in
cash or its equivalent. Notwithstanding anything to the contrary in this
Agreement, the REINSURER and the CEDING COMPANY agree that the letter of
credit may be drawn on by the CEDING COMPANY at any time and will be
utilized and applied by the CEDING COMPANY, including, without limitation,
any liquidator, rehabilitator, receiver or conservator of the CEDING
COMPANY, without diminution because of the insolvency on the part of the
CEDING COMPANY or the REINSURER, only for the following purposes:
(i) to reimburse the CEDING COMPANY for the REINSURER's share of premiums
returned to the owners of policies reinsured under this Agreement on
account of cancellations of such policies;
(ii) 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 policies reinsured under this
Agreement;
(iii) 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 policies ceded under this
Agreement. Such account shall include, but not be limited to,
amounts for policy reserves, reserves for claims and losses
incurred (including losses incurred but not reported), loss
adjustment expenses, and unearned premiums; and
(iv) to pay any other amounts the CEDING COMPANY claims are due under
this Agreement.
In the event that the CEDING COMPANY draws on the letter of credit in an
amount in excess of the actual amounts required for items (i), (ii) and/or
(iv) above, or in the case of a draw pursuant to (iii) above, any amounts
that are subsequently determined not to be due, shall be returned to the
REINSURER. In addition, in the event that the CEDING COMPANY draws on the
letter of credit pursuant to item (iii) above, the CEDING COMPANY shall pay
the REINSURER interest on the amounts held pursuant to item (iii) above at
a rate equal to the prime rate of interest or the rate permitted by an
arbitration panel operating under Article XIV of this Agreement, whichever
is greater.
In the event the REINSURER obtains the licensing status appropriate for the
CEDING COMPANY to take credit for the reinsurance hereunder without the
benefit of such security, the REINSURER may terminate such letter of credit
or trust. Provided, however, that in the event that at any point in the
future the CEDING COMPANY is no longer able to take statutory credit for
the reinsurance ceded under this Agreement, the Reinsurer will take all
reasonable measures to re-establish such credit without interruption, and
if such efforts are unsuccessful, shall again establish a letter of credit
or trust, or provide other security, as described in Paragraph C above.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 12
D. A qualified United States financial institution means an institution that
meets either subdivision (1) or (2):
1. Is organized, or in the case of a United States office of a foreign
banking organization, is licensed, under the laws of the United States
or any state in the United States, is regulated, supervised, and
examined by federal or state authorities having regulatory authority
over banks and trust companies, and has been determined by the
commissioner of Massachusetts to meet such standards of financial
condition and standing as are considered necessary and appropriate to
regulate the quality of financial institutions whose letters of credit
will be acceptable to the commissioners of Massachusetts and Delaware.
2. For those institutions that are eligible to act as a fiduciary of a
trust, is organized, or in the case of a United States branch or
agency office of a foreign banking organization, is licensed, under
the laws of the United States or any state in the United States, has
been granted authority to operate with fiduciary powers, and is
regulated, supervised, and examined by federal or state authorities
having regulatory authority over banks and trust companies.
ARTICLE IX - LITIGATION
In the event of any action brought against the CEDING COMPANY under any VARIABLE
ANNUITY CONTRACT that is subject to the terms and conditions of this Agreement,
the CEDING COMPANY shall provide a copy of such action and written notice of
such action to the REINSURER, within thirty (30) business days of the CEDING
COMPANY receiving services of the action at its home office.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 13
ARTICLE X - ACCESS TO RECORDS
A. The CEDING COMPANY and the REINSURER, or its duly authorized representative,
shall have access at any reasonable time during regular business hours, to
all records of the other, including the right to photocopy and retain
copies of such documents, which reasonably pertain to this Agreement.
Records shall be maintained in accordance with prudent standards of
insurance company record keeping and must be retained for a period of at
least three (3) years after the final settlement date. Within one hundred
and twenty (120) days following the end of each calendar year, the CEDING
COMPANY and the REINSURER will provide each other with copies of their
respective audited financial statements.
B. The CEDING COMPANY and the REINSURER may come into the possession or
knowledge of Confidential Information of the other in fulfilling
obligations under this Agreement. Each party agrees to hold such
Confidential Information in confidence and to take all reasonable steps to
ensure that such Confidential Information is not disclosed in any form by
any means by each of them or by any of its employees to third parties of
any kind, other than attorneys, accountants, reinsurance intermediaries,
consultants or retrocessionaires having an interest in such information,
except by advance written authorization by an officer of the authorizing
party; provided, however, that either party will be deemed to have
satisfied its obligations as to the Confidential Information by protecting
its confidentiality in the same manner that such party protects its own
proprietary or Confidential Information of like kind which shall be at
least a reasonable manner. "Confidential Information" means any information
which (1) is not generally available to or known by the public, or (2) has
not been lawfully obtained or developed by either party independently and
not in violation of this Agreement or from any source other than the other
party, provided that such source is not bound by a duty of confidentiality
to such other party, and which consists of:
1. Information or knowledge about each party's products, processes,
services, finances, customers, research, computer programs, marketing
and business plans, claims management practices; and
2. Any medical or other personal, individually identifiable information
about people or business entities with whom the parties do business,
including customers, prospective customers, vendors, suppliers,
individuals covered by insurance plan, and each party's producers and
employees.
3. Records provided pursuant to Paragraph A, above.
C. If either the CEDING COMPANY or the REINSURER discloses confidential
information to interested parties such as, but not limited to, attorneys,
accountants, reinsurance intermediaries, consultants or retrocessionaires
having an interest in such information, such interested parties shall also
be bound by this Article's provisions on disclosing confidential
information. The CEDING COMPANY or the REINSURER must inform the interested
party of the provisions of this Article and agree to ensure that the
interested parties honor the provisions.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 14
ARTICLE XI - UNINTENTIONAL ERRORS, MISUNDERSTANDINGS OR OMISSIONS
It is expressly understood and agreed that if failure to comply with any terms
of this Agreement is hereby shown to be the result of an unintentional error,
misunderstanding or omission, on the part of either the CEDING COMPANY or the
REINSURER, both the CEDING COMPANY and the REINSURER, will be restored to the
position they would have occupied, had no such error, misunderstanding or
omission occurred, subject always to the correction of the error,
misunderstanding or omission.
ARTICLE XII - CURRENCY
All retentions and limits hereunder, and all monetary data elements as described
in Schedule H, are expressed in United States dollars and all premium and claim
payments shall be made in United States dollars.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 15
ARTICLE XIII - INSOLVENCY
A. In the event of insolvency of the CEDING COMPANY, all reinsurance under this
Agreement will be payable directly by the REINSURER to the CEDING COMPANY
or to its liquidator, receiver, conservator or statutory successor on the
basis of the REINSURER's liability to the CEDING COMPANY without diminution
because of the insolvency of the CEDING COMPANY or because the liquidator,
receiver, conservator or statutory successor of the CEDING COMPANY has
failed to pay all or a portion of any claim.
B. In the event of insolvency of the CEDING COMPANY, the liquidator, receiver,
or statutory successor will, within reasonable time after the claim is
filed in the insolvency proceeding, give written notice to the REINSURER of
all pending claims against the CEDING COMPANY on any contracts reinsured.
While a claim is pending, the REINSURER may investigate and interpose, at
its own expense, in the proceedings where the claim is adjudicated, any
defense or defenses that it may deem available to the CEDING COMPANY or its
liquidator, receiver, or statutory successor. The expense incurred by the
REINSURER will be chargeable, subject to court approval against the CEDING
COMPANY as part of the expense of liquidation to the extent of a
proportionate share of the benefit that may accrue to the CEDING COMPANY
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 in
interest elect to interpose a defense or defenses to any such claim, the
expense will be apportioned in accordance with the terms of the reinsurance
agreement as though such expense had been incurred by the CEDING COMPANY.
C. In the event of insolvency of the REINSURER, the CEDING COMPANY may recapture
immediately all ceded benefits upon written notice to the REINSURER, its
liquidator, receiver or statutory successor. In the event of such a
recapture, a terminal accounting and settlement shall take place and
settlement shall be made on a net basis between the parties.
D. The provisions of this Article shall neither change the relationship or
status of the parties or enlarge the obligations established under this
Agreement between the CEDING COMPANY and the REINSURER, except as
specifically provided, nor create any additional obligations or establish
further rights against either the CEDING COMPANY or the REINSURER in favor
of other persons not parties to this Agreement.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 16
ARTICLE XIV - ARBITRATION
A. It is the intention of the CEDING COMPANY and the REINSURER that the customs
and practices of the insurance and reinsurance industry will be given full
effect in the operation and interpretation of this Agreement. The parties
agree to act in all things with the highest good faith. If the REINSURER or
the CEDING COMPANY cannot mutually resolve a dispute that arises out of or
relates to this Agreement, the dispute will be decided through arbitration.
To initiate arbitration, either the REINSURER or the CEDING COMPANY will
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 will respond to the notification in writing within ten (10) days of
its receipt.
B. Each party shall select an arbitrator within thirty (30) days after the
written request for arbitration. If either party refuses or neglects to
appoint an arbitrator within thirty (30) days after the written request for
arbitration, the other party may appoint the second arbitrator. The two
arbitrators shall select an umpire within thirty (30) days after the
appointment of the second arbitrator. If the two arbitrators fail to agree
on the selection of the umpire within thirty (30) days after the
appointment of the second arbitrator, either party may submit a request to
the American Arbitration Association to select an umpire, subject to the
requirements for such arbitrator set forth below.
C. The arbitrators and the umpire shall be present or former disinterested
executive officers of life insurance or reinsurance companies other than
the contracting companies or affiliates thereof. The umpire shall preside
at all hearings and meetings of the panel and shall announce the decision
of the panel. The majority vote of the arbitrators and the umpire shall be
the decision of the panel. The decision shall be in writing signed by the
majority in favor thereof.
D. The arbitration panel shall have power to fix all procedural rules for the
holding of the arbitration including discretionary power to make orders as
to matters which it may consider proper in the circumstances of the case
including pleadings, discovery, inspection of documents, examination of
witnesses and any other matter whatsoever relating to the conduct of the
arbitration and may receive and act upon such evidence whether oral or
written strictly admissible or not as it shall in its discretion think fit.
The arbitration panel shall interpret this Agreement as an honorable
engagement rather than merely as a legal obligation and shall make its
decision considering the custom and practice of the applicable insurance
and reinsurance business. The arbitration panel is released from judicial
formalities and shall not be bound by strict rules of procedure and
evidence. Judgment upon the award may be entered in any court having
jurisdiction. The panel is empowered to grant interim relief.
E. The decision of the arbitration panel shall be final and binding on both
parties. The arbitration panel may, at its discretion, award costs and
expenses, as it deems appropriate, including, but not limited to,
attorneys' fees and interest. Judgment may be entered upon the final
decision of the arbitration panel in any court of competent jurisdiction.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 17
ARTICLE XIV - ARBITRATION, (CONTINUED)
F. All meetings and hearings before the arbitration panel shall take place in
Worcester, Massachusetts unless some other place is mutually agreed upon by
both parties or ordered by the panel.
G. In the absence of a decision to the contrary by the arbitration panel, each
party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire and of the
arbitration.
ARTICLE XV - OFFSET
Either party shall have, and may exercise at any time the right to offset any
balance or amounts whether on account of premiums, or on account of claims or
otherwise, due from one party to the other under the terms of this Agreement.
ARTICLE XVI - REPRESENTATIONS
The CEDING COMPANY acknowledges that, at the REINSURER'S request, it has
provided the REINSURER with the Ceding Company Data prior to the execution of
this Agreement by the REINSURER. The CEDING COMPANY represents that all factual
information contained in the Ceding Company Data is complete and accurate, in
all material respects, as of the date the document containing the information
was prepared. The CEDING COMPANY further represents that any assumptions made in
preparing the Ceding Company Data were based upon informed judgment and are
consistent with sound actuarial principles, in all material respects. The CEDING
COMPANY further represents that it is not aware of any omissions, errors,
changes or discrepancies which would materially affect the Ceding Company Data.
The REINSURER has relied on such data and the foregoing representations in
entering into this Agreement. Schedule G has excluded all VARIABLE ANNUITY
CONTRACTS with the attained age of the insured life being greater than 74 and
the net amount of risk being greater than $1 million dollars on the EFFECTIVE
DATE.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 18
ARTICLE XVII - MISCELLANEOUS
A. This Agreement will be binding to the parties and their respective successors
and permitted assignees. This Agreement may not be assigned by either party
without the written consent of the other.
B. This Agreement means the text hereof and all Exhibits, Schedules and
Amendments effected in accordance herewith. The Agreement constitutes the
entire statement of agreement between the parties with regard to the
subject matter hereof. There are no other understandings or agreements
between the parties regarding the contracts reinsured other than as
expressed in this Agreement. Any changes or additions to this Agreement
must be effected by means of a written amendment that has been signed by
both parties.
C. Notwithstanding the termination of this Agreement as provided herein, its
provisions will continue to apply hereunder to the end that all obligations
and liabilities incurred by each party hereunder will be fully performed
and discharged.
D. Severability. In the event that any provision or term of this Agreement shall
be held by any court to be invalid, illegal or unenforceable, all of the
other terms and provisions shall remain in full force and effect to the
extent that their continuance is practicable and consistent with original
intent of the parties, and the parties will attempt in good faith to
renegotiate this Agreement to carry out its original intent. All of the
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.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 19
ARTICLE XVIII - NOTICES
A. All notices required to be given hereunder shall be in writing and shall be
deemed delivered if personally delivered, sent via facsimile with evidence
of successful transmission, sent via reputable overnight carrier, or
dispatched by certified or registered mail, return receipt requested,
postage prepaid, addressed to the parties as follows:
Chief Financial Officer
Allmerica Financial Life Insurance and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Chief Financial Officer
RGA Reinsurance Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇ ) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
B. Notice shall be deemed given on the date it is received in accordance with
the foregoing. Any party may change the address to which to send notices by
notifying the other party of such change of address in writing in
accordance with the foregoing.
In witness whereof, the parties hereto have caused this Agreement to be signed
in duplicate on the dates indicated to be effective as of the date specified
above.
RGA Reinsurance Company Allmerica Financial Life Insurance and Annuity
Company
By ________________________________ By ___________________________________
Date ______________________________ Date ________________________________
By ________________________________ By ___________________________________
Date ______________________________ Date ________________________________
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 20
SCHEDULE A
Description of Guaranteed Minimum Death Benefits (GMDBs)
The Guaranteed Minimum Death Benefits are completely described in the VARIABLE
ANNUITY CONTRACTS, riders, or prospectuses.
I. Dollar for Dollar Reduction for withdrawals:
Maximum of (AV, premium, 7yr ratchet)
Maximum of (AV, premium, 5yr ratchet)
II. Proportionate or Blended Reduction for Withdrawals:
Maximum of (AV, premium)
Maximum of (AV, premium, 5yr ratchet)
Maximum of (AV, 5% premium rollup,1 yr ratchet)
Maximum of (AV, premium,1 yr ratchet)
Maximum of (AV, 7% premium rollup)
Maximum of (AV, 7% premium rollup,1 yr ratchet)
Maximum of (AV, premium,15% Breakthrough ratchet)
Maximum of (AV, premium,10% Breakthrough ratchet)
Maximum of (AV, 5% premium rollup,15% Breakthrough ratchet)
Maximum of (AV, 5% premium rollup,10% Breakthrough ratchet)
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 21
SCHEDULE B
Investment Funds Subject to this Reinsurance Agreement
All Investment Funds available to VARIABLE ANNUITY CONTRACT owners on the
EFFECTIVE DATE are subject to this Agreement. If applicable, new Investment
Funds, eligible for reinsurance hereunder since the EFFECTIVE DATE, are listed
below.
None
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 22
SCHEDULE C-1
Limits and Rules of the CEDING COMPANY
1) CEDING COMPANY will determine the Guaranteed Minimum Death Benefit for each
contract within fourteen (14) working days of receipt of due proof of death and
all required claim forms.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 23
SCHEDULE C-2
Limits and Rules of the REINSURER
1) REINSURER's liability cannot be increased as a result of CEDING COMPANY's
actions with respect to contested claims.
2) The REINSURER will not be liable for extra contractual damages (whether they
constitute Compensatory damages, Statutory penalties, Exemplary or Punitive
damages) which are awarded against the CEDING COMPANY.
3) A contract where a spousal continuation occurs after the EFFECTIVE DATE will
be subject to this Agreement; however, the REINSURER will not pay more than one
GMDB CLAIM per VARIABLE ANNUITY CONTRACT.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 24
SCHEDULE D
REINSURANCE PREMIUM RATE by Treaty Year
The premium rates for reinsurance, subject to the terms and conditions of this
Agreement, are guaranteed while the reinsurance coverage is in effect.
Treaty Year beginning in REINSURANCE PREMIUM RATE
------------------------ ------------------------
2002 66.0%
2003 67.3%
2004 68.7%
2005 70.0%
2006 71.4%
2007 72.9%
2008 74.3%
2009 75.8%
2010 77.3%
2011 78.9%
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 25
SCHEDULE E
MORTALITY RATE by INSURED LIFE, ATTAINED AGE and SEX
94 MGDB MONTHLY REINSURANCE PREMIUM RATES
(Rates per $1 of NAR, based on oldest owner's age last birthday)
AGE MALE FEMALE AGE MALE FEMALE AGE MALE FEMALE
--- ---- ------ --- ---- ------ --- ---- ------
0 0.00005 0.00004 39 0.00010 0.00007 78 0.00522 0.00330
1 0.00005 0.00004 40 0.00011 0.00007 79 0.00580 0.00368
2 0.00004 0.00003 41 0.00012 0.00008 80 0.00643 0.00410
3 0.00003 0.00002 42 0.00013 0.00008 81 0.00709 0.00458
4 0.00002 0.00002 43 0.00014 0.00009 82 0.00777 0.00512
5 0.00002 0.00002 44 0.00015 0.00009 83 0.00846 0.00570
6 0.00002 0.00002 45 0.00016 0.00010 84 0.00919 0.00633
7 0.00002 0.00001 46 0.00018 0.00011 85 0.00998 0.00704
8 0.00002 0.00001 47 0.00020 0.00011 86 0.01088 0.00783
9 0.00002 0.00001 48 0.00022 0.00012 87 0.01192 0.00874
10 0.00002 0.00001 49 0.00024 0.00013 88 0.01308 0.00975
11 0.00002 0.00001 50 0.00027 0.00015 89 0.01435 0.01085
12 0.00002 0.00002 51 0.00030 0.00016 90 0.01571 0.01203
13 0.00003 0.00002 52 0.00033 0.00018 91 0.01715 0.01329
14 0.00003 0.00002 53 0.00037 0.00020 92 0.01866 0.01462
15 0.00004 0.00002 54 0.00041 0.00022 93 0.02029 0.01602
16 0.00004 0.00002 55 0.00046 0.00024 94 0.02201 0.01750
17 0.00004 0.00003 56 0.00052 0.00027 95 0.02377 0.01906
18 0.00005 0.00003 57 0.00059 0.00031 96 0.02549 0.02069
19 0.00005 0.00003 58 0.00066 0.00036 97 0.02715 0.02241
20 0.00005 0.00003 59 0.00074 0.00041 98 0.02875 0.02421
21 0.00005 0.00003 60 0.00084 0.00047 99 0.03031 0.02610
22 0.00006 0.00003 61 0.00094 0.00054 100 0.03188 0.02805
23 0.00006 0.00003 62 0.00107 0.00062 101 0.03350 0.03003
24 0.00006 0.00003 63 0.00120 0.00070 102 0.03521 0.03209
25 0.00007 0.00003 64 0.00135 0.00080 103 0.03711 0.03429
26 0.00007 0.00003 65 0.00152 0.00090 104 0.03909 0.03659
27 0.00007 0.00003 66 0.00169 0.00101 105 0.04099 0.03880
28 0.00008 0.00003 67 0.00187 0.00111 106 0.04263 0.04075
29 0.00008 0.00003 68 0.00205 0.00121 107 0.04387 0.04232
30 0.00008 0.00004 69 0.00224 0.00130 108 0.04473 0.04358
31 0.00008 0.00004 70 0.00245 0.00141 109 0.04530 0.04458
32 0.00008 0.00004 71 0.00268 0.00155 110 0.04564 0.04530
33 0.00008 0.00004 72 0.00294 0.00172 111 0.04580 0.04571
34 0.00008 0.00005 73 0.00321 0.00191 112 0.04583 0.04583
35 0.00008 0.00005 74 0.00351 0.00212 113 0.04583 0.04583
36 0.00009 0.00005 75 0.00384 0.00236 114 0.04583 0.04583
37 0.00009 0.00006 76 0.00423 0.00264 115 0.08333 0.08333
38 0.00010 0.00006 77 0.00469 0.00296
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 26
SCHEDULE F
ANNUAL MORTALITY IMPROVEMENT FACTOR
If in any treaty year, the voluntary terminations on the reinsured contracts are
less than 5%, the subsequent year's annual mortality improvement factor is
defined to be MIN .95 / (1-V), 1, where V represents the actual voluntary
termination rate in the previous treaty year. The new reinsurance premium rates
are equal to the rates otherwise in effect as described above times the product
of the current and all previous years' annual mortality improvement factors.
Voluntary terminations include all terminations with the exception of death and
nursing home surrenders that qualify for waiving the CDSC.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 27
SCHEDULE G
REINSURER Quota Share of Risk
For each VARIABLE ANNUITY CONTRACT, REINSURED NET AMOUNT AT RISK will be based
on the share of risk from the table below.
VARIABLE ANNUITY CONTRACTS Share of Risk
-------------------------- -------------
CB10006745 0.0%
CB10010371 0.0%
CB10014103 0.0%
GN00126341 0.0%
GN00131909 0.0%
PN00451756 0.0%
SB10004198 0.0%
VN00414175 0.0%
All other 25.0%
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 28
SCHEDULE H
Reporting Format and Data Requirements
MONTHLY REPORTING DATA REQUIREMENTS (PREPARED BY THE CEDING COMPANY)
ACTIVE CONTRACTS ONLY:
INSURED LIFE SSN (available no later than June 1, 2003)
Contract Identifier
INSURED LIFE Indicator
Joint Life Indicator
INSURED LIFE Issue Age
INSURED LIFE Sex
Issue Date
Initial Purchase Payment
Total Purchase Payment
Cumulative Withdrawals
Account value by subaccount
GMDB Type
GMDB Amount
NET AMOUNT AT RISK
Qualified Status
Termination Indicator (reported in first monthly report following termination)
ADDITIONAL MONTHLY CLAIM REPORTING DATA REQUIREMENTS (PREPARED BY THE CEDING
COMPANY)
This includes Monthly Reporting Data Requirements as of the Date of Notification
(the date that death related paperwork is submitted in full), plus the
following:
Date of Death
Date of Notification
Death Benefit Paid
Death Benefit Proceeds in Excess of Account Value
QUARTERLY REPORTING REQUIREMENTS (PREPARED BY THE REINSURER)
A.M. Best Ratings
MONTHLY STATEMENT OF ACCOUNT (PREPARED BY THE CEDING COMPANY)
(prepared for each GMDB TYPE and in aggregate)
1. Calculated value of ANNUAL CLAIM LIMIT and ANNUAL GMDB CLAIMS
2. Calculated value of MONTHLY REINSURANCE BASE PREMIUMS
3. Calculated value of REINSURED NET AMOUNT AT RISK and MONTHLY
REINSURANCE PREMIUM
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 29
SCHEDULE I
DAC Tax
The Ceding Company and the Reinsurer hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29, 1992,
under Section 848 of the Internal Revenue Code of 1986, as amended.
1. The term "party" will refer to either the Ceding Company or the Reinsurer as
appropriate.
2. The terms used in this Article are defined by reference to Treasury
Regulation Section 1.848-2 in effect as of December 29, 1992. The term "net
consideration" will refer to net consideration as defined in Treasury Regulation
Section 1.848-2(f).
3. The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with respect
to this Agreement without regard to the general deductions limitation of IRS
Section 848(c)(1).
4. The Ceding Company and the Reinsurer agree to exchange information pertaining
to the amount of net consideration under this Agreement each year to ensure
consistency. The Ceding Company and the Reinsurer also agree to exchange
information which may be otherwise required by the IRS.
5. The Ceding Company will submit a schedule to the Reinsurer by June 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 Ceding Company stating that the Ceding Company will report
such net consideration in its tax return for the preceding calendar year.
6. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company. If the Reinsurer does not so notify the
Ceding Company, the Reinsurer will report the net consideration as determined by
the Ceding Company in the Reinsurer's tax return for the previous calendar year.
7. If the Reinsurer contests the Ceding Company's calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount. If the Ceding Company and the Reinsurer reach agreement on
an amount of net consideration, each party will report such amount in their
respective tax returns for the previous calendar year.
--------------------------------------------------------------------------------
AFLIAC and RGA Reinsurance GMDB 30