Exhibit 10.19

COINSURANCE AMENDING AGREEMENT

THIS COINSURANCE AMENDING AGREEMENT is made effective as of December 31, 2011,
between PRIMERICA LIFE INSURANCE COMPANY OF CANADA, a life insurance company
incorporated under the Insurance Companies Act (Canada) (together with its
successors and permitted assigns, the “Ceding Company”), and FINANCIAL
REASSURANCE COMPANY 2010, LTD., a reinsurance company incorporated in Bermuda
and registered as an insurer pursuant to the Insurance Act 1978 of Bermuda
(together with its successors and permitted assigns, the “Reinsurer”).

WHEREAS the Ceding Company and the Reinsurer are parties to a coinsurance
agreement dated March 31, 2010 (the “Coinsurance Agreement”) pursuant to which
the Ceding Company cedes certain liabilities to the Reinsurer on an indemnity
reinsurance basis; and

AND WHEREAS, in connection with the arrangements contemplated by the Coinsurance
Agreement, the Ceding Company and the Reinsurer entered into a reinsurance trust
agreement dated March 15, 2010 (the “Reinsurance Trust Agreement”) with RBC
Dexia Investor Services Trust (“RBC Dexia”), as trustee, and OSFI, pursuant to
which the Reinsurer is maintaining security in Canada in respect of its
potential liabilities under the Coinsurance Agreement;

AND WHEREAS, to reflect a change in OSFI’s guidelines on reinsurance
arrangements and implement the new arrangements contemplated thereby, the Ceding
Company and the Reinsurer wish to terminate the Reinsurance Trust Agreement and
enter into a reinsurance security agreement dated as of December 31, 2011 (the
“Reinsurance Security Agreement”) with RBC Dexia, as custodian, and perform
their respective obligations thereunder;

AND WHEREAS, in connection therewith, the Ceding Company and the Reinsurer wish
to make certain amendments to the Coinsurance Agreement to reflect these
changes;

AND WHEREAS all capitalized terms used herein that are not otherwise defined
shall have the meaning set forth in the Coinsurance Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:

1. Termination of Reinsurance Trust Arrangements. The Ceding Company and the
Reinsurer hereby agree to take all such steps, including filing all required
forms with, and obtaining all consents required from, OSFI, so as to terminate
the Reinsurance Trust Agreement and the arrangements contemplated thereby, it
being acknowledged that such agreement and arrangements will be replaced with
the Reinsurance Security Agreement and the arrangements contemplated thereby.
Notwithstanding the termination of the Reinsurance Trust Agreement, the
Coinsurance Agreement shall continue in full force and effect.

2. Amendments to the Definitions.

 

(a)

Eligible Assets: Section 1.1(s) of the Coinsurance Agreement is hereby amended
by deleting the definition of “Eligible Assets” and replacing it with the
following:

“Eligible Assets” means assets permitted to be deposited in the Reinsurance
Security Account pursuant to the Reinsurance Security Agreement and the
Investment Guidelines; provided, however,. investments in or issued by an entity
controlling, controlled by or under common control with either the Ceding
Company or the Reinsurer shall not exceed 5% of total investments. The Eligible
Assets are further subject to, and limited by, the Investment Guidelines.

 

(b)

Reinsurance Security Account: Section 1.1(zz) of the Coinsurance Agreement is
hereby amended by deleting the definition of “Reinsurance Trust Account” and
replacing it with the following:

 

 

 

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“Reinsurance Security Account” shall have the meaning specified in Section 15.1.

 

(c)

Reinsurance Security Account Balance: Section 1.1(aaa) of the Coinsurance
Agreement is hereby amended by deleting the definition of “Reinsurance Trust
Account Balance” and replacing it with the following:

“Reinsurance Security Account Balance” means, as of the last day of each
calendar quarter following the date hereof, the aggregate Market Value as of
such date of the Eligible Assets maintained in the Reinsurance Security Account.

 

(d)

Reinsurance Security Agreement: Section 1.1(bbb) of the Coinsurance Agreement is
hereby amended by deleting the definition of “Reinsurance Trust Agreement” and
replacing it with the following:

“Reinsurance Security Agreement” shall have the meaning specified in Section
15.1.

 

(e)

Required Balance. Section 1.1(jjj) of the Coinsurance Agreement is hereby
amended by deleting the definition of “Required Balance” and replacing it with
the following:

“Required Balance” means, as of any date, the amount equal to the greater of (i)
the Reinsurer’s Quota Share of the Subject Reserves with respect to the
Reinsured Policies, and (ii) the amount of assets necessary at any particular
point in time under the MCCSR Guideline in order for the Ceding Company to take
full Financial Statement Credit for the unlicensed reinsurance in the same
manner as if licensed reinsurance was being provided that enables the Ceding
Company to maintain its OSFI target capital ratio as well as to be able to meet
all Dynamic Capital Adequacy Testing adverse scenarios that may be required by
OSFI with respect to the Reinsurer’s Quota Share of the Subject Reserves. For
greater certainty, the amount of Collateral held pursuant to the Reinsurance
Security Agreement shall at no time be less than a minimum of an amount equal to
100% of the aggregate liability ceded (if greater than zero) plus 70% of the
offsetting reserves ceded (MCCSR Guideline section 1.2.3.2) plus 150% of the
Regulatory Required Capital for the Ceded Business as defined by the MCCSR
Guideline, as calculated in Schedule C as of December 31, 2009.

3. Additional Definitions. Section 1.1 of the Coinsurance Agreement is hereby
amended by adding the following definitions:

(j.1) “Collateral” shall have the meaning specified in Section 15.2(a).

(p.1) “Custodian” means RBC Dexia Investor Services Trust, or such successor
custodian as may be appointed from time to time under the Reinsurance Security
Agreement.

4. Removal of Definitions. Section 1.1 of the Coinsurance Agreement is hereby
amended by deleting Subsections 1.1 (ttt) and (uuu) (being the definitions of
“Trust Assets” and “Trustee”) in their entirety.

5. Deposit in Reinsurance Security Account. Concurrent with the termination of
the Reinsurance Trust Agreement (which, for greater certainty, is subject to
receipt of written approval of such termination from OSFI), the Ceding Company
and the Reinsurer acknowledge and agree that the Reinsurer shall cause RBC
Dexia, in its capacity as trustee under the Reinsurance Trust Agreement, to
transfer the assets held in trust pursuant to the Reinsurance Trust Agreement to
the Reinsurance Security Account, or otherwise designate the account previously
maintained under the Reinsurance Trust Agreement as the Reinsurance Security
Account.

6. Settlements. Section 8.3(b) of the Coinsurance Agreement is hereby amended by
deleting each reference to the “Reinsurance Trust Account Balance” and replacing
it with a reference to the “Reinsurance Security Account Balance”.

7. Recapture. Section 11.1(f) of the Coinsurance Agreement is hereby amended by
deleting the reference to the “Reinsurance Trust Account” and replacing it with
a reference to the “Reinsurance Security Account”.

 

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8. Insolvency. Section 13.1 of the Coinsurance Agreement is hereby deleted in
its entirety and replaced with the following:

Article XIII
Insolvency

Section 13. 1 Insolvency

(a)Insolvency Defined. A party to this Agreement will be deemed insolvent when
it:

 

i.

applies for or consents to the appointment of a receiver, rehabilitator,
conservator, liquidator or statutory successor of its properties or assets, or
any other similar Person for itself or for a substantial portion of its assets;
or

 

ii.

passes a directors’ or shareholders’ corporate resolution authorizing any of the
actions described in clause (i) above; or

 

iii.

is adjudicated as bankrupt or insolvent; or

 

iv.

files or consents to the filing of a petition in bankruptcy, seeks
reorganization to avoid insolvency or makes formal application for any
bankruptcy, dissolution, liquidation or similar law or statute; or

 

v.

becomes the subject of an order to rehabilitate or an order to liquidate as
defined by the insurance code of the jurisdiction of the party’s domicile.

(b)Insolvency of the Ceding Company

 

i.

In the event of the insolvency of the Ceding Company, all reinsurance payments
due to the Ceding Company under this Agreement will be payable directly to the
liquidator, rehabilitator, receiver, or statutory successor of the Ceding
Company, without diminution because of the insolvency, for those claims allowed
against the Ceding Company by any court of competent jurisdiction or by the
liquidator, rehabilitator, receiver or statutory successor having authority to
allow such claims.

 

ii.

In the event of insolvency of the Ceding Company, the liquidator, rehabilitator,
receiver, or statutory successor will give written notice to the Reinsurer of
all pending claims against the Ceding Company on any Reinsured Policy within a
reasonable time after such Claim is filed in the insolvency proceedings. 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,
rehabilitator, receiver, or statutory successor.

 

iii.

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 this Agreement as though
such expense had been incurred by the Ceding Company.

 

iv.

The Reinsurer will be liable only for the amounts reinsured and will not be or
become liable for any amounts or reserves to be held by the Ceding Company on
Reinsured Policies under this Agreement.

 

(c)

Insolvency of the Reinsurer. In the event of the Reinsurer’s insolvency, the
Ceding Company may terminate this Agreement upon written notice to the Reinsurer
and recapture all of the inforce business reinsured by the Reinsurer hereunder
in accordance with Article XI. The effective date for termination of this
Agreement will be no earlier than the effective date of the Reinsurer’s
insolvency.

 

(d)

Subject to, and without limitation to the rights set out in, Section 8.4, in the
event of the insolvency of the Ceding Company, the Reinsurer shall be entitled
to set off any debts due or accruing due to the Ceding Company under this
Agreement at the commencement of the winding-up of the Ceding Company against
any debts due or accruing due to the Reinsurer by the Ceding Company under this
Agreement at the commencement of the winding-up of the Ceding Company. For
greater certainty, it is understood and agreed that the Reinsurer shall not be
entitled for any reason whatsoever to exercise any set off rights (whether by
operation of law, equity, agreement or otherwise) other than as set forth in the
previous sentence or in Section 8.4.

 

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9. Security. Article XV of the Coinsurance Agreement is hereby deleted in its
entirety and replaced with the following:

ARTICLE XV

REINSURANCE SECURITY ACCOUNT

Section 15.1 Reinsurance Security Agreement. Contemporaneously with the
execution of this Coinsurance Amending Agreement, the Ceding Company, the
Reinsurer and the Custodian will enter into a reinsurance security agreement, in
the form attached hereto as Exhibit V and otherwise meeting the requirements of
OSFI (such agreement, as it may be amended from time to time, being the
“Reinsurance Security Agreement”), and the Custodian shall open an account or
otherwise designate an existing account (in either case, such account being the
“Reinsurance Security Account”) for the purposes contemplated under the
Reinsurance Security Agreement and thereafter maintain such Reinsurance Security
Account in accordance with the Reinsurance Security Agreement. The Collateral
held within the Reinsurance Security Account must be maintained at all times in
accordance with the terms and conditions of the Reinsurance Security Agreement,
the Insurance Companies Act (Canada), its applicable regulations and any
applicable instructions, advisories or guidelines issued by OSFI.

Section 15.2 Investment of Collateral.

(a) The assets held in the Reinsurance Security Account from time to time (the
“Collateral”) shall consist of Eligible Assets.

(b) The Reinsurer shall appoint either a third-party investment manager or a
Citigroup Inc. affiliate to manage the assets held in the Reinsurance Security
Account, pursuant to an investment management agreement in a form acceptable to
the Ceding Company. The Reinsurer shall be responsible for all fees arising from
the services provided by such third-party investment manager or Citigroup Inc.
affiliate.

Section 15.3 Adjustment of Collateral and Withdrawals.

(a) Any adjustments of Collateral or withdrawal of assets from the Reinsurance
Security Account shall be in compliance with the terms of the Reinsurance
Security Agreement.

(b) The amount of Collateral to be maintained in the Reinsurance Security
Account shall be adjusted following the end of each calendar quarter or at such
other time as OSFI may specify in accordance with the Reserve Report for the
last calendar month of each calendar quarter provided to the Reinsurer pursuant
to the terms of Section 8.1 or the instructions of OSFI. Such report shall set
forth the amount by which the Reinsurance Security Account Balance equals or
exceeds the Required Balance, in each case as of the end of the immediately
preceding calendar quarter or at such other time as OSFI may specify.

(c) If the Reinsurance Security Account Balance exceeds 105% of the Required
Balance, in each case as of the end of the immediately preceding calendar
quarter or at such other time as OSFI may specify, then the Reinsurer shall have
the right to seek approval from the Ceding Company (which shall not be
unreasonably or arbitrarily withheld, conditioned or delayed) to withdraw excess
Collateral, provided that the amount of such withdrawal of excess Collateral
would not reduce the Securities Account Balance to less than 105% of the
Required Balance as of the end of the immediately preceding month or at such
other time as OSFI may specify, and if so approved, such excess shall be
withdrawn in accordance with the Reinsurance Security Agreement.

(d) The Reinsurer shall, no later than twenty (20) Business Days following
receipt of the Top-Up Notice or at such earlier time as OSFI may specify, place
additional Collateral into the Reinsurance Security Account so that the
Reinsurance Security Account Balance, as of the date such additional Collateral
are so placed, is no less than the Required Balance as of the end of the
immediately preceding calendar quarter or at such other time as OSFI may
specify.

(e) Without limitation of the other provisions of this Section 15.3, subject to
obtaining the Ceding Company’s prior consent (which shall not be unreasonably or
arbitrarily withheld, conditioned or delayed), the Reinsurer may remove
Collateral from the Reinsurance Security Account in accordance with the
Reinsurance Security Agreement; provided, however, that the Reinsurer, at the
time of such withdrawal, replaces the withdrawn assets with Collateral permitted
under the terms of the Reinsurance Security Agreement and by OSFI and having a
Market Value equal to or greater than the Market Value of the Collateral
withdrawn so that the Reinsurance Security Account Balance, as of the date of
such withdrawal, is no less than the Required Balance as of the end of the
immediately preceding calendar quarter or such other time as OSFI may specify.

 

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Section 15.4 Cost of Reinsurance Security Account. The cost of maintaining the
Reinsurance Security Account shall be borne by the Reinsurer.

10. Third Party Beneficiary. Section 16.1 of the Coinsurance Agreement is hereby
amended by deleting each reference to the “Reinsurance Trust Agreement” and
replacing it with a reference to the “Reinsurance Security Agreement”.

11. Title to Collateral. Section 17.3(e) of the Coinsurance Agreement is hereby
deleted in its entirety and replaced with the following:

(e) Good and Marketable Title to Collateral. The Reinsurer will have good and
marketable title, free and clear of all liens, to all Collateral immediately
prior to the deposit thereof in the Reinsurance Security Account.

12. Indemnification. Section 18.1(b) of the Coinsurance Agreement is hereby
deleted in its entirety and replaced with the following:

The Reinsurer agrees to indemnify and hold harmless the Ceding Company and its
directors, officers, employees, agents, representatives, successors, permitted
assigns and Affiliates from and against any and all Indemnification Claims
relating to this Agreement and to the Reinsurance Security Agreement to the
extent arising from:

 

(i)

any breach or falsity of any representation, warranty or covenant of the
Reinsurer;

 

(ii)

the breach of or failure to perform any of the duties, obligations, covenants or
agreements of the Reinsurer contained in this Agreement or the Reinsurance
Security Agreement; or

 

(iii)

any amount owing to the Ceding Company pursuant to the Reinsurance Security
Agreement, including any amount paid by the Ceding Company to the Custodian in
order to indemnify or make payments to the Custodian in accordance with sections
25 and 26 of the Reinsurance Security Agreement.

13. Regulatory Matters. Section 19.1(b) of the Coinsurance Agreement is hereby
amended by deleting the phrase “deposit in trust all such Trust Assets” in its
entirety and replacing it with the following: “deposit into the Reinsurance
Security Account all such Collateral”.

14. Duration and Entire Agreement. Each of Sections 20.1 and 21.1 of the
Coinsurance Agreement are hereby amended by deleting the references to the
“Reinsurance Trust Agreement” and replacing them with references to the
“Reinsurance Security Agreement”.

15. Consent to Jurisdiction. Section 21.6 of the Coinsurance Agreement is hereby
deleted in its entirety and replaced with the following “Intentionally Deleted”.

16. Replacement of References. For greater certainty and without limiting the
generality of the foregoing, and after giving effect to the other amendments
contemplated in this Coinsurance Amending Agreement, all references within the
Coinsurance Agreement to: (a) the “Reinsurance Trust Agreement” are hereby
deleted and replaced with a reference to the “Reinsurance Security Agreement”,
(b) the “Reinsurance Trust Account” are hereby deleted and replaced with a
reference to the “Reinsurance Security Account”, and (c) the “Reinsurance Trust
Account Balance” are hereby deleted and replaced with a reference to the
“Reinsurance Security Account Balance”.

17. Exhibit V. Exhibit V of the Coinsurance Agreement is hereby amended by
changing the title thereof to “Form of Reinsurance Security Agreement” and
deleting the attachment thereto in its entirety and replacing with the form of
reinsurance security agreement attached hereto as Appendix 1.

18. Exhibit VII. Exhibit VII of the Coinsurance Agreement is hereby amended by
replacing each reference to the “Reinsurance Trust Account” with a reference to
the “Reinsurance Security Account”, and each reference to the “Reinsurance Trust
Agreement” with a reference to the “Reinsurance Security Agreement”.

19. Further Assurances. Each of the parties hereto hereby covenants and agrees
to promptly do, execute and deliver, or cause to be done, executed and delivered
all such further acts, documents and things as may be necessary or desirable to
give full force and effect to the terms and conditions of this Coinsurance
Amending Agreement.

20. Headings. The inclusion of headings in this Coinsurance Amending Agreement
is for convenience of reference only and shall not affect the construction or
interpretation of this Coinsurance Amending Agreement.

 

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21. Entire Agreement. This Coinsurance Amending Agreement, together with the
Coinsurance Agreement, constitutes the entire agreement among the parties hereto
pertaining to the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written. There are no conditions, warranties, representations or other
agreements (whether oral or written, express or implied, statutory or otherwise)
between the parties hereto in connection with the subject matter of this
Coinsurance Amending Agreement, except as specifically set out herein.

22. Governing Law. This Coinsurance Amending Agreement shall be governed by, and
enforced, construed and interpreted in accordance with, the laws of the Province
of Ontario and the laws of Canada applicable therein and shall be treated in all
respects as an Ontario contract.

23. Assignment, Successors and Assigns. This Coinsurance Amending Agreement
shall enure to the benefit of and be binding on the parties hereto, and their
respective predecessors, successors, and assigns. Neither this Coinsurance
Amending Agreement, nor any rights or obligations hereunder, may be assigned by
either of the parties hereto, except as set forth expressly in the Coinsurance
Agreement.

24. Counterparts. This Coinsurance Amending Agreement may be executed in several
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts together shall constitute one and the same document.
Counterparts may be executed either in original, faxed or electronic form and
the parties hereto adopt any signatures received by a receiving fax machine or
in portable document format (PDF) as original signatures of the parties;
provided, however, that any party providing its signature in such manner will
promptly forward to the other party hereto an original of the signed copy of
this Agreement which was so faxed or sent by PDF.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.

 

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

 

By:

/s/ John A. Adams

Name:

John A. Adams

Title:

CEO

 

 

FINANCIAL REASSURANCE COMPANY 2010, LTD.

 

By:

/s/ Reza Shah

Name:

Reza Shah

Title:

PRESIDENT

 

 

 

 

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Appendix 1

Form of Reinsurance Security Agreement

[see attached]

 

 

 

 

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Execution Version

FINANCIAL REASSURANCE COMPANY 2010, LTD.

as Pledgor

and

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

as Secured Party

and

RBC DEXIA INVESTOR SERVICES TRUST

as Custodian

 

REINSURANCE SECURITY AGREEMENT

December 31, 2011

 

 

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TABLE OF CONTENTS

 

SECTION 1

 

DEFINED TERMS AND INTERPRETATION.

 

1

SECTION 2

 

THE SECURITIES ACCOUNT.

 

4

SECTION 3

 

GRANT OF SECURITY.

 

5

SECTION 4

 

SECURED OBLIGATIONS.

 

5

SECTION 5

 

ATTACHMENT.

 

6

SECTION 6

 

DUTIES OF THE SECURED PARTY.

 

6

SECTION 7

 

RIGHTS OF THE PLEDGOR.

 

6

SECTION 8

 

EXPENSES.

 

6

SECTION 9

 

ENFORCEMENT.

 

7

SECTION 10

 

REMEDIES.

 

7

SECTION 11

 

EXERCISE OF REMEDIES.

 

8

SECTION 12

 

APPOINTMENT OF ATTORNEY.

 

8

SECTION 13

 

DEALING WITH THE COLLATERAL.

 

8

SECTION 14

 

STANDARDS OF SALE.

 

8

SECTION 15

 

DEALINGS BY THIRD PARTIES.

 

9

SECTION 16

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR.

 

9

SECTION 17

 

COLLATERAL MATTERS.

 

10

SECTION 18

 

APPOINTMENT AND DUTIES OF THE CUSTODIAN.

 

11

SECTION 19

 

DIRECTED POWERS.

 

12

SECTION 20

 

CONTRACTUAL SETTLEMENT.

 

13

SECTION 21

 

SERVICES TO BE PERFORMED WITHOUT DIRECTION.

 

13

SECTION 22

 

EXPRESS PROVISIONS.

 

14

SECTION 23

 

SECURITY INTEREST, SET-OFF AND DEDUCTION

 

14

SECTION 24

 

WAIVER BY CUSTODIAN.

 

15

SECTION 25

 

CHARGES OF THE CUSTODIAN.

 

15

SECTION 26

 

INDEMNIFICATION OF CUSTODIAN.

 

15

SECTION 27

 

LIMITATION OF CUSTODIAN LIABILITY.

 

15

SECTION 28

 

REMOVAL AND RESIGNATION OF THE CUSTODIAN.

 

17

SECTION 29

 

NO CONFLICT.

 

18

SECTION 30

 

COMMUNICATIONS AND DIRECTIONS.

 

18

SECTION 31

 

CONFIDENTIALITY.

 

21

SECTION 32

 

GENERAL.

 

21

 

 

 

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REINSURANCE SECURITY AGREEMENT

Reinsurance Security Agreement dated as of the 31st day of December, 2011 made
between:

Financial Reassurance Company 2010, Ltd., a reinsurance company incorporated
under the laws of Bermuda and registered as an insurer pursuant to the Insurance
Act 1978 of Bermuda, and having its head office located at Clarendon House, 2
Church Street, Hamilton HM 11, Bermuda (together with its successors and
permitted assigns, the “Pledgor”);

-and-

Primerica Life Insurance Company of Canada, an insurance company incorporated
under the federal laws of Canada and having its head office located at 2000
Argentia Road, Plaza V, Suite 300, Mississauga, Ontario L5N 2R7, Canada
(together with its successors and permitted assigns, the “Secured Party”);

-and-

RBC Dexia Investor Services Trust, a trust company incorporated under the laws
of Canada and having its head office located at 155 Wellington Street West, 10th
Floor, Toronto, Ontario M5V 3L3 (together with its successors and permitted
assigns, the “Custodian”)

RECITALS:

 

(i)

The Secured Party is authorized to carry on insurance business in Canada under
the Insurance Companies Act (Canada) (the “ICA”);

 

(ii)

The Pledgor and the Secured Party have entered into the 2010 Coinsurance
Agreement, pursuant to which the Pledgor has agreed to reinsure certain risks
for the benefit of the Secured Party;

 

(iii)

The Pledgor is not authorized under the ICA to reinsure risks in Canada;

 

(iv)

The Secured Party will only receive credit for capital purposes under the ICA
for reinsurance ceded under the 2010 Coinsurance Agreement if security is
maintained in Canada in respect of the reinsurance liabilities of the Pledgor in
accordance with the Superintendent’s guidance on reinsurance arrangements;

 

(v)

The Pledgor has agreed to provide security to the Secured Party for its
obligations pursuant to the 2010 Coinsurance Agreement and has agreed to enter
into this Agreement and to perform the obligations of the Pledgor described
hereunder;

 

(vi)

The Pledgor and the Secured Party desire to retain the Custodian to act as
custodian of the Collateral in accordance with the terms of this Agreement and
to provide safekeeping and custodial services in respect of the Collateral; and

 

(vii)

The Custodian has agreed to act as custodian of the Collateral and to provide
safekeeping and custodial services in respect of the Collateral, all on the
terms and conditions of this Agreement.

In consideration of the foregoing and the mutual agreements herein set forth and
other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties agree as follows.

Section 1

Defined Terms and Interpretation.

(1)

As used in this Agreement, the following terms have the following meanings:

“Affiliate” shall have the meaning set out in the Canada Business Corporations
Act, as amended from time to time, and any successor legislation thereto as in
effect from time to time.

“Agent” means any agent, service provider, advisor or other entity appointed by
the Custodian to assist in providing services under this Agreement, and may
include Affiliates and subsidiaries of the Custodian, but for greater certainty,
shall not include any agent or Affiliate of the Pledgor or the Secured Party.

“Agreement” means this Reinsurance Security Agreement, as supplemented or
amended, restated or replaced from time to time.

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“Applicable Law” means in relation to any person, any existing or future laws,
regulations, policies or orders made and promulgated under statutory authority
by any governmental or regulatory body, commission or agency purporting to have
jurisdiction over such person whether or not having the force of law, including,
without limitation, laws in relation to taxation, all as the same may be amended
from time to time.

“Blocking Service” has the meaning specified in Section 2(4)

“Business Day” means a day, other than a Saturday or a Sunday, on which banks
are open for general business in Toronto, Ontario.

“Collateral” has the meaning specified in Section 3.

“Contractual Settlement Date” means:

 

(i)

with respect to the purchase or sale of any security, the date the parties have
contracted to settle the trade;

 

(ii)

with respect to the purchase or sale of any short term money market investments,
the date specified by the Pledgor at the time at which it gave instructions to
the Custodian;

 

(iii)

with respect to the maturity of a security, the maturity date; and

 

(iv)

with respect to interest and dividend payments, the due date established by the
payor.

“Corporate Action” means any conversion privileges, subscription rights,
warrants or other rights or options available to the holder in connection with
any securities which form part of the Collateral, including those relating to
the reorganization, recapitalization, takeover, consolidation, amalgamation,
merger, liquidation, filing for or declaration of bankruptcy or plans of
arrangement of any corporation or association.

“Custodian” means RBC Dexia Investor Services Trust, a trust company continued
under the laws of Canada, and any successor Custodian appointed pursuant hereto,
and their respective successors and assigns.

“Custodian Security Interest” has the meaning specified in Section 23(5).

“Declaration” means a declaration in the form and with the supplementary
information approved by the Superintendent, setting out the Market Value of the
Collateral as of the date of such report.

“Depository” means any authorized domestic depository or clearing or settlement
agency or system, including a transnational book-based system, and shall include
CDS Clearing and Depository Services Inc. and its successors and assigns.

“Direction” means any directions, notices, requests, instructions and any other
communication of the Pledgor, the Secured Party or any Investment Manager
(including, for greater certainty, Entitlement Orders) given to the Custodian in
accordance with the terms of this Agreement and “Direct” means to give a
Direction.

“Entitlement Order” means an “entitlement order” as defined in the STA.

“Event of Default” has the meaning specified in Section 9.

“Expenses” has the meaning specified in Section 4(b).

“Fee Schedule” means the schedule of fees payable hereunder as agreed to by the
parties, as amended from time to time.

“Investment Manager” means any person or entity designated by the Pledgor as an
investment manager pursuant to Section 7.

“Lien” means (i) any mortgage, charge, pledge, hypothecation, security interest,
assignment by way of security, encumbrance, lien (statutory or otherwise), hire
purchase agreement, conditional sale agreement, deposit arrangement, title
retention agreement or arrangement, or any other assignment, arrangement or
condition that in substance secures payment or performance of an obligation,
(ii) any trust arrangement, or (iii) any agreement to grant any such rights or
interests.

“Market Value” means the market value of the Collateral, as determined by the
Custodian in accordance with the terms of this Agreement.

“Minimum Market Value” means the amount required pursuant to the Guideline on
the Minimum Continuing Capital and Surplus Requirement for Life Companies, as
amended from time to time, in order to avoid any capital deduction or margin
requirement as a result of entering into, and ceding risks to the Pledgor
pursuant to the terms of the 2010 Coinsurance Agreement.

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“Notice of Exclusive Control” means a notice from the Secured Party to the
Custodian and the Pledgor in substantially the form attached hereto as Schedule
“B”.

“Overdraft” has the meaning specified in Section 23(1).

“Permitted Investments” means Eligible Assets as defined in the Reinsurance
Agreement and set out in the document titled “FINANCIAL REASSURANCE COMPANY
2010, LTD - PRIMERICA LIFE INSURANCE COMPANY OF CANADA TRUST ACCOUNT - ACCOUNT
NUMBER 110335034 - INVESTMENT PORTFOLIO GUIDELINES” dated as of March 3, 2010,
provided that they are held and settled through CDS Clearing and Depository
Services Inc. or are represented by physical certificates delivered to, and
registered or endorsed in the name of, the Custodian or its nominee.

“Person” means any natural person, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, company,
limited liability company, institution, public benefit corporation, investment
or other fund, government (whether federal, provincial, county, city, municipal
or otherwise, including any instrumentality, division, agency, body or
department thereof) or other entity of any nature.

“Pledgor Obligations” has the meaning specified in Section 23(5).

“PPSA” means the Personal Property Security Act (Ontario), including any
regulation promulgated thereunder, as amended from time to time.

“Release Date” means the date on which all the Secured Obligations have been
indefeasibly paid and discharged in full and the Secured Party and the Pledgor
have no further dealings pursuant to which further Secured Obligations might
arise. For greater certainty, “Release Date” shall include the date on which the
Secured Party recaptures all of the reinsurance liabilities of the Pledgor under
the 2010 Coinsurance Agreement or the 2010 Coinsurance Agreement is terminated
in accordance with Article XX therein.

“Secured Obligations” has the meaning specified in Section 4(a).

“Securities Account” means each account opened or maintained by the Pledgor with
the Custodian for purposes of this Agreement or which the parties may agree is
to be a Securities Account for purposes of this Agreement.

“Security Interest” has the meaning specified in Section 4.

“STA” means the Securities Transfer Act, 2006 (Ontario) and the regulations
promulgated thereunder, as amended from time to time.

“Standard of Care” has the meaning specified in Section 27(1).

“Superintendent” mean the Superintendent of Financial Institutions, appointed
pursuant to the Office of the Superintendent of Financial Institutions Act.

“2010 Coinsurance Agreement” means the reinsurance agreement between the Secured
Party and the Pledgor described in Schedule “A”, as amended or supplemented from
time to time.

“Voting Materials” means all proxies, proxy solicitation materials and other
communications received by the Custodian relating to any securities which form
part of the Collateral and that call for voting.

(2)

Terms defined in the PPSA or the STA and used but not otherwise defined in this
Agreement have the same meanings as in the PPSA or STA, as the case may be. For
greater certainty, the terms “investment property”, “money” and “proceeds” have
the meanings given to them in the PPSA; and the terms “certificated security”,
“control”, “deliver”, “entitlement holder”, “entitlement order”, “financial
asset”, “security”, “securities account”, “securities intermediary”, “security
entitlement” and “uncertificated security” have the meanings given to them in
the STA.

(3)

In this Agreement the words “including”, “includes” and “include” mean
“including (or includes or include) without limitation”. The expressions
“Section” and other subdivision followed by a number mean and refer to the
specified Section or other subdivision of this Agreement.

(4)

Any reference in this Agreement to gender includes all genders. Words importing
the singular number only include the plural and vice versa.

(5)

The division of this Agreement into Sections and other subdivisions and the
insertion of headings are for convenient reference only and do not affect its
interpretation.

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(6)

Any reference in this Agreement to this Agreement, any other agreement or any
instrument, means this Agreement, such other agreement, or such instrument, in
each case, as the same may have been or may from time to time be amended,
modified, extended, renewed, restated, replaced or supplemented and includes all
schedules attached thereto. Except as otherwise provided in this Agreement, any
reference in this Agreement to a statute refers to such statute and all rules
and regulations made under it as the same may have been or may from time to time
be amended or re-enacted.

Section 2

The Securities Account.

(1)

The Custodian shall open and maintain the Securities Account as an account of,
and in the name of, the Pledgor, or shall designate an existing account as a
Securities Account for purposes of this Agreement. The parties hereby agree that
the account described in Schedule “C” is and shall be a “Securities Account” for
purposes of this Agreement.

(2)

The Securities Account shall be opened and maintained at the offices of the
Custodian in Toronto, Ontario. The Custodian will not change the location, name
or account number of any Securities Account without the prior written consent of
the Pledgor and the Secured Party. The Securities Account shall be administered
upon the terms and conditions set forth herein. The Custodian agrees to hold the
Collateral as client property separate and apart from its general property.
Notwithstanding Section 17.1(l)(c) of the PPSA, or equivalent legislation in any
other jurisdiction, the Custodian shall not lend, re-pledge or re-hypothecate
the Collateral.

(3)

The Pledgor shall, from time to time, deposit, contribute or deliver property to
the Securities Account as required by the terms of the 2010 Coinsurance
Agreement.

(4)

The Pledgor shall ensure that all property deposited, contributed or delivered
by it to the Securities Account, or in which it Directs that amounts in the
Securities Account be invested, consists of Permitted Investments and cash
deposited in the Securities Account in the normal course of operating an
investment securities account. While it is the Pledgor’s obligation to ensure
that all property delivered by it to the Securities Account consists of
Permitted Investments and the Secured Party has access to statements of the
Securities Account to permit it to confirm that the assets in the Securities
Account are Permitted Investments, as a supplemental control, the Custodian may,
at its sole discretion, block the settlement of property that is non-CDS
eligible into the Securities Account (the “Blocking Service”). On each occasion
that the Custodian provides the Blocking Service, it shall promptly notify the
Secured Party and the Pledgor of any property that has not settled into the
Securities Account due to the Blocking Service. The Pledgor and the Secured
Party shall not Direct the Custodian to use any part of the Collateral in a
securities lending program.

(5)

The Custodian shall determine the Market Value of the Collateral at such times
as required for purposes of this Agreement. In determining such Market Values,
the Custodian shall use nationally recognized pricing services for property for
which such prices are available, and for property for which such prices are not
available, the Market Value shall be the market value or estimated market value
agreed by the Secured Party and the Pledgor (or the Investment Manager on its
behalf). The Custodian shall not be liable for any loss, damage or expense,
arising as a result of (i) an error in such data sources, or (ii) market values
or estimated market values provided by the Pledgor or the Secured Party or for
any delay or failure of either party providing such market values or estimated
market values.

(6)

The Pledgor shall ensure that the Market Value of the Permitted Investments
forming part of the Collateral shall at all times be at least equal to the
Minimum Market Value. If the Market Value of the Permitted Investments forming
part of the Collateral shall at any time fall below the Minimum Market Value,
the Pledgor shall promptly deposit in the Securities Account additional
Collateral with a Market Value sufficient to bring the Market Value of the
Permitted Investments forming part of the Collateral to at least the Minimum
Market Value.

(7)

The Pledgor may not withdraw, and the Custodian shall not comply with any
Entitlement Order issued by the Pledgor to withdraw, any of the Collateral from
the Securities Account without the joint written Direction of the Pledgor and
the Secured Party. Upon any withdrawal made in accordance with this Section
2(7), the Collateral withdrawn shall cease to be subject to the Security
Interest and shall cease to be Collateral. The Security Interest shall not
otherwise terminate except by means of the earlier of (i) the Release Date or
(ii) a discharge in writing executed by the Secured Party in accordance with
Section 30. The Custodian shall be entitled to set off against any Collateral
withdrawn by the Pledgor pursuant to this Section 2(7) any fees and expenses due
and payable to it by the Pledgor pursuant to this Agreement.

(8)

No withdrawal of Collateral pursuant to Section 2(7) shall prejudice the right
of the Secured Party to subsequently require, or the obligation of the Pledgor
to make, delivery of new Collateral in accordance with the terms of the 2010
Coinsurance Agreement and this Agreement.

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(9)

Notwithstanding anything in this Agreement to the contrary, the Custodian agrees
that it will comply with any Entitlement Orders originated by the Secured Party,
without the further consent of the Pledgor. Upon receipt by the Custodian of a
written notice from the Secured Party of a Notice of Exclusive Control, the
Custodian shall promptly cease to comply with Entitlement Orders of the Pledgor
or the Investment Manager with respect to the Collateral or the Securities
Account (including without limitation Directions pursuant to Section 7(1) and
Section 7(2)). In complying with any such Notice of Exclusive Control, the
Custodian shall be entitled to a reasonable period of time to implement the
Notice of Exclusive Control and shall not be required to cease processing a
pending transaction not involving the withdrawal of property from the Securities
Account pursuant to a Direction that was received by the Custodian prior to
receiving the Notice of Exclusive Control. Other than the delivery of an
Entitlement Order, no other statement or document need be presented by the
Secured Party to withdraw any of the Collateral from the Securities Account,
except that the Secured Party shall acknowledge to the Custodian receipt of such
withdrawn Collateral.

(10)

As between the Secured Party and the Pledgor, the Secured Party agrees that it
may only deliver a Notice of Exclusive Control to the Custodian if an Event of
Default has occurred and is continuing.

Section 3

Grant of Security.

The Pledgor grants to the Secured Party a security interest in, and assigns,
mortgages, charges, hypothecates and pledges to the Secured Party, the following
(collectively, the “Collateral”):

(a)

the Securities Account

(b)

all of the credit balances, security entitlements, securities, cash, and other
financial assets and other property (or their value) from time to time held in
the Securities Account;

(c)

all securities and other property derived from any dealing with or distribution
of any property referred to in this Section 3;

(d)

all substitutions and replacements of, increases and additions to the property
described in Section 3(a), Section 3(b) and Section 3(c), including as a result
of any merger, amalgamation, arrangement, consolidation, subdivision,
reclassification, stock dividend or other adjustment; and

(e)

all proceeds in any form derived directly or indirectly from any dealing with
all or any part of the property described in Section 3(a), Section 3(b), Section
3(c) and Section 3(d), including the proceeds of such proceeds.

Section 4

Secured Obligations.

The security interest, assignment, mortgage, charge, hypothecation and pledge
granted by this Agreement (collectively, the “Security Interest”) secures the
payment and performance of:

(a)

all of the Pledgor’s present and future obligations to the Secured Party to pay
the Pledgor’s share of any loss or liability or both (including where required
by the 2010 Coinsurance Agreement, any loss or liability on account of claims
incurred but not reported) sustained by the Secured Party for which the Pledgor
is liable under the 2010 Coinsurance Agreement and all of the Pledgor’s other
present and future debts, liabilities and obligations to the Secured Party,
direct or indirect, absolute or contingent, whether alone or with others,
pursuant to or in connection with the 2010 Coinsurance Agreement or this
Agreement (collectively, and together with the Expenses, the “Secured
Obligations”); and

(b)

all reasonable legal fees, court costs, receiver’s or agent’s remuneration and
other expenses of taking possession of, realizing, collecting, selling,
transferring, delivering or obtaining payment for the Collateral upon the
Security Interest becoming enforceable, and of taking, defending or
participating in any action or proceeding in connection with any of the
foregoing matters (collectively, the “Expenses”).

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Section 5

Attachment.

(1)

The Pledgor acknowledges that (i) value has been given, (ii) it has rights in
the Collateral or the power to transfer rights in the Collateral to the Secured
Party (other than after- acquired Collateral), (iii) it has not agreed to
postpone the time of attachment of the Security Interest, and (iv) it has
received a copy of this Agreement.

(2)

At the request of the Secured Party, the Pledgor will take all action that the
Secured Party deems advisable to cause the Secured Party to have control over
any securities or other investment property delivered by the Pledgor pursuant to
the 2010 Coinsurance Agreement or this Agreement or that is now or at any time
becomes Collateral, including (i) causing the Collateral to be transferred to or
registered in the name of the Custodian or its nominee, (ii) endorsing any
certificated securities to the Custodian or its nominee by an effective
endorsement, (iii) directing CDS Clearing and Depository Services Inc. that the
Collateral is to be credited to an account in the name of the Custodian or its
nominee, (iv) delivering the Collateral to the Custodian, and (v) delivering to
the Custodian any and all consents or other documents or agreements which may be
necessary to effect the transfer of any Collateral to the Custodian.

Section 6

Duties of the Secured Party.

(1)

The Secured Party has no obligation to exercise any option or right in
connection with any Collateral. The Secured Party has no obligation to protect
or preserve any Collateral from depreciating in value or becoming worthless and
is released from all responsibility for any loss of value whether such
Collateral is in the possession of, is a security entitlement of, or is subject
to the control of, the Secured Party, the Custodian, the Pledgor or any other
Person. The Custodian shall comply with its Standard of Care in the physical
keeping of any Collateral.

Section 7

Rights of the Pledgor.

(1)

Until the Secured Party has delivered a Notice of Exclusive Control, the Pledgor
shall be entitled, subject to Section 2(4), Section 2(6) and Section 2(7), to
Direct the Custodian as to the manner of investment of the Collateral and to
otherwise deal with the Collateral in the ordinary course of business. The
Custodian may establish reasonable requirements relative to the time or times by
which Direction must be given and shall advise the Pledgor of those
requirements. The Pledgor may, by Direction to the Custodian and the Secured
Party, designate an Investment Manager to manage the investment of some or all
of the Collateral as identified by the Pledgor, and to provide Directions to the
Custodian with regard to the investment of the Collateral. The Custodian may
assume that the designation of an Investment Manager continues in force until it
receives a written Direction from the Pledgor to the contrary. Whenever a Notice
of Exclusive Control has been delivered to the Custodian, all rights of the
Pledgor, or any Investment Manager, to Direct the Custodian as to the manner of
investment of the Collateral shall terminate and all such rights shall become
vested solely and absolutely in the Secured Party.

(2)

Until the Secured Party has delivered a Notice of Exclusive Control, the Pledgor
shall be entitled to Direct the Custodian with respect to the exercise of the
voting rights attached to the securities and other financial assets that are
part of the Collateral. The Custodian may establish reasonable requirements
relative to the time or times by which any such Directions must be given and
shall advise the Pledgor of those requirements. Following delivery to the
Custodian of a Notice of Exclusive Control, all rights of the Pledgor to vote or
to Direct the voting (including under any proxy given by the Custodian or the
Secured Party (or a nominee) or otherwise) shall cease and all such rights
become vested solely and absolutely in the Secured Party.

(3)

All dividends, interests, distributions and other amounts related to the
Collateral shall be collected by the Custodian, credited to the Securities
Account and shall constitute Collateral, unless and until released in accordance
with Section 2(7). Any dividend, interest, cash or other amounts received by the
Pledgor contrary to this Section 7(3) will be held by the Pledgor as trustee for
the Secured Party and shall be immediately paid over to the Custodian, or after
the giving of a Notice of Exclusive Control, to or to the order of the Secured
Party.

Section 8

Expenses.

The Pledgor is liable for and will pay on demand by the Custodian or Secured
Party, as the case may be, any and all Expenses of the Custodian or the Secured
Party. For greater certainty, each party hereto shall be responsible for all
expenses, including legal fees, incurred by such party in connection with the
negotiation of this Agreement. As between the Pledgor and the Secured Party
only, each shall pay for their own legal opinions, any financing statements
delivered or filed in accordance herewith, and any other filing fees and
disbursements related thereto, and any legal fees incurred in connection
therewith, and neither of the Pledgor or the Secured Party shall be responsible
for such expenses incurred by the other party.

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Section 9

Enforcement.

(1)

The Security Interest shall become and be enforceable against the Pledgor upon
the occurrence of any one or more of the following events (each, an “Event of
Default”):

 

(a)

the Pledgor is no longer authorized in its home jurisdiction to carry on the
business of reinsurance;

 

(b)

the Pledgor fails to make any payment when due (following the expiry of any cure
period provided for in the 2010 Coinsurance Agreement) under the 2010
Coinsurance Agreement (whether on a scheduled payment date or upon default or
termination);

 

(c)

the Pledgor defaults in any of its other duties and obligations under the 2010
Coinsurance Agreement (following the expiry of any cure period provided for in
the 2010 Coinsurance Agreement);

 

(d)

any representation or warranty made by the Pledgor in this Agreement is breached
or is incorrect in any respect and the Pledgor fails to remedy such breach and
cause such representation or warranty to become correct in all respects within
three Business Days of receipt of notice from the Secured Party requiring it to
do so;

 

(e)

the Pledgor fails to perform any of its undertakings, covenants or agreements in
this Agreement and such failure is not remedied on or before the third Business
Day following the day in which notice of such failure has been given by the
Secured Party to the Pledgor;

 

(f)

the Pledgor becomes insolvent or unable to pay its debts as they fall due or
fails or admits in writing its inability to pay its debts as they fall due;

 

(g)

the Pledgor institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors’ rights, or a petition
is presented for its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it, such proceeding or
petition (i) results in a judgment of insolvency or liquidation, or (ii) is not
dismissed, discharged, stayed or restrained in each case within 30 days of the
institution or presentation thereof provided the Pledgor is diligently pursuing
the dismissal, discharge, stay or restrain during such time;

 

(h)

one or more supervisory or regulatory authorities takes control of all or
substantially all of the assets of the Pledgor, with the intention that such
authority or authorities act as administrator, liquidator or provisional
liquidator, receiver or interim receiver, trustee, custodian or other similar
officer; or

 

(i)

a liquidator or receiver of the Pledgor or of any part of the insurance business
of the Pledgor is appointed under the provisions of any statute or pursuant to
any agreement between the Pledgor and a third party.

(2)

The Pledgor and the Secured Party hereby acknowledge and agree that the
Custodian shall in no way be required to confirm or verify that an Event of
Default has occurred or is continuing prior to acting upon a Notice of Exclusive
Control or an Entitlement Order given to the Custodian in accordance with the
terms of this Agreement.

Section 10

Remedies.

The Secured Party and the Pledgor agree that, upon the occurrence and during the
continuance of an Event of Default, the Secured Party may realize upon the
Collateral and enforce the rights of the Secured Party by:

 

(a)

delivering a Notice of Exclusive Control to the Custodian;

 

(b)

realizing upon or otherwise disposing of or contracting to dispose of the
Collateral by sale, transfer or delivery;

 

(c)

exercising and enforcing all rights and remedies of a holder of the Collateral
as if the Secured Party were the absolute owner thereof (including, if
necessary, causing the Collateral to be registered in the name of the Secured
Party or its nominee if not already done);

 

(d)

collecting any proceeds arising in respect of the Collateral;

 

(e)

directing the Custodian to transfer all Collateral held by the Custodian in the
Securities Account to another account maintained with, by or on behalf of the
Secured Party or otherwise as the Secured Party may Direct, and the Custodian
shall comply with any such Direction;

 

(f)

applying any proceeds arising in respect of the Collateral in accordance with
Section 32(11); and

 

(g)

exercising any other remedy or proceeding authorized or permitted under the PPSA
or otherwise by Applicable Law or equity.

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Section 11

Exercise of Remedies.

The remedies under Section 10 may be exercised from time to time separately or
in combination and are in addition to, and not in substitution for, any other
rights of the Secured Party however arising or created. The Secured Party is not
bound to exercise any right or remedy, and the exercise of rights and remedies
is without prejudice to the rights of the Secured Party in respect of the
Secured Obligations including the right to claim for any deficiency.

Section 12

Appointment of Attorney.

Effective upon the occurrence and during the continuance of an Event of Default,
the Pledgor hereby irrevocably constitutes and appoints the Secured Party (and
any officer of the Secured Party) the true and lawful attorney of the Pledgor to
take any and all appropriate action and to execute any and all documents as, in
the opinion of the Secured Party, may be necessary to accomplish the purposes of
this Agreement. As the attorney of the Pledgor, the Secured Party has the power
to exercise for and in the name of the Pledgor with full power of substitution,
at any time that the Security Interest is enforceable, any of the Pledgor’s
right (including the right of disposal), title and interest in and to the
Collateral including the execution, endorsement, delivery and transfer of the
Collateral to the Secured Party, its nominees or transferees, and the Secured
Party and its nominees or transferees are hereby empowered to exercise all
rights and powers and to perform all acts of ownership with respect to the
Collateral to the same extent as the Pledgor might do. This power of attorney is
irrevocable until the Release Date, is coupled with an interest, has been given
for valuable consideration (the receipt and adequacy of which is acknowledged)
and survives, and does not terminate upon, the bankruptcy, dissolution, winding
up or insolvency of the Pledgor. This power of attorney extends to and is
binding upon the Pledgor’s successors and assigns. The Pledgor authorizes the
Secured Party to delegate in writing to another Person any power and authority
of the Secured Party under this power of attorney as may be necessary or
desirable in the opinion of the Secured Party, and to revoke or suspend such
delegation. For greater certainty, this power of attorney is revoked upon the
termination of this Agreement.

Section 13

Dealing with the Collateral.

In exercising its rights upon the occurrence and the continuance of an Event of
Default:

 

(a)

the Secured Party is not obliged to exhaust its recourse against the Pledgor or
any other Person or against any other security it may hold in respect of the
Secured Obligations before realizing upon or otherwise dealing with the
Collateral in such manner as the Secured Party may consider desirable;

 

(b)

the Secured Party may grant extensions or other indulgences, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the Pledgor and with other Persons, sureties or securities as it may
see fit without prejudice to the Secured Obligations, the liability of the
Pledgor or the rights of the Secured Party in respect of the Collateral; and

 

(c)

except as otherwise provided by Applicable Law or this Agreement, the Secured
Party is not (i) liable or accountable for any failure to collect, realize or
obtain payment in respect of the Collateral, (ii) bound to institute proceedings
for the purpose of collecting, enforcing, realizing or obtaining payment of the
Collateral or for the purpose of preserving any rights of any Persons in respect
of the Collateral, (iii) responsible for any loss occasioned by any sale or
other dealing with the Collateral or by the retention of or failure to sell or
otherwise deal with the Collateral, or (iv) bound to protect the Collateral from
depreciating in value or becoming worthless.

Section 14

Standards of Sale.

Without prejudice to the ability of the Secured Party to dispose of the
Collateral in any manner which is commercially reasonable after the occurrence
and during the continuance of an Event of Default, the Pledgor acknowledges
that:

 

(a)

the Collateral may be disposed of in whole or in part;

 

(b)

the Collateral may be disposed of by public auction, public tender or private
contract, with or without advertising and without any other formality;

 

(c)

any assignee of such Collateral may be the Secured Party or a customer of the
Secured Party;

 

(d)

any sale conducted by the Secured Party will be at such time and place, on such
notice and in accordance with such procedures as the Secured Party, in its sole
discretion, may deem advantageous;

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(e)

the Collateral may be disposed of in any manner and on any terms necessary to
avoid violation of Applicable Law (including compliance with such procedures as
may restrict the number of prospective bidders and purchasers, require that the
prospective bidders and purchasers have certain qualifications, and restrict the
prospective bidders and purchasers to Persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of the Collateral) or in order to obtain any required
approval of the disposition (or of the resulting purchase) by any governmental
or regulatory authority or official;

 

(f)

a disposition of the Collateral may be on such terms and conditions as to credit
or otherwise as the Secured Party, in its sole discretion, may deem
advantageous; and

 

(g)

the Secured Party may establish an upset or reserve bid or price in respect of
the Collateral.

Section 15

Dealings by Third Parties.

(1)

No Person dealing with the Secured Party or an agent or receiver appointed at
the instance of the Secured Party is required to determine (i) whether the
Security Interest has become enforceable, (ii) whether the powers which such
Person is purporting to exercise have become exercisable, (iii) whether any
money remains due to the Secured Party or the Custodian by the Pledgor, (iv) the
necessity or expediency of the stipulations and conditions subject to which any
sale or lease is made, (v) the propriety or regularity of any sale or other
dealing by the Secured Party with the Collateral, or (vi) how any money paid to
the Secured Party has been applied.

(2)

Any bona fide purchaser of all or any part of the Collateral from the Secured
Party or any receiver or agent will hold the Collateral absolutely, free from
any claim or right of whatever kind, including any equity of redemption, of the
Pledgor, which it specifically waives (to the fullest extent permitted by
Applicable Law) as against any such purchaser together with all rights of
redemption, stay or appraisal which the Pledgor has or may have under any rule
of law or statute now existing or hereafter adopted.

Section 16

Representations, Warranties and Covenants of the Pledgor.

The Pledgor represents and warrants (which representations and warranties will
be deemed to be repeated as of each date on which the Pledgor delivers
Collateral) and undertakes to the Secured Party and the Custodian that:

 

(a)

the Pledgor is an insurance company duly incorporated and validly existing under
the laws of its jurisdiction of incorporation and is not in liquidation, is
authorized in its jurisdiction of incorporation to carry on the business of
reinsurance and has the corporate power and authority to enter into this
Agreement and to exercise its rights and perform its obligations hereunder and
has taken all corporate and other action required to authorise its execution and
performance of this Agreement;

 

(b)

the Pledgor owns, or will at the time of it being credited to the Securities
Account own, the Collateral free and clear of all Liens (other than the Security
Interest and the Custodian Security Interest) and other adverse claims and the
Pledgor is entitled to grant the Security Interest and the Custodian Security
Interest created pursuant to this Agreement;

 

(c)

this Agreement does not conflict in any material respect with any contractual or
other obligation binding upon the Pledgor or with the constitutional documents
of the Pledgor;

 

(d)

the Security Interest created pursuant to this Agreement constitutes and will
constitute a first priority security interest over the Collateral, not subject
to any prior or pari passu security interest (other than the Custodian Security
Interest);

 

(e)

this Agreement has been duly executed and delivered by the Pledgor and
constitutes the legal, valid and binding obligations of the Pledgor, enforceable
in accordance with its terms;

 

(f)

other than with the prior written consent of the Secured Party, the Pledgor
shall not dispose of the Collateral, shall not create any Liens, other than the
Security Interest and the Custodian Security Interest created by this Agreement,
in respect of the Collateral (irrespective of whether ranking behind the
Security Interest created hereby), shall not permit the existence of any such
Lien, and shall not grant control over any of the Collateral to any Person other
than the Secured Party;

 

(g)

to the Pledgor’s knowledge, no transfer restrictions apply to any of the
Collateral, except as have been complied with;

 

(h)

the Pledgor does not know of any claim to or interest in any Collateral,
including any adverse claims. If any Person asserts any Lien, encumbrance or
adverse claim against any of the Collateral, the Pledgor will promptly notify
the Secured Party;

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(i)

the Pledgor has not consented to, will not consent to, and has no knowledge of
any control by any Person with respect to any Collateral, other than the Secured
Party;

 

(j)

the Pledgor will notify the Secured Party immediately upon becoming aware of any
change in an “issuer’s jurisdiction” within the meaning of the STA and the
equivalent legislation in any other jurisdiction in respect of any Collateral
that are uncertificated securities;

 

(k)

the Pledgor will not change its name in any manner or its jurisdiction of
incorporation without providing at least 30 days’ prior written notice to the
Secured Party and the Custodian;

 

(1)

the head office and chief executive office of the Pledgor is located at the
location specified in the 2010 Coinsurance Agreement or otherwise provided to
the Secured Party, and the Pledgor will not change the jurisdiction of its head
office or chief executive office without providing at least 30 days’ prior
written notice to the Secured Party; and

 

(m)

the Pledgor will grant to the Secured Party such further security interests,
assignments, mortgages, charges, hypothecations and pledges in such of the
Collateral that is not effectively subject to a valid and perfected first
ranking security interest pursuant to this Agreement, and in each relevant
jurisdiction as reasonably determined by the Secured Party. The Pledgor will
perform all acts, execute and deliver all agreements, documents and instruments
and take such other steps as are reasonably requested by the Secured Party at
any time to register, file, signify, publish, perfect, maintain, protect, and
enforce the Security Interest including: (i) executing, recording and filing of
financing or other statements, and paying all taxes, fees and other charges
payable, (ii) placing notations on its books of account to disclose the Security
Interest, (iii) delivering acknowledgements, confirmations and subordinations
that may be necessary to ensure that the Security Interest constitutes a valid
and perfected first ranking security interest, (iv) executing and delivering any
certificates, endorsements, instructions, agreements, documents and instruments,
required to register, file, signify, publish, perfect, maintain, protect and
enforce the Security Interest. The documents contemplated by this paragraph must
be in form and substance reasonably satisfactory to the Secured Party.

Section 17

Collateral Matters.

(1)

The Custodian acknowledges and agrees that:

 

(a)

the Collateral is and will at all times be held by the Custodian in Canada;

 

(b)

the Custodian represents and warrants to the Secured Party that it is a Canadian
financial institution and is not an Affiliate of the Pledgor, and covenants to
remain a Canadian financial institution and not an Affiliate of the Pledgor so
long as this Agreement remains in force;

 

(c)

subject to the provisions set out herein, it has not acquired and will not
acquire any right, title or interest in the Collateral on its own behalf other
than such rights as it may have as securities intermediary with respect thereto
(including the Custodian Security Interest) and to hold and administer the same
in accordance with the terms of this Agreement;

 

(d)

it has not entered into, and will not enter into, any agreement, other than this
Agreement, in which it agrees to comply with any Entitlement Order or other
instruction or direction in respect of the Collateral or any portion thereof and
it will not accept or act upon an Entitlement Order, instruction or direction in
respect of the Collateral or the Securities Account, except as provided in this
Agreement;

 

(e)

all property (whether a credit balance, a security, an instrument or other
property whatsoever) credited to or held in the Securities Account is to be
treated as a financial asset under the STA and the equivalent legislation in
other jurisdictions;

 

(f)

the Securities Account is a “securities account” for purposes of the STA, and
the equivalent legislation in other jurisdictions;

 

(g)

it is acting as a “securities intermediary”, for purposes of the STA and the
equivalent legislation in other jurisdictions, in respect of the Collateral and
any security entitlements credited to the Securities Account; and

 

(h)

its “securities intermediary’s jurisdiction” for purposes of the STA, and the
equivalent legislation in other jurisdictions, is the Province of Ontario,
Canada.

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(2)

Each of the Pledgor and the Secured Party acknowledges and agrees that

 

(a)

the Custodian shall have no obligation to register any financing statement or
other personal property security filings in respect of any of the Collateral, or
to perfect or maintain the perfection of any Lien, other than its obligation to
open and maintain the Securities Account in accordance with the terms of this
Agreement; and

 

(b)

the Custodian shall not be responsible for determining the amount of Collateral
required to be delivered by the Pledgor at any time pursuant to the 2010
Coinsurance Agreement or to determine whether the Collateral held in the
Securities Account are either Permitted Investments or cash.

Section 18

Appointment and Duties of the Custodian.

(1)

The Custodian agrees to act as Custodian and, in that connection, agrees to
maintain the Securities Account in accordance with the terms of this Agreement.
In particular, the Custodian agrees that:

 

(a)

except as otherwise provided herein, all securities and all other property
delivered to the Custodian pursuant to this Agreement or the 2010 Coinsurance
Agreement for credit to the Securities Account, or otherwise as Collateral,
shall promptly be credited to, and shall be held in, the Securities Account. The
Custodian shall hold the Collateral in accordance with the terms and conditions
of this Agreement. The Custodian shall hold the Collateral as client property
separate and apart from its general property. All Collateral shall at all times
and in all circumstances be clearly recorded in the books and records of the
Custodian as being separate and apart from the assets of the Custodian and in a
manner which reflects the Pledgor as the beneficial owner of the securities and
other property in the Securities Account. The Custodian shall make notations in
its records that the Securities Account is subject to a security interest in
favour of the Secured Party;

 

(b)

the Custodian shall promptly credit and deposit all cash or other amounts
received as dividends, interest, distributions or other payment related to the
Collateral, including all cash or other amounts received pursuant to Section
7(3), to the Securities Account;

 

(c)

the Custodian shall, with respect to Corporate Actions, use reasonable efforts
to promptly forward to the Pledgor, or, on Direction from the Pledgor, to the
Investment Manager, or, following the delivery of a Notice of Exclusive Control
to the Custodian, the Secured Party, a corporate action notice that contains a
summary of information which has actually been received by the Custodian from
third party sources believed by the Custodian to be reliable, and request
Directions with respect to such Corporate Action where required. The Custodian
shall, with respect to Voting Materials, use reasonable efforts to promptly
forward, or arrange to have promptly forwarded, to the Pledgor (or to the
Investment Manager which the Pledgor has designated as having responsibility for
the relevant security) or, following the delivery of a Notice of Exclusive
Control to the Custodian, the Secured Party, all Voting Materials which the
Custodian receives in respect of securities forming part of the Collateral. The
Custodian shall be under no duty to investigate, participate in or take
affirmative action concerning any Corporate Actions or Voting Materials, except
in accordance with a Direction given in accordance with this Agreement, and upon
such indemnity and provision for fees and expenses as the Custodian may require.
For greater certainty, other than as described in this paragraph and in (l)(e)
below, the Custodian shall not be obligated to forward or summarize any other
shareholder communications, including shareholder mailings, notices or reports,
and the Custodian shall have no responsibility or liability for ensuring the
accuracy or adequacy of such third party information contained in any such
Voting Materials or Corporate Action notice;

 

(d)

the Custodian shall register the Collateral in the Custodian’s own name in the
name of a Depository or in the name of a nominee, or in bearer form, if the
security is not capable of being registered or registration of it would not be
in the best interests of the Pledgor and the Secured Party;

 

(e)

the Custodian shall account for all Collateral in the Securities Account and
shall provide monthly statements of account. Additional statements as required
to satisfy the requirements of the Superintendent and any other regulatory or
administrative agencies will also be provided as requested by the Secured Party,
the Pledgor, the Superintendent or such other regulatory or administrative
agency, all at the expense of the Pledgor. Upon the expiration of one hundred
and twenty (120) days from the date of mailing of any statement, the Custodian
shall be fully released and discharged from any liability or accountability to
any party with respect to the acts or transactions disclosed in such statement,
except when the Custodian has breached its Standard of Care and in respect of
those certain acts and transactions which the Pledgor or the Secured Party has
identified by giving written notice to the Custodian;

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(f)

the Custodian shall respond to any direct inquiries of the Pledgor, the Secured
Party, the Superintendent, or any of their representatives, concerning the
Securities Account or the Collateral, and shall upon reasonable prior notice
provide to the Pledgor, the Secured Party and the Superintendent detailed
inventories of all securities and other property held in the Securities Account,
and the Custodian shall, upon reasonable prior notice, and subject to such
commercially reasonable requirements as the Custodian may impose, permit the
Pledgor, the Secured Party, the Superintendent, or any of their representatives,
to examine and audit all securities and other property held in the Securities
Account. The Custodian shall promptly provide notice to the Secured Party and
the Pledgor concerning audits of the Superintendent. The parties acknowledge
that copies of statements and confirmations relating to the Securities Account
are available through the Custodian’s client access web portal, and the Pledgor
hereby consents to the Custodian granting access to the Secured Party to
information regarding the Securities Account by such web portal and such consent
to access may not be withdraw without the consent of the Secured Party. The
Pledgor and the Secured Party hereby consent to the Custodian granting access to
the Superintendent to the information regarding the Securities Account by the
Custodian’s client access web portal;

 

(g)

the Custodian shall keep records of the administration of the Securities
Account. The Pledgor, the Superintendent, the Secured Party and/or any other
persons to whom the Custodian is legally obligated to provide access, may
examine such records upon reasonable prior notice during business hours through
any person or persons duly authorized in writing by the Pledgor, the
Superintendent, the Secured Party and/or such other person, as the case may be;

 

(h)

the Custodian shall notify the Pledgor and the Secured Party of any claim of
which the Custodian has actual notice against the Collateral or any part thereof
exerted by any Person, or of any loss, destruction of or damage to the
Collateral or any part thereof;

 

(i)

the Custodian shall, on the receipt from the Secured Party of an Entitlement
Order, or notice from the Secured Party that such surrender or transfer is
required in connection with a realization effected in accordance with Section
10, surrender possession of all or part of the Collateral or transfer all or
part of the Collateral from the Securities Account to the Secured Party, another
Person or to an account designated by the Secured Party, all as Directed by the
Secured Party;

 

(j)

the Custodian will, on or before the fifteenth day of each calendar month, or,
if the fifteenth day is not a business day of the Custodian, on or before the
first business day of the Custodian following the fifteenth day, prepare and
file with the Superintendent, in a form acceptable to the Superintendent, a
Declaration with respect to the Collateral, in such form as the Superintendent
may require from time to time, together with paper and electronic copies of
information all as may be required from time to time by the Superintendent with
respect to the Collateral. The Secured Party hereby appoints the Custodian as
its agent for the purpose of filing such Declaration and authorizes the
Custodian to file each such Declaration on its behalf. The Secured Party
acknowledges that such Declaration may as an administrative matter be filed by
the Custodian as part of a larger filing made in respect of other similar
arrangements with other clients;

 

(k)

notwithstanding Section 17.1(l)(c) of the PPSA, the equivalent legislation in
any other jurisdictions or any other provision of Applicable Law, the Custodian
shall not lend, re-pledge or re-hypothecate the Collateral; and

 

(1)

the Custodian shall not permit any of the Collateral to be used as part of the
Custodian’s securities lending program.

Section 19

Directed Powers.

(1)

The Custodian shall exercise the following powers and authority in the
administration of the Securities Account only upon Direction of the Pledgor or
its Investment Manager and, to the extent required by Section 2, the consent of
the Secured Party and, after receipt of a Notice of Exclusive Control from the
Secured Party, only upon the Direction of the Secured Party:

 

(a)

settle the purchase and sale of Collateral; and

 

(b)

complete and process such Voting Materials and process Corporate Actions as the
Custodian may be Directed, provided that the Custodian has received Directions
within the time frames specified by the Custodian in any such Voting Materials
or Corporate Action notice applicable thereto. Where Directions have not been
provided within such time frames, the Custodian will take no action except only
in the case of Corporate Actions and where a default option exists, such default
option as outlined in the notice will apply. In the event that Directions are
provided after such time frames, the Custodian shall use reasonable efforts to
process such Corporate Actions or Voting Materials.

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Section 20

Contractual Settlement.

The Custodian shall, in jurisdictions where settlement practices permit, credit
the Securities Account with Collateral, in connection with the receipt of
interest or dividends or the sale or redemption of any security held hereunder,
and debit such Securities Account, in connection with the purchase of any
security, on the Contractual Settlement Date with respect thereto, whether or
not such monies have been received, or payment made, by the Contractual
Settlement Date. However, if after a reasonable time (as determined by the
Custodian) following the Contractual Settlement Date any such payment or receipt
shall fail to take place for any reason other than the failure of the Custodian
to make payment against delivery or delivery against payments, all related
credits and debits shall be reversed and adjusted to reflect the failure of the
transaction to take place.

Section 21

Services to be Performed without Direction.

(1)

The Custodian may, without Direction, perform the following duties with respect
to the Collateral in accordance with accepted industry practice in the relevant
market:

 

(a)

hold securities forming part of the Collateral through a Depository on the terms
of business of the operators of such Depository, and may effect settlement in
accordance with the customary or established trading and processing practices
and procedures in the jurisdiction or market in which any transaction in respect
of the Collateral occurs. The Custodian shall be fully protected and absolved
from any liability howsoever arising from effecting transactions in the
foregoing manner except to the extent that such liability arises out of the
Custodian’s breach of its Standard of Care in carrying out Directions in
relation to such transactions.

The Custodian may commingle Collateral held through a Depository with property
of other clients of the Custodian (but not with property held for the
Custodian’s own account).

Where the Collateral is so held through a Depository, the Pledgor and the
Secured Party confirm that they will not assert any claim in respect of such
Collateral which would be contrary to the rules and procedures of such
Depository, and will not knowingly act in any way which could result in the
Custodian being in breach of any rule or procedure of such Depository;

 

(b)

enter into and settle foreign exchange transactions, on behalf of the Pledgor,
for purposes of facilitating settlement of trades of Collateral or otherwise,
and any such transactions may be entered into with such counterparties
(including but not limited to the Custodian acting as principal) as the
Custodian may choose in its sole discretion, including Affiliates of the
Custodian, unless the Pledgor otherwise Directs;

 

(c)

to the extent it may do so in the ordinary course of its business, (i) collect
income payable to and distributions due to the Securities Account and sign on
behalf of the Pledgor or the Secured Party any declarations, affidavits,
certificates of ownership and other documents required to collect income and
principal payments, including but not limited to, tax reclamations, rebates and
other withheld amounts, and (ii) collect proceeds from securities or other
property which may mature, provided that whenever a security or other property
offers the Custodian the option of receiving dividends in shares or cash, the
Custodian is authorized to select the cash option unless the Custodian receives
a Direction to the contrary. The Custodian shall not be responsible for the
failure to receive payment of (or late payment of) distributions with respect to
securities or other property held in the Securities Account;

 

(d)

present for redemptions or exchange any securities or other property which may
be recalled, redeemed, withdrawn or retired provided that timely receipt of
written notice of the same is received by the Custodian from the issuer;

 

(e)

retain uninvested cash balances from time to time on hand in the Securities
Account and may, in its sole discretion, hold such cash balances on deposit with
a bank or another deposit taking institution, including the Custodian or its
Affiliates, in such interest bearing account as the Custodian may, in its sole
discretion, determine.

For greater certainty, the parties agree that all free credit balances standing
to the credit of any Securities Account, including un-invested cash balances and
all interests earned, shall constitute “financial assets” for the purposes of
the STA and shall be subject to the Security Interest; and

 

(f)

do all such acts, take all such proceedings and exercise all such rights and
privileges, although not specifically mentioned in this Agreement, as the
Custodian may deem necessary to carry out its rights and obligations under this
Agreement.

(2)

The Custodian may appoint Agents and nominees (which may be Affiliates of or
otherwise connected to the Custodian) to perform any of the services to be
performed by the Custodian as required under the Agreement.

(3)

The Custodian shall act in accordance with its Standard of Care in the selection
and monitoring of Agents and nominees.

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(4)

The Custodian shall not be liable in any circumstances for the acts or omissions
of any agent appointed by the Secured Party or Pledgor. For greater certainty,
Depositories are not agents of the Custodian.

(5)

For greater certainty, any rights, powers, authorities, benefits, and
limitations on liability or responsibility whatsoever granted to the Custodian
under this Agreement or conferred upon the Custodian otherwise at law shall be
deemed to have been granted to, or conferred upon, any and all Agents and
nominees duly appointed by the Custodian, and in furtherance thereof, any
references to “the Custodian” herein shall be construed as references to such
Agents or nominees, as the context requires.

(6)

Settlements of transactions may be effected in accordance with trading and
processing practices customary in the jurisdiction or market where the
transaction occurs. The Pledgor acknowledges that this may, in certain
circumstances, require the delivery of cash or securities (or other property)
without the concurrent receipt of securities (or other property) or cash and, in
such circumstances, the Pledgor shall have sole responsibility for non receipt
of payment (or late payment) by the counterparty.

Section 22

Express Provisions.

Notwithstanding any of the foregoing provisions, the Custodian, in the
administration of the Securities Account, is to be bound solely by the express
provisions of this Agreement, and such further written and signed Directions as
the appropriate party or parties may, under the conditions herein provided,
deliver to the Custodian. The Custodian shall have no duties or obligations
under any other agreement, notwithstanding that such other agreement may be
referred to in this Agreement. The Custodian shall be under no obligation to
enforce the Pledgor’s or the Secured Party’s obligations under this Agreement,
except as otherwise expressly provided or Directed pursuant hereto in accordance
with the terms hereof.

Section 23

Security Interest, Set-Off and Deduction

(1)

If a Direction from the Pledgor, or the settlement of a transaction would create
a debt owing, overdraft or short position in the Securities Account (an
“Overdraft”), then the Custodian is authorized to, but shall not be obliged to,
act on such Direction or complete such transaction.

(2)

Interest on any Overdraft shall be calculated on the daily balance of the amount
owing (before and after demand, default and judgment) at an annual rate
established and declared by the Custodian from time to time, subject to such
minimum charges as declared from time to time, with interest on overdue interest
at the same rate. Interest is payable monthly and shall form part of the
Overdraft.

(3)

The Pledgor agrees to pay to the Custodian promptly upon notice, the amount of
any Overdraft together with any interest that has accrued in accordance with
Section 23(2).

(4)

Notwithstanding any other provision of this Agreement, the Custodian, in its
reasonable discretion, shall be entitled to decline to act upon any Direction of
the Pledgor unless and until all the amounts due and owing to the Custodian
under this Agreement have been paid in full. The Custodian shall give the
parties notice of its decision not to act on any such Direction as soon as
practicable thereafter.

(5)

The Pledgor hereby assigns, conveys, mortgages, pledges, hypothecates, and
charges in favour of, and grants a security interest (the “Custodian Security
Interest”) to the Custodian in the Collateral and all proceeds thereof as
continuing collateral security for, and in an amount not to exceed the amount
of, any obligations, liabilities and indebtedness of the Pledgor to the
Custodian from time to time, whether present or future, absolute or contingent,
liquidated or unliquidated, of whatsoever nature or kind, in any currency or
otherwise, arising pursuant to this Agreement, with respect to (i) any unpaid
fees, disbursements and expenses, and (ii) Overdraft amounts (collectively, the
“Pledgor Obligations”).

The Pledgor and the Custodian agree that it is their intention that the
Custodian Security Interest shall attach immediately to any Collateral in which
the Pledgor has an interest on the date hereof, and, with respect to
after-acquired Collateral, forthwith at the time the Pledgor acquires an
interest therein, all in accordance with the terms hereof.

The Pledgor and the Secured Party acknowledge and agree that the Custodian
Security Interest shall have priority over any other security interest in the
Collateral granted by the Pledgor (including the Security Interest granted
hereunder in favour of the Secured Party), and the Custodian shall be under no
obligation to waive, subordinate or discharge the Custodian Security Interest
except upon the indefeasible payment and satisfaction in full of the Pledgor
Obligations.

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(6)

If and to the extent that at any time any Pledgor Obligations owing to the
Custodian hereunder are outstanding and unpaid, in addition to any right or
remedy that the Custodian may otherwise have hereunder or under any Applicable
Law, the Custodian is hereby authorized, in its discretion (upon reasonable
notice to the Pledgor and the Secured Party and in accordance with Applicable
Law), both before and after demand or judgment, and whether or not default has
occurred hereunder:

 

(a)

to sell, as agent for the Pledgor, such portion of the Collateral (which, for
the purposes of this Section 23 shall include any account with any third party
with whom cash has been deposited by the Custodian on behalf of the Pledgor) as
may be required to satisfy any such unpaid Pledgor Obligations, on such
commercially reasonable terms as it thinks fit in its discretion; and

 

(b)

set off against and deduct from the proceeds of any such sale amounts owing to
the Pledgor in respect of unpaid Pledgor Obligations, and account for any
surplus in excess of such amount to the Pledgor, or as provided in this
Agreement,

it being agreed and understood by the Pledgor that the exercise of the
Custodian’s rights under this Section 23(6) shall not be construed as the
exercise of a right of realization in respect of the Custodian Security Interest
but a separate right of set-off.

Section 24

Waiver by Custodian.

Subject to Section 2(7) and Section 23, the Custodian acknowledges and agrees
that it has not acquired any right, title or interest in the Collateral on its
own behalf other than such rights as it may have as a securities intermediary
and the right and obligation to hold and administer the Collateral in accordance
with the terms of this Agreement.

Section 25

Charges of the Custodian.

The Pledgor agrees to pay all reasonable costs, fees or expenses charged by the
Custodian for acting as the Custodian pursuant to this Agreement, including fees
incurred by the Custodian for legal services deemed reasonably necessary by the
Custodian as a result of the Custodian’s so acting. Following the delivery of a
Notice of Exclusive Control, the Secured Party shall be required to pay all fees
and expenses otherwise required to be paid by the Pledgor pursuant to this
Section 25.

Section 26

Indemnification of Custodian.

(1)

The Pledgor shall indemnify and hold the Custodian, its directors, officers,
employees, representatives and agents harmless from and against any and all
taxes, charges, costs, expenses, damages, claims, demands and liabilities to
which they, or any of them, may become subject, including legal and accounting
costs, for or in respect of anything done or omitted to be done in connection
with this Agreement or in respect of the Collateral, except for the negligence,
wilful misconduct, fraud or lack of good faith of the Custodian, such
indemnification to survive the resignation or removal of the Custodian and the
termination of this Agreement.

(2)

Following the delivery of a Notice of Exclusive Control, the Secured Party shall
indemnify and hold the Custodian, its directors, officers, employees,
representatives and agents harmless from and against any and all taxes, charges,
costs, expenses, damages, claims, demands and liabilities to which they, or any
of them, may become subject, including legal and accounting costs, for or in
respect of anything done or omitted to be done in connection with this Agreement
or in respect of the Collateral following the delivery of a Notice of Exclusive
Control, except for the negligence, wilful misconduct, fraud or lack of good
faith of the Custodian, such indemnification to survive the resignation or
removal of the Custodian and the termination of this Agreement.

(3)

Whenever an action by the Custodian is authorized by Direction pursuant to the
provisions of this Agreement and such action is taken in accordance with such
Direction, the party or parties authorizing such action by way of Direction
hereby agree to indemnify the Custodian against all losses, damages, costs and
expenses, including reasonable attorneys’ fees, resulting from any action so
taken by the Custodian.

Section 27

Limitation of Custodian Liability.

(1)

The Custodian, in carrying out its duties in respect of the safekeeping of, and
dealing with, the Collateral, shall exercise the degree of care, diligence and
skill that a prudent Canadian trust company would exercise incomparable
circumstances (the “Standard of Care”).

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(2)

Except to the extent that the Custodian has not complied with the Standard of
Care, or to the extent of its own negligence, wilful misconduct, fraud or lack
of good faith, the Custodian shall not be liable for any act or omission in the
course of, or connected to, rendering services hereunder. Without limitation,
the Custodian shall not be liable for any losses to, or diminution of, the
Collateral, except to the extent that such loss or diminution is directly caused
by the Custodian’s breach of the Standard of Care. In no event shall the
Custodian be liable for any consequential or special damages, including but not
limited to loss of reputation, goodwillor business. Notwithstanding the
foregoing or any other provision of this Agreement, the Custodian’s liability
arising from the Blocking Service shall in no event exceed the aggregate amount
of fees received by the Custodian with respect to the specific Securities
Account in the preceding six (6) months.

(3)

The Custodian shall not be responsible for:

 

(a)

any property until it has been received by the Custodian;

 

(b)

the title, validity or genuineness of any property or evidence of title to any
Collateral or any defect in ownership or title;

 

(c)

any act or omission required or demanded by any governmental, taxing, regulatory
or other competent authority in any country in which all or part of the
Collateral is held or which has jurisdiction over the Custodian the Pledgor or
the Secured Party;

 

(d)

any loss resulting from official action (including nationalisation and
expropriation), currency restrictions or devaluations, acts or threat of war or
terrorism, insurrection, revolution or civil disturbance, acts of God, strikes
or work stoppages, inability of any Depository or other settlement system to
settle transactions, interruptions in postal, telephone, telex and/or other
communication systems or in power supply, the failure of any third party
appointed by the Pledgor to fulfil its obligations hereunder, or any other event
or factor beyond the reasonable control of the Custodian;

 

(e)

any failure to act on Directions, if the Custodian reasonably believed that to
do so might result in breach of Applicable Law or the terms of this Agreement;
or

 

(f)

any Collateral which it does not hold or which is not directly controlled by the
Custodian or its appointed Agents.

(4)

The Custodian’s duties and responsibilities in connection with this Agreement
will be limited to those expressly set forth in this Agreement. The Custodian is
not a principal, participant, party or beneficiary in any transaction underlying
this Agreement and will have no duty to inquire beyond the terms and provisions
hereof. Save and except for carrying out Directions as provided herein, the
Custodian shall have no responsibility for trading in securities which form part
of the Collateral, or for any investment management or investment decision. The
Custodian shall not be held responsible for the sufficiency of the Collateral or
for any market decline in the value of the Collateral and shall have no
obligation to notify either the Pledgor or the Secured Party of any such
decline. The Custodian will not be liable for any error in judgement, any act or
omission, any mistake of law or fact, or for anything it may do or refrain from
doing in connection herewith, except for its own negligence, wilful misconduct,
fraud or lack of good faith.

(5)

Should any dispute arise in respect of the Collateral or this Agreement, or
should the Custodian in good faith be uncertain as to what action to take under
this Agreement, it will be entitled to withhold delivery of all or any part of
the Collateral until the dispute is resolved, any conflicting demands are
withdrawn or any uncertainty is resolved. Should the Custodian be threatened
with litigation or become involved in litigation or arbitration in any manner
whatsoever in connection with this Agreement or the Collateral, the Pledgor
hereby agrees to reimburse the Custodian for its lawyers’ fees and any and all
other expenses, losses, costs and damages incurred by the Custodian in
connection with such threatened or actual litigation or arbitration.
Notwithstanding any other term of this Agreement, the Custodian shall have no
responsibility or liability to the Pledgor for complying with a Notice of
Exclusive Control or an Entitlement Order concerning the Securities Account
issued by the Secured Party, and shall have no responsibility to investigate the
appropriateness of any such Entitlement Order, even if the Pledgor notifies the
Custodian that the Secured Party is not legally entitled to originate any such
Entitlement Order, unless the Custodian has been served with an injunction,
restraining order or other legal process issued by a court of competent
jurisdiction (“Court Order”) enjoining it from complying and has had a
reasonable opportunity to act on such Court Order.

(6)

The Custodian may employ and retain and consult with legal counsel or
professional advisors satisfactory to it concerning any questions relating to
its duties or responsibilities hereunder or otherwise in connection herewith and
the Pledgor shall reimburse the Custodian for all reasonable costs and expenses
associated therewith. Provided that no conflict exists as in relation to the
issue between the Pledgor and the Secured Party, the Custodian may consult with
counsel to the Secured Party or the Pledgor, as the Custodian may determine. The
Custodian shall be entitled to rely on and may act upon advice of such legal
counsel or professional advisors and shall not be liable for any action taken,
suffered or omitted by it in good faith in relying thereon, provided the advice
so acted or relied upon by the Custodian was within the area of professional
competence of the person from whom it was received.

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(7)

The Pledgor shall notify the Custodian in writing of any taxes payable in
respect of the Collateral. The Custodian shall use reasonable efforts, based
upon the information available to it, to assist the Pledgor with respect to any
taxes. If the Custodian is responsible under any Applicable Law for any taxes in
respect of the Securities Account, the Pledgor shall inform the Custodian in
writing of such taxes, shall Direct the Custodian with respect to the payment of
such taxes and shall provide the Custodian with the necessary funds and all
information required to fund, pay or meet such taxes. The Custodian shall have
no responsibility or liability for and shall be indemnified and held harmless by
the Pledgor for any assistance provided to the Pledgor and for any taxes now or
hereafter imposed on the Securities Account or the Pledgor or the Custodian in
respect of the Securities Account by any taxing authorities, domestic, foreign
or international.

(8)

Each of the Pledgor and the Secured Party shall provide the Custodian with an
incumbency certificate substantially in the form set out in Schedule “D” setting
out the names and sample signatures of persons authorized to give Directions to
the Custodian hereunder. The Custodian shall be entitled to rely on such
certificate until a revised certificate is provided to it hereunder. Unless
otherwise expressly provided, each Direction shall continue in full force and
effect until superseded or cancelled by another written instruction. Any
Directions shall, as against the Pledgor and the Secured Party, if applicable,
and in favour of the Custodian, be conclusively deemed to be Directions for the
purposes of this Agreement notwithstanding any error in the transmission thereof
or that such written instruction may not be genuine, if believed by the
Custodian acting in good faith, to be genuine. Provided however that the
Custodian, subject to Section 27(9), may in its discretion decline to act upon
any Direction: (a) that is insufficient or incomplete; or (b) that is not
received by the Custodian in sufficient time to give effect to such written
instructions; or (c) where the Custodian has reasonable grounds for concluding
that the same has not been accurately transmitted or is not genuine. If the
Custodian declines to give effect to any Directions for any reason set out in
the preceding sentence, it shall notify the person giving such instruction
forthwith after it so declines.

(9)

Except as otherwise expressly provided in this Agreement, any statement,
certificate, notice, request, consent, approval, or other instrument to be
delivered or furnished by the Pledgor or the Secured Party shall be sufficiently
executed if executed in the name of the Pledgor or the Secured Party by persons
named in the incumbency certificate delivered pursuant to Section 27(8). The
Custodian shall be protected in acting upon any written statement or other
instrument made by such officers or agents of the Pledgor or the Secured Party
with respect to the authority conferred on it.

Section 28

Removal and Resignation of the Custodian.

(1)

The Custodian may at any time resign from, and terminate its capacity hereunder
by delivery of written notice of resignation, effective not less than ninety
(90) days after receipt by both the Secured Party and the Pledgor. The Custodian
may be removed by the Pledgor and the Secured Party delivering to the Custodian
of a joint written notice of removal, effective not less than ninety (90) days
after receipt by the Custodian. Notwithstanding the foregoing, no such
resignation by the Custodian or removal by the Pledgor and the Secured Party
shall be effective until a successor to the Custodian shall have been duly
appointed by the Pledgor and approved by the Secured Party and all Collateral in
the Securities Account have been duly transferred to such successor. The Pledgor
and the Secured Party, upon receipt of the written notice of resignation of the
Custodian or issuance of a notice of removal of the Custodian, shall undertake
to obtain the agreement of a qualified, successor depository, agreeable to each
of the Secured Party and the Pledgor, to act as a successor Custodian in
accordance with all agreements of the Custodian herein. Neither the Secured
Party nor the Pledgor shall unreasonably withhold approval of such Custodian.

(2)

Any successor Custodian appointed hereunder shall execute an instrument
accepting such appointment hereunder and shall deliver the same to the Pledgor
and the Secured Party and to the then acting Custodian. Thereupon such successor
Custodian shall, without any further act, assume the obligations and duties of
the Custodian under this Agreement with like effect as if originally named
herein; but the predecessor Custodian shall nevertheless, when requested in
writing by the successor Custodian, execute an instrument or instruments
assigning such of its rights and powers, and shall duly assign, transfer and
deliver to the Custodian all property and money held by such predecessor
hereunder. The predecessor Custodian shall be entitled to reimbursement in
accordance with Section 26 for all reasonable expenses it incurs in connection
with the settlement of its account and the transfer and delivery of the
Collateral to its successor. The predecessor Custodian shall continue to be
indemnified by reason of such entity being or having been a Custodian in
accordance with the terms hereof.

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Section 29

No Conflict.

(1)

The Custodian represents and warrants to the Secured Party and the Pledgor that,
at the time of the execution and delivery of this Agreement, no material
conflict of interest exists with respect to the Custodian’s role hereunder. The
Custodian shall resign by giving notice in accordance with Section 28 if a
material conflict of interest arises with respect to its role as custodian
hereunder that is not eliminated within ninety (90) days after the Custodian
becomes aware of such conflict of interest. Immediately after the Custodian
becomes aware that it has a material conflict of interest, it shall provide the
Secured Party and the Pledgor with written notice of the nature of that
conflict.

(2)

The Pledgor and the Secured Party agree that the Custodian, and any of its
divisions, branches or Affiliates, may take any one or more of the following
actions without creating a conflict of interest; and without being liable to
account therefor or being in breach of this Agreement:

 

(a)

purchase, hold, sell, invest in or otherwise deal with securities or other
property of the same class and nature as may be part of the Collateral, whether
on its own account or for the account of another (in a fiduciary capacity or
otherwise);

 

(b)

act as a market maker in any securities that form part of the Collateral;

 

(c)

provide brokerage services to other clients;

 

(d)

act as financial adviser to the issuer of such securities;

 

(e)

act in the same transaction as agent for more than one client;

 

(f)

act as a deposit taking institution holding the cash balances in the Securities
Account;

 

(g)

have a material interest in any issue of securities that form part of the
Collateral;

 

(h)

subject to Section 31(1), use in other capacities knowledge gained in its
capacity as Custodian hereunder; and

 

(i)

earn profits from any of the activities listed herein.

Section 30

Communications and Directions.

(1)

All communications hereunder (including, for greater certainty, Directions) must
be given by one of the following methods of communication:

 

•

personal or courier delivery;

 

•

prepaid ordinary mail;

 

•

authenticated telex;

 

•

facsimile;

 

•

S.W.I.F.T.;

 

•

one of the Custodian’s secured client access channels, including RBC Dexia
OnLine;

 

•

directly between electromechanical or electronic terminals (including, subject
to Section 30(5), the internet or unsecured lines of communication); or

 

•

telephone (subject to Section 30(3)).

(2)

Communications should be addressed, as applicable, as follows:

 

(i)

to the Pledgor at:

Financial Reassurance Company 2010, Ltd.,

Clarendon House

2 Church Street, Hamilton

HM 11, Bermuda

 

Attention:

Dawna Ferguson

 

Facsimile:

+1 (441) 298-7800

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with a copy to:

Conyers Dill & Pearman Limited

Clarendon House, 2 Church Street

PO Box HM 666, Hamilton

HM CX, Bermuda

 

Attention:

Michael G. Frith

 

Facsimile:

+1 (441)292 7876

with an additional copy to:

485 Lexington Avenue

17th Floor

New York

NY 10017

 

Attention:

Reza Shah

 

Facsimile:

(212)793 5585

 

(ii)

to the Secured Party at:

Primerica Life Insurance Company of Canada

2000 Argentia Road, Plaza V, Suite 300

Mississauga, Ontario L5N 2R7, Canada

 

Attention:

General Counsel

 

Facsimile:

(905) 813-5314

 

(iii)

to the Custodian at:

RBC Dexia Investor Services Trust

155 Wellington Street West, 7th Floor

P.O. Box 7500, Station A

Toronto, Ontario M5W 1P9

Attention:Senior Manager, Client Service Insurance

Facsimile:1-416-955-2600

Any party may change its address and number for communications by notifying the
other parties in accordance with the notice provision above. Any communication
delivered personally shall be deemed to have been given and received on the day
it is so delivered (or if that day is not a Business Day, on the next succeeding
Business Day). Subject to disruptions in the postal service, any communication
sent by prepaid ordinary mail shall be deemed to have been given and received on
the fifth Business Day following the date of mailing. Any communication given by
authenticated telex, facsimile, S.W.I.F.T., one of the Custodian’s secured
client access channels or directly between electromechanical or electronic
terminals (including, subject to Sections 30(5) and 30(6), the internet or
unsecured lines of communication) shall be deemed to have been given and
received on the Business Day it is transmitted provided that it was received
before 3:00 p.m. (Toronto time), and, if received after 3:00 p.m. (Toronto
time), it shall be deemed to have been given and received on the Business Day
following the day of transmission provided in each case that confirmation of
transmission is available from the party giving the communication.

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(3)

With respect to telephone Directions, the party giving such Directions shall
endeavour to forward written Directions confirming such telephone Directions on
the same day that such telephone Directions are given to the Custodian. The fact
that such confirming written Directions are not received or that contrary
Directions are received by the Custodian shall in no way affect the validity of
any transactions effected by the Custodian on the basis of the telephone
Directions.

The parties acknowledge and agree that some or all telephone communications
between the parties, including, without limitation, Directions, may be recorded
by the Custodian. In the event of any disagreement as to the content of any
communication given by telephone, the Custodian’s recording will be conclusive
and determinative of the contents of such communication.

(4)

Without limiting the foregoing, in the case of Directions sent through one of
the Custodian’s secured access channels, including RBC Dexia Online, or sent
directly between electromechanical or electronic terminals (including, subject
to Sections 30(5) and 30(6), the internet or unsecured lines of communication),
the parties acknowledge that it may not be possible for such Directions to be
executed, however the Custodian shall nevertheless be protected in relying on
such Directions as if they were written Directions from the party issuing same.
The Custodian shall be entitled, without further inquiry or investigation, to
assume that such Directions have been duly and properly issued by the Pledgor,
the Investment Manager, or the Secured Party, as the case may be, and that the
sender(s) is/are duly authorized to act, and to provide Directions, on behalf of
the Pledgor, the Investment Manager, or the Secured Party, as case may be.

(5)

The parties acknowledge and agree that the Custodian, in providing the services
hereunder, may forward reports and information to the parties or an Investment
Manager, and may receive and act upon communications and instructions (including
without limitation, Directions) received from the parties or an Investment
Manager, through use of the internet or any other electronic means of
communication which is not secure.

The parties acknowledge and agree that the internet is not a secure or
confidential means of communication, and that accordingly, there are certain
risks inherent in its use. The parties therefore agree that the Custodian shall
bear no responsibility or liability whatsoever for any errors and omissions, or
direct, indirect or consequential losses or damages that are directly
attributable to the use of the internet as a means of communication, including
any losses or damages arising from viruses or worms, or the interception,
tampering or breach of confidentiality of data or information transmitted which
is not encrypted and authenticated in accordance with the Custodian’s encryption
standards.

The parties also agree that the Custodian may rely and act upon any email
instructions or Directions received via the internet from the parties, without
the Custodian having to take any further actions of any kind to verify or
otherwise ascertain the validity of such instructions or Directions, and any
such instructions or Directions shall be binding on the Party on whose behalf
the e-mail instructions or Directions shall have been given and that such Party
shall not make any claim or take any action or proceedings against the Custodian
for any losses or damages whatsoever suffered by reason of the Custodian
accepting and acting upon such instructions or Directions.

(6)

Nothing in this Agreement shall create an obligation for the Custodian to
constantly monitor its electronic communication equipment, provided that
reasonable monitoring is performed within business hours of the Custodian where
communications are sent and the Custodian will not be held liable for an
omission to act from not receiving electronically transmitted communications
(including, without limitation, Directions). The party giving an electronic
communication is responsible to ensure that it has been transmitted and received
by the correct recipient. In the event of any disagreement as to whether
electronic communications (including, without limitation, Directions) have been
received by the Custodian, the sender will have the onus of proving that such
electronic communication have been so received by the correct recipient.

(7)

The Custodian shall:

 

(a)

be fully protected in acting upon any Direction believed by it to be genuine and
presented by the proper person(s); and

 

(b)

be under no duty to make any investigation or inquiry as to any statement
contained in any such Direction but may accept such statement as conclusive
evidence of the truth and accuracy of such statement.

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Section 31

Confidentiality.

(1)

Each party shall hold in confidence all information relating to the Collateral
and this Agreement (“Confidential Information”) and may only release such
information to others where required by Applicable Law, where such information
was within such party’s possession on a non-confidential basis prior to it being
provided to such party, such information is or becomes generally available to
the public or as otherwise agreed between the parties. The parties hereby
consent to the delivery and availability of a copy of this Agreement, and any
amendment thereto, to the Superintendent.

(2)

Without limitation of Section 31(1) above, the parties agree that the Custodian
may share Confidential Information, on a need-to-know basis, with its Agents,
service providers, Affiliates, related companies, subsidiaries, parent companies
and their respective parent companies, Affiliates, related companies and
subsidiaries, for the purposes of marketing, administration, to prevent fraud,
to verify the identity of the parties and to prevent money laundering. For
greater certainty, information disclosed for marketing purposes shall be on a
no-names basis and shall be aggregated with similar information of other clients
of the Custodian and shall form part of the collective internal client database
used by the Custodian on an ongoing basis to assess and change how it promotes
and performs its services to its clients. The Custodian will also provide the
information relative to the Pledgor and the Secured Party’s information,
including Confidential Information, to any federal or provincial legal or
regulatory body if required by Applicable Law to do so.

The parties also agree and acknowledge that it may from time to time be
necessary for the Custodian to disclose Confidential Information to third
parties where the Custodian is compelled by Applicable Law.

(3)

Unless otherwise prohibited by Applicable Law, in the event that the Custodian
becomes legally obligated to disclose any of the Confidential Information, the
Custodian shall provide the parties with notice, as soon as reasonably
practicable given the circumstances, of such requirements so that one or both of
the parties may seek a protective order or other appropriate remedy or waive
compliance with the terms of this section, which waiver may not be unreasonably
withheld. The Custodian will reasonably cooperate with a party’s effort to
obtain such protective order or other remedy at the applicable party’s sole
expense. In the event that such protective order or other remedy is not obtained
within a reasonable period of time or that the parties waive compliance with the
provisions of this section or that the Custodian is compelled to forthwith
provide the Confidential Information, the Custodian agrees to provide only that
portion of the Confidential Information which is legally required and the
Custodian will use commercially reasonable efforts to obtain confidential
treatment for any Confidential Information that is so disclosed.

(4)

The Pledgor and Secured Party acknowledge that the Custodian may from
time-to-time be required to transfer, store and process Confidential Information
outside of Canada. The parties further acknowledge and agree that the
contractual or other measures that the Custodian may use to protect such
information are subject to the legal requirements of the jurisdiction where such
information may be transferred, stored or processed, and that the Custodian may
be required by Applicable Law to disclose Confidential Information to the lawful
authorities operating within that jurisdiction. The parties further agree and
acknowledge that the Custodian shall in no way be liable or responsible in any
way for any damages, costs or expenses whatsoever that the parties may face as a
result of the Custodian being legally obligated to disclose any such
Confidential Information.

Section 32

General.

(1)

The Agreement shall not be terminated until the earlier of (i) the Release Date
and (ii) the delivery to the Pledgor of a written release or discharge signed by
the Secured Party. Upon termination of the Agreement and at the request and
expense of the Pledgor, the Secured Party will execute and deliver to the
Pledgor such financing statements and other releases, discharges, documents or
instruments as the Pledgor may reasonably require and the Custodian will
redeliver to the Pledgor, or as the Pledgor may otherwise Direct the Custodian,
any Collateral in its possession.

(2)

This Agreement does not operate by way of merger of any of the Secured
Obligations and no judgment recovered by the Secured Party will operate by way
of merger of, or in any way affect, the Security Interest, which is in addition
to, and not in substitution for, any other security now or hereafter held by the
Secured Party in respect of the Secured Obligations. The representations,
warranties and covenants of the Pledgor in this Agreement survive the execution
and delivery of this Agreement. Notwithstanding any investigation made by or on
behalf of the Custodian or the Secured Party, the covenants, representations and
warranties continue in full force and effect.

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(3)

The Pledgor will do all acts and things and execute and deliver, or cause to be
executed and delivered, all agreements, documents and instruments that the
Secured Party may require and take all further actions as the Secured Party may
require for (i) protecting the Collateral, (ii) perfecting, preserving and
protecting the Security Interest, and (iii) exercising all powers, authorities
and discretions conferred upon the Secured Party and the Custodian. After the
Security Interest becomes enforceable, the Pledgor will do all acts and things
and execute and deliver all documents and instruments that the Secured Party may
require for facilitating the sale or other disposition of the Collateral in
connection with its realization, or for enforcing any of its other rights and
remedies hereunder or under Applicable Law.

(4)

This Agreement is in addition to, without prejudice to and supplemental to all
other security now held or which may hereafter be held by the Secured Party.

(5)

This Agreement is binding on the Pledgor, its successors and assigns, and enures
to the benefit of the Secured Party, the Custodian, and their respective
successors and assigns. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto.

(6)

The Pledgor acknowledges and agrees that in the event it amalgamates or merges
with any other Person, it is the intention of the parties that the Security
Interest (i) extends to: (A) all of the Collateral that any of the amalgamating
corporations then own, (B) all of the Collateral that the amalgamated
corporation thereafter acquires, (C) all of the Collateral in which any of the
amalgamating corporations then has any interest and (D) all of the Collateral in
which the amalgamated corporation thereafter acquires any interest; and (ii)
secures the payment and performance of the Secured Obligations of each of the
amalgamating corporations and the amalgamated corporation to the Secured Party
in any currency, however or wherever incurred, and whether incurred alone or
jointly with another or others and whether as principal, guarantor or surety and
whether incurred prior to, at the time of or subsequent to the amalgamation. The
Security Interest attaches to the additional Collateral at the time of
amalgamation and to any Collateral thereafter owned or acquired by the
amalgamated corporation when such becomes owned or is acquired. Upon any such
amalgamation, the defined term “Pledgor” will extend to and include the
amalgamated corporation and the defined term “Secured Obligations” will extend
to and include the Secured Liabilities of the amalgamated corporation.

(7)

If any court of competent jurisdiction from which no appeal exists or is taken,
determines any provision of this Agreement to be illegal, invalid or
unenforceable, that provision will be severed from this Agreement and the
remaining provisions will remain in full force and effect.

(8)

This Agreement may only be amended, supplemented or otherwise modified by
written agreement executed by the Secured Party, the Custodian and the Pledgor.

(9)

No consent or waiver by the Secured Party in respect of this Agreement is
binding unless made in writing and signed by an authorized officer of the
Secured Party. Any consent or waiver given by the Secured Party under this
Agreement is effective only in the specific instance and for the specific
purpose for which given. No waiver of any of the provisions of this Agreement
constitutes a waiver of any other provision.

(10)

A failure or delay on the part of the Secured Party in exercising a right under
this Agreement does not operate as a waiver of, or impair, any other right of
the Secured Party however arising. A single or partial exercise of a right on
the part of the Secured Party does not preclude any other or further exercise of
that right or the exercise of any other right by the Secured Party.

(11)

All monies collected by the Secured Party upon the enforcement of its rights and
remedies under this Agreement, including any sale or other disposition of the
Collateral, will be applied on account of the Secured Obligations at such times,
in such manner and in such order as the 2010 Coinsurance Agreement may require
or as the Secured Party may determine.

(12)

This Agreement will be governed by, interpreted and enforced in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein.

(13)

The Pledgor irrevocably attorns and submits to the non-exclusive jurisdiction of
any court of competent jurisdiction of the Province of Ontario sitting in
Toronto, Ontario in any action or proceeding arising out of or relating to this
Agreement. The Pledgor irrevocably waives objection to the venue of any action
or proceeding in such court or that such court provides an inconvenient forum.
Nothing in this Section 32(13) limits the right of the Secured Party to bring
proceedings against the Pledgor in the courts of any other jurisdiction.

(14)

Any action or proceeding against the Custodian arising out of or relating to
this Agreement may only be brought in a court of competent jurisdiction in the
Province of Ontario.

(15)

The Pledgor hereby irrevocably consents to the service of any and all process in
any such action or proceeding by the delivery of copies of such process to the
Pledgor at the address set out in relation to the Pledgor in Section 30(2).
Nothing in this Section 32(15) limits the right of the Secured Party to serve
process in any other manner permitted by Applicable Law.

12519155.10

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IN WITNESS WHEREOF this agreement has been executed and delivered as of the date
first above written.

 

 

FINANCIAL REASSURANCE COMPANY

2010, LTD.

 

 

 

 

 

Per:

 

[Illegible]

 

 

 

Authorized Signing Officer

 

 

 

 

 

Per:

 

 

 

 

 

Authorized Signing Officer

 

 

 

 

 

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

 

 

 

 

 

Per:

 

[Illegible]

 

 

 

Authorized Signing Officer

 

 

 

 

 

Per:

 

[Illegible]

 

 

 

Authorized Signing Officer

 

 

 

 

 

RBC DEXIA INVESTOR SERVICES

TRUST, as Custodian

 

 

 

 

 

Per:

 

Lydia Moffitt

 

 

 

Authorized Signing Officer

 

 

 

 

 

Per:

 

Meredith MacMillan

 

 

 

Authorized Signing Officer

 

12519155.10

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SCHEDULE“A”

TO THE REINSURANCE SECURITY AGREEMENT

DATED AS OF THE 31st DAY OF DECEMBER, 2011

2010 COINSURANCE AGREEMENT

Coinsurance Agreement by and Between Primerica Life Insurance Company of Canada
and Financial Reassurance Company 2010, Ltd. dated as of March 31, 2010.

 

 

 

12519155.10

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PRIVILEGED AND CONFIDENTIAL

COINSURANCE AGREEMENT

by and between

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

(the “Ceding Company”)

FINANCIAL REASSURANCE COMPANY 2010, LTD

(the “Reinsurer”)

DATED March 31, 2010

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

 

 

ARTICLE I

 

1

 

 

 

 

 

 

 

DEFINITIONS

 

 

 

 

 

 

 

Section 1.1

 

Definitions

 

1

 

 

 

 

 

 

 

ARTICLE II

 

5

 

 

 

 

 

 

 

REINSURANCE

 

 

 

 

 

 

 

Section 2.1

 

Reinsurance

 

5

Section 2.2

 

Exclusions

 

5

Section 2.3

 

Territory

 

5

 

 

 

 

 

 

 

ARTICLE III

 

5

 

 

 

 

 

 

 

COMMENCEMENT OF THE REINSURER'S LIABILITY

 

 

 

 

 

 

 

Section 3.1

 

Commencement of the Reinsurer's Liability

 

5

 

 

 

 

 

 

 

ARTICLE IV

 

6

 

 

 

 

 

 

 

REINSURANCE PREMIUMS, ALLOWANCES AND OTHER OBLIGATIONS

 

 

 

 

 

 

 

Section 4.1

 

Reinsurance Premiums

 

6

Section 4.2

 

Allowances

 

6

Section 4.3

 

Other Obligations

 

6

Section 4.4

 

Third Party Reinsurance

 

6

 

 

 

 

 

 

 

ARTICLE V

 

6

 

 

 

 

 

 

 

TAXES

 

 

 

 

 

 

 

Section 5.1

 

Guaranty Fund Assessments

 

6

Section 5.2

 

Tax Elections

 

6

 

 

 

 

 

 

 

ARTICLE VI

 

7

 

 

 

 

 

 

 

CLAIMS

 

 

 

 

 

 

 

Section 6.1

 

Notice of Claims

 

7

Section 6.2

 

Settlement Authority

 

7

Section 6.3

 

Claim Payments

 

7

Section 6.4

 

Misstatement of Age or Sex

 

7

 

 

 

 

 

 

 

ARTICLE VII

 

7

 

 

 

 

 

 

 

REINSTATEMENTS

 

 

 

 

 

 

 

Section 7.1

 

Reinstatements

 

7

 

 

 

 

 

 

 

ARTICLE VIII

 

7

 

 

 

 

 

 

 

ACCOUNTING AND RESERVES

 

 

 

 

 

 

 

Section 8.1

 

Monthly Reports

 

7

Section 8.2

 

Monthly Account Balance Reports

 

7

Section 8.3

 

Settlements

 

7

Section 8.4

 

Offset and Recoupment

 

8

Section 8.5

 

Currency

 

8

 

 

 

 

 

 

 

ARTICLE IX

 

8

 

 

 

 

 

 

 

EXPENSES IN CONNECTION WITH THE REINSURED POLICIES

 

 

 

 

 

 

 

Section 9.1

 

Expenses in Connection with the Reinsured Policies

 

8

i

--------------------------------------------------------------------------------

 

 

 

 

 

Page

 

 

 

 

 

 

 

ARTICLE X

 

8

 

 

 

 

 

 

 

ERRORS AND OMISSIONS

 

 

 

 

 

 

 

Section 10.1

 

Errors and Omissions

 

8

 

 

 

 

 

 

 

ARTICLE XI

 

8

 

 

 

 

 

 

 

RECAPTURE

 

 

 

 

 

 

 

Section 11.1

 

Recapture

 

8

Section 11.2

 

Notice of Recapture

 

9

Section 11.3

 

Recapture Fee

 

9

Section 11.4

 

Renewal Recapture

 

9

Section 11.5

 

Commutation Accounting and Settlement

 

9

Section 11.6

 

Limitation on Partial Recaptures

 

9

 

 

 

 

 

 

 

ARTICLE XII

 

10

 

 

 

 

 

 

 

ACCESS TO BOOKS AND RECORDS

 

 

 

 

 

 

 

Section 12.1

 

Access to Books and Records

 

10

 

 

 

 

 

 

 

ARTICLE XIII

 

10

 

 

 

 

 

 

 

INSOLVENCY

 

 

 

 

 

 

 

Section 13.1

 

Insolvency

 

10

 

 

 

 

 

 

 

ARTICLE XIV

 

11

 

 

 

 

 

 

 

DISPUTE RESOLUTION

 

 

 

 

 

 

 

Section 14.1

 

Consent to Jurisdiction

 

11

Section 14.2

 

Waiver of Jury Trial

 

11

Section 14.3

 

Specific Performance

 

11

 

 

 

 

 

 

 

ARTICLE XV

 

11

 

 

 

 

 

 

 

REINSURANCE TRUST ACCOUNT

 

 

 

 

 

 

 

Section 15.1

 

Reinsurance Trust Agreement

 

11

Section 15.2

 

Investment of Trust Assets

 

11

Section 15.3

 

Adjustment of Trust Assets and Withdrawals

 

11

Section 15.4

 

Negotiability of Trust Assets

 

12

Section 15.5

 

Ceding Company's Withdrawals

 

12

Section 15.6

 

Return of Excess Withdrawals

 

12

Section 15.7

 

Costs of Trust

 

12

 

 

 

 

 

 

 

ARTICLE XVI

 

12

 

 

 

 

 

 

 

THIRD PARTY BENEFICIARY

 

 

 

 

 

 

 

Section 16.1

 

Third Party Beneficiary

 

12

 

 

 

 

 

 

 

ARTICLE XVII

 

13

 

 

 

 

 

 

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

 

 

 

 

 

 

Section 17.1

 

Representations and Warranties of the Ceding Company

 

13

Section 17.2

 

Covenants of the Ceding Company

 

14

Section 17.3

 

Representations and Warranties of the Reinsurer

 

15

 

 

 

 

 

 

 

ARTICLE XVIII

 

16

 

 

 

 

 

 

 

INDEMNIFICATION

 

 

 

 

 

 

 

Section 18.1

 

Indemnification

 

16

ii

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Page

 

 

 

 

 

 

 

ARTICLE XIX

 

16

 

 

 

 

 

 

 

LICENSES, REGULATORY MATTERS

 

 

 

 

 

 

 

Section 19.1

 

Licenses

 

16

Section 19.2

 

Regulatory Matters

 

16

 

 

 

 

 

 

 

ARTICLE XX

 

 

 

 

 

 

 

 

 

DURATION OF AGREEMENT; TERMINATION

 

 

 

 

 

 

 

Section 20.1

 

Duration

 

16

Section 20.2

 

Termination by Mutual Consent

 

16

Section 20.3

 

Termination by the Reinsurer

 

17

Section 20.4

 

No Termination Upon Change of Control

 

17

Section 20.5

 

Survival

 

17

 

 

 

 

 

 

 

ARTICLE XXI

 

17

 

 

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

 

 

Section 21.1

 

Entire Agreement

 

17

Section 21.2

 

Amendments

 

17

Section 21.3

 

Severability

 

17

Section 21.4

 

Governing Law

 

17

Section 21.5

 

Notices

 

18

Section 21.6

 

Consent to Jurisdiction

 

18

Section 21.7

 

Service of Process

 

18

Section 21.8

 

Assignment

 

18

Section 21.9

 

Captions

 

19

Section 21.10

 

Treatment of Confidential Information

 

19

Section 21.11

 

No Waiver; Preservation of Remedies

 

19

Section 21.12

 

Calendar Days

 

19

Section 21.13

 

Counterparts

 

19

Section 21.14

 

Incontestability

 

19

Section 21.15

 

Interpretation

 

20

Section 21.16

 

Reasonableness

 

20

 

 

 

 

 

SCHEDULES

 

 

 

 

 

 

 

 

 

Schedule A

 

Identification of Reserves

 

1

 

 

 

 

 

Schedule B

 

No Conflict or Violation Exceptions

 

2

 

 

 

 

 

Schedule C

 

Required Balance

 

3

 

iii

--------------------------------------------------------------------------------

 

 

EXHIBITS

 

 

 

 

Exhibit I

 

Identification of Reinsured Policies

 

 

 

 

 

 

 

Exhibit II

 

Third Party Reinsurance

 

 

 

 

 

 

 

Exhibit III

 

Form of Monthly Report

 

 

 

 

 

 

 

Exhibit IV

 

Form of Monthly Account Balance Report

 

 

 

 

 

 

 

Exhibit V

 

Form of Reinsurance Trust Agreement

 

 

 

 

 

 

 

Exhibit VI

 

Factual Information

 

 

 

 

 

 

 

Exhibit VII

 

Milliman Report

 

 

 

 

 

 

 

Exhibit VIII

 

Investment Guidelines

 

 

 

 

 

iv

--------------------------------------------------------------------------------

 

COINSURANCE AGREEMENT

This COINSURANCE AGREEMENT (together with the Exhibits hereto, this “Agreement”)
is made by and between PRIMERICA LIFE INSURANCE COMPANY OF CANADA, a life
insurance company incorporated under the Insurance Companies Act (Canada)
(together with its successors and permitted assigns, the “Ceding Company”)
having its principal business office located at 2000 Argentia Road, Plaza V,
Suite 300, Mississauga, Ontario L5N 2R7 and Financial Reassurance Company 2010,
Ltd, a reinsurance company incorporated in Bermuda and registered as an insurer
pursuant to the Insurance Act 1978 of Bermuda (together with its successors and
permitted assigns, the “Reinsurer”) having its registered office located at the
Emporium Building, 69 Front Street, Hamilton HM 12, Bermuda.

WHEREAS, the Ceding Company is authorized to engage in the business of issuing
certain life insurance policies and certain related riders;

WHEREAS, the Reinsurer is authorized and registered in Bermuda to conduct long
term insurance business;

WHEREAS, the Ceding Company desires to cede to the Reinsurer on an indemnity
reinsurance basis certain liabilities with respect to the Reinsured Policies (as
defined herein); and

WHEREAS, the Reinsurer is willing to reinsure on an indemnity reinsurance basis
the liabilities that the Ceding Company desires to cede hereunder on the terms
and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual and several promises and
undertakings herein contained, and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Ceding Company and
the Reinsurer (individually, a “Party” and collectively, the “Parties”) hereby
agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. The following terms, when used in this Agreement, shall
have the meanings set forth in this Article I.

 

(a)

“Administrative Practices” shall have the meaning specified in Section 17.2(a).

 

(b)

“Affiliate” means, with respect to a Party, any entity that controls, is
controlled by or is under common control with such Party.

 

(c)

“Agreement” shall have the meaning specified in the Preamble.

 

(d)

“Applicable Law” means any domestic or foreign, federal, provincial, state or
local statute, law, ordinance or code, or any written rules, regulations or
administrative interpretations or guidelines issued by any Governmental
Authority pursuant to any of the foregoing, in each case applicable to any
Party, and any order, writ, injunction, directive, judgment or decree of a court
of competent jurisdiction applicable to the Parties.

 

(e)

“Bermuda Monetary Authority” means the regulatory authority in Bermuda that is
responsible for the registration and on-going supervision of the Reinsurer.

 

(f)

“Business Day” means any day other than a day on which banks in the Province of
Ontario or Bermuda are permitted or required to be closed.

 

(g)

“Ceding Company” shall have the meaning specified in the Preamble.

 

(h)

“CGAAP” means applicable Canadian generally accepted accounting principles as
modified by the requirements, if any, of OSFI.

 

(i)

“Change of Control” shall have the meaning specified in Section 21.10.

 

(j)

“Claims” means any and all claims, requests, demands or notices made under a
Reinsured Policy for payment of benefits or other obligations, including death
benefits, waived premiums, returned premium or any other payments alleged to be
due in accordance with the terms and conditions of such Reinsured Policy.

 

(k)

“Commissions” means the contractual amounts earned by and the bonuses paid to
the Ceding Company's sales representatives in connection with the Reinsured
Policies on and after the Effective Date.

 

(l)

“Commutation Payment” shall have the meaning specified in Section 11.5.

 

--------------------------------------------------------------------------------

 

 

(m)

“Confidential Information” shall have the meaning specified in Section 21.10.

 

(n)

“Conversion” means the issuance by the Ceding Company of a new Coverage in
replacement of a Coverage under a Reinsured Policy pursuant to an option granted
under the terms of such Reinsured Policy; provided, however, in no event shall
Conversions include any Renewal.

 

(o)

“Coverage” means, with respect to any Policy, one or more life insurance
coverages issued by the Ceding Company. A single Policy may have multiple
Coverages issued to multiple individuals and such multiple Coverages, in turn,
may have different Original Initial Level Premium Periods, all within a single
Policy.

 

(p)

“Covered Liabilities” means all liabilities incurred by the Ceding Company under
the express terms of the Reinsured Policies (including End of Term Renewals) and
all Reinsured ECOs; provided, however, in no event shall Covered Liabilities
include any Excluded Liabilities.

 

(q)

“Direct Premiums” means all premiums actually received from the Policyholders
attributable to the Reinsured Policies from and after the Effective Date and
waived premiums on such Policies.

 

(r)

“Effective Date” means January 1, 2010.

 

(s)

“Eligible Assets” means assets permitted to be vested in trust pursuant to the
Reinsurance Trust Agreement and the Investment Guidelines (“Eligible Assets”);
provided, however, investments in or issued by an entity controlling, controlled
by or under common control with either the Ceding Company or the Reinsurer shall
not exceed 5% of total investments. The Eligible Assets are further subject to
and limited by, the Investment Guidelines.

 

(t)

“End of Term Conversion” means, with respect to a Coverage under a Reinsured
Policy, a Conversion that occurs (i) at any time during the two year period
ending on the last day of the Original Initial Level Premium Period of a
Coverage or (ii) after the last day of such period.

 

(u)

“End of Term Renewal” means a Renewal that occurs at the end of the Original
Initial Level Premium Period.

 

(v)

“Excluded Liabilities” shall have the meaning specified in Section 2.2.

 

(w)

“Existing Practice” shall have the meaning specified in Section 17.2(a).

 

(x)

“Expense Allowance” means an annualized per base policy expense allowance equal
to the Reinsurer's Quota Share multiplied by C$42.50 for each Reinsured Policy
payable on a monthly basis, which amount shall be increased (i) by 3% on the
first anniversary date of the Effective Date and (ii) thereafter, by a
compounded rate equal to the percentage increase, if any, in the labour cost
index published by Statistics Canada on each subsequent anniversary date of the
Effective Date.

 

(y)

“Extra-Contractual Obligations” means all liabilities, obligations and expenses
not arising under the express terms and conditions of any Reinsured Policy,
whether such liabilities, obligations or expenses are owing to an insured, a
Governmental Authority or any other Person in connection with such Reinsured
Policy, including (a) any liability for punitive, exemplary, consequential,
special, treble, tort, bad faith or any other form of extra-contractual damages,
(b) damages or claims in excess of the applicable policy limits of the Reinsured
Policies, (c) statutory or regulatory damages, fines, penalties, administrative
monetary amounts, forfeitures and similar charges of a penal or disciplinary
nature, and (d) liabilities and obligations arising out of any act, error or
omission, whether or not intentional, in bad faith or otherwise, including any
act, error or omission relating to (i) the form, marketing, production,
issuance, sale, cancellation or administration of Reinsured Policies or (ii) the
failure to pay or the delay in payment of claims, benefits, disbursements or any
other amounts due or alleged to be due under or in connection with Reinsured
Policies (exclusive of interest on payments to Policyholders, as determined in
accordance with the laws of the jurisdiction applicable to such Reinsured
Policy). For avoidance of doubt, any liabilities, obligations and expenses
relating to any change in the Reinsured Policies arising out of or resulting
from litigation, arbitration or settlements will be deemed Extra-Contractual
Obligations.

 

(z)

“Financial Statement Credit” means credit for reinsurance permitted by OSFI on
the Ceding Company's financial statements and MCCSR calculations filed with OSFI
with respect to the Reinsured Policies as though licensed reinsurance was
provided.

 

(aa)

“Governmental Authority” means any federal, provincial, state, county, local,
foreign or other governmental or public agency, instrumentality, commission,
authority or self-regulatory organization, board or body, including OSFI and
other insurance regulatory authorities.

 

(bb)

“Indemnification Claims” shall have the meaning specified in Section 18.1.

 

(cc)

“Investment Guidelines” means the investment guidelines attached as Exhibit
VIII.

2

--------------------------------------------------------------------------------

 

 

(dd)

“Initial Ceding Commission” means the sum of C$74,000,000 as determined in
accordance with the actuarial report originally dated October 21,2009 and
revised as of November 25,2009.

 

(ee)

“Market Value” shall have the meaning specified in the Reinsurance Trust
Agreement.

 

(ff)

“MCCSR” means minimum continuing capital and surplus requirements determined in
accordance with the MCCSR Guideline.

 

(gg)

“MCCSR Guideline” means Guideline A - entitled “Minimum Continuing Capital and
Surplus Requirements for Life Insurance Companies dated December 2009.

 

(hh)

“Milliman” shall have the meaning specified in Section 17.1(e).

 

(ii)

“Milliman Information” shall have the meaning specified in Section 17.1(e).

 

(jj)

“Milliman Report” shall mean the report attached hereto as Exhibit VII.

 

(kk)

“Monthly Account Balance Report” shall have the meaning specified in Section
8.2.

 

(ll)

“Monthly Report” shall have the meaning specified in Section 8.1.

 

(mm)

“Net Premium” shall have the meaning specified in Section 4.1(b).

 

(nn)

“Original Initial Level Premium Period” means, with respect to each Reinsured
Policy, the period beginning with the original issue date of a Coverage and
ending with the first premium increase date identified within such Reinsured
Policy on which premiums for such Coverage will increase without a corresponding
increase in the terms or limits of such Coverage.

 

(oo)

“OSFI” means the Office of the Superintendent of Financial Institutions, Canada.

 

(pp)

“Parties” shall have the meaning specified in the Preamble.

 

(qq)

“Person” means any natural person, corporation, limited liability company,
unlimited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

 

(rr)

“Policies” means term life insurance base policies and riders thereto issued by
the Ceding Company.

 

(ss)

“Policyholders” means the owners or holders of one or more of the Reinsured
Policies.

 

(tt)

“Premium Taxes” means any Taxes imposed on premiums relating to the Reinsured
Policies.

 

(uu)

“Prime Rate” means, as of any day, a fluctuating interest rate per annum equal
to the “prime” rate of interest announced publicly by The Royal Bank of Canada.
If the Royal Bank of Canada does not publicly announce a prime rate, the Ceding
Company and the Reinsurer (or its designee) shall jointly select another bank
that publicly announces a prime rate and the prime rate publicly announced by
that bank shall be used.

 

(vv)

“Primerica” means Primerica, Inc., a Delaware corporation.

 

(ww)

“Recapture Fee” shall have the meaning specified in Section 11.3.

 

(xx)

“Recapture Notice” shall have the meaning specified in Section 11.2.

 

(yy)

“Reinstatement” shall have the meaning specified in Section 7.1.

 

(zz)

“Reinsurance Trust Account” shall have the meaning specified in Section 15.1.

 

(aaa)

“Reinsurance Trust Account Balance” means, as of the last day of each calendar
quarter following the date hereof, the aggregate Market Value as of such date of
the Eligible Assets maintained in the Reinsurance Trust Account

 

(bbb)

“Reinsurance Trust Agreement” shall have the meaning specified in Section 15.1.

 

(ccc)

“Reinsured ECOs” means (i) Extra-Contractual Obligations paid by the Ceding
Company to a single (or joint) policyholder or beneficiary in the ordinary
course of business, consistent with prudent business practices and (ii)
Extra-Contractual Obligations arising in circumstances where the Reinsurer is an
active party and directs or consents to the act, omission or course of conduct
occurring after the date hereof that resulted in such Extra- Contractual
Obligation; provided, however, that Reinsured ECOs shall not include any
liabilities: (x) relating to class actions of any kind; (y) relating to sales,
marketing or distribution practices of the Ceding Company or its sales
representatives directed or applied to any specific class of policyholders, as
indicated on the underwriting records of the Ceding Company; or (z) relating to
or based on violations of, or noncompliance with, Applicable Law by the Ceding
Company.

3

--------------------------------------------------------------------------------

 

 

(ddd)

“Reinsured Policies” means Policies issued (i) on the policy forms identified in
Exhibit I and riders thereto in force as of 11:59 p.m. (EST) on December 18,
2009; and (ii) as a result of any Conversions thereto, but not including any End
of Term Conversions arising from Coverages with an Original Initial Level
Premium Period ending on or after January 1, 2017. For greater certainty, the
Reinsured Policies do not include any segregated fund business.

 

(eee)

“Reinsurer” shall have the meaning specified in the Preamble.

 

(fff)

“Reinsurer's Quota Share” means eighty percent (80%) or such other percentage as
modified to reflect a partial recapture of the Reinsurer's Quota Share of the
Reinsured Policies pursuant to the terms and conditions specified in Article XI.

 

(ggg)

“Renewal” means the continuation of coverage under a Reinsured Policy after the
end of the Original Initial Level Premium Period of such coverage in accordance
with the terms of the Reinsured Policy.

 

(hhh)

“Renewal Recapture Right” shall have the meaning specified in Section 11.4.

 

(iii)

“Representatives” shall have the meaning specified in Section 12.1.

 

(jjj)

“Required Balance” means, as of any date, the amount equal to the greater of (i)
the Reinsurer's Quota Share of the Subject Reserves with respect to the
Reinsured Policies, and (ii) the amount of assets held in trust necessary at any
particular point in time under the MCCSR Guideline in order for the Ceding
Company to take full Financial Statement Credit for the unlicensed reinsurance
in the same manner as if licensed reinsurance was being provided that enables
the Ceding Company to maintain its OSFI target capital ratio as well as to be
able to meet all Dynamic Capital Adequacy Testing adverse scenarios that may be
required by OSFI with respect to the Reinsurer's Quota Share of the Subject
Reserves. For greater certainty, the amount of Trust Assets held in trust shall
at no time be less than a minimum of an amount equal to 100% of the aggregate
liability ceded (if greater than zero) plus 70% of the offsetting reserves ceded
(MCCSR Guideline section 1.2.3.2) plus 150% of the Regulatory Required Capital
for the Ceded Business as defined by the MCCSR Guideline, as calculated in
Schedule C hereto as of December 31, 2009.

 

(kkk)

“Required Regulatory Capital” means the amount of capital necessary to be
maintained by the Ceding Company under the MCCSR Guideline with respect to the
Subject Reserves.

 

(lll)

“Subject Reserves” means, as of any date, all reserves set forth on Schedule A
as of such date corresponding to liabilities of a type or kind identified as
Covered Liabilities, related to the Reinsured Policies, such amount as
determined by the Ceding Company in accordance with the methodologies used by
the Ceding Company to calculate such amounts for purposes of its financial
statements prepared in accordance with CGAAP, or such other accounting standards
as may be applicable during the term of this agreement, and generally consistent
with past practices as of all dates without giving effect to this Agreement or
as may otherwise be required to be maintained pursuant to the Insurance
Companies Act (Canada) and its applicable regulations as well as any
instructions, advisories or guidelines issued by OSFI, including the MCCSR
Guideline.

 

(mmm)

“Superintendent” means the Superintendent of Financial Institutions (Canada).

 

(nnn)

“Tax Authority” means the Canada Revenue Agency and any other domestic or
foreign Governmental Entity responsible for the administration of any Taxes.

 

(ooo)

“Taxes” means all forms of taxation, whether of Canada or elsewhere and whether
imposed by a local, municipal, provincial, state, federal, foreign or other body
or instrumentality, and shall include, without limitation, income, excise,
sales, use, gross receipts, value added and premium taxes, together with any
related interest, penalties and additional amounts imposed by any taxing
authority.

 

(ppp)

“Then Current Practice” shall have the meaning specified in Section 17.2(a).

 

(qqq)

“Third Party Reinsurance” means reinsurance of the Reinsured Policies placed
with third party reinsurers, as identified and summarized in Exhibit II (as such
Exhibit II may be amended from time to time).

 

(rrr)

“Third Party Reinsurance Premiums” means all premiums paid by the Ceding Company
on or after the Effective Date for coverage under Third Party Reinsurance, net
of refunds of unearned premiums on lapse (except that the refund of unearned
premiums shall only apply for premiums payable under Third Party Reinsurance on
or after the Effective Date).

 

(sss)

“Top-Up Notice” shall have the meaning specified in Section 8.3.

 

(ttt)

“Trust Assets” shall have the meaning specified in Section 15.2(a).

 

(uuu)

“Trustee” shall have the meaning specified in Section 15.1.

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ARTICLE II

REINSURANCE

Section 2.1 Reinsurance. Subject to the terms and conditions of this Agreement,
the Ceding Company hereby cedes on an indemnity basis to the Reinsurer, and the
Reinsurer hereby accepts and agrees to reinsure on an indemnity basis, the
Reinsurer's Quota Share of the Covered Liabilities, provided, however, in the
event of a recapture involving a pro rata portion of the Reinsurer's Quota Share
of the Reinsured Policies pursuant to Article XI hereof, the Reinsurer's Quota
Share of the Covered Liabilities will be proportionately reduced. The
Reinsurer’s Quota Share of Covered Liabilities shall be reduced, but not below
zero, by the Reinsurer's Quota Share of Third Party Reinsurance for Covered
Liabilities in accordance with the respective terms thereof, to the extent such
Third Party Reinsurance is actually collected.

Section 2.2 Exclusions. Notwithstanding any provision of this Agreement to the
contrary, the Reinsurer shall not be liable for any liabilities or obligations
of the Ceding Company that are not Covered Liabilities, including:

 

(a)

liabilities relating to benefits, including, but not limited to, terminal
illness benefits, other than life insurance death benefits, any related waiver
of premium coverages and write-offs of terminal illness policy loan balances;

 

(b)

any liabilities resulting from any coverage added after the Effective Date to a
Reinsured Policy that is not a Conversion or Renewal or otherwise required or
permitted by the terms of such Reinsured Policy in effect on the Effective Date,
unless such additional coverage is required by applicable law or has been
approved in writing in advance by the Reinsurer;

 

(c)

any liabilities relating to deaths occurring prior to the Effective Date;

 

(d)

Extra-Contractual Obligations, other than Reinsured ECOs;

 

(e)

any loss or liabilities relating to or arising from the Ceding Company's
Retained Asset Account for the Reinsured Policies;

 

(f)

any losses or liabilities arising under any End of Term Conversion occurring on
or after January 1,2017;

 

(g)

any loss or liabilities relating to or arising from actions taken by the Ceding
Company without the consent of the Reinsurer as required by Section 17.2(b)
hereof;

 

(h)

any loss or liabilities relating to or arising from claims made, or lawsuits
brought, by agents of the Ceding Company; and

 

(i)

all liabilities or obligations of any kind or nature whatsoever that do not
relate to the Reinsured Policies (collectively, (a)-(i) constitute the “Excluded
Liabilities”).

Section 2.3 Territory. The reinsurance provided under this Agreement shall apply
to the Covered Liabilities covering lives and risks wherever resident or
situated.

ARTICLE III

COMMENCEMENT OF THE REINSURER'S LIABILITY

Section 3.1 Commencement of the Reinsurer's Liability. Except as otherwise set
forth in this Agreement, the Reinsurer’s liability under this Agreement shall
attach simultaneously with that of the Ceding Company, and all reinsurance with
respect to which the Reinsurer shall be liable by virtue of this Agreement shall
be subject in all respects to the same risks, terms, rates, conditions,
interpretations, and to the same modifications, alterations, cancellations and
receivables under Third Party Reinsurance, as the respective Reinsured Policies
to which liability under this Agreement attaches, the true intent of this
Agreement being that the Reinsurer shall, in every case to which liability under
this Agreement attaches, and always subject to the Excluded Liabilities, follow
the fortunes of the Ceding Company.

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ARTICLE IV

REINSURANCE PREMIUMS. ALLOWANCES AND OTHER OBLIGATIONS

Section 4.1 Reinsurance Premiums.

 

(a)

On the date hereof, as consideration for the reinsurance provided hereunder, the
Ceding Company shall transfer to the Reinsurance Trust Account on behalf of the
Reinsurer an amount equal to the Reinsurer's Quota Share of the Subject
Reserves, if positive, and advance premiums attributable to the Reinsured
Policies as of the Effective Date and the Reinsurer shall pay to the Ceding
Company an amount equal to the Initial Ceding Commission and the value of the
Reinsurer’s Quota Share of the Subject Reserves, to the extent such reserves are
negative. For greater certainty, the Ceding Company shall retain all reserves,
if any, established with respect to Excluded Liabilities. Any Eligible Assets
shall be free of all liens, charges or encumbrances, and assigned or endorsed in
blank by the Ceding Company to the Trustee in order to transfer absolutely and
unequivocally all right, title and interest in such assets.

 

(b)

As additional consideration for the reinsurance provided herein, on a monthly
basis during the term of this Agreement, the Ceding Company shall pay to the
Reinsurer the Reinsurer's Quota Share of Direct Premiums net of the Reinsurer's
Quota Share of Third Party Reinsurance Premiums (the “Net Premium”). The Net
Premium shall be paid in accordance with Article VIII.

Section 4.2 Allowances. At each month end following the date hereof, the
Reinsurer shall pay the Ceding Company the Expense Allowance calculated on the
basis of the number of Reinsured Policies in force on such date. The number of
Reinsured Policies in force for each calendar month shall be determined by
adding the number of Reinsured Policies in force on the last day of the prior
calendar month (or December 18, 2009 for the initial calculation) and the number
of Reinsured Policies in force on the last day of the current calendar month and
dividing that total by two (2); provided, however, if there are any End of Term
Renewals, the Expense Allowance for the Reinsured Policies associated with such
End of Term Renewals that start after December 31, 2016 will be zero. The
Expense Allowance shall be payable in accordance with Article VIII.

Section 4.3 Other Obligations. On a monthly basis during the term of this
Agreement, the Reinsurer shall pay the Ceding Company the Reinsurer's Quota
Share of the following amounts: (i) 2.1% of premiums collected for such month in
connection with the Reinsured Policies as a provision for Premium Taxes incurred
by the Ceding Company; (ii) C$50 for each new Conversion which results in the
issuance of a Reinsured Policy (including the issuance of one or more riders to
a base Policy); (iii) Commissions for each Reinsured Policy; and (iv) any
out-of-pocket underwriting fees associated with Reinstatements.

Section 4.4 Third Party Reinsurance. The Ceding Company shall pay to the
Reinsurer the Reinsurer's Quota Share of all ceding commissions and any Premium
Tax or other expense allowances collected by the Ceding Company from the
reinsurers under Third Party Reinsurance.

ARTICLE V

TAXES

Section 5.1 Guaranty Fund Assessments. Except as provided in Section 4.2, the
Reinsurer shall not reimburse the Ceding Company for any guaranty fund
assessments arising on account of premiums on the Reinsured Policies.

Section 5.2 Tax Elections. The parties agree to make all necessary tax elections
to facilitate the intent of this Agreement or the transactions contemplated
hereby.

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ARTICLE VI

CLAIMS

Section 6.1 Notice of Claims. Claim amounts less than or equal to C$250,000 (net
of amounts recoverable under Third Party Reinsurance) will be reported by the
Ceding Company to the Reinsurer on a bordereau basis, and all other Claims shall
be reported on an individual basis, in each case in accordance with Section 8.1.

Section 6.2 Settlement Authority. The Ceding Company shall have full authority
to determine liability on any Claim reinsured hereunder and may settle losses as
it deems appropriate, but in so doing it shall act with the skill and diligence
commonly expected from qualified personnel performing such duties for Canadian
life insurance companies and consistent with the Ceding Company's Then Current
Practice.

Section 6.3 Claim Payments. Following receipt by the Reinsurer of the Monthly
Report setting forth the Ceding Company's payment of any Covered Liabilities
reinsured hereunder, the Reinsurer shall make payment of the Reinsurer's Quota
Share of the Covered Liabilities in accordance with Article VIII.

Section 6.4 Misstatement of Age or Sex. In the event of an increase or reduction
in the amount of the Ceding Company’s insurance on any Reinsured Policy because
of an overstatement or understatement of age or misstatement of sex, established
during the life, or after the death, of the insured, the Reinsurer will share in
such increase or reduction in proportion to the Reinsurer’s Quota Share.

ARTICLE VII

REINSTATEMENTS

Section 7.1 Reinstatements. If a Reinsured Policy is reinstated in accordance
with its terms and the Ceding Company's reinstatement rules as in effect on the
Effective Date (a “Reinstatement”), the reinsurance of such Reinsured Policy
will be restored as if no change had occurred. In such a case, the Ceding
Company shall promptly pay the Reinsurer the Reinsurer's Quota Share of the Net
Premiums attributable to such Reinstatement

ARTICLE VIII

ACCOUNTING AND RESERVES

Section 8.1 Monthly Reports. Within twenty (20) Business Days after the end of
each calendar month, the Ceding Company shall deliver to the Reinsurer the
following monthly reports (each a “Monthly Report”) substantially in the form
set forth in Exhibit III hereto: i) Monthly Settlement Report; (ii) Policy
Exhibit; (iii) Reserve Report; (iv) Claim Reserve Report; (v) Bordereau Report;
and (vi) Non-Bordereau Claims Report it being understood that the initial
Monthly Report shall be for the period from the Effective Date to the last day
of the month in which this Agreement is executed.

Section 8.2 Monthly Account Balance Reports. No later than ten (10) Business
Days after the end of each calendar month, the Ceding Company shall prepare and
deliver to the Reinsurer a report in the form and containing the information set
forth in Exhibit IV (each a “Monthly Account Balance Report”).

Section 8.3 Settlements.

 

(a)

All monthly settlements shall be effected as follows: (i) if the Monthly Report
shows that the Ceding Company owes the Reinsurer a positive amount, the Ceding
Company will pay the amount owed simultaneously with the delivery to the
Reinsurer of the Monthly Report and (ii) if the Monthly Report shows that the
Reinsurer owes the Ceding Company a positive amount, the Reinsurer shall pay the
amount owed within twenty (20). Business Days after receiving the Monthly
Report, it being understood that, for purposes of this Section 8.3(a),
appropriate adjustments shall be made for withdrawals and reimbursements made
during the month by the Ceding Company pursuant to Sections 15.5 and 15.6.

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(b)

If the Reserve Report provided to the Reinsurer for the last month of a calendar
quarter, which report shall be prepared in accordance with CGAAP, shows that the
Reinsurance Trust Account Balance is less than the Required Balance or if at any
time specified by OSFI the Reinsurance Trust Account Balance is less than the
Required Balance, the Ceding Company shall provide notice to the Reinsurer of
the failure by the Reinsurer to ensure the Reinsurance Trust Account Balance
equals or exceeds the Required Balance as of the end of the immediately
preceding calendar quarter or such other time as OSFI has specified, the Ceding
Company shall notify the Reinsurer of the amount of the deficiency along with a
copy of the applicable Monthly Report (the “Top-Up Notice”). The Top-Up Notice
shall be delivered to the Reinsurer at the same time as the copy of the Monthly
Report for the same calendar quarter.

 

(c)

All settlements of account between the Ceding Company and the Reinsurer shall be
made in cash or its equivalent.

Section 8.4 Offset and Recoupment. Each Party, at its option, may offset or
recoup any balance or balances, whether on account of premiums, Expense
Allowances, claims and losses or amounts otherwise due from one Party to the
other under this Agreement, or as a result of damages awarded to either Party
pursuant to litigation or otherwise, which shall be deemed mutual debts or
credits, as the case may be; provided, however, that the Party electing such
right with respect to matters not reflected in the Monthly Reports shall notify
the other Party in writing of its election to do so. This Section 8.4 shall not
be modified or reconstrued due to the insolvency, liquidation, rehabilitation,
conservatorship or receivership of either Party.

Section 8.5 Currency. All financial data required to be provided pursuant to the
terms of this Agreement shall be expressed in Canadian dollars. All payments and
all settlements of account between the Parties shall be in Canadian currency
unless otherwise agreed by the Parties.

ARTICLE IX

EXPENSES IN CONNECTION WITH THE REINSURED POLICIES

Section 9.1 Expenses in Connection with the Reinsured Policies. The Ceding
Company shall pay for all expenses and charges incurred in connection with the
Reinsured Policies including medical examinations, inspection fees, and other
fees. Except as provided in Section 4.2 and Section 4.3, such amounts shall not
be reimbursed by the Reinsurer.

ARTICLE X

ERRORS AND OMISSIONS

Section 10.1 Errors and Omissions. Subject to the terms of this Agreement,
neither Party hereto shall be prejudiced in any way by inadvertent errors or
omissions made by such Party in connection with this Agreement provided such
errors and omissions are corrected promptly following discovery thereof. Upon
the discovery of an inadvertent error or omission by either Party hereto,
appropriate adjustments shall be made as soon as practicable to restore the
Parties to the fullest extent possible to the position they would have been in
had no such inadvertent error or omission occurred.

ARTICLE XI

RECAPTURE

Section 11.1 Recapture. The Ceding Company may in accordance with the provisions
of this Article XI recapture, in its sole discretion, all or a pro rata portion
of all of the Reinsurer's Quota Share of the Reinsured Policies upon the
occurrence of one of the following events;

 

(a)

If the Reinsurer becomes insolvent;

 

(b)

If the Bermuda Monetary Authority takes control of the assets of the Reinsurer
and/or cancels or significantly restricts the conditions of the Reinsurer’s
license;

 

(c)

If either the Bermuda Monetary Authority, Petitioning Creditor(s) or the
Reinsurer institutes a proceeding or petition for, the appointment of a
liquidator of the Reinsurer;

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(d)

If the Reinsurer fails to take steps reasonably satisfactory to the Ceding
Company to assure the Ceding Company of full Financial Statement Credit for the
Reinsured Policies within forty-five (45) calendar days of Reinsurer’s receipt
of written notice from the Ceding Company that the Ceding Company has been
advised by any Governmental Authority that the Governmental Authority will deny
or has denied Financial Statement Credit on any financial statement filed by the
Ceding Company with such Governmental Authority;

 

(e)

If the Reinsurer is in material breach of any other representation, warranty or
covenant under this Agreement and the Reinsurer fails to cure any such material
breach of any representation, warranty or covenant hereunder within sixty (60)
calendar days of receipt of written notice of such breach by the Reinsurer; or

 

(f)

If the Reinsurer fails in any material respects to fund the Reinsurance Trust
Account to the amount required after receipt of the Top-Up Notice under Section
15.3(c) within the time period specified therein, and the Reinsurer fails to
cure any such funding deficiency within twenty (20) Business Days of receipt of
written notice of such funding deficiency by the Reinsurer.

Section 11.2 Notice of Recapture. The Ceding Company shall notify the Reinsurer
in writing of the reasons for, and the effective date of, the recapture at least
ninety (90) calendar days prior to the effective date of recapture (the
“Recapture Notice”); provided, however. that the recapture shall not be deemed
to be consummated until the final accounting described in Section 11.4 of this
Article XI has been completed and the Reinsurer has paid the Commutation
Payment, if any.

Section 11.3 Recapture Fee. The Ceding Company shall pay a recapture fee (the
“Recapture Fee”) to the Reinsurer upon (i) the occurrence of any recapture of
the Reinsured Policies pursuant to Section 11.1 (d) if such recapture was
triggered by the inability of the Ceding Company to obtain full Financial
Statement Credit for the Reinsured Policies due to actions taken by the Ceding
Company or its Affiliates; provided, however, that if the Reinsurer is in
material breach of any representation, warranty or covenant under this Agreement
at the time a recapture is triggered under Section 11.1 (d), no Recapture Fee
will be due and payable by the Ceding Company or (ii) termination of this
Agreement under Section 20.3(a). The Recapture Fee shall be equal to an amount
to be determined by an actuarial appraisal prepared by a nationally recognized
independent actuarial firm in accordance with methodologies agreed upon by the
Ceding Company and Reinsurer to determine the value of the Reinsured Policies at
such time in a manner consistent with the valuation of the Reinsured Policies as
set forth in the Milliman Report and consistent with the determination of the
Initial Ceding Commission based on such valuation.

Section 11.4 Renewal Recapture. The Ceding Company shall also have the right,
upon prior written notice to the Reinsurer, to recapture, in its sole
discretion, all or a pro rata portion of End of Term Renewals arising from
Policies with an Original Initial Level Premium Period ending on or after
January 1, 2017 (the “Renewal Recapture Right”). No Recapture Fee is payable in
connection with the recapture of any End of Term Renewal.

Section 11.5 Commutation Accounting and Settlement. In the event of any
recapture under this Article XI, the Reinsurer shall pay to the Ceding Company
an amount equal to (i) the Reinsurer's Quota Share of the Subject Reserves and
advance premiums, if applicable, attributable to the Reinsured Policies being
recaptured, calculated as of the effective date of the recapture set forth in
the Recapture Notice, minus (ii) any amounts due to the Reinsurer but unpaid
under this Agreement, including the Recapture Fee, if any, and net deferred
premiums; plus (iii) any amounts due to the Ceding Company but unpaid under this
Agreement (collectively, the “Commutation Payment”); provided, however, that, if
the amount calculated pursuant to clause (ii) of this subsection exceeds the
amounts calculated pursuant to clauses (i), (ii) and (iii) of this subsection,
the Ceding Company shall pay to the Reinsurer the amount of such excess.
Following recapture and payment to the appropriate Party of the net Commutation
Payment required hereunder, neither Party shall have further liability to the
other Party hereunder with respect to the recaptured business.

Section 11.6 Limitation on Partial Recaptures. Notwithstanding the provisions of
Sections 11.1, the Ceding Company shall not be permitted to effect a partial
recapture pursuant to Section 11.1 if, after giving effect to the recapture, the
Subject Reserves would be less than C$75,000,000.

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ARTICLE XII

ACCESS TO BOOKS AND RECORDS

Section 12.1 Access to Books and Records.

 

(a)

The Ceding Company shall, upon reasonable notice and subject to Applicable Law,
provide to the Reinsurer and the counsel, financial advisors, accountants,
actuaries and other representatives of the Reinsurer (the “Representatives”)
access, at the Reinsurer's sole cost and expense, to review, inspect, examine
and reproduce the Ceding Company's books, records, accounts, policies, practices
and procedures, including underwriting, policy, claims administration guidelines
and sales and Conversion practices, relating to the Reinsured Policies,
including any audits and self assessments conducted by the Ceding Company as
well as any unaudited information provided to Primerica in connection with
Primerica's public company reporting requirements, at the place such records are
located, and to discuss such matters with the employees, external auditors and
external actuaries of the Ceding Company that are knowledgeable about such
records, without undue disruption of the normal operations of the Ceding
Company.

 

(b)

The Reinsurer and its Representatives shall have the right, at its sole cost and
expense, to conduct audits from time to time, upon reasonable notice to the
Ceding Company, of the relevant books, records, accounts, policies, practices
and procedures, including underwriting, policy, claims administration guidelines
and sales and Conversion practices of the Ceding Company relating to the
Reinsured Policies. Reinsurer shall also have the right, at any time it deems
necessary, to request that the Ceding Company provide a copy of specific Claim
files for the Reinsurer review. The Reinsurer's requests will be limited to paid
or settled Claims with a Claim amount greater than C$250,000.

 

(c)

The Reinsurer shall reimburse the Ceding Company for any reasonable
out-of-pocket costs that the Ceding Company incurs in providing assistance to
the Reinsurer and its Representatives in connection with this Section 12.1.

 

(d)

The Ceding Company shall use its reasonable best efforts to assist and cooperate
with the Reinsurer and its Representatives in providing access to the relevant
in force files, experience data, books, records and accounts of the Ceding
Company relating to the Reinsured Policies.

ARTICLE XIII

INSOLVENCY

Section 13.1 Insolvency. In the event of the insolvency of the Ceding Company,
payments due the Ceding Company on all reinsurance made, ceded, renewed or
otherwise  becoming effective under this Agreement shall be payable by the
Reinsurer on the basis of claims filed and allowed in the liquidation proceeding
under the Reinsured Policies without diminution because of the insolvency of the
Ceding Company, either directly to the Ceding Company or to its domiciliary
liquidator, receiver or statutory successor, except where the Reinsurer, with
the consent of the Policyholder and in conformity with Applicable Law, has
assumed the Ceding Company's obligations as direct obligations of the Reinsurer
to the payees under the Reinsured Policies and in substitution for the
obligations of the Ceding Company to the payees. It is understood, however, that
in the event of the insolvency of the Ceding Company, the liquidator or receiver
or statutory successor of the Ceding Company shall give written notice to the
Reinsurer of any impending Claim against the Ceding Company on a Reinsured
Policy within a reasonable period of time after such Claim is filed in the
insolvency proceedings and that during the pendency of such Claim the Reinsurer
may, at its own expense, investigate such Claim and interpose, in the proceeding
where such Claim is to be adjudicated any defense or defenses which it may deem
available to the Ceding Company or its liquidator or receiver or statutory
successor. It is further understood that the expense thus incurred by the
Reinsurer shall 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 which may accrue to the Ceding Company solely as a result
of the defense undertaken by the Reinsurer.

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ARTICLE XIV

DISPUTE RESOLUTION

Section 14.1 Consent to Jurisdiction. Each of the Parties hereto irrevocably and
unconditionally submits to the exclusive jurisdiction of the courts of the
Province of Ontario for the purposes of enforcing this Agreement. The Parties
shall take such actions as are within their control to cause any disputes as
described in the preceding sentence to be assigned to the Commercial List of the
Ontario Superior Court of Justice in Toronto. In any action, application or
other proceeding, each of the Parties hereto irrevocably and unconditionally
waives and agrees not to assert by way of motion, as a defense or otherwise any
claim that it is not subject to the jurisdiction of the courts of Ontario, that
such action, application or proceeding is brought in an inconvenient forum or
that the venue of such action, application or other proceeding is improper. Each
of the Parties hereto also agrees that any final order or judgment for which
there are no further rights of appeal against any Party hereto in connection
with any action, application or other proceeding as contemplated in this Article
XIV shall be conclusive and binding on such Party and that such order or
judgment may be enforced in any court of competent jurisdiction, either within
or outside of Canada or Bermuda. A certified copy of such order or judgment
shall be conclusive evidence of the fact and amount of such award or judgment.

Section 14.2 Waiver of Jury Trial. Each of the Parties hereto irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
related to this Agreement or the transactions contemplated hereby.

Section 14.3 Specific Performance. The Parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each Party agrees that, in addition to any
other available remedies each other Party shall be entitled to an injunction
restraining any violation or threatened violation of any of the provisions of
this Agreement without the necessity of posting a bond or other form of
security. In the event that any action should be brought in equity to enforce
any of the provisions of this Agreement, no Party will allege, and each Party
hereby waives the defense, that there is an adequate remedy at law.

ARTICLE XV

REINSURANCE TRUST ACCOUNT

Section 15.1 Reinsurance Trust Agreement. On the date hereof, in accordance with
the standard form reinsurance trust agreement issued by OSFI to be entered into
between Ceding Company, the Reinsurer, OSFI and the trustee (the “Trustee”) in
the form attached hereto as Exhibit V (as such agreement may be amended from
time to time in writing by mutual consent of OSFI, the Ceding Company, the
Reinsurer and the trustee thereunder, the “Reinsurance Trust Agreement”), the
Reinsurer, as grantor, shall create a trust account (the “Reinsurance Trust
Account”) naming the Ceding Company as sole beneficiary thereof. The Reinsurance
Trust Account shall initially be funded with Trust Assets the Market Value of
which (as of the date hereof) is at least equal to the Required Balance as of
the Effective Date. The Trust Assets must be maintained at all times in
accordance with the terms and conditions of the Reinsurance Trust Agreement, the
Insurance Companies Act (Canada), its applicable regulations and any applicable
instructions, advisories or guidelines issued by OSFI.

Section 15.2 Investment of Trust Assets.

 

(a)

The assets held in the Reinsurance Trust Account (the “Trust Assets”) shall
consist of Eligible Assets.

 

(b)

The Reinsurer shall appoint either a third-party investment manager or a
Citigroup Inc. affiliate to manage the assets held in the Reinsurance Trust
Account, pursuant to an investment management agreement in a form acceptable to
the Ceding Company. The Reinsurer shall be responsible for all fees arising from
the services provided by such third-party investment manager or Citigroup Inc.
affiliate.

Section 15.3 Adjustment of Trust Assets and Withdrawals.

 

(a)

Any adjustments of Trust Assets or withdrawals of Trust Assets from the
Reinsurance Trust Account shall be in compliance with the terms of the
Reinsurance Trust Agreement.

 

(b)

The amount of Trust Assets to be maintained in the Reinsurance Trust Account
shall be adjusted following the end of each calendar quarter or at such other
time as OSFI may specify in accordance with the Reserve Report for the last
calendar month of each calendar quarter provided to the Reinsurer pursuant to
the terms of Section 8.1 or the instructions of OSFI. Such report shall set
forth the amount by which the Reinsurance Trust Account Balance equals or
exceeds the Required Balance, in each case as of the end of the immediately
preceding calendar quarter or at such other time as OSFI may specify.

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(c)

If the Reinsurance Trust Account Balance exceeds 105% of the Required Balance,
in each case as of the end of the immediately preceding calendar quarter or at
such other time as OSFI may specify, then the Reinsurer shall have the right to
seek approval from the Ceding Company (which shall not be unreasonably or
arbitrarily withheld, conditioned or delayed) and from OSFI to withdraw the
excess.

 

(d)

The Reinsurer shall, no later than twenty (20) Business Days following receipt
of the Top-Up Notice or at such earlier time as OSFI may specify, place
additional Trust Assets into the Reinsurance Trust Account so that the
Reinsurance Trust Account Balance, as of the date such additional Trust Assets
are so placed, is no less than the Required Balance as of the end of the
immediately preceding calendar quarter or at such other time as OSFI may
specify.

 

(e)

Without limitation of the other provisions of this Section 15.3, subject to
obtaining the Ceding Company's prior consent (which shall not be unreasonably or
arbitrarily withheld, conditioned or delayed) and OSFI's prior consent, the
Reinsurer may remove Trust Assets from the Reinsurance Trust Account; provided,
however, that the Reinsurer, at the time of such withdrawal, replaces the
withdrawn assets with Trust Assets permitted under the terms of the Reinsurance
Trust Agreement and by OSFI and having a Market Value equal to or greater than
the Market Value of the Trust Assets withdrawn so that the Reinsurance Trust
Account Balance, as of the date of such withdrawal, is no less than the Required
Balance as of the end of the immediately preceding calendar quarter or such
other time as OSFI may specify.

 

(f)

Unless the Trustee is otherwise directed in writing by OSFI:

 

(i)

the Reinsurer shall be entitled to all income on the assets held in the
Reinsurance Trust Account collected by the Trustee, as the same is collected;
and

 

(ii)

the Reinsurer shall be entitled at all times to exercise, through such officer
or other person designated by it, the right of attending, acting and voting at
meetings of corporations or security holders or otherwise in respect of the
assets held in the Reinsurance Trust Account.

Section 15.4 Negotiability of Trust Assets. Prior to depositing Trust Assets
with the Trustee, the Reinsurer shall execute all assignments or endorsements in
blank, or transfer legal title to the Trustee of all shares, obligations or any
other assets requiring assignments, in order that the Ceding Company, or the
Trustee upon direction of the Ceding Company, may whenever necessary negotiate
any such assets without consent or signature from the Reinsurer or any other
entity.

Section 15.5 Ceding Company's Withdrawals. The Ceding Company (or any successor
by operation of law of the Ceding Company, including, but not limited to, any
liquidator, rehabilitator, receiver or conservator of the Ceding Company) may
only withdraw Trust Assets pursuant to the terms of the Reinsurance Trust
Agreement.

Section 15.6 Return of Excess Withdrawals. The Ceding Company shall return to
the Reinsurer, within five (5) Business Days, assets withdrawn in excess of all
amounts due under Section 15.5. Any assets subsequently returned shall include
interest at the Prime Rate applied on a daily basis for the amounts returned.

Section 15.7 Costs of Trust. The cost of maintaining the Reinsurance Trust
Account shall be borne by the Reinsurer.

ARTICLE XVI

THIRD PARTY BENEFICIARY

Section 16.1 Third Party Beneficiary. Nothing in this Agreement or the
Reinsurance Trust Agreement is intended to give any person, other than the
Parties to such agreements, their successors and permitted assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or the
Reinsurance Trust Agreement or any provision contained therein.

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ARTICLE XVII

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 17.1 Representations and Warranties of the Ceding Company.

 

(a)

Organization, Standing and Authority of the Ceding Company. The Ceding Company
is a life insurance company duly organized, validly existing and in good
standing under the federal laws of Canada, and has all requisite corporate power
and authority to carry on the operations of its business as they are now being
conducted. The Ceding Company has obtained all authorizations and approvals
required under Applicable Law to enter into and perform the obligations
contemplated of the Ceding Company under this Agreement.

 

(b)

Authorization. The Ceding Company has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery by the Ceding Company of this Agreement, and the
performance by the Ceding Company of its obligations under this Agreement, have
been duly authorized by all necessary corporate action and do not require any
further authorization, action or consent of the Ceding Company. This Agreement,
when duly executed and delivered by the Ceding Company, subject to the due
execution and delivery by the Reinsurer, will be a valid and binding obligation
of the Ceding Company, enforceable against the Ceding Company in accordance with
its terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
enforcement of creditors' rights and to general equity principles.

 

(c)

No Conflict or Violation. Except as set forth in Schedule B, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby in accordance with the respective terms and
conditions hereof will not (a) violate any provision of the Letters Patent or
Bylaws of the Ceding Company, (b) violate, conflict with or result in the breach
of any of the terms of, result in any modification of, give any counterparty the
right to terminate, or constitute a default under, any contract or other
agreement to which the Ceding Company is a party, or (c) violate any order,
judgment, injunction, award or decree of any court, arbitrator or Governmental
Authority against, or binding upon, or any agreement with, or condition imposed
by, any Governmental Authority, foreign or domestic, binding upon the Ceding
Company.

 

(d)

Absence of Litigation. There is no action, suit, proceeding or investigation
pending or threatened that questions the legality of the transactions
contemplated by this Agreement or that would prevent consummation of the
transactions contemplated by this Agreement or the performance by the Ceding
Company of its obligations hereunder.

 

(e)

Milliman Information True and Complete.

 

(i)

To the best of the Ceding Company's knowledge, all information and data supplied
to Milliman Inc. (“Milliman”) identified on Exhibit VI-A hereto (the “Milliman
Information”) was true, accurate and complete in all material respects as of the
date the document containing such Milliman Information was provided to Milliman
by the Ceding Company; provided, however, the Parties acknowledge that no
representation or warranty has been made to the Reinsurer or any of its
Affiliates or Representatives with respect to the truth, accuracy and
completeness of any assumptions, projections, or estimates either provided by
the Ceding Company or underlying any of the studies prepared by the Ceding
Company in connection with the Milliman Information except that the Ceding
Company represents and warrants that such assumptions, projections or estimates
were the ones actually utilized by the Ceding Company for the purposes stated in
Exhibit VI. The Milliman Information was compiled in a commercially reasonable
manner given the intended purpose.

 

(ii)

The financial data supplied to Milliman identified on Exhibit VI-B hereto
presents fairly, in all material respects, the financial condition and results
of operations of the Ceding Company as of and for the periods specified therein
in accordance with CGAAP, or such other accounting standards as may be
applicable during the term of this agreement, consistently applied.

 

(f)

Coverage Information. The Reinsured Policies information identified in Exhibit I
is true, accurate and complete in all material respects.

 

(g)

Good and Marketable Title to Eligible Assets. The Ceding Company will have good
and marketable title, free and clear of all liens, to all Eligible Assets
immediately prior to the payment thereof to the Reinsurer in accordance with
Section 4.1.

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Section 17.2 Covenants of the Ceding Company.

 

(a)

Administration and Claims Practices.

 

(i)

In the administration and claims practices relating to the Reinsured Policies
(the “Administrative Practices”), the Ceding Company shall (A) use the skill and
diligence commonly expected from qualified personnel performing such duties for
similarly sized Canadian life insurance companies; (B) act in accordance with
the Ceding Company's internal company guidelines as in effect on the Effective
Date; (C) be in conformance with Applicable Law in all material respects; and
(D) act in a manner consistent with its existing administrative and claims
practices in effect on the Effective Date and in any case with no less skill,
diligence and expertise as the Ceding Company applies to servicing its other
business, including those claims practices in existence for Third Party
Reinsurance (each, an “Existing Practice”); notwithstanding the foregoing, the
Ceding Company shall not be in breach of this Section 17.1 (a)(i) unless either
(Y) the Reinsurer shall have notified the Ceding Company in writing of the
Ceding Company's failure to perform its obligations under this Section
17.1(a)(i) (which written notice shall describe such failure with reasonable
particularity) or (Z) an officer of the Ceding Company with direct
responsibility for its administrative services, or any senior officer of the
Ceding Company, has actual knowledge that the Ceding Company has failed to
perform its obligations under this Section 17.1(a)(i), and in either case the
Ceding Company shall have failed to cure such breach within thirty (30) days
following receipt of such notice or such actual knowledge.

 

(ii)

An Existing Practice may be reasonably modified from time to time, except that,
to the extent the Ceding Company modifies an Existing Practice from time to time
following the Effective Date (an Existing Practice, as modified from time to
time, a “Then Current Practice”), the Ceding Company shall act in accordance and
consistent with the Then Current Practice; provided, that, if a Then Current
Practice would materially adversely affect the rights, remedies and position of
the Reinsurer, the Ceding Company shall obtain the consent of the Reinsurer
(which consent shall not be unreasonably withheld or delayed) prior to applying
the Then Current Practice to the Reinsured Policies.

 

(b)

Reinsured Policies. In all instances as they relate to the Reinsured Policies:

 

(i)

The Ceding Company shall not, and shall cause its Affiliates not to (A) change
agent commission and compensation schedules, (B) adopt or implement any program
that is expected to result in an increase in lapses, exchanges, replacements or
Conversions under the Reinsured Policies or (C) change coverage options or
premiums (except as contemplated by Section 17.2(g) hereof), including coverage
options for End of Term Conversions, in each case under (A), (B) and (C) without
notifying the Reinsurer in advance of any such action and obtaining the
Reinsurer's prior written consent (which shall not be unreasonably withheld or
delayed).

 

(ii)

The Ceding Company and the Reinsurer shall reasonably cooperate on any proposals
for pricing or coverage changes proposed by either Party, including making any
rate and form filings or other regulatory filings that impact pricing or
premiums under the Reinsured Policies provided, however, the Ceding Company
shall have final approval authority in its discretion over any proposal brought
by the Reinsurer pursuant to this Section 17.2(b)(ii).

 

(iii)

The Ceding Company shall notify the Reinsurer of any information known to the
Ceding Company, including any third party or regulatory actions and management
decisions reasonably anticipated to adversely and materially impact the
economics of the Reinsured Policies for the Reinsurer. Such notification shall
be made within five (5) Business Days after the information becomes known to the
Ceding Company. The Parties agree and acknowledge that the Ceding Company's
relationship with the Reinsurer shall in all respects be governed by a duty of
utmost good faith. At all times during the term of this Agreement, the Ceding
Company shall (i) administer, manage and oversee the Reinsured Policies and the
Covered Liabilities, and (ii) perform all its obligations to the Reinsurer under
this Agreement, in a manner consistent with its utmost good faith obligations.

 

(c)

Third Party Reinsurance.

 

(i)

The Ceding Company shall not, without the Reinsurer's prior approval (which
approval shall not be unreasonably or arbitrarily withheld, conditioned or
delayed), (A) terminate or materially modify any existing Third Party
Reinsurance or (B) purchase new third party reinsurance for the Reinsured
Policies.

 

(ii)

The Ceding Company shall use commercially reasonable efforts to maintain its
existing Third Party Reinsurance from and after the Effective Date, consistent
with the existing practice of the Ceding Company in effect on the Effective
Date.

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(d)

Reporting. To the extent not prohibited by Applicable Law, the Ceding Company
will provide all reports it is required to deliver under this Agreement
(including, without limitation, each Monthly Report and Quarterly Report) not
later than the last date on which such report is required to be so delivered,
except that the Ceding Company shall not be in breach of this Section 17.2(d)
unless either (i) the Reinsurer shall have notified the Ceding Company in
writing of its failure to timely deliver such report or (ii) a officer of the
Ceding Company with direct responsibility for the preparation and delivery of
such report has actual knowledge that the report was not delivered when due, and
in either case the Ceding Company shall have failed to deliver such information
within thirty (30) days following receipt of such notice or actual knowledge.

 

(e)

Policy Data. Within six (6) months of the date hereof, the Ceding Company shall
provide to the Reinsurer a schedule containing a list of Policies with Original
Initial Level Premium Periods ending on or after January 1, 2017.

 

(f)

Books and Records. The Ceding Company shall maintain and implement reasonable
administrative and operating procedures with respect to records relating to the
Reinsured Policies and shall keep and maintain all material documents, books,
records and other information reasonably necessary for the maintenance of the
Reinsured Policies, which documents, books, records and other information will
be accurately maintained in all material respects throughout the term of this
Agreement.

Section 17.3 Representations and Warranties of the Reinsurer.

 

(a)

Organization, Standing and Authority of the Reinsurer. The Reinsurer is a
special purpose long term insurance company duly organized, validly existing and
in good standing under the laws of Bermuda and has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on the operations of its business as they are proposed to be conducted. The
Reinsurer has obtained all authorizations and approvals required under
Applicable Law to enter into and perform the obligations contemplated of the
Reinsurer under this Agreement and the Reinsurer shall maintain throughout the
term of this Agreement all licenses, permits or other permissions of any
Governmental Authority that shall be required in order to perform the
obligations of the Reinsurer hereunder.

 

(b)

Authorization. The Reinsurer has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery by the Reinsurer of this Agreement, and the performance
by the Reinsurer of its obligations under this Agreement, have been duly
authorized by all necessary corporate action and do not require any further
authorization, action or consent of the Reinsurer or its stockholder. This
Agreement, when duly executed and delivered by the Reinsurer, subject to the due
execution and delivery by the Ceding Company, will be a valid and binding
obligation of the Reinsurer, enforceable against the Reinsurer in accordance
with its terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
enforcement of creditors' rights and to general equity principles.

 

(c)

No Conflict or Violation. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(i) violate any provision of the Articles of Incorporation, Bylaws or other
charter or organizational document of the Reinsurer, or (ii) violate any order,
judgment, injunction, award or decree of any court, arbitrator or Governmental
Authority against, or binding upon, or any agreement with, or condition imposed
by, any Governmental Authority, foreign or domestic, binding upon the Reinsurer,
except when any such violation would not have a material adverse effect on this
Agreement or the consummation of the transactions contemplated hereby.

 

(d)

Absence of Litigation. There is no action, suit, proceeding or investigation
pending or threatened that questions the legality of the transactions
contemplated by this Agreement or that would prevent consummation of the
transactions contemplated by this Agreement or the performance by the Reinsurer
of its obligations hereunder.

 

(e)

Good and Marketable Title to Trust Assets. The Reinsurer will have good and
marketable title, free and clear of all liens, to all Trust Assets immediately
prior to the deposit thereof in the Trust Account.

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ARTICLE XVIII

INDEMNIFICATION

Section 18.1 Indemnification.

 

(a)

The Ceding Company shall indemnify, defend and hold harmless the Reinsurer and
its directors, officers, employees, agents, representatives, successors,
permitted assigns and Affiliates from and against any and all losses,
liabilities, claims, expenses (including reasonable attorneys' fees and
expenses) and damages reasonably and actually incurred by the Reinsurer
(collectively, “Indemnification Claims”) relating to this Agreement to the
extent arising from:

 

(i)

any breach or falsity of any representation, warranty or covenant of the Ceding
Company; or

 

(ii)

the breach of or failure to perform any of the duties, obligations, covenants or
agreements of the Ceding Company contained in this Agreement.

 

(b)

The Reinsurer agrees to indemnify and hold harmless the Ceding Company and its
directors, officers, employees, agents, representatives, successors, permitted
assigns and Affiliates from and against any and all Indemnification Claims
relating to this Agreement to the extent arising from:

 

(i)

any breach or falsity of any representation, warranty or covenant of the
Reinsurer; or

 

(ii)

the breach of or failure to perform any of the duties, obligations, covenants or
agreements of the Reinsurer contained in this Agreement.

ARTICLE XIX

LICENSES, REGULATORY MATTERS

Section 19.1 Licenses.

 

(a)

At all times during the term of this Agreement, each of the Reinsurer and the
Ceding Company, respectively agrees that it shall hold and maintain all licenses
and authorities required under Applicable Laws to perform its respective
obligations hereunder unless otherwise mutually agreed by the parties.

 

(b)

At all times during the term of this Agreement, the Reinsurer shall hold and
maintain all licenses and authorizations required under Applicable Law, deposit
in trust all such Trust Assets or otherwise to take all action that may be
necessary so that at all times the Ceding Company shall receive full Financial
Statement Credit.

Section 19.2 Regulatory Matters.

 

(a)

If Ceding Company or Reinsurer receives notice of, or otherwise becomes aware of
any inquiry, investigation, examination, audit or proceeding outside the
ordinary course of business by Governmental Authorities, relating to the
Reinsured Policies or the reinsurance provided hereunder, the Ceding Company or
Reinsurer, as applicable, shall promptly notify the other party thereof.

 

(b)

If Ceding Company or Reinsurer receives notice of, or otherwise becomes aware of
any enforcement action by any Governmental Authority arising out of any inquiry,
investigation, examination, audit or proceeding by such Governmental Authority,
the Ceding Company or Reinsurer, as applicable, shall promptly notify the other
party thereof, and the Parties shall cooperate to resolve such matter.

ARTICLE XX

DURATION OF AGREEMENT; TERMINATION

Section 20.1 Duration. This Agreement shall automatically terminate if, at such
time, there are no Covered Liabilities and the Reinsurance Trust Agreement has
been terminated in accordance with the terms and conditions provided therein.

Section 20.2 Termination by Mutual Consent. This Agreement shall be terminated
by the mutual written consent of the Reinsurer and the Ceding Company, which
writing shall state the effective date and relevant terms of termination,
provided that the Reinsurance Trust Agreement has been terminated in accordance
with the terms and conditions provided therein.

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Section 20.3 Termination by the Reinsurer.

 

(a)

From and after the third anniversary date of the Effective Date, the Reinsurer
may terminate this Agreement in the event of Ceding Company's failure to pay to
Reinsurer any undisputed amounts owed under this Agreement. Reinsurer must
provide written notice to Ceding Company containing sufficient information to
inform Ceding Company of the details relating to its failure to pay. Ceding
Company shall have sixty (60) calendar days from the receipt of the notice to
make payment of any such undisputed amounts owed or make arrangements for
payment satisfactory to Reinsurer. Following the sixty (60) day cure period, if
Ceding Company has not paid any such undisputed amounts owed or made
arrangements for payment satisfactory to Reinsurer, Reinsurer may provide
written notice to Ceding Company terminating this Agreement, effective upon the
date that Reinsurer makes the Commutation Payment to Ceding Company.
Notwithstanding the above, if Ceding Company disputes the amount owed, the sixty
(60) day cure period referenced above will begin only after a final
determination is made by a court of law, pursuant to Section 14, that the
disputed amounts are owed to the Reinsurer.

 

(b)

Upon termination of this Agreement under Section 20.3(a), no further risks shall
be ceded or assumed under this Agreement and Reinsurer shall not be liable for
any losses occurring on and after the termination effective date. In the event
of notice of termination under Section 20.3(a), Ceding Company will be entitled
to the Commutation Payment in the same manner as provided in Section 11.5 and
Reinsurer will be entitled to the Recapture Fee in the same manner as provided
in Section 11.3.

Section 20.4 No Termination Upon Change of Control. For the avoidance of doubt,
a Change of Control, sale or merger of the Reinsurer shall not result in
termination of this Agreement.

Section 20.5 Survival. Notwithstanding the other provisions of this Article XX,
the terms and conditions of Articles I, IV, V, VIII, X, XI, XII, XIV, XV, XVI,
XX and XXI shall remain in full force and effect after termination of this
Agreement.

ARTICLE XXI

MISCELLANEOUS

Section 21.1 Entire Agreement. This Agreement represents the entire agreement
between the Reinsurer and the Ceding Company concerning the business reinsured
hereunder. There are no understandings between the Reinsurer and the Ceding
Company other than as expressed in this Agreement and the Reinsurance Trust
Agreement.

Section 21.2 Amendments.

 

(a)

Any provision of this Agreement may be amended if, but only if, such amendment
is in writing and is signed by each party to this Agreement. Any change or
modification to this Agreement shall be null and void unless made by an
amendment hereto signed by each party to this Agreement.

 

(b)

No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 21.3 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or if
determined by a court of competent jurisdiction to be unenforceable, and if the
rights or obligations of the Ceding Company or the Reinsurer under this
Agreement will not be materially and adversely affected thereby, such provision
shall be fully severable, and this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a part
of this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

Section 21.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein, without giving effect to the principles of conflicts
of law thereof.

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Section 21.5 Notices. Any notice and other communication required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally or, if mailed, on the date shown on
the receipt therefore, as follows:

if to the Ceding Company:

Primerica Life Insurance Company of Canada

2000 Argentia Road

Plaza V, Suite 300

Mississauga, Ontario LSN 2R7

with copies to (which shall not constitute notice to the Ceding Company for
purposes of this Section 21.5):

Primerica Life Insurance Company

3120 Breckinridge Blvd.

Duluth, Georgia 30099

Attention: General Counsel

if to the Reinsurer:

Financial Reassurance Company 2010, Ltd

Emporium Building

69 Front Street

Hamilton HM 12, Bermuda

with copies to (which shall not constitute notice to the Reinsurer for purposes
of this Section 21.5):

Robert Sullivan, Esq.

Susan Sutherland, Esq.

Skadden, Arps, State, Meagher & Flom LLP

Four Times Square

New York, New York 10036

(212) 735-3000

Either Party may change the names or addresses where notice is to be given by
providing notice to the other Party of such change in accordance with this
Section 21.5.

Section 21.6 Consent to Jurisdiction. Subject to the terms and conditions of
Article XIV, the Parties agree that in the event of the failure of either Party
to perform its obligations under the terms of this Agreement, the Party so
failing to perform, at the request of the other Party, shall submit to the
jurisdiction of any court of competent jurisdiction in the Province of Ontario
and shall comply with all requirements necessary to give such court
jurisdiction, and shall abide by the final decision of such court or of any
appellate court in the event of an appeal.

Section 21.7 Service of Process. The Reinsurer hereby designates its Chief Legal
Counsel, at the address listed above in Section 21.5, 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 Ceding Company. The Ceding Company
hereby designates its General Counsel and Corporate Secretary, at the address
listed above in Section 21.5, 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 Reinsurer.

Section 21.8 Assignment.

 

(a)

This Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties. Neither Party may novate or
assign any of its rights, remedies, interests, powers and privileges, or novate
or delegate any of its duties or obligations hereunder, without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld, conditioned or delayed.

 

(b)

Notwithstanding any other provision in this Agreement to the contrary, the
Reinsurer shall have the right to retrocede all or a portion of the Reinsured
Policies under this Agreement.

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Section 21.9 Captions. The captions contained in this Agreement are for
reference only and are not part of the Agreement.

Section 21.10 Treatment of Confidential Information. The Parties agree that,
other than as contemplated by this Agreement and to the extent permitted or
required to implement the transactions contemplated hereby, the Parties will
keep confidential and will not use or disclose the other Party's Confidential
Information or the terms and conditions of this Agreement, including, without
limitation, the exhibits and schedules hereto, except as otherwise required by
Applicable Law or any order or ruling of any provincial insurance regulatory
authority, the OSFI or any other Governmental Authority; provided, however, that
the Reinsurer may disclose Confidential Information to its Representatives in
connection with the exercise of its rights under Article XII; provided, further,
that either party may disclose, with the other party's written consent,
Confidential Information to any person other than its Representatives who agrees
to (i) hold such Confidential Information in strict confidence as if such person
were a Party to this Agreement and (ii) use such Confidential Information solely
for the limited purpose of evaluating a potential purchase, merger or Change of
Control of such Party. Without limiting the generality of the foregoing, neither
the Reinsurer nor any Affiliates of the Reinsurer shall utilize any Confidential
Information regarding Policyholders for the purpose of soliciting Policyholders
for the sale of any insurance policies or other products or services. The
parties agree that any violation or threatened violation of this Section 21.10
may cause irreparable injury to a party and that, in addition to any other
remedies that may be available, each party shall be entitled to seek injunctive
relief against the threatened breach of the provisions of this Section 21.10, or
a continuation of any such breach by the other party or any person provided with
Confidential Information, specific performance and other such relief to redress
such breach together with damages and reasonable counsel fees and expenses to
enforce its rights hereunder. For purposes of this Agreement, “Confidential
Information” means all documents and information concerning one Party, any of
its Affiliates, the Covered Liabilities or the Reinsured Policies, including any
information relating to any person insured directly or indirectly under the
Reinsured Policies, furnished to the other Party or such other Party's
Affiliates or representatives in connection with this Agreement or the
transactions contemplated hereby, except that Confidential Information shall not
include information which: (a) at the time of disclosure or thereafter is
generally available to and known by the public other than by way of a wrongful
disclosure by a Party or by any representative of a Party; (b) was available on
a non confidential basis from a source other than the Parties or their
representatives, provided that such source is not and was not bound by a
confidentiality agreement with a Party; or (c) was independently developed
without violating any obligations under this Agreement and without the use of
any Confidential Information. For the purposes of this Agreement, “Change of
Control” means the acquisition of ten percent (10%) or more of the voting
securities of a Party or any parent of such Party, or any other acquisition that
is deemed to be a Change of Control by applicable insurance regulatory
authorities of the state of domicile of such Party.

Section 21.11 No Waiver. Preservation of Remedies. No consent or waiver, express
or implied, by any Party to or of any breach or default by any other Party in
the performance by such other Party of its obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance of obligations hereunder by such other Party hereunder. Failure
on the part of any Party to complain of any act or failure to act of any other
Party or to declare any other Party in default, irrespective of how long such
failure continues, shall not constitute a waiver by such first Party of any of
its rights hereunder.

Section 21.12 Calendar Days. To the extent that any calendar day on which a
deliverable pursuant to this Agreement is due is not a Business Day, such
deliverable will be due the next Business Day.

Section 21.13 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the Parties may execute this Agreement by signing such
counterpart. This Agreement shall become effective when each Party hereto shall
have received a counterpart hereof signed by the other party hereto.

Section 21.14 Incontestability. In consideration of the mutual covenants and
agreements contained herein, each party hereto does hereby agree that this
Agreement, and each and every provision hereof, is and shall be enforceable by
and between them according to its terms, and each party does hereby agree that
it shall not contest the validity or enforceability hereof.

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Section 21.15 Interpretation.

 

(a)

When a reference is made in this Agreement to a Section, such reference shall be
to a Section to this Agreement unless otherwise indicated. The Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.” The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes. References to a person are also to its permitted
successors and assigns.

 

(b)

The parties have participated jointly in the negotiation and drafting of this
Agreement; consequently, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties thereto, and no presumption or burden of proof shall arise
favouring or disfavouring any party by virtue of the authorship of any
provisions of this Agreement.

 

(c)

In the event of a conflict or inconsistency between the terms and conditions of
this Agreement and the terms and conditions of the Reinsurance Trust Agreement,
the terms of the latter shall in each and every instance prevail, except that,
to the extent that the Investment Guidelines are more restrictive than the list
of assets in Schedule A to the Reinsurance Trust Agreement, the Investment
Guidelines shall prevail.

Section 21.16 Reasonableness. Each of the parties will act reasonably and in
good faith on all matters within the terms of this Agreement.

 

 

20

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed this
31st day of March, 2010.

 

 

PRIMERICA LIFE INSURANCE

COMPANY OF CANADA

 

 

 

By:

 

/s/ John a Adams

 

 

Name:

John a Adams

 

 

Title:

EVP & CEO

 

 

 

FINANCIAL REASSURANCE

COMPANY 2010 LTD.

 

 

 

By:

 

/s/ Reza Shah

 

 

Name:

Reza Shah

 

 

Title:

President

 

 

 

[Signature Page To Coinsurance Agreement]

--------------------------------------------------------------------------------

 

Schedule A

Identification of Reserves

Exhibit 5 Policy Reserves

 

•

Life Insurance Reserves

 

•

Disability - Active Lives Reserves

 

•

Disability - Disabled Lives Reserves

 

•

Miscellaneous Reserves

Exhibit 8 Claim Reserves

 

•

Pending Claims

 

•

Incurred but Not Reported Claims

 

•

Amounts Recoverable on Paid Claims

 

 

--------------------------------------------------------------------------------

 

Schedule B

No Conflict or Violation Exceptions

None.

 

 

--------------------------------------------------------------------------------

 

Schedule C

Required Balance as of 12/31/09

 

FINANCIAL REASSURANCE COMPANY, LTD.

 

 

 

 

 

 

Calculation of Trust Account Requirement for

 

 

 

 

 

 

Primerical Life Insurance Company of Canada Ceded Business

 

 

 

 

 

 

January 1, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Required Capital

 

 

 

 

 

 

prior to ceding existing business

 

 

 

 

 

 

Mortality Risk

 

 

 

 

 

32,634

Lapse Risk

 

 

 

 

 

63,276

Other

 

 

 

 

 

3,663

Unadjusted Capital Required

 

 

 

 

 

99,573

Trust Account

 

 

 

 

 

 

1. Ceded Reserves

 

 

 

 

 

-59,182

2. Negative Reserves

 

 

 

 

 

186,270

Policy-by-policy Positive Reserves

 

 

 

 

 

127,088

Offsetting ceded reserves

 

 

 

 

 

127,088

3. Related Capital

 

 

 

 

 

 

Required Capital

 

99,573

 

 

 

 

Reinsurance rate

 

80

%

 

 

79,658

Calculation

 

 

 

 

 

 

Greater of Ceded Reserves 1. and 0

 

 

 

 

 

0

70% of Offsetting Ceded Reserves

 

127,088

 

 

 

 

 

 

70

%

 

 

88,962

150% of Related Capital

 

79,658

 

 

 

 

 

 

150

%

 

 

119,488

Trust Account Calculated

 

 

 

 

 

208,450

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit I

Identification of Reinsured Policies

 

 

 

 

I-1

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

ADD ON

 

ZML-767

 

—

 

 

2

 

 

 

40,000

 

AG10 GUAR

 

ZA-10G

 

728

 

 

—

 

 

 

73,143,564

 

 

 

ZA-101G

 

—

 

 

 

1,386

 

 

 

100,403,300

 

 

 

ZA-10SG

 

—

 

 

 

1,396

 

 

 

98,970,500

 

 

 

 

 

728

 

 

 

2,782

 

 

 

272,517,364

 

AG10B GUAR

 

ZA-10BG

 

 

2,636

 

 

—

 

 

 

435,341,180

 

 

 

ZA-10IBG

 

—

 

 

 

4,072

 

 

 

382,717,650

 

 

 

ZA-10SBG

 

—

 

 

 

4,660

 

 

 

474,461,350

 

 

 

 

 

 

2,636

 

 

 

8,732

 

 

 

1,292,520,180

 

ART

 

ZML-911 W

 

—

 

 

1

 

 

 

150,000

 

BART 100

 

ZBART-100

 

11

 

 

—

 

 

 

1,677,000

 

 

 

ZB ART-102

 

—

 

 

2

 

 

 

225,000

 

 

 

ZBART-300

 

3

 

 

—

 

 

 

600,000

 

 

 

 

 

14

 

 

2

 

 

 

2,502,000

 

BART 100 GUAR

 

ZBART-300G

 

15

 

 

—

 

 

 

3,066,000

 

BG20 GUAR

 

ZB-20G

 

 

5,357

 

 

—

 

 

 

767,972,953

 

 

 

ZB-20IG

 

—

 

 

 

1,013

 

 

 

96,787,656

 

 

 

ZB-20SG

 

—

 

 

 

3,823

 

 

 

409,772,718

 

 

 

 

 

 

5,357

 

 

 

4,836

 

 

 

1,274,533,327

 

BG20B GUAR

 

ZB-20BG

 

 

5,179

 

 

—

 

 

 

846,330,570

 

 

 

ZB-201BG

 

—

 

 

 

1,302

 

 

 

131,254,800

 

 

 

ZB-20SBG

 

—

 

 

 

4,125

 

 

 

499,597,500

 

 

 

 

 

 

5,179

 

 

 

5,427

 

 

 

1,477,182,870

 

CART

 

ZCARTNS

 

7

 

 

—

 

 

 

113,300

 

 

 

ZCARTNSBB

 

—

 

 

3

 

 

51,250

 

 

 

 

 

7

 

 

3

 

 

 

164,750

 

CG25 LEVEL GUAR

 

ZC-25G

 

 

6,716

 

 

—

 

 

 

1,105,427,349

 

 

 

ZC-25IG

 

—

 

 

411

 

 

 

49,226,100

 

 

 

ZC-25SG

 

—

 

 

4,377

 

 

 

567,443,055

 

 

 

 

 

 

6,716

 

 

 

4,788

 

 

 

1,722,096,704

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

CG25B GUAR

 

ZC-25BG

 

8,802

 

 

—

 

 

 

1,508,679,574

 

 

 

ZC-25IBG

 

—

 

 

585

 

 

 

78,563,300

 

 

 

ZC-25SBG

 

—

 

 

5,537

 

 

 

791,445,007

 

 

 

 

 

8,802

 

 

 

6,122

 

 

 

2,378,687,881

 

CHILD RIDER

 

ZCH-25

 

—

 

 

 

11,025

 

 

 

215,834,000

 

 

 

ZCP-CHG

 

—

 

 

 

57,896

 

 

 

1,278,625,880

 

 

 

ZML-909

 

—

 

 

23

 

 

 

352,000

 

 

 

ZML-909 B

 

—

 

 

 

3,556

 

 

 

59,230,000

 

 

 

ZML-909 S

 

—

 

 

73

 

 

 

1,058,000

 

 

 

ZML-909A

 

—

 

 

167

 

 

 

2,710,000

 

 

 

ZPL-CR

 

—

 

 

 

8,116

 

 

152,646,000

 

 

 

 

 

—

 

 

 

80,856

 

 

 

1,710,455,880

 

CONV ART GUAR

 

NO FORMCART

 

16

 

 

3

 

 

 

333,565

 

 

 

ZGARTNS

 

13

 

 

—

 

 

 

202,000

 

 

 

ZGARTNSBB

 

—

 

 

2

 

 

 

15,000

 

 

 

ZGARTS

 

1

 

 

—

 

 

 

10,000

 

 

 

 

 

30

 

 

5

 

 

 

560,565

 

CONV DT100

 

NO FORM DTC

 

4

 

 

1

 

 

 

133,163

 

CONV DT100 GUAR

 

NO FORM DTC

 

85

 

 

24

 

 

 

2,034,498

 

CST

 

ZML-T90

 

512

 

 

—

 

 

 

43,892,300

 

 

 

ZML-T95

 

3,549

 

 

—

 

 

 

331,400,705

 

 

 

ZML-867 S

 

—

 

 

7

 

 

 

331,000

 

 

 

ZML-867A

 

—

 

 

82

 

 

 

4,421,100

 

 

 

ZML-877A

 

—

 

 

 

1,659

 

 

 

98,468,500

 

 

 

ZML-877S

 

—

 

 

225

 

 

 

12,865,000

 

 

 

ZML-887 S

 

—

 

 

11

 

 

 

170,000

 

 

 

ZML-887A

 

—

 

 

75

 

 

 

1,795,000

 

 

 

 

 

4,061

 

 

 

2,059

 

 

 

493,343,605

 

C41BR10 GUAR

 

ZC4-101BG

 

—

 

 

 

13,980

 

 

 

974,342,300

 

 

 

ZC4-10SBG

 

—

 

 

 

7,147

 

 

 

470,786,000

 

 

 

 

 

—

 

 

 

21,127

 

 

 

1,445,128,300

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

C4IBR5 GUAR

 

ZC4-5IBG

 

—

 

 

 

16,404

 

 

 

668,562,750

 

 

 

ZC4-5SBG

 

—

 

 

 

9,189

 

 

 

348,629,400

 

 

 

 

 

—

 

 

 

25,593

 

 

 

1,017,192,150

 

C410 GUAR

 

ZC4-I10G

 

—

 

 

 

15,937

 

 

 

1,738,074,650

 

 

 

ZC4-S10G

 

—

 

 

 

21,648

 

 

 

2,460,289,860

 

 

 

ZC4-10G

 

 

19,292

 

 

—

 

 

 

3,005,965,536

 

 

 

 

 

 

19,292

 

 

 

37,585

 

 

 

7,204,330,046

 

C415 GUAR

 

ZC4-115G

 

—

 

 

 

8,561

 

 

 

941,007,511

 

 

 

ZC4-S15G

 

—

 

 

 

10,422

 

 

 

1,251,914,301

 

 

 

ZC4-15G

 

 

7,927

 

 

—

 

 

 

1,295,005,483

 

 

 

 

 

 

7,927

 

 

 

18,983

 

 

 

3,487,927,295

 

C420 GUAR

 

ZC4-120G

 

—

 

 

 

7,904

 

 

 

987,599,430

 

 

 

ZC4-S20G

 

—

 

 

 

16,507

 

 

 

2,434,362,109

 

 

 

ZC4-20G

 

 

19,228

 

 

—

 

 

 

3,598,217,400

 

 

 

 

 

 

19,228

 

 

 

24,411

 

 

 

7,020,178,939

 

C425 GUAR

 

ZC4-I25G

 

—

 

 

 

2,430

 

 

 

294,114,500

 

 

 

ZC4-S25G

 

—

 

 

 

7,802

 

 

 

1,215,856,000

 

 

 

ZC4-25G

 

 

9,654

 

 

—

 

 

 

1,823,007,899

 

 

 

 

 

 

9,654

 

 

 

10,232

 

 

 

3,332,978,399

 

C430 GUAR

 

ZC4-130G

 

—

 

 

 

2,281

 

 

 

318,531,899

 

 

 

ZC4-S30G

 

—

 

 

 

11,179

 

 

 

1,972,012,120

 

 

 

ZC4-30G

 

 

19,412

 

 

—

 

 

 

3,853,722,392

 

 

 

 

 

 

19,412

 

 

 

13,460

 

 

 

6,144,266,411

 

C435 GUAR

 

ZC4-135G

 

—

 

 

705

 

 

 

96,202,200

 

 

 

ZC4-S35G

 

—

 

 

 

2,783

 

 

 

475,140,100

 

 

 

ZC4-35G

 

 

6,461

 

 

—

 

 

 

1,133,136,500

 

 

 

 

 

 

6,461

 

 

 

3,488

 

 

 

1,704,478,800

 

C5IBR10 GUAR

 

ZC51BRG

 

—

 

 

 

5,724

 

 

 

158,086,400

 

 

 

ZC5SBRG

 

—

 

 

 

2,560

 

 

 

72,502,500

 

 

 

 

 

—

 

 

 

8,284

 

 

 

230,588,900

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

C5IBR5 GUAR

 

ZC5IBRG

 

—

 

 

 

6,269

 

 

 

88,371,400

 

 

 

ZC5SBRG

 

—

 

 

 

2,871

 

 

 

41,931,100

 

 

 

 

 

—

 

 

 

9,140

 

 

 

130,302,500

 

C510 GUAR

 

ZC5G

 

 

6,804

 

 

—

 

 

 

1,399,928,300

 

 

 

ZC5IRG

 

—

 

 

 

8,153

 

 

 

1,053,708,829

 

 

 

ZC5SRG

 

—

 

 

 

8,566

 

 

1,296,583,498

 

 

 

 

 

 

6,804

 

 

 

16,719

 

 

 

3,750,220,627

 

C515 GUAR

 

ZC5G

 

 

3,904

 

 

—

 

 

 

726,550,300

 

 

 

ZC5IRG

 

—

 

 

 

4,948

 

 

 

596,566,569

 

 

 

ZC5SRG

 

—

 

 

 

5,170

 

 

 

714,378,100

 

 

 

 

 

 

3,904

 

 

 

10,118

 

 

 

2,037,494,969

 

C520 GUAR

 

ZC5G

 

 

13,241

 

 

—

 

 

 

2,860,157,476

 

 

 

ZC5IRG

 

—

 

 

 

5,741

 

 

 

856,638,324

 

 

 

ZC5SRG

 

—

 

 

 

10,401

 

 

 

1,895,415,175

 

 

 

 

 

 

13,241

 

 

 

16,142

 

 

 

5,612,210,975

 

C525 GUAR

 

ZC5IR25G

 

—

 

 

 

1,454

 

 

 

209,733,900

 

 

 

ZC5SR25G

 

—

 

 

 

4,704

 

 

 

829,456,100

 

 

 

ZC525G

 

 

6,496

 

 

—

 

 

1,280,726,700

 

 

 

 

 

 

6,496

 

 

 

6,158

 

 

 

2,319,916,700

 

C530 GUAR

 

ZC5G

 

 

9,770

 

 

—

 

 

 

2,184,913,400

 

 

 

ZC5IRG

 

—

 

 

 

1,377

 

 

 

233,495,000

 

 

 

ZC5SRG

 

—

 

 

 

5,519

 

 

1,153,456,300

 

 

 

 

 

 

9,770

 

 

 

6,896

 

 

 

3,571,864,700

 

C535 GUAR

 

ZC5G

 

 

11,895

 

 

—

 

 

 

2,275,287,900

 

 

 

ZC5IRG

 

—

 

 

 

872

 

 

 

157,420,200

 

 

 

ZC5SRG

 

—

 

 

 

4,133

 

 

 

784,905,100

 

 

 

 

 

 

11,895

 

 

 

5,005

 

 

 

3,217,613,200

 

DG25 MOD GUAR

 

ZD-25G

 

 

310

 

 

—

 

 

 

42,122,000

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

 

FORM

 

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

DT65

 

 

ZML-T100

 

 

53

 

 

 

 

 

 

1,589,497

 

 

 

 

ZML-T100NS

 

 

18

 

 

 

 

 

 

605,105

 

 

 

 

ZML-T100P

 

 

17

 

 

 

 

 

 

836,042

 

 

 

 

ZML-T100S

 

 

7

 

 

—

 

 

 

208,228

 

 

 

 

ZML-1000

 

 

—

 

 

18

 

 

 

380,004

 

 

 

 

ZML-1000NS

 

 

—

 

 

7

 

 

 

142,600

 

 

 

 

ZML-1000P

 

 

—

 

 

9

 

 

 

282,843

 

 

 

 

ZML-1000S

 

 

—

 

 

2

 

 

 

24,994

 

 

 

 

ZML-1001

 

 

—

 

 

38

 

 

 

660,213

 

 

 

 

ZML-1001NS

 

 

—

 

 

26

 

 

 

673,830

 

 

 

 

ZML-1001S

 

 

—

 

 

3

 

 

 

104,110

 

 

 

 

 

 

 

95

 

 

103

 

 

 

5,507,465

 

DT65 GUAR

 

 

ZML-T100G

 

 

130

 

 

—

 

 

 

3,906,354

 

 

 

 

ZML-1000G

 

 

—

 

 

29

 

 

 

1,193,818

 

 

 

 

ZML-1001G

 

 

—

 

 

56

 

 

 

1,480,246

 

 

 

 

 

 

 

130

 

 

85

 

 

 

6,580,418

 

D05 BD

 

 

ZML-D5

 

 

14

 

 

—

 

 

 

75,000

 

 

 

 

ZML-1001A

 

 

—

 

 

8

 

 

 

34,000

 

 

 

 

 

 

 

14

 

 

8

 

 

 

109,000

 

D05 BD GUAR

 

 

ZML-D5G

 

 

6

 

 

—

 

 

—

 

 

 

 

ZML-1001AG

 

 

—

 

 

5

 

 

—

 

 

 

 

 

 

 

6

 

 

5

 

 

—

 

D10 BD

 

 

ZML-D10

 

 

21

 

 

—

 

 

 

150,000

 

 

 

 

ZML-1000B

 

 

—

 

 

1

 

 

—

 

 

 

 

ZML-1001B

 

 

—

 

 

17

 

 

—

 

 

 

 

 

 

 

21

 

 

18

 

 

 

150,000

 

D10 BD GUAR

 

 

ZML-D10G

 

 

18

 

 

—

 

 

 

110,000

 

 

 

 

ZML-1001BG

 

 

—

 

 

10

 

 

 

82,500

 

 

 

 

ZML-1002BG

 

 

—

 

 

2

 

 

 

102,000

 

 

 

 

 

 

 

18

 

 

12

 

 

 

294,500

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

EAGLE GUAR 1BR

 

ZPL-104G

 

—

 

 

326

 

 

 

14,537,500

 

 

 

ZPL-105G

 

—

 

 

303

 

 

 

11,148,900

 

 

 

ZPL-154G

 

—

 

 

 

1,260

 

 

 

81,286,000

 

 

 

ZPL-155G

 

—

 

 

418

 

 

 

18,120,600

 

 

 

ZPL-204G

 

—

 

 

 

13,318

 

 

 

754,357,500

 

 

 

ZPL-205G

 

—

 

 

 

8,323

 

 

 

350,361,500

 

 

 

 

 

—

 

 

 

23,948

 

 

 

1,229,812,000

 

EAGLE 10 GUAR

 

ZPL-106G

 

—

 

 

639

 

 

 

52,114,250

 

 

 

ZPL-107G

 

—

 

 

792

 

 

 

55,995,250

 

 

 

ZPL-108G

 

—

 

 

44

 

 

 

1,505,000

 

 

 

ZPLEAGLE10

 

305

 

 

—

 

 

 

21,091,717

 

 

 

ZPLEAGLE10G

 

823

 

 

—

 

 

 

60,540,500

 

 

 

 

 

 

1,128

 

 

 

1,475

 

 

 

191,246,717

 

EAGLE 15 GUAR

 

ZPL-156LG

 

—

 

 

213

 

 

 

21,856,400

 

 

 

ZPL-157LG

 

—

 

 

739

 

 

 

78,569,500

 

 

 

ZPL-158LG

 

—

 

 

15

 

 

 

1,650,000

 

 

 

ZPLEAGLE15

 

123

 

 

—

 

 

 

11,451,000

 

 

 

ZPLEAGLE15G

 

 

1,743

 

—

—

 

 

 

261,818,000

 

 

 

 

 

 

1,866

 

 

967

 

 

 

375,344,900

 

EAGLE 20 GUAR

 

ZPL-206G

 

—

 

 

976

 

 

 

93,694,200

 

 

 

ZPL-207G

 

—

 

 

 

12,335

 

 

 

1,283,767,299

 

 

 

ZPL-208G

 

—

 

 

145

 

 

 

5,573,000

 

 

 

ZPLEAGLE20

 

 

4,785

 

 

—

 

 

 

648,578,450

 

 

 

ZPLEAGLE20G

 

 

14,209

 

 

—

 

 

 

1,994,782,600

 

 

 

 

 

 

18,994

 

 

 

13,456

 

 

 

4,026,395,549

 

EG15 GUAR

 

ZE-151G

 

—

 

 

 

1,114

 

 

 

86,760,876

 

 

 

ZE-15SG

 

—

 

 

953

 

 

 

72,285,826

 

 

 

 

 

—

 

 

 

2,067

 

 

 

159,046,702

 

EG15B GUAR

 

ZE-15BG

 

 

2,427

 

 

—

 

 

 

324,951,000

 

 

 

ZE-151BG

 

—

 

 

 

2,255

 

 

 

200,539,970

 

 

 

ZE-15SBG

 

—

 

 

3,074

 

 

 

302,782,400

 

 

 

 

 

 

2,427

 

 

 

5,329

 

 

 

828,273,370

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

IBR

 

ZML-667

 

—

 

 

18

 

 

 

1,800,000

 

 

 

ZML-677

 

—

 

 

15

 

 

 

800,000

 

 

 

 

 

—

 

 

33

 

 

 

2,600,000

 

IBR GUAR

 

ZML-667G

 

—

 

 

 

3,265

 

 

 

196,284,100

 

 

 

ZML-677G

 

—

 

 

 

2,139

 

 

 

79,407,200

 

 

 

 

 

—

 

 

 

5,404

 

 

 

275,691,300

 

IBR10 GUAR

 

ZBI-10IG

 

—

 

 

 

2,345

 

 

 

257,939,500

 

 

 

ZBI-10SG

 

—

 

 

 

1,289

 

 

 

112,425,600

 

 

 

 

 

—

 

 

 

3,634

 

 

 

370,365,100

 

IBR10BGUAR

 

ZBI-10BI

 

—

 

 

14

 

 

 

2,785,500

 

 

 

ZBI-10BS

 

—

 

 

13

 

 

 

1,510,000

 

 

 

ZBI-10IBG

 

—

 

 

 

3,835

 

 

 

444,584,460

 

 

 

ZBI-10SBG

 

—

 

 

 

2,174

 

 

 

215,559,100

 

 

 

 

 

—

 

 

 

6,036

 

 

 

664,439,060

 

IBR5GUAR

 

ZBI-5IG

 

—

 

 

 

4,795

 

 

 

334,981,900

 

 

 

ZBI-5SG

 

—

 

 

 

2,755

 

 

 

160,454,400

 

 

 

 

 

—

 

 

 

7,550

 

 

 

495,436,300

 

IBR5BGUAR

 

ZBI-5BI

 

—

 

 

9

 

 

 

922,500

 

 

 

ZBI-5BS

 

—

 

 

8

 

 

 

487,300

 

 

 

ZBI-5IBG

 

—

 

 

 

6,417

 

 

 

454,389,600

 

 

 

ZBl-5SBG

 

—

 

 

 

3,795

 

 

 

227,057,000

 

 

 

 

 

—

 

 

 

10,229

 

 

 

682,856,400

 

MOD15

 

ZMT-85(15)

 

19

 

 

—

 

 

 

717,000

 

NL RIDER

 

ZML-867

 

—

 

 

12

 

 

 

797,000

 

 

 

ZML-877

 

—

 

 

9

 

 

 

425,000

 

 

 

ZML-911 W

 

—

 

 

2

 

 

 

138,000

 

 

 

 

 

—

 

 

23

 

 

 

1,360,000

 

PAIDUP

 

CT1(86)REV

 

1,137

 

 

—

 

 

 

10,736,000

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

PLUSIBR10 GUAR

 

ZCP-10IBG

 

—

 

 

 

4,855

 

 

 

499,319,700

 

 

 

ZCP-10SBG

 

—

 

 

 

2,685

 

 

 

251,027,200

 

 

 

 

 

—

 

 

 

7,540

 

 

 

750,346,900

 

PLUSIBR5 GUAR

 

ZCP-5IBG

 

—

 

 

 

6,955

 

 

 

431,095,250

 

 

 

ZCP-5SBG

 

—

 

 

 

3,933

 

 

 

215,952,850

 

 

 

 

 

—

 

 

 

10,888

 

 

 

647,048,100

 

PLUS10 GUAR

 

ZCP-II0G

 

—

 

 

 

4,809

 

 

 

482,851,100

 

 

 

ZCP-S10G

 

—

 

 

 

5,855

 

 

 

635,316,800

 

 

 

ZCP-10G

 

 

4,292

 

 

—

 

 

 

700,626,178

 

 

 

 

 

 

4,292

 

 

 

10,664

 

 

 

1,818,794,078

 

PLUS15 GUAR

 

ZCP-I15G

 

—

 

 

 

2,683

 

 

 

269,514,700

 

 

 

ZCP-S15G

 

—

 

 

 

3,654

 

 

 

420,232,100

 

 

 

ZCP-15G

 

 

2,987

 

 

—

 

 

 

488,606,275

 

 

 

 

 

 

2,987

 

 

 

6,337

 

 

 

1,178,353,075

 

PLUS20 GUAR

 

ZCP-I20G

 

—

 

 

 

2,078

 

 

 

253,628,593

 

 

 

ZCP-S20G

 

—

 

 

 

5,683

 

 

 

808,025,600

 

 

 

ZCP-20G

 

 

6,822

 

 

—

 

 

 

1,240,014,085

 

 

 

 

 

 

6,822

 

 

 

7,761

 

 

 

2,301,668,278

 

PLUS25 GUAR

 

ZCP-I25G

 

—

 

 

927

 

 

 

128,032,395

 

 

 

ZCP-S25G

 

—

 

 

 

6,019

 

 

 

932,885,668

 

 

 

ZCP-25G

 

 

9,918

 

 

—

 

 

 

1,743,332,95

 

 

 

 

 

 

9,918

 

 

 

6,946

 

 

 

2,804,251,013

 

SPECIAL CASES

 

NO FORMCART

 

1

 

 

—

 

 

 

58,000

 

 

 

ZML-T95

 

2

 

 

—

 

 

 

65,000

 

 

 

 

 

3

 

 

—

 

 

 

123,000

 

T10 JUMBO GUAR

 

ZML-967G

 

—

 

 

439

 

 

 

47,324,500

 

 

 

ZML-977G

 

—

 

 

252

 

 

 

23,505,000

 

 

 

ZML-987G

 

—

 

 

4

 

 

 

460,000

 

 

 

 

 

—

 

 

695

 

 

 

71,289,500

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 1 - Identification of Reinsured Policies

 

PLAN

 

FORM

 

POLICIES

 

 

RIDERS

 

 

FACE AMOUNT

 

T10 JUMBO RIDER

 

ZML-967

 

—

 

 

411

 

 

 

50,977,000

 

 

 

ZML-977

 

—

 

 

322

 

 

 

33,721,000

 

 

 

ZML-987

 

—

 

 

6

 

 

 

295,000

 

 

 

 

 

—

 

 

739

 

 

 

84,993,000

 

T15 BD

 

ZML-T15

 

20

 

 

—

 

 

 

2,402,000

 

 

 

ZML-877B

 

—

 

 

12

 

 

 

925,000

 

 

 

ZML-887B

 

—

 

 

3

 

 

 

75,000

 

 

 

 

 

20

 

 

15

 

 

 

3,402,000

 

T15 BD GUAR

 

ZML-T15G

 

20

 

 

—

 

 

 

2,980,000

 

 

 

ZML-867BG

 

—

 

 

1

 

 

 

50,000

 

 

 

ZML-877BG

 

—

 

 

8

 

 

 

537,000

 

 

 

ZML-887BG

 

—

 

 

2

 

 

 

80,000

 

 

 

 

 

20

 

 

11

 

 

 

3,647,000

 

T20 BD

 

ZML-T20

 

 

5,487

 

 

—

 

 

 

827,329,725

 

 

 

ZML-867C

 

—

 

 

83

 

 

 

6,676,000

 

 

 

ZML-877C

 

—

 

 

 

3,597

 

 

 

333,483,646

 

 

 

ZML-887C

 

—

 

 

88

 

 

 

3,420,000

 

 

 

 

 

 

5,487

 

 

 

3,768

 

 

 

1,171,009,371

 

T20 BD GUAR

 

ZML-T20G

 

 

6,737

 

 

—

 

 

 

904,937,860

 

 

 

ZML-867CG

 

—

 

 

79

 

 

 

6,080,500

 

 

 

ZML-877CG

 

—

 

 

 

4,019

 

 

 

362,165,650

 

 

 

ZML-887CG

 

—

 

 

101

 

 

 

4,457,000

 

 

 

 

 

 

6,737

 

 

 

4,199

 

 

 

1,277,641,010

 

T2000 GUAR

 

ZPL-125

 

—

 

 

688

 

 

 

85,680,100

 

 

 

ZPL-M25

 

 

5,248

 

 

—

 

 

 

713,772,800

 

 

 

ZPL-S25

 

—

 

 

 

3,333

 

 

 

398,145,300

 

 

 

 

 

 

5,248

 

 

 

4,021

 

 

 

1,197,598,200

 

 

 

 

 

 

235,417

 

 

 

492,947

 

 

 

85,535,930,004

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit II

Third Party Reinsurance

 

 

 

 

II-1

--------------------------------------------------------------------------------

 

EXHIBIT II - THIRD PARTY REINSURANCE

 

REINSURER / AGREEMENT

 

TYPE*

 

POLICIES

 

RIDERS

 

REINSURANCE

AMOUNT

 

CANADA LIFE ASSURANCE

 

CO

 

191

 

 

1,148

 

 

13,926,380

 

CANADA LIFE ASSURANCE

 

QS

 

 

44,910

 

 

61,645

 

 

1,421,777,969

 

EMPLOYERS RE CORP

 

CO

 

 

12,416

 

 

8,179

 

 

58,153,874

 

EMPLOYERS RE CORP

 

QS

 

 

45,101

 

 

62,792

 

 

2,868,430,916

 

LIFE REASSURANCE CORP

 

CO

 

 

15,032

 

 

9,591

 

 

206,405,521

 

LINCOLN NATIONAL LIFE

 

CO

 

 

15,039

 

 

9,593

 

 

220,103,102

 

MERCANTILE & GENERAL

 

QS

 

 

39,961

 

 

55,585

 

 

2,521,532,024

 

MUNICH AMERICAN RE

 

QS

 

34

 

29

 

 

11,680,642

 

MUNICH RE

 

CO

 

836

 

595

 

 

11,664,963

 

MUNICH RE CANADA

 

QS

 

 

45,101

 

 

62,792

 

 

1,437,424,031

 

OXFORD LIFE INS CO

 

CO

 

 

13,575

 

 

8,913

 

 

49,174,113

 

REASSURANCE OF HANOVER

 

CO

 

 

13,568

 

 

8,910

 

 

14,545,100

 

RGA LIFE OF CANADA

 

QS

 

 

37,186

 

 

51,432

 

 

1,205,690,267

 

SCOR GLOBAL LIFE

 

QS

 

 

45,101

 

 

62,793

 

 

2,869,209,192

 

SCOR GLOBAL LIFE

 

XL

 

 

5,407

 

 

9,551

 

 

1,795,731,417

 

SWISS RE

 

CO

 

 

13,385

 

 

8,747

 

 

59,447,480

 

COMPANY TOTALS

 

 

 

 

 

 

 

 

 

 

14,764,896,991

 

 

*

CO = COINSURANCE

XL = EXCESS LOSS YRT

QS = QUOTA SHARE YRT

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit III

Form of Monthly Report

[See attached]

 

 

 

 

III-1

--------------------------------------------------------------------------------

 

 

SCWRAI--1

CO0404

 

MONTHLY SETTLEMENT REPORT

 

 

REPORT DATE:

 

01/01/10

RUN DATE:

02/05/10

 

DEAL - DL01

 

 

REPORT PAGE:

 

1

RUN TIME:

11:31:14

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

REPORTING MONTH

 

DIRECT PREMIUMS

 

 

ETPR PREMIUMS

 

 

DIRECT CLAIMS

 

 

ETPR CLAIMS

 

01-2010

 

 

126,132,469

 

 

 

30,558,042

 

 

 

2,301,669

 

 

 

—

 

 

 

--------------------------------------------------------------------------------

 

 

SCWPE 2--1

CO0404

SECURITIZATION AND CO-INSURANCE

REPORT DATE:

01-31-10

RUN DATE:

02/18/10

DL01 - EXHIBIT OF LIFE INSURANCE

REPORT PAGE:

1

RUN TIME:

08:23:33

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

DIRECT

 

 

REINSURANCE

 

 

 

POLICY CNT

 

 

COVERAGES

 

 

AMOUNT

 

 

POLICY CNT

 

 

COVERAGES

 

 

AMOUNT

 

1-IN FORCE AT PERIOD

   01-01-10

 

1, 991,874

 

 

 

5,095,241

 

 

428,615.315,416

 

 

 

1,720,510

 

 

 

3,755,831

 

 

 

303,825,719,227

 

4-REVIVED DURING

   YEAR

 

 

6,441

 

 

 

20,523

 

 

1,126,054,646

 

 

 

5,512

 

 

 

16,378

 

 

 

706,359,127

 

5-INCREASED (NET)

 

—

 

 

—

 

 

 

313,952,140

 

 

—

 

 

—

 

 

 

268,728,366

 

6-FROZEN RELEASE

 

—

 

 

—

 

 

—

 

 

 

1,855

 

 

 

3,524

 

 

 

309,130,393

 

7-SUBTOTAL (2-6)

 

 

6,441

 

 

 

20,523

 

 

 

1,440,006,786

 

 

 

7,367

 

 

 

19,902

 

 

 

1,284,217,886

 

DEDUCTIONS DURING

   YEAR:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9-DEATH

 

149

 

 

599

 

 

 

30,590,185

 

 

116

 

 

445

 

 

 

17,970,323

 

10-MATURITY

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

12-EXPIRY

 

318

 

 

 

2,988

 

 

 

78,912,614

 

 

37

 

 

586

 

 

 

9,599,122

 

13-SURRENDER

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

14-LAPSE

 

 

27,193

 

 

 

68,637

 

 

 

5,763,811,252

 

 

 

24,840

 

 

 

49,818

 

 

 

4,016,592,114

 

15-CONVERSION

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

16-DECREASED (NET)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

17-FROZEN

 

—

 

 

—

 

 

—

 

 

 

2,137

 

 

 

4,501

 

 

 

375,805,383

 

20-TOTAL (9-19)

 

 

27,660

 

 

 

72,224

 

 

 

5,873,314,050

 

 

 

27,130

 

 

 

55,350

 

 

 

4,419,966,942

 

21-IN FORCE AT PERIOD

   01-31-10

 

 

1,970,655

 

 

 

5,043,538

 

 

 

424,181,960,151

 

 

 

1,700,747

 

 

 

3,720,383

 

 

 

300,689,970,172

 

NUMBER OF ERRORS

   FOUND

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24-ERROR

   COUNTS/AMOUNTS

 

—

 

 

2

 

 

 

48,000

 

 

—

 

 

—

 

 

—

 

 

 

--------------------------------------------------------------------------------

 

 

SCWPE 2--1

CO0404

 

SECURITIZATION AND CO-INSURANCE

 

REPORT DATE:

01-31-10

RUN DATE:

02/18/10

 

DL01 - ADDITIONAL INFORMATION ON ORDINARY INSURANCE

 

REPORT PAGE:

2

RUN TIME:

08:23:33

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

IN FORCE AT END OF PERIOD 01-31-10

 

 

 

POLICY COUNT

PHASE 1

 

 

FACS AMOUNT

PHASE 1

 

 

COVERAGES

NON-PHASE 1

 

 

FACE AMOUNT

NON-PHASE 1

 

PLAN TYPE 5 OR A

 

 

1,693,683

 

 

 

198,432,574,293

 

 

 

2,014,519

 

 

 

128,176,712,307

 

PLAN TYPE 8 OR B

 

276, 962

 

 

 

36,394,276,834

 

 

 

1,058,364

 

 

 

61,178,118,168

 

—TOTALS—

 

 

1,970,645

 

 

 

234,826,851,127

 

 

 

3,072,883

 

 

 

189,354,830,475

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWPE2--1

CO0404

 

SECURITIZATION AND CO-INSURANCE

 

 

REPORT DATE:

01-31-10

 

RUN DATE:

02/18/10

 

DL01 - POLICIES WITH DISABILITY PROVISION

 

 

REPORT PAGE:

3

 

RUN TIME:

08:23:33

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

DIRECT

 

 

REINSURANCE

 

 

 

 

POLICY CNT

 

 

COVERAGES

 

 

AMOUNT

 

 

POLICY CNT

 

 

COVERAGES

 

 

AMOUNT

 

 

WAIVER

 

 

638,092

 

 

 

1,423,326

 

 

 

133,106,637,753

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

--------------------------------------------------------------------------------

 

 

SCWPE3--1

 

 

CO0404

 

 

SECURITIZATION AND CO-INSURANCE

 

 

 

REPORT  DATE:

01-31-10

 

RUN DATE:

 

 

02/18/10

 

 

DEAL-DL01 CO-04 POLICY EXHIBIT ERRORS

 

 

 

REPORT  PAGE:

1

 

RUN TIME:

 

 

08:23:33

 

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEAL

 

 

 

 

 

 

 

 

 

 

ISSU

 

 

PLAN

 

 

PL

 

 

POL

 

COVG

 

 

 

 

 

ACTIVE

 

 

 

 

 

 

 

 

ID

 

 

CONTRACT

 

 

PH

 

TY

 

 

YBAR

 

 

CODB

 

 

TY

 

 

BASE

 

CNT

 

 

FACE AMOUNT

 

 

WP RSERVE

 

 

ERROR  MESSAGE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DL01

 

 

0433472468

 

 

02

 

D0

 

 

2005

 

 

8DHW00

 

 

HI

 

 

0

 

l

 

 

24.000.00

 

 

0.00

 

 

TERM ON SPIN NOT ON VPIN

 

 

 

NOTON TERM VALN COV

 

DL01

 

 

0433472468

 

 

04

 

D0

 

 

2005

 

 

8DHW20

 

 

HI

 

 

0

 

1

 

 

24,000.00

 

 

0.00

 

 

TERM ON SPIN NOT ON VPIN

 

 

 

NOT ON TERMVALN COV

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

#

 

LINES PRINTED

 

 

 

 

 

 

 

 

0

 

 

 

 

48,000.00

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

1

 

 

#

 

CONTRACTS

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA3—1  CO0404

 

 

 

 

 

 

RESERVE REPORT

 

REPORT DATE:

01/01/10

RUN DATE:  02/05/10

 

 

 

 

 

 

DBAL -- DL01

 

REPORT PAGE:

1

RUN TIME:  12:15:42

 

 

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REPORTING MONTH

 

 

DIRECT RESEVES

 

KTPR RESRVES

 

ECONOMIC RESERVES

 

 

 

 

01-2010

 

 

 

3,909,517,510

 

 

614,543,893

 

0

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA2—1  CO0404

 

 

 

 

 

 

CLAIM RESERVE REPORT

 

REPORT DATE:

01/01/10

RUN DATE:  02/05/10

 

 

 

 

 

 

DEAL - DL01

 

REPORT PAGE:

1

RUN TIME:  11:46:41

 

 

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REPORTING MONTH

 

 

DIRECT PENDING

 

ETPR PENDING

 

ETPR RECOVERABLES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

01-2010

 

 

 

27,814,536

 

 

15,684,264

 

395,733

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA4--3

CO0404

 

DETAIL PENDING CLAIMS AND RECOVERABLES

 

 

 

 

REPORT DATE:

 

01/01/10

 

RUN DATE:

02/05/10

 

DEAL - DL01

 

 

 

 

REPORT PAGE:

 

1

 

RUN TIME:

11:59:35

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

POLICY

PHASE

 

PLAN

CLAIM

DATE OF

DATE OF

CAUSE OF

FACE

 

DIRECT

 

ETPR

 

ETPR

 

NUMBER

 

NUM

 

CODE

 

NUMBER

 

DEATH

 

ISSUE

 

DEATH

 

AMOUNT

 

 

PENDING

 

 

PENDING

 

RECVRBLS

 

10033599

 

03

 

505920

 

2010008011

 

2010-01-07

 

1990-08-22

 

 

 

50,000

 

 

38,800

 

 

5,238

 

0

 

10074809

 

01

 

524000

 

2010013005

2010-01-11

1989-01-02

 

 

50,000

 

 

38,800

 

 

29,100

 

0

 

10159273

 

01

 

890800

 

2010014001

2010-01-07

1992-09-16

 

 

5,923

 

 

4,596

 

 

3,447

 

0

 

10201258

 

01

 

890100

2010015017

2010-01-12

2003-10-16

 

6,070

 

 

4,710

 

 

1,408

 

0

 

10243560

 

01

 

544400

2010019032

2010-01-17

1992-03-15

 

 

100,000

 

 

77,600

 

 

19,400

 

0

 

10243560

 

03

 

544900

2010019032

2010-01-17

1992-03-15

 

 

100,000

 

 

77,600

 

 

19,400

 

0

 

10245015

 

01

 

591800

2010011032

2010-01-06

1982-03-15

428

 

21,000

 

 

16,296

 

9,778

 

0

 

10256311

 

01

 

5W8120

2010011078

2010-01-07

1997-04-28

 

 

7,500

 

5,820

 

 

3,492

 

0

 

10262626

 

01

 

524000

2010021046

2010-01-18

1988-07-10

 

 

100,000

 

 

77,600

 

42,680

 

0

 

10264825

 

01

 

5X9200

2010020015

2010-01-20

1996-06-20

 

 

50,000

 

 

38,800

 

 

23,280

 

0

 

10288526

 

02

 

596320

2010014028

2010-01-11

1982-07-28

191

 

10,000

 

 

7,760

 

0

 

0

 

10306174

 

01

 

5W8100

2010019018

2010-01-15

1997-07-21

 

 

50,000

 

 

38,800

 

 

20,042

 

0

 

10315082

 

01

 

5J400C

2010013008

2010-01-11

1994-08-05

 

 

25,000

 

 

19,400

 

 

11,594

 

0

 

10324492

 

01

 

5CCE00

2010020066

2010-01-16

2008-06-28

038

 

150,000

 

 

89,604

 

 

29,868

 

0

 

10352943

 

02

 

596320

2010006026

2010-01-05

1982-09-14

518

 

20,000

 

 

15,520

 

0

 

0

 

10361628

 

01

 

591820

2010008025

2010-01-01

1982-10-12

 

 

10,000

 

 

7,760

 

 

4,656

 

0

 

10380542

 

01

 

890800

2010013021

2010-01-06

1997-11-25

 

 

8,983

 

 

6,971

 

 

4,182

 

0

 

10393681

 

02

 

5J4320

2010019072

2010-01-16

1994-11-18

710

 

10,000

 

 

7,760

 

0

 

0

 

10401553

 

01

 

890800

2010012045

2010-01-09

1998-01-08

174

 

5,741

 

 

4,455

 

 

1,782

 

0

 

10406941

 

01

 

8CK900

2010011040

2010-01-03

1998-01-15

414

 

20,000

 

15,520

 

 

9,310

 

0

 

10406941

 

02

 

5CD700

2010011040

2010-01-03

1998-01-15

414

 

15,000

 

11,640

 

 

6,982

 

0

 

10408069

 

01

 

502500

2010019052

2010-01-12

1991-10-09

 

 

70,000

 

 

54,320

 

 

23,280

 

0

 

10430006

 

01

 

5CP800

2010012047

2010-01-03

1998-01-09

162

 

100,000

 

 

77,600

 

 

31,040

 

0

 

10459375

 

01

 

5H0700

2010004053

2010-01-01

1995-04-25

201

 

30,000

 

23,280

 

 

9,247

 

0

 

10542735

 

01

 

5CA120

2010019002

2010-01-04

1998-06-20

 

 

25,000

 

 

19,400

 

 

7,760

 

0

 

10542764

 

03

 

596320

2010021045

2010-01-20

1983-07-15

 

 

10,000

 

 

7,760

 

0

 

0

 

10553913

 

01

 

890800

2010022023

2010-01-15

1998-08-17

189

 

3,853

 

 

2,990

 

 

1,196

 

0

 

10564255

 

01

 

591820

2010011007

2010-01-09

1983-09-07

436

 

53,000

 

 

41,128

 

 

16,451

 

0

 

10564255

 

02

 

511400

2010011007

2010-01-09

1983-09-07

436

 

47,000

 

 

36,472

 

14,589

 

0

 

10582355

 

01

 

8CK900

2010015013

2010-01-14

1998-08-16

 

 

15,000

 

 

11,640

 

 

4,656

 

0

 

10583217

 

01

 

8CW900

2010008017

2010-01-07

1998-07-16

162

 

1,000

 

776

 

0

 

0

 

10583217

 

03

 

5DBJ00

2010008017

2010-01-07

2008-07-16

162

 

249,000

 

 

148,743

 

0

 

0

 

10610939

 

01

 

890800

2010007029

2010-01-02

1998-10-12

331

 

3,884

 

 

3,014

 

 

1,206

 

0

 

10627216

 

01

 

5CC100

2010013038

2010-01-11

1998-10-15

038

 

150,000

 

 

116,400

 

 

46,560

 

0

 

10676543

 

01

 

890800

2010004011

2010-01-03

1998-10-25

162

 

3,994

 

0

 

0

 

 

1,280

 

10699541

 

01

 

5CBY00

2010007020

2010-01-02

2007-03-01

162

 

20,000

 

 

14,187

 

 

5,675

 

0

 

10721085

 

01

 

5AOQ00

2010019027

2010-01-14

1999-03-15

414

 

75,000

 

 

58,200

 

 

23,280

 

0

 

10727528

 

04

 

5J4300

2010006043

2010-01-01

1994-03-20

428

 

12,000

 

 

9,312

 

0

 

0

 

10728745

 

01

 

5GO020

2010011081

2010-01-10

1999-05-03

 

 

25,000

 

 

19,400

 

 

7,760

 

0

 

10747872

 

03

 

5CH920

2010004007

2010-01-02

1999-04-03

 

 

50,000

 

 

38,800

 

0

 

0

 

10760679

 

01

 

5CCB00

2010005030

2010-01-03

2008-05-05

206

 

150,000

 

 

89,604

 

35,842

 

0

 

10774060

 

01

 

5J4020

2010019049

2010-01-19

1994-06-01

 

 

15,000

 

 

11,640

 

 

1,242

 

0

 

10826844

 

01

 

5X9000

2010021005

2010-01-10

1996-08-13

 

 

25,000

 

 

19,400

 

 

7,760

 

0

 

10848452

 

01

 

5AOQ00

2010019005

2010-01-17

1999-09-17

 

 

100,000

 

 

77,600

 

 

31,040

 

0

 

10886692

 

01

 

575800

2010011031

2010-01-03

2009-12-07

 

 

30,000

 

16,879

 

 

7,596

 

0

 

10944614

 

03

 

5DBS00

2010019057

2010-01-16

2009-11-05

 

 

100,000

 

 

56,264

 

0

 

0

 

10946327

 

02

 

5APU000

2010013028

2010-01-03

1999-11-25

 

 

22,000

 

 

17,072

 

0

 

0

 

10951420

 

01

 

592020

2010011052

2010-01-04

1984-12-15

162

 

30,000

 

 

23,280

 

 

9,312

 

0

 

10951420

 

02

 

596120

2010011052

2010-01-04

1984-12-15

162

 

30,000

 

 

23,280

 

 

9,312

 

0

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA4--3

CO0404

 

DETAIL PENDING CLAIMS AND RECOVERABLES

 

 

 

 

REPORT DATE:

 

01/01/10

 

RUN DATE:

02/05/10

 

DEAL - DL01

 

 

 

 

REPORT PAGE:

 

14

 

RUN TIME:

11:59:35

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

POLICY

PHASE

 

PLAN

CLAIM

DATE OF

DATE OF

CAUSE OF

 

FACE

 

DIRECT

 

ETPR

 

ETPR

 

NUMBER

 

NUM

 

CODE

 

NUMBER

 

DEATH

 

ISSUE

 

DEATH

 

AMOUNT

 

PENDING

 

PENDING

 

RECVRBLS

 

88447761

 

01

 

5EQQ00

 

2010011063

 

2010-01-06

 

2008-05-15

 

 

 

 

200,000

 

 

119,472

 

 

107,525

 

0

 

88447761

 

02

 

8ET500

2010011063

2010-01-06

2008-05-15

 

 

 

 

20,000

 

 

11,947

 

 

10,752

 

0

 

88469291

 

01

 

5EOU00

2010019084

2010-01-15

2008-07-02

 

 

 

 

100,000

 

 

59,736

 

 

53,762

 

0

 

68470903

 

02

 

5EMQ20

2010011009

2010-01-08

2008-07-10

162

 

 

250,000

 

 

149,340

 

 

134,406

 

0

 

88473430

 

03

 

5EMF00

2010004074

2010-01-03

2008-06-15

 

 

 

 

40,000

 

 

23,894

 

 

21,505

 

0

 

88473430

 

04

 

8EUF00

2010004074

2010-01-03

2008-06-15

 

 

 

 

4,000

 

 

2,389

 

 

2,151

 

0

 

88478624

 

01

 

5EKZ00

2010007018

2010-01-07

2008-08-03

 

 

 

 

25,000

 

 

14,934

 

 

13,441

 

0

 

88520471

 

01

 

5EHG20

2010004082

2010-01-03

2008-10-03

 

 

 

 

50,000

 

 

29,868

 

 

26,881

 

0

 

88524500

 

03

 

5FSC00

2010019042

2010-01-19

2008-11-16

 

 

 

 

10,000

 

 

5,974

 

0

 

0

 

88536550

 

05

 

5PSC00

2010006018

2010-01-05

2009-01-15

 

 

 

 

25,000

 

14,066

 

0

 

0

 

88547685

 

02

 

5FSC00

2010021004

2010-01-20

2008-12-03

 

 

 

 

10,000

 

 

5,974

 

0

 

0

 

88564226

 

01

 

5EBP00

2010011051

2010-01-09

2009-02-03

 

 

 

 

110,000

 

 

61,890

 

 

55,701

 

0

 

88610435

 

01

 

5EOW00

2010004003

2010-01-02

2009-06-20

394

 

 

200,000

 

 

112,528

 

 

101,275

 

0

 

88612282

 

02

 

5EME00

2010011058

2010-01-11

2009-05-15

303

 

 

25,000

 

 

14,066

 

 

12,659

 

0

 

88613736

 

02

 

5EQC20

2010005053

2010-01-04

2009-06-28

 

 

 

 

150,000

 

 

84,396

 

 

75,956

 

0

 

88636116

 

01

 

5EQM20

2010008019

2010-01-07

2009-07-10

485

 

 

75,000

 

 

42,198

 

 

37,978

 

0

 

88645747

 

03

 

5ESC00

2010012008

2010-01-10

2009-08-15

 

 

 

 

20,000

 

 

11,253

 

0

 

0

 

88650924

 

01

 

5ELA00

2010011075

2010-01-11

2009-08-28

 

 

 

 

150,000

 

 

84,396

 

75,956

 

0

 

88660572

 

02

 

5EQE00

2010005042

2010-01-03

2009-11-17

 

 

 

 

150,000

 

 

84,396

 

 

75,956

 

0

 

88681261

 

01

 

5EL300

2010005007

2010-01-04

2009-10-06

E81

 

'50,000

 

0

 

0

 

 

36,041

 

88681261

 

02

 

5EIE00

2010005007

2010-01-04

2009-10-06

E81

 

100,000'

 

0

 

0

 

 

72,083

 

88706522

 

01

 

5EQV00

2010019014

2010-01-15

2009-12-15

 

 

 

 

270,000

 

 

151,913

 

 

136,722

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR FACE AMOUNT

 

 

38,829,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR DIRECT PENDING

 

 

27,814,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR ETPR PENDING

 

 

15,684,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR ETPR RECOVERABLES

 

 

395,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA4--1

CO0404

 

BULK CLAIM RESERVE

 

 

 

 

REPORT DATE:

01/01/10

RUN DATE:

02/05/10

 

DEAL - DL01

 

 

 

 

REPORT PAGE:

1

RUN TIME:

11:59:35

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

POLICY

PHASE

 

PLAN

CLAIM

DATE OF

DATE OF

 

CAUSE OF

 

FACE

 

DIRECT AMOUNTS

ETPR AMOUNTS

NUMBER

 

NUM

 

CODE

 

NUMBER

 

DEATH

 

ISSUE

 

DEATH

 

AMT

 

PENDING

 

INT PD

 

RECVRBLS

 

INT PD

10676543

 

01

 

890800

 

2010004011

 

2010-01-03

 

1998-10-25

 

162

 

 

3,994

 

 

3,195

 

6

 

0

 

0

11158035

 

01

 

551900

2010004077

2010-01-01

2000-05-25

 

332

 

 

5,000

 

 

4,000

 

2

0

0

11341011

 

01

 

5AOQ20

2010008028

2010-01-07

2000-04-26

 

585

 

31,000

 

 

24,800

 

0

0

0

12504146

 

01

 

521200

2010012032

2010-01-02

1988-02-03

 

153

 

 

50,000

 

 

40,000

 

0

0

0

12672450

 

01

 

5CBY0C

2010007033

2010-01-03

2007-12-09

 

496

 

 

40,000

 

 

32,000

 

0

0

0

12774976

 

01

 

5CCB00

2010011098

2010-01-07

2008-02-20

 

162

 

 

100,000

 

 

80,000

 

25

0

0

21731538

 

01

 

544300

2010005017

2010-01-04

1991-08-15

 

157

 

 

1,000

 

800

 

0

0

0

21731538

 

02

 

5DBJ00

2010005017

2010-01-04

2004-10-15

 

157

 

 

174,000

 

 

139,200

 

0

0

0

30060583

 

02

 

500500

2010011072

2010-01-09

1992-10-28

 

348

 

 

10,000

 

 

8,000

 

0

0

0

30060583

 

03

 

528400

2010011072

2010-01-09

1992-10-28

 

348

 

 

15,000

 

 

12,000

 

0

0

0

30458619

 

03

 

5J4300

2010005039

2010-01-04

1994-08-31

 

436

 

 

10,000

 

 

8,000

 

0

0

0

30483657

 

01

 

5H5420

2010004040

2010-01-01

1994-03-20

 

189

 

 

100,000

 

 

80,001

 

0

0

0

30483657

 

02

 

5J9420

2010004040

2010-01-01

1994-03-20

 

189

 

 

50,000

 

 

39,999

 

0

0

0

30483657

 

03

 

813820

2010004040

2010-01-01

1994-03-20

 

189

 

 

75,000

 

 

60,000

 

0

0

0

30934047

 

04

 

5Y0700

2010004093

2010-01-02

1996-09-25

 

895

 

 

25,000

 

 

20,000

 

30

0

0

30982807

 

01

 

5H0700

2010004001

2010-01-03

1995-12-01

 

414

 

 

10,000

 

 

8,000

 

0

0

0

30982807

 

02

 

8I1500

2010004001

2010-01-03

1995-12-01

 

414

 

 

15,000

 

 

12,000

 

0

0

0

31001327

 

01

 

5J4000

2010004025

2010-01-01

1995-11-12

 

410

 

 

30,000

 

 

24,000

 

7

0

0

32000162

 

01

 

5CA100

2010004010

2010-01-03

1999-10-13

 

294

 

 

15,000

 

 

12,000

 

0

0

0

32373244

 

01

 

5ALH0C

2010004099

2010-01-02

2001-02-21

 

203

 

 

100,000

 

 

80,000

 

158

0

0

32373244

 

02

 

8ATN00

2010004099

2010-01-02

2001-02-21

 

203

 

 

80,000

 

 

64,000

 

126

0

0

32716430

 

02

 

5BOC2C

2010013044

2010-01-08

2002-05-20

 

194

 

 

25,000

 

 

12,924

 

0

0

0

33211197

 

01

 

5DDM20

2009355030

2009-12-19

2004-07-01

 

441

 

 

30,000

 

 

24,000

 

0

0

0

33349970

 

01

 

5DCB20

2010004044

2010-01-03

2005-02-15

 

038

 

 

15,000

 

 

12,000

 

0

0

0

88681261

 

01

 

5BLG00

2010005007

2010-01-04

2009-10-06

 

881

 

 

50,000

 

 

40,000

 

46

0

0

88681261

 

02

 

5B1B00

2010005007

2010-01-04

2009-10-06

 

881

 

 

100,000

 

 

80,000

 

92

0

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR FACE AMOUNT

 

 

 

 

1,159,994

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR DIRECT BENEFIT PAID

 

 

 

 

872,919

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR DIRECT INTEREST PAID

 

 

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR ETPR BENEFIT PAID

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR ETPR INTEREST PAID

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL FOR WAIVER BENEFITS

 

1,428,153

 

 

DETAIL NOT PROVIDED

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCWRA4--2

 

 

CO3434

 

 

 

 

 

 

 

 

NONBULK CLAIM RESERVE

 

 

 

 

 

REPORT DATE:

 

 

01/01/10

 

RUN DATE:

 

 

02/05/10

 

 

 

 

 

 

 

 

DEAL - DL01

 

 

 

 

 

REPORT PAGE:

 

 

1

 

RUN TIME:

 

 

11:59:35

 

 

 

 

 

 

 

 

NATIONAL BENEFIT LIFE INS. CO.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

POLICY

 

 

PHASE

 

 

PLAN

 

 

CLAIM

 

 

DATE OF

 

 

DATE OF

 

 

CAUSE OF

 

 

FACE AMT

 

 

DIRECT AMOUNTS

 

 

ETPR AMOUNTS

 

NUMBER

 

 

NUM

 

 

CODE

 

 

NUMBER

 

 

DEATH

 

 

ISSUE

 

 

DEATH

 

 

 

 

 

BENE PD

 

 

INT PD

 

 

BKNE PD

 

 

INT PD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALL TOTALS EQUAL ZERO, NO REPORT TO PRINT.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit IV

Form of Monthly Account Balance Report

[See attached]

 

 

IV-1

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

 

ORIG

 

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

 

CGAP GENERAL LEDGER SUMMARY – CURRECT MONTH

 

 

REPORT PAGE:

1

 

RUN TIME: 00:54:11

 

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

 

ENDING
BALANCE

 

310502 Lf Ren Pm-Non-Funded SW Asmd

 

 

0.00

 

39,577,171.15-

 

 

39,577,171.15-

 

LF REN PM-NON-FUNDED

 

 

0.00

 

39,577,171.15-

 

 

39,577,171.15-

 

LF REN-WAIVE OF PREM

 

 

0.00

 

0.00

 

 

0.00

 

310512 Lf Ren Rt Ck-Waiv Pm Asmd

 

 

0.00

 

11,942.76

 

 

11,942.76

 

LF RN RT CK-WAIV PRM

 

 

0.00

 

11,942.76

 

 

11,942.76

 

DIRECT PREMIUM REN

 

 

0.00

 

39,565,228.39-

 

 

39,565,228.39-

 

310002 Lf 1st Yr Prm SW Asmd

 

 

0.00

 

5,404,179.79-

 

 

5,404,179.79-

 

LF 1ST YR PREM

 

 

0.00

 

5,404,179.79-

 

 

5,404,179.79-

 

310007 1 Yr Waiv Pm Retnd It SW Asmd

 

 

0.00

 

35,782.58

 

 

35,782.58

 

1YR WAIV PM RETND LF

 

 

0.00

 

35,782.58

 

 

35,782.58

 

310022 Over and Short SW Asmc

 

 

0.00

 

1,012.50

 

 

1,012.50

 

OVER AND SHORT

 

 

0.00

 

1,012.50

 

 

1,012.50

 

DIRECT PREM 1ST YR

 

 

0.00

 

5,367,384.71-

 

 

5,367,384.71-

 

DIRECT PREMIUMS

 

 

0.00

 

44,932,613.10-

 

 

44,932,613.10-

 

CEDED PREM FROZEN

 

 

0.00

 

0.00

 

 

0.00

 

311504 Lf Ren Pm-Re-Cd Una SW Asmd

 

 

0.00

 

488,634.78

 

 

488,634.78

 

LF REN PM-RE-CD UNAF

 

 

0.00

 

488,634.78

 

 

488,634.78

 

LF REN PRM YRT CEDED

 

 

0.00

 

0.00

 

 

0.00

 

311517 Lf Ren Prm Yrt Cad SW Asmd

 

 

0.00

 

193,277.70

 

 

193,277.70

 

LP REN PRM-YRT CED

 

 

0.00

 

193,277.70

 

 

193,277.70

 

311523 Rn Ced Prm Quota Yrt SW Asmd

 

 

0.00

 

2,758,277.56

 

 

2,758,277.56

 

RN CED PRM QUOTA YRT

 

 

0.00

 

2,758,277.56

 

 

2,758,277.56

 

CEDED PREMIUM REN

 

 

0.00

 

3,440,190.04

 

 

3,440,190.04

 

FY CED PRM QUOTA YRT

 

 

0.00

 

0.00

 

 

0.00

 

LF 1YR PM-RE-CD-COIN

 

 

0.00

 

0.00

 

 

0.00

 

311007 Lf 1Yr Prm Yrt Ced SW Asmd

 

 

0.00

 

189.67-

 

 

189.67-

 

LF 1YR PRM YRT CEDED

 

 

0.00

 

189.67-

 

 

189.67-

 

CEDED PREMIUM 1ST YR

 

 

0.00

 

189.67-

 

 

189.67-

 

CEDED PREMIUMS

 

 

0.00

 

3,440,000.37

 

 

3,440,000.37

 

OTHER REV

 

 

0.00

 

0.00

 

 

0.00

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL LEDGER SUMMARY – CURRENT MONTH

 

REPORT PAGE:

2

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

RECAPTURE FEES

 

0.00

 

0.00

 

0.00

 

RECAPTURE FEE

 

0.00

 

0.00

 

0.00

 

REVENUES

 

0.00

 

41,492,612.73-

 

41,492,612.73-

 

410002 Death Clm - Cons SW Asmd

 

0.00

 

18,982,408.01

 

18,982,408.01

 

DEATH CLAIM-COINS

 

0.00

 

18,982,408.01

 

18,982,408.01

 

DEATH CLM-SPECIAL

 

0.00

 

0.00

 

0.00

 

LF CLM - AD&D

 

0.00

 

0.00

 

0.00

 

LF REN AD&D CLAIM

 

0.00

 

0.00

 

0.00

 

CLAIMS-LIFE DIRECT

 

0.00

 

18,982,408.01

 

18,982,408.01

 

410018 Lf Clm Waiver of Prm SW Asmd

 

0.00

 

160,731.00

 

160,731.00

 

LF CLM WAIVER OF PRM

 

0.00

 

160,731.00

 

160,731.00

 

410503 Lf Clm Re - Ced Unaff SW Asmd

 

0.00

 

900,306.99-

 

900,306.99-

 

LF CLM RE-CED UNAFF

 

0.00

 

900,306.99-

 

900,306.99-

 

410508 Ced Clm Quota Yrt SW Asmd

 

0.00

 

3,058,103.61-

 

3,058,103.61-

 

CED CLM QUOTA YRT

 

0.00

 

3,058,103.61-

 

3,058,103.61-

 

CLAIMS LIFE CEDED

 

0.00

 

3,958,410.60-

 

3,958,410.60-

 

SURR VALS-ORDINARY

 

0.00

 

0.00

 

0.00

 

SURVIVAL SPOUSE RIDR

 

0.00

 

0.00

 

0.00

 

SURR VAL RE-CD UNAFF

 

0.00

 

0.00

 

0.00

 

INT ON POL HOLD FUND

 

0.00

 

0.00

 

0.00

 

INT SURR SPOUSE RIDR

 

0.00

 

0.00

 

0.00

 

CASHSURR&OTH BEN DIR

 

0.00

 

0.00

 

0.00

 

INT POL HOLD FUND CD

 

0.00

 

0.00

 

0.00

 

CSH SORR&OTH BEN CD

 

0.00

 

0.00

 

0.00

 

CHANGE IN RES-FROZEN

 

0.00

 

0.00

 

0.00

 

402014 Change in Res Dir Lf SW Asmd

 

0.00

 

4,018,494.80

 

4,018,494.80

 

CHANGE IN RES DIRECT

 

0.00

 

4,018,494.80

 

4,018,494.80

 

402008 Chng in Res Ceded SW Asmd

 

0.00

 

96,207.92

 

96,207.92

 

CHANGE IN RES COINS

 

0.00

 

96,207.92

 

96,207.92

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL LEDGER SUMMARY – CURRENT MONTH

 

REPORT PAGE:

3

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

402012 Ced Lf Res Quota Yrt SW Asmd

 

0.00

 

510,697.28

 

510,697.28

 

CHANGE IN RES QSYRT

 

0.00

 

510,697.28

 

510,697.28

 

CHANGE IN RES CEDED

 

0.00

 

606,905.20

 

606,905.20

 

CHANGE IN RESRV-LIFE

 

0.00

 

4,625,400.00

 

4,625,400.00

 

INSCOMM 1STYR LF DIR

 

0.00

 

0.00

 

0.00

 

500043 Inc in Coat of Coll SW Asmd

 

0.00

 

365,601.99

 

365,601.99

 

INC IN COST OF COLL

 

0.00

 

365,601.99

 

365,601.99

 

500009 ICa Comm Expense-SW Asmd

 

0.00

 

407,923.81

 

407,923.81

 

DCA EXPENSE

 

0.00

 

407,923.81

 

407,923.81

 

500027 Lf 1 Yr Cm-Non-Fund-SW Asmd

 

0.00

 

4,010,331.89

 

4,010,331.89

 

LF 1YR COMM NONFUND

 

0.00

 

4,010,331.89

 

4,010,331.89

 

INS COMM-1YR LF DIR

 

0.00

 

4,783,857.69

 

4,783,857.69

 

INSCOMM REN LF DIR

 

0.00

 

0.00

 

0.00

 

500204 Lf Ren Cm-Non-Fund-SW Asmd

 

0.00

 

440,847.57-

 

440,847.57-

 

LF REN CM NONFUNDED

 

0.00

 

440,847.57-

 

440,847.57-

 

INS COMM-REN LIFE DR

 

0.00

 

440,847.57-

 

440,847.57-

 

LF 1YRCOMM-RE-CED-UN

 

0.00

 

0.00

 

0.00

 

INS COMM-1YR LIFE CD

 

0.00

 

0.00

 

0.00

 

FROZEN ALLOWANCE

 

0.00

 

0.00

 

0.00

 

500603 Lf Ren Com-Re-Ced Unaf SW Asmd

 

0.00

 

52,135.55-

 

52,135.55-

 

LF REN COM-RE-CED UN

 

0.00

 

52,135.55-

 

52,135.55-

 

500696 Comm Allow: EOT Bonus, B Fund

 

0.00

 

331,947.04

 

331,947.04

 

COMMISSION ALLOWANCE

 

0.00

 

331,947.04

 

331,947.04

 

INS COMM ALLOWANCES

 

0.00

 

279,811.49

 

279,811.49

 

417002 Amort - DAC SW Asmd

 

0.00

 

7,141,652.44

 

7,141,652.44

 

AMORT – DAC

 

0.00

 

7,141,652.44

 

7,141,652.44

 

AMORT OF DAC

 

0.00

 

7,141,652.44

 

7,141,652.44

 

522012 Cap of Dac - Lf SW Asmd

 

0.00

 

4,581,448.00-

 

4,581,448.00-

 

CAP OF DAC

 

0.00

 

4,581,448.00-

 

4,581,448.00-

 

670101 Expense Allowance

 

0.00

 

1,978,562.00

 

1,978,562.00

 

670111 Conversion Allowance

 

0.00

 

58,040.00

 

58,040.00

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL, LEDGER SUMMARY – CURRENT MONTH

 

REPORT PAGE:

4

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

670121 Reinstatement U/W Exp Allow

 

0.00

 

5,926.26

 

5,926.26

 

EXPENSE ALLOWANCE

 

0.00

 

2,042,528.36

 

2,042,528.26

 

INT ON REIN PYMT-FRZ

 

0.00

 

0.00

 

0.00

 

PRM TAX RECOV FROZEN

 

0.00

 

0.00

 

0.00

 

700712 Premium Tax Allowance CitiRein

 

0.00

 

856,987.47

 

856,987.47

 

PREM TAX ALLOW CITI

 

0.00

 

856,987.47

 

856,987.47

 

700702 Prm Taxes Recvred - SCW Asmd

 

0.00

 

11,482.91-

 

11,482.91-

 

PREMIUM TAX ALLOW

 

0.00

 

11,482.91-

 

11,482.91-

 

700107 Accrued TaxLicenses-SCW Assmd

 

0.00

 

91,132.24

 

91,132.24

 

PREMIUM TAX

 

0.00

 

91,132.24

 

91,132.24

 

TAXESLIC&FEES

 

0.00

 

936,636.80

 

936,636.80

 

BENEFITS & EXPENSES

 

0.00

 

29,972,319.52

 

29,972,319.52

 

NET INCOME

 

0.00

 

11,520,293.21-

 

11,520,293.21-

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL LEDGER SUMMARY - CURRENT MONTH

 

REPORT PAGE:

1

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

INVESTMENT IN PRIMERE

 

0.00

 

0.00

 

0.00

 

INTERCO N-IN PFS

 

0.00

 

0.00

 

0.00

 

INTERCOMPANY -LEGACY

 

0.00

 

0.00

 

0.00

 

140007 Prm Due-Term Lf - FY SW Asmd

 

0.00

 

365,601.99

 

365,601.99

 

PRM DUE-TERM LF - FY

 

0.00

 

365,601.99

 

365,601.99

 

140003 Prm Due-Term Lf - Res SW Asmc

 

0.00

 

3,776,778.44

 

3,776,778.44

 

PRM DUE_TERM LF-REN

 

0.00

 

3,776,778.44

 

3,776,778.44

 

GR DEF PREM

 

0.00

 

0.00

 

0.00

 

LOADING ON DUE&DEF

 

0.00

 

0.00

 

0.00

 

PREMIUM DUE & UNPAID

 

0.00

 

4,142,380.43

 

4,142,380.43

 

FROZEN RES QSYRT

 

0.00

 

0.00

 

0.00

 

FROZEN RES COIN

 

0.00

 

0.00

 

0.00

 

140607 Due Fm Rai-Lf - Coins SW Asmd

 

0.00

 

120,799.97

 

120,799.97

 

REINS RECOV - COINS

 

0.00

 

120,799.97

 

120,799.97

 

140603 Due Fm Rai-Lf - Qsyrt SW Asmd

 

0.00

 

504,961.84

 

504,961.84

 

REINS RECOV QSYRT

 

0.00

 

504,961.84

 

504,961.84

 

REINS RECOVERABLE

 

0.00

 

625,761.81

 

625,761.81

 

140807 A/R Rei-Lf Clm - Coins SW Asmd

 

0.00

 

745,306.96

 

745,306.96

 

CEDED PENDING COINS

 

0.00

 

745,306.96

 

745,306.96

 

140803 A/R Rei-Lf Clm - Qsyrt SW Asmd

 

0.00

 

2,283,543.51

 

2,283,543.51

 

CEDED PENDING QSYRT

 

0.00

 

2,283,543.51

 

2,283,543.51

 

CEDED PENDING

 

0.00

 

3,028,850.47

 

3,028,850.47

 

141207 A/R Rei-Res Coin SW Asmd

 

0.00

 

2,687,700.08

 

2,687,700.08

 

CEDED RESERVES COINS

 

0.00

 

2,687,700.08

 

2,687,700.08

 

141203 A/R Rei-Res Qsyrt SW Asmd

 

0.00

 

27,373.92

 

27,373.92

 

CEDED RESERVES QSYRT

 

0.00

 

27,373.92

 

27,373.92

 

CEDED RESERVES

 

0.00

 

2,715,074.00

 

2,715,074.00

 

DIRECT PENDING

 

0.00

 

0.00

 

0.00

 

DIRECT RESERVES

 

0.00

 

0.00

 

0.00

 

DUE FRM REINSURER

 

0.00

 

6,369,686.28

 

6,369,686.28

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL LEDGER SUMMARY - CURRENT MONTH

 

REPORT PAGE:

2

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

130303 Dpac-Lf SW Asmd

 

0.00

 

243,707,809.96

 

243,707,809.96

 

DPAC – LF

 

0.00

 

243,707,809.96

 

243,707,809.96

 

DEFERRED ACQ COST

 

0.00

 

243,707,809.96

 

243,707,809.96

 

ASSETS

 

0.00

 

254,219,876.67

 

254,219,876.67

 

200109 Fpb-Lf SW Asmd

 

0.00

 

304,967,795.60-

 

304,967,795.60-

 

FPB – LIFE

 

0.00

 

304,967,795.60-

 

304,967,795.60-

 

FUTURE POL BENS-LF

 

0.00

 

304,967,795.60-

 

304,967,795.60-

 

201202 Pol Clm Lf SW Asmd

 

0.00

 

15,171,288.00-

 

15,171,288.00-

 

DIRECT PENDING CLM

 

0.00

 

15,171,288.00-

 

15,171,288.00-

 

POL & CONTRCT CLAIMS

 

0.00

 

15,171,288.00-

 

15,171,288.00-

 

210007 Adv Prm-Lf - FY SW Asmd

 

0.00

 

62,768.02-

 

62,768.02-

 

ADV PREM-LF - FY

 

0.00

 

62,768.02-

 

62,768.02-

 

210004 Adv Prm-Lf - Ren SW Asmd

 

0.00

 

518,363.33-

 

518,363.33-

 

ADV PRM-LF REN

 

0.00

 

518,363.33-

 

518,363.33-

 

ADVANCE PREMIUM

 

0.00

 

581,131.35-

 

581,131.35-

 

OTHER POLHOLDR FUNDS

 

0.00

 

581,131.35-

 

581,131.35-

 

232107 TaxLicensesFees-Coins-SCW Assmd

 

0.00

 

91,132.24-

 

91,132.24-

 

TAXSLICSFEES-COINS

 

0.00

 

91,132.24-

 

91,132.24-

 

ACCRUED TAXESLICFEES

 

0.00

 

91,132.24-

 

91,132.24-

 

270107 Cost of Collection - SCW Assmd

 

0.00

 

365,601.99-

 

365,601.99-

 

COST OF COLL

 

0.00

 

365,601.99-

 

365,601.99-

 

COST OF COLLECTION

 

0.00

 

365,601.99-

 

365,601.99-

 

FROZEN NET CASH FLOW

 

0.00

 

0.00

 

0.00

 

DUE TO REINSURERS

 

0.00

 

0.00

 

0.00

 

DUETOFRPLICPRIMRE80%

 

0.00

 

0.00

 

0.00

 

230620 Due to/from PLICC/FRAC D Prm

 

0.00

 

45,200,560.02

 

45,200,560.02

 

230621 Due to/from PLICC/FRAC C Prm

 

0.00

 

3,440,000.37-

 

3,440,000.37-

 

230622 Due to/from PLICC/FRAC D Clm

 

0.00

 

3,971,851.01-

 

3,971,851.01-

 

230623 Due to/from PLICC/FRAC C Clm

 

0.00

 

303,798.32

 

303,798.32

 

230624 Due to/from PLICC/FRAC

 

0.00

 

11,536,889.24-

 

11,536,889.24-

 

DUETOFRPLICCFRAC80%

 

0.00

 

26,555,617.72

 

26,555,617.72

 

DUE TOFR NBL AHL 90%

 

0.00

 

0.00

 

0.00

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

PSP031C FRAC_GP

 

ORIG

 

 

 

REPORT DATE:

03/30/2010

 

RUN DATE: 03/30/2010

 

CGAP GENERAL LEDGER SUMMARY - CURRENT MONTH

 

REPORT PAGE:

3

 

RUN TIME: 00:54:11

 

BUSINESS UNIT/NODE: FRAC_GP AS OF 03/2010

 

 

 

 

 

 

 

 

 

 

 

ACCOUNT
NUMBER

 

BEGINNING
BALANCE

 

MONTH-TO-DATE
NET

 

ENDING
BALANCE

 

DUTOFRPLICPRIMERE10%

 

0.00

 

0.00

 

0.00

 

DUE TO AFFILIATES

 

0.00

 

26,555,617.72

 

26,555,617.72

 

LIABILITIES

 

0.00

 

294,621,331.46-

 

294,621,331.46-

 

291010 Gross Paid In & Contributed

 

0.00

 

51,921,748.00

 

51,921,748.00

 

PAID IS CAPITAL

 

0.00

 

51,921,748.00

 

51,921,748.00

 

RETEARN

 

0.00

 

0.00

 

0.00

 

NET INCOME

 

0.00

 

11,520,293.21-

 

11,520,293.21-

 

EQUITY

 

0.00

 

40,401,454.79

 

40,401,454.79

 

LIABILITIES & EQUITY

 

0.00

 

254,219,876.67-

 

254,219,876.67-

 

BALANCE SHEET TOTAL

 

0.00

 

0.00

 

0.00

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit V

Form of Reinsurance Trust Agreement

[See attached]

 

 

 

V-1

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

INDEX

AGREEMENT MADE THE 15TH DAY OF MARCH, 2010 AMONG FINANCIAL REASSURANCE COMPANY
2010, LTD., PRIMERICA LIFE INSURANCE COMPANY OF CANADA, RBC DEXIA INVESTOR
SERVICES TRUST AND THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS CANADA.

 

PARAGRAPH

NUMBER

 

HEADING

 

PAGE

NUMBER

 

 

 

 

 

1.

 

APPOINTMENT OF TRUSTEE

 

2

 

 

 

 

 

2.

 

AUTHORIZED ASSETS

 

2

 

 

 

 

 

3.

 

ASSETS VESTED IN TRUST

 

2

 

 

 

 

 

4.

 

VALUE OF ASSETS DETERMINED BY THE SUPERINTENDENT

 

2

 

 

 

 

 

5.

 

VESTING, VARYING, EXCHANGING OR WITHDRAWING ASSETS

 

2

 

 

 

 

 

6.

 

SECURITIES LENDING

 

3

 

 

 

 

 

7.

 

ASSETS IN TRUSTEE’S NAME

 

3

 

 

 

 

 

8.

 

POWERS AND AUTHORITY OF TRUSTEE

 

3

 

 

 

 

 

9.

 

ACCOUNTABILITY OF TRUSTEE

 

3

 

 

 

 

 

10.

 

DIRECTION OF REINSURER AND COMPANY

 

4

 

 

 

 

 

11.

 

CANADIAN DEPOSITORY FOR SECURITIES LIMITED

 

4

 

 

 

 

 

12.

 

PAYMENTS ON ACCOUNT OF AN INTEREST IN REAL ESTATE

 

4

 

 

 

 

 

13.

 

EXERCISE OF RIGHTS ATTACHED TO AN ASSET

 

4

 

 

 

 

 

14.

 

STATEMENT OF ASSETS

 

4

 

 

 

 

 

15.

 

ACCESS

 

5

 

 

 

 

 

16.

 

DIRECTION TO VEST ASSETS IN THE COMPANY

 

5

 

 

 

 

 

17.

 

DIRECTION TO VEST ASSETS IN THE SUPERINTENDENT

 

5

 

 

 

 

 

18.

 

COMPENSATION OF TRUSTEE

 

5

 

 

 

 

 

19.

 

INTEREST ON MONIES HELD IN TRUST

 

6

 

 

 

 

 

20.

 

AMENDMENTS

 

6

 

 

 

 

 

21.

 

TERMINATION

 

6

 

 

 

 

 

22.

 

APPOINTMENT OF NEW TRUSTEE

 

6

 

 

 

 

 

23.

 

WAIVER

 

6

 

 

 

 

 

24.

 

FURTHER ASSURANCES

 

6

 

 

 

 

 

25.

 

NOTICES

 

7

 

 

 

 

 

26.

 

EXECUTION IN COUNTERPART

 

7

 

 

 

 

 

27.

 

PARTIAL INVALIDITY

 

8

 

 

 

 

 

28.

 

EFFECTIVE DATE

 

8

 

 

 

 

 

29.

 

PROPER LAW

 

8

 

 

 

 

 

30.

 

CONFLICTS OR INCONSISTENCIES

 

8

 

 

 

 

 

31.

 

MISCELLANEOUS

 

8

 

 

 

 

 

 

 

SCHEDULE

 

 

 

 

 

 

 

SCHEDULE “A”-VESTING OF ASSETS

 

9

 

 

 

 

 

SCHEDULE “B”-DECLARATION (MONTHLY)

 

9

 

 

TA16279

Revised May 17, 2001

- i -

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

AGREEMENT

THIS AGREEMENT made in quadruplicate on the 15th day of March, 2010.

 

AMONG:

 

Financial Reassurance Company 2010, Ltd., a corporation duly organized and
existing under the laws of Bermuda (hereinafter called the “Reinsurer”)

 

 

 

AND:

 

Primerica Life Insurance Company of Canada, a corporation duly organized and
existing under the laws of Canada (hereinafter called the “Company”)

 

 

 

AND:

 

RBC Dexia Investor Services Trust, a trust company incorporated under the laws
of Canada and licensed to do business in the Province of Ontario (hereinafter
called the “Trustee”)

 

 

 

AND:

 

The Superintendent of Financial Institutions Canada (hereinafter called the
“Superintendent”)

 

 

 

WHEREAS

 

the Company is authorized under the Insurance Companies Act (hereinafter called
the “Act”) to insure risks;

 

 

 

AND WHEREAS

 

the Company has caused itself to be reinsured by the Reinsurer against certain
risks insured by it under one or more reinsurance agreements (hereinafter called
the “Reinsurance Agreements”);

 

 

 

AND WHEREAS

 

the Reinsurer is not authorized under the Act to insure risks;

 

 

 

AND WHEREAS

 

where the Reinsurer is not authorized under the Act to insure risks and is
incorporated elsewhere than in Canada, a reduction in the Company’s Minimum
Continuing Capital and Surplus Requirements, in the Company’s Minimum Capital
Test or in the assets to be maintained by the Company under the Act, as the case
may be, may be made by the Company only to the extent that security is
maintained in Canada, in respect of the potential liabilities of the Reinsurer
under the Reinsurance Agreements, in an amount, of a nature and under
arrangements determined by the Superintendent to be satisfactory.

NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements contained in the Agreement, the parties hereto agree with one another
as follows:

 

Revised May 17, 2001

1

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

APPOINTMENT OF TRUSTEE

1.

The Reinsurer appoints as trustee the Trustee to hold in trust for the Company,
solely to secure the payment to the Company by the Reinsurer of the Reinsurer's
share of any loss or liability or both sustained by the Company for which the
Reinsurer is liable under the Reinsurance Agreements, such assets as the
Reinsurer may vest in trust with the Trustee in accordance with the terms of
this Agreement.

AUTHORIZED ASSETS

2.

Assets that may be vested in trust with the Trustee shall be cash or assets in
which the Company may invest its funds or any portion thereof pursuant to the
Company's investment and lending policies, standards and procedures established
pursuant to the Act in force from time to time while this Agreement is in force.

ASSETS VESTED IN TRUST

3.     (a)

The Reinsurer shall vest and maintain with the Trustee assets valued in
accordance with subparagraph (b) at all times at least equal to 100% of an
amount equal to the greater of (i) the Reinsurer’s quota share of the subject
reserves with respect to the reinsured policies, and (ii) the amount of assets
held in trust necessary at any particular point in time under the MCCSR
Guideline in order for the Company to take full financial statement credit for
the unlicensed reinsurance in the same manner as if licensed reinsurance was
being provided that enables the Company to maintain its target capital ratio as
required by the Superintendent as well as to be able to meet all Dynamic Capital
Adequacy Testing adverse scenarios that may be required by the Superintendent
with respect to the Reinsurer's quota share of the subject reserves. For greater
certainty, the amount of trust Assets held in trust shall at no time be less
than a minimum of an amount equal to 100% of the aggregate liability ceded (if
greater than zero) plus 70% of the offsetting reserves ceded (MCCSR Guideline
section 1.2.3.2) plus 150% of the Regulatory Required Capital for the Ceded
Business as defined by the MCCSR Guideline.

 

(b)

The assets vested in trust shall be valued at market value.

 

(c)

Assets vested in trust under this Agreement in respect of the class of life
insurance shall be held by the Trustee in an account identified in its records
as separate and distinct from the assets vested in trust under this Agreement in
respect of other classes.

 

(d)

Assets vested in trust under this Agreement shall be held by the Trustee in an
account identified in its records as separate and distinct from other accounts
of the Trustee.

 

(e)

Assets vested in trust under this Agreement shall be free of all liens, charges
and encumbrances of any nature except for the charge customarily required to be
given by the relevant participant in the Canadian Depository for Securities
Limited under the rules governing participation in the Canadian Depository for
Securities Limited on an asset deposited, and recorded in book-based form, with
the Canadian Depository for Securities Limited.

VALUE OF ASSETS DETERMINED BY THE SUPERINTENDENT

4.

The Superintendent may determine from time to time the market value of the
assets vested in trust or the liabilities for which the Reinsurer is liable
under the Reinsurance Agreements. Any determination made by the Superintendent
under this paragraph shall be binding on the Reinsurer and the Company.

 

This paragraph shall be effective only with respect to the obligations of the
Reinsurer and the Company under this Agreement and shall not affect the
contractual relationship between the parties under the Reinsurance Agreements.

VESTING, VARYING, EXCHANGING OR WITHDRAWING ASSETS

5.      (a)

Subject to paragraph 3 and subparagraph (b), prior to vesting an asset in trust
or withdrawing an asset vested in trust, the Reinsurer shall obtain the written
approval of the Superintendent and, upon receipt of the written approval of the
Superintendent, the Trustee shall follow the written direction of the Reinsurer.

Revised May 17, 2001

2

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

 

(b)

Unless the Superintendent has otherwise directed by written notice to both the
Reinsurer and the Trustee, the Reinsurer may, without the prior written approval
of the Superintendent:

 

(i)

vest in trust an asset listed in Schedule “A”; and

 

(ii)

withdraw an asset listed in Schedule “A” vested in trust on condition that the
asset withdrawn is replaced, either prior to or simultaneously, with an asset or
assets listed in Schedule “A” the value of which on the date of the withdrawal,
as determined under subparagraph 3(b), is and is certified by the Reinsurer to
the Trustee to be, at least equal to the value, as determined under subparagraph
3(b), of the asset withdrawn.

SECURITIES LENDING

6.

The assets vested pursuant to this Agreement may not be used as part of a
securities lending program.

ASSETS IN TRUSTEE’S NAME

7.

Subject to paragraph 11, the Trustee shall register in its name or, subject to
the prior written approval of the Superintendent, in the name of its nominee,
any asset vested in trust that can be issued in registered form. Notwithstanding
the foregoing but subject to the prior written approval of the Superintendent,
the Reinsurer may vest with the Trustee, and the Trustee shall not be required
to register in its name, mortgages on real estate acquired by or on behalf of
the Reinsurer under an agreement whereby the mortgages are to be administered by
a third party.

POWERS AND AUTHORITY OF TRUSTEE

8.    (a)

Subject to paragraph 5, the Trustee, on the written direction of any of the
persons authorized by the Reinsurer for that purpose for the time being and from
time to time, shall have, in respect of the assets vested in trust, the powers
and authority authorized in that written direction.

 

(b)

Subject to the prior written approval of the Reinsurer, which approval must not
be unreasonably withheld, the Trustee may employ, at the expense of the
Reinsurer, agents, counsel (who may be counsel to the Reinsurer) and other
professional advisors.

 

(c)

The Trustee may, from time to time,

 

(i)

deal with securities of the same class and nature as may constitute the assets
held in trust in its own behalf or on behalf of accounts it manages;

 

(ii)

subject to Part XI of the Trust and Loan Companies Act, be affiliated with any
party to whom or from whom such securities may be sold or purchased; and

 

(iii)

use in other capacities knowledge gained in its capacity hereunder without being
liable to account therefor in law or in equity except where the use would be
detrimental, prejudicial, or adverse to the best interests of the Company or the
Reinsurer.

ACCOUNTABILITY OF TRUSTEE

9.     (a)

Subject to subparagraph (b), the Trustee will exercise its powers and carry out
its obligations under this Agreement as Trustee honestly, in good faith and in
the best Interests of the Company and in connection therewith will exercise that
degree of care, diligence and skill that a reasonable and prudent person would
exercise in comparable circumstances.

 

(b)

Where the Superintendent determines that an asset vested in trust is withdrawn
other than in accordance with paragraph 5, the Superintendent shall so notify
the Trustee. Within thirty (30) days of the day on which the Trustee is notified
by the Superintendent, the Trustee shall replace that asset with an asset or
assets of the kind listed in Schedule “A” such that the value of the assets
vested in trust on the replacement date, as determined under subparagraph 3(b),
is equal to the lesser of:

 

(i)

the total value of the assets required under the Agreement to be vested in trust
on the replacement date, as determined under subparagraph 3(b); and

Revised May 17, 2001

3

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

 

(ii)

the total value of the assets, as determined under subparagraph 3(b), vested in
trust on the day when the asset vested in trust was withdrawn other than in
accordance with paragraph 5, determined before giving effect to the withdrawal.

In each instance where the Trustee replaces an asset in accordance with this
paragraph, the Reinsurer shall immediately reimburse the Trustee for all losses,
damages, expenses, and costs incurred by the Trustee in respect of the
replacement.

DIRECTION OF REINSURER AND COMPANY

10.   (a)

The Reinsurer shall identify to the Trustee, in writing, those Reinsurer
representatives authorized to direct the Trustee in respect of a matter under
this Agreement. The Trustee shall act only upon the written directions of those
Reinsurer representatives and shall have no duty to verify the appropriateness
of any directions which shall be binding on the Reinsurer.

 

(b)

The Company shall identify to the Trustee, in writing, those Company
representatives authorized to direct the Trustee in respect of a matter under
this Agreement. The Trustee shall act only upon the written directions of those
Company representatives and shall have no duty to verify the appropriateness of
any directions which shall be binding on the Company.

CANADIAN DEPOSITORY FOR SECURITIES LIMITED

11.

Subject to the written approval of the Superintendent, the Trustee may deposit
any of the assets vested in trust with the Canadian Depository for Securities
Limited and shall have the same responsibility for assets vested in trust
whether in the possession of the Trustee or deposited with the Canadian
Depository for Securities Limited.

PAYMENTS ON ACCOUNT OF AN INTEREST IN REAL ESTATE

12.

Unless the Reinsurer and the Trustee are otherwise directed in writing by the
Superintendent, the Reinsurer may collect payments on account of any interest in
real estate by way of lease, mortgage or otherwise vested in trust with the
Trustee, provided that the Reinsurer shall:

 

(a)

forthwith pay to the Trustee any monies collected on account of the principal of
any mortgage; and

 

(b)

on or before the tenth day of each month, notify in writing the Trustee, the
Company and the Superintendent of the balance of principal on any mortgage on
account of which the Reinsurer collected a payment and account for all monies
collected hereunder, which information shall be contained in a statutory
declaration of an officer of the Reinsurer.

EXERCISE OF RIGHTS ATTACHED TO AN ASSET

13.

Unless the Trustee is otherwise directed in writing by the Superintendent:

 

(a)

the Trustee shall hand over to the Reinsurer all income upon the vested assets
collected by the Trustee as the same is collected; and

 

(b)

the Reinsurer shall be entitled at all times to exercise, through such officer
or other person designated by it, the right of attending, acting and voting at
meetings of corporations or security holders or otherwise in respect of vested
assets and the Trustee shall, at the request of the Reinsurer, execute and
deliver such instruments of proxy or attorney as may be reasonably required to
enable the Reinsurer through such officer or person to exercise such rights.

Revised May 17, 2001

4

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

STATEMENT OF ASSETS

14.

Unless the Superintendent otherwise directs the Trustee in writing, the Trustee
shall on or before the fifteenth day of each month, or, if the fifteenth day is
not a business day of the Trustee, on or before the first business day of the
Trustee following the fifteenth day, and at such other times as requested by
notice in writing to the Trustee from the Superintendent, file:

 

(a)

with the Superintendent, and if the Reinsurer so elects, with the Reinsurer, a
declaration in the form of Schedule “B”, or in such other form as may be
prescribed by the Superintendent from time to time, together with a diskette,
containing that information as may be prescribed by the Superintendent from time
to time of all assets held by the Trustee under this Agreement as at the close
of business on the Trustee's last business day in the immediately preceding
month; and

 

(b)

where the Reinsurer does not elect under subparagraph (a), with the Reinsurer a
statement containing that information as may be prescribed by the Reinsurer from
time to time of all assets held by the Trustee under this Agreement.

The Trustee shall submit separate declarations in respect of the class of life
insurance and in respect of classes of insurance other than life insurance.

ACCESS

15.

The Trustee shall at all times, upon reasonable notice, permit the
Superintendent, the Reinsurer and the Company access, for purposes of
examination, to all assets held in trust under this Agreement and to the records
of the Trustee in relation thereto.

DIRECTION TO VEST ASSETS IN THE COMPANY

16.  (a)

The Trustee shall, on notice in writing from the Company accompanied by the
written approval of the Superintendent, without inquiry as to the correctness of
any request made by the Company, assign and deliver to the Company those assets
held by it in trust that the Company specifies in its request after deduction by
the Trustee of an amount equal to the aggregate of any unpaid compensation to
the date of transfer and any losses, damages, expenses and costs owing to the
Trustee pursuant to paragraph 18 and subparagraph 9(b) respectively.

 

(b)

The Company shall apply the assets assigned and delivered to it pursuant to
subparagraph (a) without diminution on account of the insolvency of the Company
for the following purposes only:

 

(i)

to pay or reimburse itself for the Reinsurer’s share of any loss or liability or
both, including any loss or liability on account of claims incurred but not
reported, sustained by the Company for which the Reinsurer is liable under the
Reinsurance Agreements; and

 

(ii)

to make payment to the Reinsurer of any balance of the assets in excess of the
actual amount required by clause (i) above if requested by the Reinsurer.

DIRECTION TO VEST ASSETS IN THE SUPERINTENDENT

17.  (a)

If

 

(i)

the Company is no longer authorized under the Act to insure risks,

 

(ii)

a judgment against the Company in respect of which no further right of appeal
exists remains unsatisfied for thirty (30) days, or

 

(iii)

a liquidator or receiver of the Company or of any part of the insurance business
of the Company is appointed under the provisions of any statute or pursuant to
any agreement between the Company and a third party

the Superintendent may direct the Trustee and the Trustee shall, without inquiry
into the correctness of any statement of the Superintendent, assign and transfer
to the Superintendent or the Superintendent's appointee all assets held in trust
under the terms of this Agreement after deduction by the Trustee of an amount
equal to the aggregate of any unpaid compensation to the date of transfer and
any losses, damages, expenses and costs owing to the Trustee pursuant to
paragraph 18 and subparagraph 9(b) respectively.

Revised May 17, 2001

5

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

 

(b)

The Superintendent or his appointee shall apply the assets assigned and
delivered pursuant to subparagraph (a) without diminution on account of the
insolvency of the Company for the following purposes only:

 

(i)

to pay or reimburse the Company for the Reinsurer’s share of any loss or
liability or both, including any loss or liability on account of claims incurred
but not reported, sustained by the Company for which the Reinsurer is liable
under the Reinsurance Agreements; and

 

(ii)

to make payment to the Reinsurer of any balance of the assets in excess of the
actual amount required by clause (i) above if requested by the Reinsurer.

COMPENSATION OF TRUSTEE

18.

The Trustee is entitled to reasonable compensation for its services and expenses
under this Agreement as may be agreed upon by the Reinsurer and the Trustee, and
if no such agreement is reached, either the Reinsurer or the Trustee may on ten
(10) days notice in writing apply to a court of competent jurisdiction to fix
the compensation that the Reinsurer shall pay the Trustee.

INTEREST ON MONIES HELD IN TRUST

19.

The Trustee shall pay the Reinsurer such interest on monies held in trust as is
paid by the Trustee on the same or similar accounts.

AMENDMENTS

20.  (a)

This Agreement may be amended only by a written agreement executed by the
Company, the Reinsurer, the Trustee and the Superintendent.

 

(b)

The Company, the Reinsurer and the Trustee shall make those amendments to this
Agreement that the Superintendent reasonably requires.

TERMINATION

21.

The Trustee and, subject to the prior written approval of the Superintendent,
the Company or the Reinsurer may terminate this Agreement on at least thirty
(30) days notice in writing to the Superintendent and the other parties
specifying in the notice the date of termination. Upon the date of termination
specified in the notice, the Trustee shall be discharged from any further
responsibilities to carry out the terms provided in this Agreement save for its
obligations under paragraph 22.

APPOINTMENT OF NEW TRUSTEE

22.

As soon as practicable

 

(i)

on the Trustee ceasing to carry on business, or refusing to act as a trustee,

 

(ii)

on the Trustee becoming insolvent, being deemed insolvent or admitting that it
is insolvent within the meaning of any statute, or becoming (whether voluntarily
or involuntarily) subject to any proceedings for its winding-up, liquidation or
dissolution,

 

(iii)

on the Superintendent taking control of the assets of, or taking control of, the
Trustee under the Trust and Loan Companies Act,

 

(iv)

on the Trustee defaulting in its duties or obligations or any of them hereunder
and not commencing to rectify the default within thirty (30) days after written
notice from another party specifying the default and requiring the Trustee to
remedy the same, or

Revised May 17, 2001

6

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

 

(v)

after giving or receiving a notice under paragraph 21,

the Reinsurer shall appoint another trust company approved by the Superintendent
and authorized to act as a trustee and the Trustee shall execute all documents
that the Reinsurer shall deem necessary to vest in that trust company the assets
vested in trust in the Trustee and transfer in writing to that trust company all
its rights and obligations under this Agreement after deduction by the Trustee
of an amount equal to the aggregate of any unpaid compensation to the date of
the transfer and any losses, damages, expenses and costs owing to the Trustee
pursuant to paragraph 18 and subparagraph 9(b) respectively.

WAIVER

23.

No waiver by any party of any breach of any of the covenants, provisos,
conditions, restrictions or stipulations contained in this Agreement shall take
effect or be binding upon that party unless the same is expressed in writing
under the authority of that party and is approved in writing by the
Superintendent and any waiver so given and approved shall extend only to the
particular breach so waived and shall not limit or affect any rights with
respect to any other future breach.

FURTHER ASSURANCES

24.

Each of the parties to this Agreement shall execute and deliver all such
instruments and assurances and do all other acts and things as are necessary to
give full effect to and carry out their respective obligations under this
Agreement.

NOTICES

25.   (a)

Notices under this Agreement shall be served either

 

(i)

personally by delivering them to the party on whom they are to be served at that
party's address hereinafter given, provided such delivery shall be during the
addressee’s normal business hours. Personally served notices shall be deemed
received by the addressees when actually delivered as aforesaid.

 

(ii)

by telex or facsimile (or by any other like method by which a written and
recorded message may be sent) directed to the party on whom they are to be
served at that party's address hereinafter given. Notices so served shall be
deemed received by the addressee: i) when actually received by the addressee if
received within the normal working hours of the addressee's business day; or ii)
at the commencement of the next ensuing business day of the addressee following
transmission thereof, whichever is the earlier, or

 

(iii)

by prepaid first class mail addressed to the party on whom they are to be served
at that party's address hereinafter given. Notices so served shall be deemed
received on the fifth (5th) day following the day on which they are so mailed,
provided however that if delivery by prepaid first class mail of any notice
required or permitted under this Agreement is or is likely to be delayed due to
interruption or suspension of the postal service because of a mail strike,
slowdown or other labour dispute which might affect the delivery of the notice,
then the notice shall be effective only if delivered personally or by telex or
facsimile (or by any other like method by which a written and recorded message
may be sent).

 

(b)

Unless changed by written notice to the other parties, the addresses for service
of notice hereunder of each of the respective parties shall be as follows:

 

Reinsurer

Financial Reassurance Company 2010, Ltd.

 

44 Church Street

 

PO. Box 2274

 

Hamilton HMJX, Bermuda

 

Attention:

 

David Pickering, Director

 

Facsimile:

 

#441-295-6448

 

 

 

 

 

Company

Primerica Life Insurance Company of Canada 2000 Argentina Road, Plaza V, Suite
300 Mississauga, Ontario L5N 2R7

 

Attention:

 

Heather Koski, VP Finance & CFO

 

Facsimile:

 

(905)813-5316

 

 

 

 

 

Revised May 17, 2001

7

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

Trustee

RBC Dexia Investor Services Trust 155 Wellington Street West, 5th Floor P.O. Box
7500, Station “A” Toronto, Ontario M5W 1P9

 

Attention:

 

Head of Client Service

 

Facsimile:

 

(416) 955-2600

 

 

 

 

Superintendent of Financial Institutions Canada

121 King Street West, 22nd Floor

Toronto, Ontario

M5H 3T9

Attention: Assistant Superintendent,

Supervision Facsimile: (416) 973-1171

EXECUTION IN COUNTERPART

26.

This Agreement may be executed and delivered in counterpart, each of which, when
so executed and delivered, shall be deemed to be an original. All counterparts
together shall constitute one and the same agreement.

PARTIAL INVALIDITY

27.

If at any time any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions of this
Agreement nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction shall in any way be affected or impaired
thereby.

EFFECTIVE DATE

28.

This Agreement shall take effect as of the date and year first above written.

PROPER LAW

29.

This Agreement shall be governed by the laws of the Province of Ontario and the
federal laws of Canada applicable therein.

CONFLICTS OR INCONSISTENCIES

30.

In the event of a conflict or inconsistency between the terms and conditions of
this Agreement and the terms and conditions of the Reinsurance Agreements, the
former shall in each and every instance prevail, except that, to the extent that
the investment guidelines referenced in any Reinsurance Agreement are more
restrictive than the list of assets in Schedule “A”, it shall be the
responsibility of the Company and the Reinsurer to ensure compliance with such
restrictions.

MISCELLANEOUS

31.

Paragraph headings and other headings or captions or the index or the title
hereto shall not be used in construing or interpreting any provision of this
Agreement or the relationship of the parties to this Agreement.

Revised May 17, 2001

8

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

IN WITNESS WHEREOF the Reinsurer, the Company, the Trustee and the
Superintendent has executed this Agreement.

 

Financial Reassurance Company 2010, Ltd.

 

Primerica Life Insurance Company of Canada

 

 

 

 

 

 

 

 

 

/s/ Reza Shah

(Seal)

 

 

/s/ John A. Adams

Name

 

Reza Shah

 

Name

 

John A. Adams

Title

 

Head of City Reinsurance

 

Title

 

EVP & CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Heather Koski

Name

 

 

 

Name

 

Heather Koski

Title

 

 

 

Title

 

VP Finance and CFO

 

 

 

 

 

 

 

RBC Dexia Investor Services Trust

 

Superintendent of financial Institutions

 

 

 

 

 

 

 

 

 

/s/ Lydia Moffitt

 

 

 

/s/ D. Bruce Thompson

Name

 

Lydia Moffitt

 

Name

 

D. Bruce Thompson

Title

 

Senior Manager, Client Service

 

Title

 

Director

 

 

 

 

Date:

 

March 24, 2010

 

 

/s/ David Fraser

 

 

 

 

Name

 

David Fraser

 

 

 

 

Title

 

Client Service Manger

 

 

 

 

 

SCHEDULE “A” to the Agreement made the 15th day of March, 2010 among Financial
Reassurance Company 2010, Ltd., Primerica Life Insurance Company of Canada, RBC
Dexia Investor Services Trust and the Superintendent of Financial Institutions
Canada.

Revised May 17, 2001

9

--------------------------------------------------------------------------------

Canadian Company – Life and P&C

 

VESTING OF ASSETS

PAYABLE IN CANADIAN CURRENCY

I.

Cash

II.

Bonds, Debentures and Other Evidences of Indebtedness:

 

(a)

Government:

 

(i)

Canada and Guaranteed

 

(ii)

Canadian Provincial and Guaranteed

 

(iii)

Canadian Municipal, Public Authority, School and Parochial.

 

(b)

Corporate: Canadian

III.

Shares:

 

(a)

Common: Canadian

 

(b)

Preferred: Canadian

IV.

Guaranteed Investment Certificates

SCHEDULE “B” to the Agreement made the 15th day of March, 2010 among Financial
Reassurance Company 2010, Ltd., Primerica Life Insurance Company of Canada, RBC
Dexia Investor Services Trust and the Superintendent of Financial Institutions
Canada.

DECLARATION

WHEREAS RBC Dexia Investor Services Trust, a trust company incorporated under
the laws of Canada and having its chief office or place of business for Canada
in the City of Toronto, in the Province of Ontario, has been appointed pursuant
to the Agreement made the 15th day of March, 2010 among Financial Reassurance
Company 2010, Ltd., Primerica Life Insurance Company of Canada, and the
Superintendent of Financial Institutions Canada (the “Agreement”) as Trustee for
the purposes of the Agreement.

NOW THEREFORE IT IS WITNESSED that the said Trust Company, as such Trustee,
hereby acknowledges and declares that it now holds, in accordance with and
subject to the terms and provisions of the Agreement, assets the total accepted
values of which, as at             ,20       based on the values as last
determined by the requirements of the Agreement, are summarized below and
details in respect of which are set forth in the diskette accompanying this
Declaration and that the said Trustee declares that it will continue to hold
said assets under and subject to all the terms and provisions of the said
Agreement.

DATED at the City of                   this                   day
of                  , 20                   .

TRUST COMPANY

 

 

Insurance Company

Full Company Name

Accepted

Value

Institution Code

 

Book

Market

 

 

 

Revised May 17, 2001

10

--------------------------------------------------------------------------------

 

Exhibit VI-A

Milliman Information

1)

Inventories of term life insurance policies in force as of June 30, 2009,
including computer files and other listings of these records.

2)

Current set of assumptions actually used for pricing the Custom Advantage Policy
as provided by the Ceding Company.

3)

Mortality and lapse studies prepared by the Ceding Company for the business in
force.

4)

Product characteristics and data including premium rates, policy fees, banding,
commission rates, product benefit features, etc.

5)

Ceding Company methodology and basis regarding statutory reserves and tax
reserves.

6)

Information on the terms of existing reinsurance agreements with third parties.

7)

Information with respect to the current unit expenses of the Ceding Company.

Exhibit VI-B

Milliman Information

1)

Actual recent financial data for the Covered Liabilities.

 

 

VI-1

--------------------------------------------------------------------------------

 

Exhibit VII

Milliman Report

[See attached]

 

 

 

VII-1

--------------------------------------------------------------------------------

 

ACTUARIAL ANALYSIS OF

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

AS OF JUNE 30, 2009

 

 

PREPARED FOR:

 

 

 

Citigroup, Inc.

 

 

 

PREPARED BY:

 

 

 

Thomas K. Kim, F.S.A., F.C.I.A.

 

Bruce W. Winterhof, F.S.A., M.A.A.A.

 

Yiping Yang, F.S.A., M.A.A.A.

 

Laird D. Zacheis, F.S.A., M.A.A.A.

 

 

 

October 21, 2009

 

Revised November 25, 2009

 

 

 

Milliman

--------------------------------------------------------------------------------

 

[g2017022721265374013074.jpg]

 

71 S. Wacker Drive, 31st Floor

Chicago. IL 60608

Tel + 1 312 724.0677

Fax + 1 312 099.6700

www.milliman.com

 

October 21, 2009

Revised November 25, 2009

 

Mr. James von Moltke

Mr. D. Richard Williams

M&A Group Manager

Citigroup Inc.

Co-Chief Executive Officer & Chief Operating Officer

909 Third Avenue

Primerica Life Financial Services

New York, New York 10022

3120 Breckinridge Boulevard

 

Duluth, Georgia 30099

Dear Sirs:

This report provides actuarial values and projections as of June 30, 2009 for
the individual life and annuity business of Primerica Life Insurance Company of
Canada. This report reflects updates to our October 21, 2009 report for
anticipated changes to the Canadian reserve assumptions at yearend 2009.

Section I outlines the scope and qualifications associated with the analysis.
Actuarial values and yearly statutory profits are summarized in Section II.
Section III and the Appendices summarize the methodology, models and actuarial
assumptions underlying the developed values.

This report may be considered a statement of actuarial opinion under guidelines
promulgated by the American Academy of Actuaries. The undersigned professional
is a member of the American Academy of Actuaries and meet the Qualification
Standards of the American Academy of Actuaries to render the opinion contained
herein.

The professionals responsible for developing the actuarial values in this report
are available to answer any questions regarding the assumptions and procedures
underlying the values. Please contact us if any questions are raised.

 

Sincerely,

 

 

 

/s/ Laird D. Zacheis

 

Laird D. Zacheis, F.S.A., M.A.A.A.

 

Consulting Actuary

 

 

LDZ:jk

 

 

Offices in Principal Cities Worldwide

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

SECTION

 

 

 

PAGE

 

 

 

 

 

I.

 

Introduction and Qualifications

 

1

 

 

 

 

 

II.

 

Summary of Results

 

3

 

 

 

 

 

III.

 

Product Descriptions, Methodology and Actuarial Assumptions

 

5

 

 

 

 

 

 

 

 

 

 

APPENDIX

 

 

 

 

 

 

 

 

 

A

 

Asset and Investment Assumptions

 

A-1

 

 

 

 

 

B

 

Liability Models and Assumptions

 

B-1

 

 

 

 

 

C

 

Detailed Statutory Income Projections

 

C-1

 

 

 

Milliman

--------------------------------------------------------------------------------

 

SECTION I

Introduction and Qualifications

Milliman, Inc. (“Milliman”) was retained by Citigroup, Inc. (“Citi”) to perform
certain actuarial analyses with respect to the life insurance business in
Primerica Life Insurance Company of Canada (“PLICC” or “Primerica Canada”).
PLICC is wholly owned by Primerica Life Insurance Company (“PLIC”), which is
wholly owned through various holding companies by Citi.

Specifically, our assignment has been to develop projected statutory earnings
arising from the existing and new individual life business of PLICC and to
calculate present values of these future earnings using discount rates of 11%,
13% and 15%, which may be used for the determination of the ceding commission
for a reinsurance transaction between PLICC and Financial Reassurance Company
(FRAC), an offshore Citi affiliated reinsurer. For purposes of this report,
where amounts are shown in U.S. dollars, an exchange rate of $1 Canadian to
$0.90 U.S. is assumed.

The PLICC business consists primarily of level term traditional life business.
PLICC also sells a significant amount of segregated funds (seg funds) savings
business. PLICC markets through a network of independent agents who are
primarily part-time, and who are exclusive to the Companies. The term business
sold through this network is referred to generally as “term” or “PFS Term” in
this report.

Milliman is frequently engaged to prepare such analyses of life Insurance
companies. The approach followed in this situation is consistent with
methodology we have generally employed in previous engagements.

We have prepared this report with the understanding that it will be used by Citi
and its advisors to analyze the statutory earnings and potential value of PLICC.
The report is intended to provide certain actuarial information and analyses as
of June 30, 2009 that would assist a qualified actuary, technically competent in
the area of actuarial appraisals, to develop an estimate of (1) the adjusted
statutory book value of the companies as of June 30, 2009; (2) the projected
amounts and present values of future statutory profits from insurance in force
as of June 30, 2009; and (3) the projected amounts and present values of future
statutory profits from insurance written after June 30, 2009.

In order to fully comprehend this report, any user of this report should be
advised by an actuary with a substantial level of expertise in areas relevant to
this analysis to appreciate the significance of the underlying assumptions and
the impact of those assumptions on the illustrated results. This report must be
read in its entirety to be understood.

This report may not be distributed, disclosed, copied or otherwise furnished to
any party without our prior consent. Any distribution of this report must be in
its entirety.

Nothing included in this report is to be used in any filings with any public
body, such as but not limited to the Securities and Exchange Commission, without
prior written consent from Milliman. We understand this report may be shared
with OSFI.

We have projected future statutory profits computed according to regulatory
reporting criteria. The validity of these projections depends on how well future
experience conforms to our assumptions. Our assumptions for future mortality,
persistency, expenses, investment return and other actuarial factors are based
on our evaluation of recent experience of PLIC and PLICC, industry experience
and anticipated future trends. The approach employed to develop the projection
assumptions is described below.

1.

Mortality and persistency assumptions are based on the experience of PLIC and
PLICC and on general industry experience.

2.

Expenses were based on the target unit expense allowables of PLICC.

3.

Future investment income reflects a new money investment yield of 4.95% based on
assumptions for asset yield, quality, and maturity provided by PLICC. The
projections are based on the June 30, 2009 interest rate environment.

4.

New business production assumptions were provided by PLICC and are summarized in
Section II.

Actual experience may differ from that assumed in the projections. To the extent
actual experience is different from the assumptions underlying this Report, so
will actual results differ from the projected results shown here. Sensitivity of
results to changes in assumptions is provided as part of Section II, Summary of
Results.

- 1 -

Milliman

--------------------------------------------------------------------------------

 

Data Reliance

We have relied on information supplied by PLIC and PLICC as well as on published
financial information. We performed no audits or independent verification of the
information furnished to us. To the extent that there are any material errors in
the information provided, the results of our analysis will be affected as well.
The principal materials relied upon include:

 

1)

Information contained in the public and internal statutory and GAAP financial
statements of PLICC.

 

2)

Inventory of insurance policies as of June 30, 2009, December 31, 2008 and
December 31, 2007.

 

3)

Information on business inforce, including schedules or electronic files of
premiums, policy benefits, commission rates, cost of insurance charges,
description of guaranteed benefits, and other policy benefits.

 

4)

Information relating to PLICC’s statutory reserve practices.

 

5)

Current and historical pricing assumptions.

 

6)

Information and analysis prepared by PLICC on recent mortality and persistency
experience.

 

7)

Information on invested assets as of June 30, 2009.

 

8)

Information on new investment strategy.

 

9)

Information on statutory/tax asset and reserve assumptions and differences and
other information with respect to Federal income taxes.

 

10)

Information on the terms of reinsurance agreements.

 

11)

Information on future premium production volumes, products, and mix of riders
and other guaranteed benefits.

 

12)

Information on future expenses.

- 2 -

Milliman

--------------------------------------------------------------------------------

 

SECTION II

Summary of Results

Summary of Actuarial Appraisal Values

Table I summarizes the present value of future statutory profits from business
inforce on June 30, 2009, and the development of the reinsurance ceding
commission for 80% of the PFS Term inforce business. The business values are
based upon thirty years of projected profits. Amounts reflect cost of capital
based on 240% of OSFI MCCSR.

Table I

80% of PLICC PFS Term Inforce Business

Actuarial Appraisal Value as of June 30, 2009

(In millions of Canadian Dollars)

 

 

 

11%

 

 

13%

 

 

15%

 

Pre-Tax Value

$

259.8

 

$

223.6

 

$

195.2

 

Taxes

(90.9)

 

(78.2)

 

(68.3)

 

Cost of Capital at 240% MCCSR

(84.7)

 

(97.5)

 

(108.0)

 

Total After-tax

$

84.2

 

$

47.8

 

$

18.9

 

Tax Benefit on Reinsurance

45.3

 

25.7

 

10.2

 

Total Value

$

129.6

 

$

73.5

 

$

29.1

 

 

Summaries of assumptions for each line of business are provided in Section III
and in the Appendices. Projection detail for 100% of the business is provided in
Appendix C; to reproduce the above table, the value shown in Appendix C should
be multiplied by .8/.9 to adjust to 80% of the block and to Canadian dollars.

Under the proposed reinsurance transaction, PLICC would transfer assets equal to
initial reserve less ceding commission. Under the illustrated values at 13%, and
since initial reserves are negative, this calculation equals C$(86.0) -
C$(73.5), i.e. it results in a net transfer of assets from FRAC to PLICC of
C$159.5 million.

Discount Rates

The actuarial appraisal values were developed using discount rates of 11%, 13%,
and 15%. Table I illustrates the importance of the discount rate in the
determination of the value of profits from the business.

General Expense

The unit expense assumptions were developed based on a combination of
Primerica’s Internal pricing allowables for acquisition costs and maintenance
costs, and reflect the anticipated reinsurance treaty allowances.

Surplus Levels, Cost of Required Capital, and Risk Based Capital

The approach used to project yearly profits underlying the present values
reflects an assumption that all future earnings from inforce and new business
are paid out as reported. Included in this calculation is provision for the
minimum level of net worth required to continue favorable regulatory and rating
agency treatment.

The cost of retaining capital to support the ongoing insurance operations will
depend on a) the level of capital believed necessary for the risks inherent in
the insurance operations of PLICC and to achieve desired ratings from various
rating agencies; and b) the differential between the rate of return realized on
retained capital and a buyer’s desired rate of return for an acquisition. The
cost of capital based on maintaining 240% MCCSR is provided for in Table I. The
detailed factors used to develop projected MCCSR are summarized in Appendix A.

- 3 -

Milliman

--------------------------------------------------------------------------------

 

Income Taxes

The actuarial appraisal values summarized in Table I have been adjusted for the
effect of income taxes based on a 35% effective tax rate.

Investments

The projections reflect a new investment earnings rate on assets backing
reserves of 4.95% in all years, based on current new money rates under PLICC’s
target investment strategy. The 4.95% NIER is also in line with the book yield
on PLICC’s portfolio, as shown in Appendix A. The investment yield on assets
backing surplus is assumed to be 5.70% based on Primerica’s targets.

Adjusted Book Value

The Adjusted Book Value to PLICC as of June 30, 2009 was C$536.6 million, based
on PLICC’s Canadian basis reported equity of C$533.2 million plus an after-tax
mark-to-market on assets of C$3.3 million.

- 4 -

Milliman

--------------------------------------------------------------------------------

 

SECTION III

Product Descriptions,

Methodology and Actuarial Assumptions

The table below summarizes the PFS Term insurance inforce as of June 30, 2009,
along with a static validation of the model.

PLICC PFS Term Business

Static Validation

As of June 30, 2009

(US$ in millions)

 

 

Primerica

 

 

Actual

 

Model

 

Policy Count

 

208,708

 

 

208,531

 

Direct Face Amount

$

83,518

 

$

83,514

 

YRT Face Amount

 

14,331

 

 

14,331

 

Coinsurance Face Amount

 

727

 

727

 

Annualized Premium

 

215

 

215

 

Net Reserve

$

(1

)

$

(97

)

 

The model was projected for June 30, 2009 inforce based on seriatim data
provided by PLICC. A detailed description of the model is provided in Appendix B
as well as the detailed actuarial assumptions. Note that the model reserves for
PLICC have been updated to reflect valuation assumptions expected to be made for
yearend 2009 reserve purposes, as specified by PLICC, while the actual June 30,
2009 reserves do not yet reflect this change.

The projections extend for a 30 year period beginning June 30, 2009. The
projections include premiums, death claims, expense allowances and statutory
reserves on a direct and net of third party reinsurance basis. The projected
cash flows are developed on an annual basis. Summarized below is a dynamic
validation of the main cashflow items for the term model.

 

PLICC PFS Term Business

Dynamic Validation

As of June 30, 2009

(In millions of dollars)

 

 

7/1/2006-6/30/2006

 

7/1/2007-6/30/2008

 

7/1/2008-6/30/2009

 

 

Actual

 

Model

 

Actual

 

Model

 

Actual

 

Model

 

Insurance Amount

 

 

 

$

71,822

 

 

 

 

$

78,722

 

$

83.518

 

$

83.514

 

Net Premiums

$

170.1

 

156.5

 

$

184.1

 

171.1

 

196.3

 

188.3

 

Net Claims

47.4

 

49.9

 

54.9

 

56.9

 

52.8

 

64.6

 

Net Insurance Cash Flows

$

122.7

 

$

106.5

 

$

129.3

 

$

114.2

 

$

143.5

 

$

123.8

 

 

Product Descriptions

Primerica was an early leader in the U.S. term insurance market, and
subsequently the Canadian term market, The inforce business consists almost
entirely of level term insurance with level periods of 10 to 30 years. Other
minor term insurance is summarized in Appendix B. The business includes several
optional riders: child term riders (CTR), spouse riders, increasing benefit
riders (IBR), and waiver of premium. The PFS Term policies inforce, other than
the currently sold product, have exchange provisions which allow conversion to a
recent plan without new underwriting, as described later in this section.

- 5 -

Milliman

--------------------------------------------------------------------------------

 

The following is a brief description of the product history and features.

Term Base Policy

The majority of the businesses consist of renewable 10, 15, 20, and 30 - year
term insurance. The Eagle series was introduced in the early 1990’s. The Custom
A, Custom B, Custom Plus and Custom IV were introduced in that order in the late
1990’s and early 2000’s. Prior to the introduction of Custom Advantage in 2007,
the products had three underwriting classes: preferred, non-tobacco and tobacco.
Custom Advantage, the only product that Primerica is currently selling, has an
additional preferred plus underwriting class.

The premium patterns vary by product, but typically remain level during the
minimum of the initial level term period and a specified attained age. After the
initial level term period, the premium steps up to a new level premium period.
There may be one or several step - up premium periods, until the policy becomes
annual renewable term at a specified age in the contract.

The premium rates for each product series are unisex and vary by issue age,
underwriting class and band. The premium bands are defined by the total face
amount of the policy including riders and are as follows:

 

Eagle, Custom A:

$0-100k, $100-150k, $150-200k, $200-250k, $250-500k, $500k+

 

 

Eagle 2000:

$0-100k, $100-150k, $150-200k, $200k+

 

 

Custom B:

$0-150k, $150-250k, $250-350k, $350-500k, $500k+

 

 

Custom Plus, Custom Advantage:

$0-150k, $150-250k, $250-500k, $500k+

 

 

Others:

No Band

 

Additionally, distribution summaries are provided in Appendix B.

Child Rider

A Child Rider may be added to any life policy. Each unit of this rider provides
$1,000 of death benefit on any covered child (or children). If the primary
insured dies, each child will be provided with $1,000 of term insurance per
unit. There is no policy fee on the Child Rider.

Premiums are $6.50 per unit for the rider, which covers all children of the
primary insured. The rider expires on the policy expiration date or when the
insured child reaches 25 years of age. Two children per policy has been assumed
for policies that elect this rider.

Spouse Riders

Each product series offers a Spouse Rider which has the same rate as the base
policy but for the spouse issue age and underwriting class. There is no policy
fee on the Spouse Rider. The Spouse Rider amount is part of the total policy
face amount for defining the band of each policy. The following table summarizes
the amount of Spouse Rider inforce for the term block as of June 30, 2009.

Spouse Riders Inforce

As of June 30, 2009

($ millions)

 

Direct Face Amount

$

27,082

 

YRT Face Amount

 

4,888

 

Coinsurance Face Amount

177

 

Net Face Amount

$

22,017

 

 

- 6 -

Milliman

--------------------------------------------------------------------------------

 

IBR

The Increasing Benefit Rider (IBR) gives the policyholder the option to increase
his or her face amount according to a specified schedule (either 5 or 10%) in
policy years two through ten without undergoing additional underwriting. Each
increase will have a separate premium rate according to the attained age, as
specified in the rate book, which results in the total premium being the sum of
the base policy premium plus each individual increase amount. The policyholder
has the option to stop the face amount increases at any point, but is not
allowed to re-start.

The following summarizes the amount of IBR inforce for the term block as of June
30, 2009.

IBR Inforce

As of June 30, 2009

($ millions)

 

 

5% Annual

Increase

 

10% Annual

Increase

 

Total IBR

 

Direct Face Amount

$

4,995

 

$

2,668

 

$

7,663

 

YRT Face Amount

 

1,870

 

 

180

 

 

2,050

 

Net Face Amount

$

3,124

 

$

2,489

 

$

5,613

 

 

Conversion

Policies issued prior to the 2007 Custom Advantage Series may be exchanged at
any time without evidence of insurability, to any plan available for conversion
which is currently the Custom IV product with the same underwriting class
available for exchange.

The converted business is modeled with premiums based on the premium schedule of
the plan that the policy is converted into. The mortality is based on the point
in scale mortality rate from original issue date, mortality era and issue age.

The vast majority of recent conversions have occurred at the end of the initial
term period. The following table summarizes the amount of past end of term (EOT)
conversions as of June 30, 2009.

 

PLICC Term Business (EOT Converted Business)

As of June 30, 2009

($ in minions)

Company

 

Block

 

Policy Count

 

Inforce Amount

Primerica Life — Canadian Business

 

Direct

 

10,103

 

$

2,584

 

 

Coinsurance Ceded

 

4,277

 

 

225

Net Primerica Life — Canadian Business

 

 

 

 

 

$

2,359

 

Future Conversion

Future conversions are projected reflecting EOT conversions to the Custom IV
product series, which is the product available for conversions. The conversion
rate is based on a study from PLIC and PLICC of conversions using EOT policies
from November 2006 to June 2009. Assumptions for the conversion rate, conversion
product distribution and the level of converted face amount are consistent with
recent experience. Future conversions other than EOT are treated as persisting
policyholders for purposes of modeling.

EOT conversions beginning in year 8 of the projection are assumed to be written
in PLICC under the anticipated terms of the reinsurance agreement. Similarly,
the reinsurance agreement gives PLICC a right to recapture EOT renewals
beginning in year 8 of the projections, which are expected to be profitable. The
determination of the ceding commission in Table I therefore does not include
profits from new EOT conversions or new EOT renewals after year 7 of the
projections.

Waiver of Premium Rider

Approximately 40% of the policyholders elect a waiver of premium rider. The
rider charges account for approximately 2% of the total premium.

- 7 -

Milliman

--------------------------------------------------------------------------------

 

Canadian Seg Fund Business

Primerica Canada sells segregated fund products called “Common Sense Funds”. The
maturity date of a contract is at least 10 years from issue. There are
guaranteed minimum death and maturity benefits equal to 75% of premiums paid,
with no resets, ratchets or roll-up provisions.

The investment strategy for these products is to invest a portion of each
deposit into a strip bond which is expected to mature at the expiry of the
contract for 75% of the deposit amount. Due to the product features and
investment approach, no guarantee cost has been projected in our forecasts. No
reserve or solvency capital requirement is forecasted, consistent with the
company’s current practice consistent with regulatory guidelines. A Deferred
Acquisition Cost (DAC) asset is forecasted for 1st year commissions, which is
assumed to be recoverable from future margins.

The Seg Fund business will not be part of the reinsurance transaction, and
therefore projections of this business have not been included in this report.

Summary of Assumptions

A description of the primary actuarial assumptions is provided below.

Mortality

PLIC and PLICC perform a very detailed mortality study annually. The study used
for purposes of this analysis covered claim experience from 2001 up to December
31, 2008. The total claims in the study are $3.7 billion. The study tracks
duration from original issue date only. Therefore, business which was converted
to a new level term plan prior to June 30, 2009 would be treated as issued from
its original date of underwriting and not from date of conversion.

The mortality study includes most of the coverages of PLICC. It excludes
business beyond the level term period, IBR, and certain coverages where the data
is not available. A separate study is performed for coverages beyond the level
term period.

There are two primary underwriting (or mortality eras) for PLICC which are
described as follows:

 

•

1992 — June 1999 Issues: In 1992 PLICC began underwriting with blood testing in
order for a policy to qualify for the preferred class; as a result, the majority
of cases were underwritten with blood testing. The blood testing indicator is
not available in the data which is used for the mortality study, so the
mortality study for this era combines the exposures for blood and non- blood
tested policies. PLICC also switched to a tobacco/non-tobacco basis in this era.

 

•

July 1999 and Later Issues: The underwriting is the same as the previous
mortality era, however the blood testing indicator is available in the data
allowing the mortality study to analyze results on a blood tested and non blood
tested basis.

The mortality assumptions are based on our evaluation of the recent experience
of PLICC, primarily through the company studies. The base mortality assumption
is a multiple of the 1975-80 15 Year Select and Ultimate Table for each model
cell. The multiple varies by mortality era, underwriting class, issue age and
sex. For converted business, we have assumed point in scale mortality from the
original issue date, mortality era and issue age.

Additionally, annual mortality improvement of 1% for fifteen years is assumed.
Mortality anti-selection according to the Dukes-MacDonald methodology is assumed
for persisting policies (both renewals and conversions) after the initial level
term period.

Further detail on the mortality assumption is described in Appendix B.

Lapse Rates

The lapse assumption is based upon a persistency study using inforce amounts
from December 31, 2005 to June 30, 2009 along with PLICC’s recent experience
study and pricing assumptions. PLICC’s persistency studies show a consistent
pattern for historical lapses from year to year for the term business.

Lapse experience at the end of the initial level term period will depend on
whether there is an ART or a level period following the current level term
period. Additional lapses are assumed each time there is an increase in premium
level after the initial level term period premium increase. Detailed lapse
assumptions are described in Appendix B.

- 8 -

Milliman

--------------------------------------------------------------------------------

 

Expenses

Unit expenses of U.S. $275 per policy for acquisition costs were developed based
on Primerica’s pricing allowables. Maintenance unit costs of U.S. $42.50 per
policy, plus 3% annual inflation, were based on target allowables.

Canadian Reserves

Canadian reserves have been calculated assuming reserves are calculated
according to PLICC practices and assumptions for inforce business. Assumptions
reflect changes currently anticipated by PLICC to be implemented by yearend
2009.

 

 

 

- 9 -

Milliman

--------------------------------------------------------------------------------

 

APPENDIX A

Asset and Investment Assumptions

Asset Portfolio as of June 30, 2009

Invested assets were provided on a seriatim basis, recognizing sinking fund
provisions, call features, refinancing provisions, and anticipated levels of
prepayments.

The tables below summarize the asset portfolio by investment category. The
assumption underlying the values in this report is that most of the asset
portfolio can be distributed out of the Companies immediately, due to reserve
financing and excess capital. Therefore, the portfolios have not been projected
in detail. Instead, a 5.7% net investment earnings rate is assumed, based on the
new money reinvestment strategy as well as the current market yield on the
portfolios.

 

 

 

PLICC

 

 

 

Summary of Modeled Assets

 

 

 

as of June 30, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coupon

 

 

Book

 

 

Market

 

 

 

Par

 

 

Book

 

 

Market

 

 

Rate

 

 

Yield

 

 

Yield

 

Asset Class

 

Value

 

 

Value

 

 

Value

 

 

(AnnEff)

 

 

(AnnEff)

 

 

(AnnEff)

 

PublicBond

 

$

375.9

 

 

$383.1

 

 

$

395.4

 

 

 

5.43%

 

 

 

5.01%

 

 

 

3.77%

 

PrivateBond

 

10.5

 

 

10.5

 

 

10.5

 

 

4.61

 

 

4.71

 

 

4.59

 

Government

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

PreferredStock

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Passthrough

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

ABS

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

CMBS

 

55.0

 

 

55.0

 

 

47.7

 

 

4.88

 

 

4.86

 

 

5.98

 

CMO

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

MortLoan

 

—

 

 

—

 

 

—

 

 

 

 

 

 

—

 

 

—

 

Total

 

$

441.4

 

 

$

448.6

 

 

$

453.7

 

 

 

5.34%

 

 

 

4.99%

 

 

 

4.02%

 

 

Reinvestment Assumptions

The strategy for the investment of net cash flow is summarized below. Spreads,
shown in the following table, are consistent with corporate bond equivalent
(semi-annual) yield. Net yields, after deduction of investment expenses and
expected defaults, are shown on an annual effective basis.

A- 1

Milliman

--------------------------------------------------------------------------------

 

 

 

 

Primerica

 

 

 

Investment Strategy Summary

 

 

 

As of June 30, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

Yield

 

 

Yield

 

 

Investment

 

 

Expected

 

 

Yield

 

Asset Class

 

Allocation

 

 

Maturity

 

Treasury

 

 

Spread

 

 

(BEY)

 

 

(AEY)

 

 

Expenses

 

 

Defaults

 

 

(AEY)

 

Public Bond, A

 

 

8.18

%

 

5

 

 

2.54

%

 

 

2.48

%

 

 

5.02

%

 

 

5.08

%

 

 

0.075

%

 

 

0.15

%

 

 

4.86

%

Public Bond, BBB

 

7.11

 

 

5

 

2.54

 

 

3.25

 

 

5.79

 

 

5.87

 

 

0.075

 

 

0.34

 

 

5.46

 

Public Bond, BB

 

2.49

 

 

5

 

2.54

 

 

6.12

 

 

8.66

 

 

8.84

 

 

0.075

 

 

1.23

 

 

7.54

 

Public Bond, A

 

9.40

 

 

10

 

3.53

 

 

2.44

 

 

5.97

 

 

6.06

 

 

0.075

 

 

0.15

 

 

5.83

 

Public Bond, BBB

 

8.18

 

 

10

 

3.53

 

 

3.18

 

 

6.71

 

 

6.82

 

 

0.075

 

 

0.34

 

 

6.41

 

Public Bond, BB

 

3.73

 

 

10

 

3.53

 

 

5.98

 

 

9.51

 

 

9.74

 

 

0.075

 

 

1.23

 

 

8.43

 

Public Bond, A

 

2.86

 

 

20

 

4.30

 

 

2.30

 

 

6.60

 

 

6.71

 

 

0.075

 

 

0.15

 

 

6.49

 

Public Bond, BBB

 

2.49

 

 

20

 

4.30

 

 

3.10

 

 

7.40

 

 

7.54

 

 

0.075

 

 

0.34

 

 

7.12

 

Private Bond, A

 

3.33

 

 

5

 

2.54

 

 

2.73

 

 

5.27

 

 

5.34

 

 

0.075

 

 

0.15

 

 

5.11

 

Private Bond, BBB

 

3.33

 

 

5

 

2.54

 

 

3.55

 

 

6.09

 

 

6.18

 

 

0.075

 

 

0.34

 

 

5.77

 

Private Bond, A

 

5.56

 

 

10

 

3.53

 

 

2.69

 

 

6.22

 

 

6.31

 

 

0.075

 

 

0.15

 

 

6.09

 

Private Bond, BBB

 

5.56

 

 

10

 

3.53

 

 

3.48

 

 

7.01

 

 

7.13

 

 

0.075

 

 

0.34

 

 

6.72

 

Private Bond, A

 

2.22

 

 

20

 

4.30

 

 

2.55

 

 

6.85

 

 

6.97

 

 

0.075

 

 

0.15

 

 

6.75

 

Private Bond, BBB

 

2.22

 

 

20

 

4.30

 

 

3.4

0

 

7.70

 

 

7.85

 

 

0.075

 

 

0.34

 

 

7.43

 

ABS, AAA

 

4.44

 

 

7

 

3.19

 

 

3.12

 

 

6.31

 

 

6.41

 

 

0.075

 

 

0.01

 

 

6.32

 

ABS, AAA

 

1.11

 

 

30

 

4.32

 

 

1.99

 

 

6.31

 

 

6.41

 

 

0.075

 

 

0.01

 

 

6.32

 

CMBS, AAA

 

0.00

 

 

30

 

4.32

 

 

6.53

 

 

10.85

 

 

11.14

 

 

0.075

 

 

0.01

 

 

11.06

 

CMO, AAA

 

3.36

 

 

15

 

3.92

 

 

0.28

 

 

4.19

 

 

4.23

 

 

0.075

 

 

0.01

 

 

4.15

 

CMO, AAA

 

10.08

 

 

30

 

4.32

 

 

0.28

 

 

4.60

 

 

4.65

 

 

0.075

 

 

0.01

 

 

4.56

 

Passthrough, AAA

 

2.87

 

 

15

 

3.92

 

 

0.67

 

 

4.58

 

 

4.63

 

 

0.075

 

 

0.01

 

 

4.55

 

Passthrough, AAA

 

11.47

 

 

30

 

4.32

 

 

0.26

 

 

4.58

 

 

4.63

 

 

0.075

 

 

0.01

 

 

4.55

 

Total

 

 

100.00

%

 

14.5

 

 

3.55

%

 

 

2.37

%

 

 

5.92

%

 

 

6.02

%

 

 

0.075

%

 

 

0.23

%

 

 

5.71

%

 

For purposes of this analysis, the new money rate for U.S. business was assumed
to be 5.70%. The yield on assets backing Primerica Canada general account
liabilities was assumed to be 75 bp below the U.S. yields, producing an NIER of
4.95%.

Default Cost

Annual default costs are based on Moody’s Data, covering the period from 1920
through 2008.

 

Quality

 

Default Cost

Aaa

 

0.01%

Aa1

 

0.02%

Aa2

 

0.04

Aa3

 

0.09

A1

 

0.09%

A2

 

0.17

A3

 

0.22

Baal

 

0.23%

Baa2

 

0.36

Baa3

 

0.46

Bal

 

0.88%

Ba2

 

1.42

Ba3

 

1.97

B1

 

2.21%

B2

 

2.66

B3

 

2.83

Caa-C

 

4.63%

 

A- 2

Milliman

--------------------------------------------------------------------------------

 

Investment Expenses

Investment expenses of 7.5 basis points are included.

Treasury Yield Curve (Corporate Bond Equivalent)

The projections are based on the constant maturity Treasury yield curve as of
June 30, 2009.

 

Yield Curves

 

30-Jun-2009

 

Maturity

 

Constant Maturity

Treasury

 

 

Corporate

A-Rated

 

90-day

 

 

0.19%

 

 

 

0.79%

 

1 year

 

0.56

 

 

1.61

 

2 year

 

1.11

 

 

3.38

 

3 year

 

1.64

 

 

3.98

 

5 year

 

2.54

 

 

5.02

 

7 year

 

3.19

 

 

5.64

 

10 year

 

3.53

 

 

5.97

 

20 year

 

4.30

 

 

6.60

 

30 year

 

4.32

 

 

5.98

 

 

The capital requirement for Primerica Canada is based on MCCSR requirements, as
follows:

 

 MCCSR Factors: Primerica Canada (100% Level)

 

Risk Component

 

Base

 

Factor

 

C-1, C-3

 

Liabilities

 

 

0.000%

 

C-2

 

Net Amount at Risk (Net)

 

 

0.156%

 

The cost of capital calculation is based on the cost of retaining capital to
support the liabilities of Primerica, assuming earnings on capital at the
after-tax annual effective rate of 3.2%.

 

 

 

A- 3

Milliman

--------------------------------------------------------------------------------

 

APPENDIX B

Liability Models and Assumptions

Model of Term Business

The following tables summarize the model inforce for the term life business as
of June 30, 2009 based on seriatim data provided by the Company.

The inforce amounts summarized below are from the seriatim extracts. There are
minor differences due to reporting timing from the seriatim extract to the
actual booked amounts as of June 30, 2009 which is summarized at the beginning
of Section IV.

 

 

 

Inforce for Company and Model Plan

 

 

 

As of June 30, 2009

 

 

 

($ in millions)

 

 

 

 

 

 

 

Modeled

 

 

 

 

 

 

 

 

 

YRT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Model

 

Plan

 

Issue

 

Policy

 

 

Death

 

 

Rein

 

 

Coinsurance

 

 

Stat Base

 

Tax

 

Grass

 

Company

 

Plan

 

Description

 

Age Range

 

Count

 

 

Benefit

 

 

Amount

 

 

Amount

 

 

Reserve

 

Reserve

 

Premium

 

Primerica -

 

TCHD

 

ChildRider

 

—

 

2

 

 

$

1,681

 

 

—

 

 

—

 

 

N/A

 

N/A

 

$

6

 

Canadian

 

TRML

 

DecrTerm to 65

 

28-68

 

283

 

 

18

 

 

$

—

 

 

$

6

 

 

N/A

 

N/A

 

0

 

Business

 

TRMM

 

CSTT-95

 

23-58

 

603

 

 

71

 

 

—

 

 

20

 

 

N/A

 

N/A

 

1

 

 

 

TRMN

 

CSTT-90

 

23-63

 

 

5,185

 

 

750

 

 

—

 

 

261

 

 

N/A

 

N/A

 

4

 

 

 

TRMO

 

Jumbo10Rider

 

28-53

 

—

 

 

177

 

 

—

 

 

24

 

 

N/A

 

N/A

 

1

 

 

 

TRMP

 

BandedCST

 

23-63

 

 

10,608

 

 

 

2,784

 

 

—

 

 

170

 

 

N/A

 

N/A

 

8

 

 

 

TRMQ

 

Eagle

 

23-53

 

 

18,654

 

 

 

6,076

 

 

—

 

 

12

 

 

N/A

 

N/A

 

19

 

 

 

TRMR

 

T-2000

 

18-63

 

 

4,325

 

 

 

1,220

 

 

—

 

 

0

 

 

N/A

 

N/A

 

3

 

 

 

TRMS

 

CustomA

 

23-53

 

 

11,276

 

 

 

4,590

 

 

7

 

 

3

 

 

N/A

 

N/A

 

13

 

 

 

TRMT

 

CustomB

 

23-65

 

 

16,565

 

 

 

7,734

 

 

 

3,880

 

 

10

 

 

N/A

 

N/A

 

19

 

 

 

TRMU

 

CustomPlus

 

23-68

 

 

20,163

 

 

 

9,731

 

 

 

7,823

 

 

13

 

 

N/A

 

N/A

 

23

 

 

 

TRMV

 

CustomlV

 

18-68

 

 

78,386

 

 

 

31,819

 

 

 

2,621

 

 

214

 

 

N/A

 

N/A

 

81

 

 

 

TRMW

 

CustomAdvantage

 

18-68

 

 

42,658

 

 

 

16,874

 

 

—

 

 

—

 

 

N/A

 

N/A

 

40

 

Total Primerica • Canadian Business

 

 

208,708

 

 

$

83,525

 

 

$

14,331

 

 

$

731

 

 

—

 

 

 

$

218

 

 

The model reflects quinquennial issue ages, sex, underwriting class and face
bands.

B- 1

Milliman

--------------------------------------------------------------------------------

 

EOT Conversion

The table on the previous page reflects all business, including end of term
(EOT) conversions. As of June 30, 2009, the EOT converted business in the term
life block is as follows:

Past Conversion — EOT

As of June 30, 2009

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YRT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Model

 

 

 

Policy

 

 

Death

 

 

Rein

 

Coinsurance

 

 

Stat Base

 

 

Tax

 

 

Grass

 

Company

 

Plan

 

Plan Description

 

Count

 

 

Benefit

 

 

Amount

 

Amount

 

 

Reserve

 

 

Reserve

 

 

Premium

 

Primerica -

 

TCHD

 

Child Rider

 

—

 

 

$

42

 

 

—

 

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Canadian

 

TRML

 

Deer Term to 65

 

$

37

 

 

1

 

 

—

 

$

—

 

 

—

 

 

—

 

 

—

 

Business

 

TRMM

 

CST T-95

 

15

 

 

1

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMN

 

CST T-90

 

—

 

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMO

 

Jumbo 10 Rider

 

—

 

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMP

 

Banded CST

 

4

 

 

1

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMQ

 

Eagle

 

2

 

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMR

 

T-2000

 

—

 

 

—

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMS

 

Custom A

 

14

 

 

3

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

 

TRMT

 

Custom B

 

143

 

 

29

 

 

—

 

5

 

 

—

 

 

—

 

 

—

 

 

 

TRMU

 

Custom Plus

 

541

 

 

142

 

 

—

 

11

 

 

2

 

 

2

 

 

1

 

 

 

TRMV

 

Custom IV

 

 

8,845

 

 

 

2,218

 

 

—

 

208

 

 

10

 

 

10

 

 

11

 

 

 

TRMW

 

Custom Advantage

 

502

 

 

147

 

 

—

 

—

 

 

—

 

 

—

 

 

1

 

Total Primerica - Canadian Business

 

$

10,103

 

 

$

2,584

 

 

—

 

$

225

 

 

$

13

 

 

$

13

 

 

$

13

 

 

Distribution of the Inforce

Distribution for the term life block by key characteristics are summarized
below.

 

Primerica - Canadian Business

 

Inforce for Company and Model Term Period

 

As of June 30, 2009

 

($ in millions)

 

 

 

Death

 

 

YRT Rein

 

 

Coinsurance

 

 

Net Death

 

Term Period

 

Benefit

 

 

Amount

 

 

Amount

 

 

Benefit

 

5 Year

 

$

1,227.3

 

 

 

—

 

 

$

1.3

 

 

$

1,226.1

 

10 Year

 

 

14,354.8

 

 

$

2,723.3

 

 

 

179.6

 

 

 

11,451.9

 

15 Year

 

 

8,120.7

 

 

 

1,767.4

 

 

 

26.7

 

 

 

6,326.6

 

20 Year

 

 

31,945.8

 

 

 

5,215.7

 

 

 

513.3

 

 

 

26,216.7

 

25 Year

 

 

12,457.8

 

 

 

3,893.4

 

 

 

2.1

 

 

 

8,562.3

 

30 Year

 

 

9,284.8

 

 

 

677.9

 

 

 

2.2

 

 

 

8,604.7

 

35 Year

 

 

4,434.7

 

 

 

53.3

 

 

 

—

 

 

 

4,381.4

 

Deer to Age 65

 

 

14.6

 

 

 

0.1

 

 

 

6.2

 

 

 

8.3

 

15 Year Deer

 

 

3.4

 

 

 

0.2

 

 

 

—

 

 

 

3.2

 

Child Rider

 

1.681.1

 

 

 

—

 

 

 

—

 

 

 

1,681.1

 

Total Canada

 

$

83,525.1

 

 

$

14,331.3

 

 

$

731.5

 

 

$

68,462.3

 

 

B- 2

Milliman

--------------------------------------------------------------------------------

 

 

 

Primerica - Canadian Business

Inforce for Company and Model Issue Ages

As of June 30, 2009

($ in millions)

 

Model Issue Ages

 

Death Benefit

 

 

YRT Rein

Amount

 

 

Coinsurance

Amount

 

 

Net Death

Benefit

 

Child Rider

 

$

1,681.1

 

 

 

—

 

 

 

—

 

 

$

1,681.1

 

18

 

 

169.5

 

 

 

—

 

 

 

—

 

 

 

169.5

 

23

 

 

5,717.6

 

 

$

930.2

 

 

$

37.9

 

 

 

4,749.5

 

28

 

 

15,799.5

 

 

 

2,597.8

 

 

 

135.7

 

 

 

13,066.1

 

33

 

 

20,135.0

 

 

 

3,448.8

 

 

 

156.9

 

 

 

16,529.3

 

38

 

 

17,008.3

 

 

 

3,341.5

 

 

 

107.6

 

 

 

13,559.3

 

43

 

 

11,496.9

 

 

 

2,227.1

 

 

 

68.6

 

 

 

9,201.2

 

48

 

 

6,441.6

 

 

 

1,109.9

 

 

 

79.4

 

 

 

5,252.3

 

53

 

 

3,225.5

 

 

 

497.8

 

 

 

72.1

 

 

 

2,655.5

 

58

 

 

1,356.2

 

 

 

134.1

 

 

 

50.3

 

 

1,171.8

 

63

 

 

417.4

 

 

 

36.9

 

 

 

17.1

 

 

 

363.4

 

68

 

 

76.4

 

 

 

7.3

 

 

 

5.8

 

 

 

63.3

 

Total Canada

 

$

83,525.1

 

 

$

14,331.3

 

 

$

731.5

 

 

$

68,462.3

 

 

 

 

Primerica - Canadian Business

Inforce for Company and Model Term Period

As of June 30, 2009

($ in millions)

 

Term Period

 

Model Smoking Class

 

Death

Benefit

 

 

YRT Rein

Amount

 

 

Coinsurance

Amount

 

 

Net Death

Benefit

 

Pre

 

Super Preferred NS

 

$

10.1

 

 

 

—

 

 

 

—

 

 

$

10.1

 

1/1/92

 

Preferred NS

 

 

1,007.1

 

 

 

—

 

 

$

174.5

 

 

 

832.7

 

 

 

Standard NS

 

 

2,507.5

 

 

 

—

 

 

 

467.6

 

 

 

2,039.9

 

 

 

Smoker

 

 

406.2

 

 

 

—

 

 

 

73.6

 

 

 

332.6

 

 

 

Child Rider

 

 

77.0

 

 

 

—

 

 

 

—

 

 

 

77.0

 

Pre

 

Super Preferred NS

 

$

27.7

 

 

 

—

 

 

 

—

 

 

$

27.7

 

7/1/99

 

Preferred NS

 

3.891.7

 

 

 

—

 

 

$

1.5

 

 

 

3,890.2

 

 

 

Standard NS

 

 

9,310.5

 

 

 

—

 

 

 

3.1

 

 

 

9,307.4

 

 

 

Smoker

 

 

1,768.9

 

 

 

—

 

 

 

0.3

 

 

 

1,768.6

 

 

 

Child Rider

 

 

304.9

 

 

 

—

 

 

 

—

 

 

 

304.9

 

Post

 

Blood Tested Super Preferred NS

 

$

2,733.2

 

 

 

—

 

 

 

—

 

 

$

2,733.2

 

7/1/99

 

Blood Tested Preferred NS

 

 

16,260.3

 

 

$

4,229.0

 

 

$

3.0

 

 

 

12,028.3

 

 

 

Blood Tested Standard NS

 

 

19,488.0

 

 

 

4,371.8

 

 

 

1.5

 

 

 

15,114.6

 

 

 

Blood Tested Smoker

 

 

2,724.9

 

 

 

435.4

 

 

 

0.1

 

 

 

2,289.4

 

 

 

Non-Blood Tested Standard NS

 

 

16,772.6

 

 

 

4,249.4

 

 

 

5.7

 

 

 

12,517.5

 

 

 

Non-Blood Tested Smoker

 

 

4,935.4

 

 

 

1,045.7

 

 

 

0.7

 

 

 

3,889.0

 

 

 

Child Rider

 

 

1,299.3

 

 

 

—

 

 

 

—

 

 

 

1,299.3

 

Total Canada

 

 

 

$

83,525.1

 

 

$

14,331.3

 

 

$

731.5

 

 

$

68,462.3

 

B- 3

Milliman

--------------------------------------------------------------------------------

 

 

 

 

Primerica - Canadian Business

Inforce for Company and Model Issue Years

As of June 30, 2009

($ in millions)

 

Model Issue Years

 

Death Benefit

 

 

YRT Rein

Amount

 

 

Coinsurance

Amount

 

 

Net Death

Benefit

 

1986

 

$

7.5

 

 

 

—

 

 

$

2.2

 

 

$

5.2

 

1987

 

 

37.5

 

 

 

—

 

 

 

9.4

 

 

 

28.2

 

1988

 

 

86.8

 

 

 

—

 

 

 

34.4

 

 

 

52.3

 

1989

 

 

474.6

 

 

 

—

 

 

 

208.0

 

 

 

266.6

 

1990

 

 

1,355.3

 

 

 

—

 

 

 

205.2

 

 

 

1,150.1

 

1991

 

 

1,046.4

 

 

 

—

 

 

 

16.6

 

 

 

1,029.8

 

1992

 

 

1,109.0

 

 

 

—

 

 

 

6.8

 

 

 

1,102.2

 

1993

 

 

1,221.1

 

 

 

—

 

 

 

4.2

 

 

 

1,216.8

 

1994

 

 

1,510.8

 

 

 

—

 

 

 

2.3

 

 

 

1,508.4

 

1995

 

 

1,571.7

 

 

 

—

 

 

 

1.4

 

 

 

1,570.3

 

1996

 

 

1,661.6

 

 

 

—

 

 

 

0.9

 

 

 

1,660.7

 

1997

 

 

1,806.0

 

 

 

—

 

 

 

1.0

 

 

 

1,805.1

 

1998

 

 

2,423.4

 

 

 

—

 

 

 

1.4

 

 

 

2,422.0

 

1999

 

 

3,028.0

 

 

 

—

 

 

 

2.3

 

 

 

3,025.7

 

2000

 

 

3,929.3

 

 

$

1,918.2

 

 

 

6.5

 

 

 

2,004.7

 

2001

 

 

4,243.6

 

 

 

3,160.4

 

 

 

5.3

 

 

 

1,077.9

 

2002

 

 

5,111.9

 

 

 

3,893.9

 

 

 

7.0

 

 

 

1,211.0

 

2003

 

 

5,727.7

 

 

 

4,531.2

 

 

 

5.2

 

 

 

1,191.3

 

2004

 

 

6,837.9

 

 

 

215.2

 

 

 

9.8

 

 

 

6,612.8

 

2005

 

 

6,832.3

 

 

 

169.0

 

 

 

8.2

 

 

 

6,655.1

 

2006

 

 

7,773.0

 

 

 

200.5

 

 

 

16.4

 

 

 

7,556.1

 

2007

 

 

8,856.0

 

 

 

185.6

 

 

 

33.9

 

 

 

8,636.6

 

2008

 

 

11,451.6

 

 

 

39.0

 

 

 

85.4

 

 

 

11,327.2

 

2009

 

5,422.2

 

 

 

18.5

 

 

 

57.6

 

 

 

5,346.1

 

Total Canada

 

$

83,525.1

 

 

$

14,331.3

 

 

$

731.5

 

 

$

68,462.3

 

 

 

 

Inforce for Company and Face Amount Per Life

As of June 30, 2009

($ in millions)

 

Size

 

Death

Benefit

 

 

YRT Rein

Amount

 

 

Coinsurance

Amount

 

 

Net Death

Benefit

 

$0 - $100k

 

$

7,456

 

 

$

676

 

 

$

305

 

 

$

6,475

 

$100k-$250k

 

 

27,938

 

 

 

4,341

 

 

 

325

 

 

 

23,272

 

$250k-$500k

 

 

35,430

 

 

 

6,301

 

 

 

88

 

 

 

29,041

 

$500k-$750k

 

 

8,913

 

 

 

1,921

 

 

 

7

 

 

 

6,986

 

$750k-$1M

 

 

2,523

 

 

 

675

 

 

 

5

 

 

 

1,843

 

$1M-$1.5M

 

 

918

 

 

 

269

 

 

 

2

 

 

 

647

 

$1.5M-$2M

 

 

209

 

 

 

87

 

 

 

—

 

 

 

122

 

$2M-$2.5M

 

 

60

 

 

 

24

 

 

 

—

 

 

 

36

 

$2.5M-$3M

 

 

19

 

 

 

7

 

 

 

—

 

 

 

12

 

$3M-$3.5M

 

 

7

 

 

 

—

 

 

 

—

 

 

 

7

 

$3.5M-$4M

 

 

24

 

 

 

15

 

 

 

—

 

 

 

9

 

Above $4M

 

 

29

 

 

 

14

 

 

 

—

 

 

 

14

 

Total Company

 

$

83,525

 

 

$

14,331

 

 

$

731

 

 

$

68,462

 

 

B- 4

Milliman

--------------------------------------------------------------------------------

 

Actuarial Assumptions

Mortality

A.

Mortality Table

The assumed mortality is based on the 15 year SOA 75-80 S&U ANB table, except
the Child Rider plan which is based on the Ultimate 75-80 ANB table.

B.

Mortality Scaling Factors

 

i,

Class Specific

 

Canada

% of the 75-80- 15 Year S&U Table

100% of Ultimate Table for Child Rider

 

 

Era 1 Prior to 1992

 

Era 2 1/1/1992 to 6/30/1999

 

Era 3 7/1/1999 + (3 Class ) Excluding Custom Advantage

 

 

 

 

 

 

Blood Tested

 

Non-Blood Tested

 

 

PNS

 

SNS

 

SM

 

PNS

 

SNS

 

SM

 

PNS

 

SNS

 

SM

 

SNS

 

SM

 

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

 

M

 

F

18-28

 

35%

 

40%

 

35%

 

45%

 

55%

 

75%

 

35%

 

40%

 

35%

 

45%

 

55%

 

75%

 

35%

 

35%

 

40%

 

40%

 

40%

 

55%

 

30%

 

55%

 

40%

 

55%

33-48

 

40

 

45

 

45

 

55

 

65

 

90

 

40

 

45

 

45

 

55

 

65

 

90

 

30

 

40

 

30

 

45

 

65

 

65

 

35

 

50

 

65

 

65

53+

 

40

 

45

 

45

 

55

 

120

 

120

 

40

 

45

 

45

 

55

 

120

 

120

 

30

 

35

 

35

 

45

 

130

 

130

 

55

 

60

 

130

 

150

 

Multiples to the above:

A.

Certain smoker class policyholders in the mortality study are considered
nonsmoker in the seriatim file for premium purposes. The smoker and SNS
mortality rates are increased by the following to adjust for this discrepancy.

 

 

 

SM/SNS

Prior to 92

 

103%

1/1/92 to 6/30/99

 

102

7/1/99+

 

101

B.

Since the mortality study was based on the data with historical exposures
without mortality improvement, an additional multiple (0.99) ^ 2.5 is applied to
reflect mortality improvement between mid-point of the study years and the start
of the projection.

 

ii.

First Year Adjustment

120%

 

iii.

Substandard

101.6% applied to all policies to reflect weighted average table weighting.

 

iv.

Custom Advantage has a new  “preferred plus” underwriting class. The mortality
factors for Custom Advantage are based on the factors of 3 class policies after
July 1, 1999, with the following adjustments:

 

Preferred Plus

:

95.2% of PNS

Non Smoker

 

 

Preferred

:

105.8% of PNS

Non Smoker

 

 

Standard

:

100% of SNS

Non - Smoker

 

 

Standard

:

100% of SM

Smoker

 

 

C.

Mortality Improvement

1% for 15 years from the beginning of the projection

D.

Mortality Anti-Selection

Mortality anti-selection on level premium term products after the initial level
term period was reflected based on the assumption that the high level of
expected lapse at the end of the level premium period will include a
disproportionate share of healthy lives resulting in increased mortality for the
remaining lives. We calculated the impact of this anticipated mortality anti-
selection using “Dukes/MacDonald theory” with an assumption that 80% of lapses
in excess of a base lapse rate of 10% exhibit newly select mortality. Sample
mortality anti-selection multiples are shown below for an original issue age 43
non-smoker, with an initial shock lapse of 30% for a 10 year plan and 40% for a
20 year plan.

B- 5

Milliman

--------------------------------------------------------------------------------

 

 

Issue Age 45

Year After Level Premium Period

 

10 Year Plan

 

15 Year Plan

1

 

122%

 

131%

2

 

119

 

128

5

 

115

 

120

10

 

110

 

116

15

 

107

 

107

A scalar of 110% grading to 100% over fifteen years is applied on subsequent
premium increases due to renewal or due to an initial increase going to ART.

Lapses

A.

Lapse experience varies by whether or not a policy is an EOT conversion. Base
lapse rates in the level term period for the non-converted and the non-EOT
converted policies are shown in the table below.

 

 

 

 

 

Level Term (Excluding EOT Converted )

 

 

 

 

Blood Tested

 

Non-Blood Tasted

Policy
Year

 

Child
Rider

 

PNT

 

SNT

 

SM

 

SNT

 

SM

 

 

18-28

 

33-48

 

53+

 

18-28

 

33-48

 

53+

 

18-28

 

33-48

 

53+

 

18-28

 

33-48

 

53+

 

18-28

 

33-48

 

53+

1

 

13%

 

10%

 

7%

 

6%

 

12%

 

11%

 

10%

 

20%

 

16%

 

15%

 

16%

 

13%

 

8%

 

24%

 

17%

 

14%

2

 

10

 

9

 

6

 

6

 

11

 

9

 

8

 

17

 

12

 

12

 

13

 

10

 

7

 

18

 

15

 

12

3

 

7

 

8

 

6

 

5

 

9

 

7

 

7

 

12

 

10

 

10

 

11

 

8

 

7

 

13

 

12

 

9

4

 

6

 

6

 

4

 

3

 

8

 

6

 

5

 

10

 

9

 

9

 

9

 

7

 

6

 

11

 

9

 

8

5

 

5

 

5

 

3

 

3

 

6

 

5

 

4

 

8

 

7

 

7

 

8

 

6

 

5

 

10

 

7

 

7

6

 

4

 

4

 

3

 

3

 

5

 

4

 

4

 

6

 

5

 

5

 

6

 

5

 

5

 

8

 

5

 

5

7

 

3

 

4

 

3

 

3

 

4

 

4

 

4

 

5

 

4

 

4

 

5

 

4

 

4

 

7

 

4

 

4

8

 

3

 

3

 

3

 

3

 

4

 

4

 

4

 

4

 

4

 

4

 

4

 

4

 

4

 

6

 

4

 

4

9

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

5

 

4

 

4

10

 

2.5

 

2.5

 

2.5 

 

2.5

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

4

 

4

 

4

11

 

2.5

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

 

3

12

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

13

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

14

 

2.5

 

2.5 

 

2.5

 

2.5

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

 

2.5

 

2.5

 

2.5

 

3

 

3

 

3

15+

 

2

 

2

 

2

 

2

 

2

 

2

 

2

 

3

 

3

 

3

 

2

 

2

 

2

 

3

 

3

 

3

Base lapse rates for the EOT converted policies are the same as the above, but
no higher than 5%.

B.

Lapse and Conversion at the end of initial Level Term Period (LTP).

Conversion rates at the end of the initial level term period are shown below,
for all products except Custom Advantage.

 

End of Term (EOT) Conversion Rate

Level Term Period

 

Rate

10

 

50%

15

 

50

20

 

50

25

 

40

30

 

30

35

 

30

Other

 

—

 

No future conversions are assumed for Custom Advantage since it does not have
the conversion provision in the contract. No future conversions are assumed for
policies that are beyond attained age 70 at the end of the level term period.

B- 6

Milliman

--------------------------------------------------------------------------------

 

The lapse rates after the end of term are summarized in the following table,
depending on whether ART period follows the original level term period. Renewals
are not projected for 25, 30, or 35- year term business.

 

 

 

EOT Lapse Rates ( % of exposure before conversion)

 

 

Non-ART

 

ART

 

 

Level Term Period (t)

 

Level Term Period

 

 

10

 

15

 

20

 

25

 

30

 

35

 

Other

 

10

 

15

 

20

 

25

 

30

 

35

 

Other

T

 

28%

 

30%

 

35%

 

60%

 

65%

 

70%

 

100%

 

28%

 

30%

 

35%

 

60%

 

65%

 

70%

 

100%

t+1

 

12

 

12

 

12

 

 

 

 

 

 

 

 

 

20

 

20

 

20

 

 

 

 

 

 

 

 

t+2

 

12

 

12

 

12

 

 

 

 

 

 

 

 

 

15

 

15

 

15

 

 

 

 

 

 

 

 

t+3

 

10

 

10

 

10

 

 

 

 

 

 

 

 

 

15

 

15

 

15

 

 

 

 

 

 

 

 

t+4

 

7

 

7

 

7

 

 

 

 

 

 

 

 

 

15

 

15

 

15

 

 

 

 

 

 

 

 

t+5

 

5

 

5

 

5

 

 

 

 

 

 

 

 

 

15

 

15

 

15

 

 

 

 

 

 

 

 

EOT lapse rates and conversion rates are additive. For example, the total
termination rate at the end of a 20-year level term period is 85%.

Lapse rates at the end of the level term period on Custom Advantage are shown
below.

 

Custom Advantage

 

 

Non ART

 

ART

 

10-20

 

25-30

 

10-20

 

25-30

t

 

60%

 

100%

 

60%

 

100%

t+1

 

25

 

 

 

50

 

 

t+2

 

10

 

 

 

25

 

 

t+3

 

10

 

 

 

15

 

 

t+4

 

5

 

 

 

15

 

 

The shock lapse and conversion is assumed at the end of the current level term
period immediately before the renewal period begins.

C.

20% additional lapse is assumed each time there is an increase in premium level
after the initial LTP premium increase. If in an ART renewal period, then the
20% is only at the start of the ART period.

D.

Lapse following an ART schedule excluding the end of the initial term period are
20% in the first year followed by 15% throughout.

E.

115%, 105% and 100% of the base lapses is assumed in the first, second and
third, respectively, and there after to reflect the deterioration of the lapse
observed from 2008 and early 2009 experience which management believes is due to
the economy and only temporary.

Expenses

The following expenses are assumed.

A.

Maintenance: $42.5

B.

Inflation: 3%

C.

Premium Tax: 3%

D.

Acquisition: $275  New Issue

  $60 New Conversion

B- 7

Milliman

--------------------------------------------------------------------------------

 

Commissions

All commissions are paid on cash premium excluding policy fees.

 

Commission for Advance (75% of net) -1st Year (Paid Immediately)

 

 

Custom Advantage

 

Other

LTP

 

10

 

15, 20

 

25, 30, 35

 

All

Band

 

1-2

 

3

 

4

 

1

 

2

 

3

 

4

 

1-4

 

All

18-25

 

67.3%

 

67.3%

 

56.1%

 

82.7%

 

82.7%

 

82.7%

 

71.5%

 

82.7%

 

91.5%

26-40

 

67.3

 

67.3

 

56.1

 

91.3

 

91.3

 

91.3

 

80.1

 

91.3

 

91.5

41-45

 

67.3

 

56.1

 

44.8

 

91.3

 

80.1

 

80.1

 

68.8

 

91.3

 

91.5

46-50

 

67.3

 

44.8

 

37.3

 

91.3

 

72.6

 

68.8

 

61.3

 

—

 

91.5

51-60

 

67.3

 

41.1

 

37.3

 

91.3

 

65.1

 

65.1

 

61.3

 

—

 

91.5

61-70

 

67.3

 

37.3

 

37.3

 

75.9

 

68.4

 

68.4

 

68.4

 

—

 

91.5

 

Modal Commission (25% of net) -1st Year Only”

 

 

Custom Advantage

 

Other

LTP

 

10

 

15, 20

 

25, 30, 35

 

All

Band

 

1-2

 

3

 

4

 

1

 

2

 

3

 

4

 

1-4

 

All

18-25

 

22.4%

 

22.4%

 

18.7%

 

27.6%

 

27.6%

 

27.6%

 

23.8%

 

27.6%

 

30.5%

26-40

 

22.4

 

22.4

 

18.7

 

30.4

 

30.4

 

30.4

 

26.7

 

30.4

 

30.5

41-45

 

22.4

 

18.7

 

14.9

 

30.4

 

26.7

 

26.7

 

22.9

 

30.4

 

30.5

46-50

 

22.4

 

14.9

 

12.4

 

30.4

 

24.2

 

22.9

 

20.4

 

—

 

30.5

51-60

 

22.4

 

13.7

 

12.4

 

30.4

 

21.7

 

21.7

 

20.4

 

—

 

30.5

61-70

 

22.4

 

12.4

 

12.4

 

25.3

 

22.8

 

22.8

 

22.8

 

—

 

30.5

 

*

Modal commissions are paid only at months of 10,11 and 12 within the first issue
year.

 

Bonus Advanced -1st Year Only (Paid Immediately)

 

 

Custom Advantage

 

Other

LTP

 

10

 

15, 20

 

25, 30, 35

 

All

Band

 

1-2

 

3

 

4

 

1

 

2

 

3

 

4

 

1-4

 

All

18-25

 

52.9%

 

52.9%

 

52.9%

 

49.8%

 

49.8%

 

49.8%

 

49.8%

 

49.8%

 

56.3%

26-40

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

56.3

41-45

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

56.3

46-50

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

—

 

56.3

51-60

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

52.9

 

—

 

56.3

61-70

 

52.9

 

52.9

 

52.9

 

44.6

 

44.6

 

44.6

 

44.6

 

—

 

56.3

 

The companies have charge-back provisions on the base commission on a declining
scale for lapses during the first ten months, which have not been reflected in
the modeling.

IBR Commissions

 

•

Percent of Increased premium resulting from the IBR face amount increase, not
total rider premium.

 

•

No Bonus

 

•

Percentage of cash premium (increased amount)

 

IA

 

 

18-25

 

75%

26+

 

90%

 

Commission on Conversion

63% of first year modal premium, of which 52% is paid at issue and 11% is paid
at months 10-12 of the first issue year.

B- 8

Milliman

--------------------------------------------------------------------------------

 

Reserve Basis

For inforce business, reserves are modeled using the basis described in the 2008
Report of the Appointed Actuary. For the 2009 valuation, the Appointed Actuary
has revised his expected mortality basis, from 66% of the pricing table to 60%
of the pricing table. That change has also been reflected in the model reserves.

For new business, reserves are modeled based on the forecast assumptions in this
report, with margins for adverse deviations consistent with those in the 2008
Report of the Appointed Actuary.

Reinsurance

Reinsurance on the inforce business is ceded on both a coinsurance and YRT
basis. Beginning in 1994, Primerica has ceded its business primarily on an YRT
basis so almost all coinsurance amounts on issues after 1994 are a result of
past conversions. Coinsurance exists primarily from business written in the
1980s. The following summarizes the general reinsurance terms.

Coinsurance Allowances

Common Sense Term

 

Issued Prior to 1/1/88:

 

PNS:

 

2.5%

 

 

SNS:

 

32.5

 

 

SM:

 

37.5

Issued in 1988-1990:

 

 

 

12.5%

Issued in 1990+:

 

IY

 

 

 

 

1-20

 

16%

 

 

21+

 

12.5

 

DT65

 

 

 

 

 

1A

0-49

 

IA

41-49

 

IA

50+

Issued Prior to 1/1/90:

 

PNS

 

13.8%

 

8.5%

 

8.5%

 

 

SNS

 

18.8

 

1.5

 

10.5

 

 

SM

 

23.8

 

21.3

 

21.3

Issued 1//1/90+:

 

PNS

 

17.3

 

12.0

 

12.0

 

 

SNS

 

22.3

 

18.5

 

14.0

 

 

SM

 

27.3

 

24.8

 

24.8

 

Jumbo Term Rider

0.10%

Banded CST

19.5%

Eagle

 

 

 

 

 

 

 

 

 

 

 

10 LTP

 

Original

IY

 

20 LTP

 

 

15 LTP

 

 

1-10

 

 

15+

 

<1990

 

 

20.0%

 

 

 

12.5%

 

 

 

5.0%

 

 

 

12.5%

 

1/1/90 - 6/30/91

 

 

25.0

 

 

 

12.5

 

 

 

5.0

 

 

 

12.5

 

7/1/91+

 

 

26.5

 

 

 

12.5

 

 

 

5.0

 

 

 

12.5

 

 

T2000 (Converted policy)

 

Base:

31.0% (weighted average for Record/Policy Count)

 

Spouse:

20.0%

B- 9

Milliman

--------------------------------------------------------------------------------

 

Custom Series (converted policy)

 

 

LTP

 

 

10

 

 

15

 

 

20

 

 

25

 

 

30

 

Custom A. Custom B, and Custom Plus

 

5%

 

 

 

12.5%

 

 

 

20%

 

 

 

20%

 

 

 

20%

 

 

YRT Reinsurance

YRT treaty terms are listed below. All YRT premium rates except for Custom
Advantage are increased by 103.5% to account for the special pool arrangement
where it is assumed to have 7% overall coverage at a 50% additional premium.
Additional YRT premium on substandard policies reflects an overall factor of
101.6%, adjusted by a substandard allowance of 90% for the first policy year and
15% thereafter. Finally, the SNS and SM rates are increased by an additional
amount consistent with the mortality assumption increase to account for
discrepancies from the actual class for reinsurance versus the class on the
seriatim file.

The YRT rates are as follows:

 

Canadian Reinsurance - YRT Rates

Percentage of CIA 86-92 Table

 

 

ERA 1

 

ERA 2

 

ERA 3

 

ERA 4

 

Custom

 

 

Tested

 

Non-Tested

 

Tested

 

Non-Tested

 

Tested

 

Non-Tested

 

Tested

 

Non-Tested

 

Advantage

M PNT

 

52.5%

 

55.2%

 

53.0%

 

53.0%

 

52.1%

 

52.1%

 

46.0%

 

46.0%

 

 

M SNT

 

77.1

 

80.4

 

77.4

 

80.3

 

76.4

 

80.1

 

73.0

 

86.0

 

 

M Tobacco

 

76.8

 

80.3

 

76.8

 

79.9

 

78.0

 

82.0

 

79.0

 

93.0

 

 

F PNT

 

54.9

 

54.9

 

55.2

 

55.2

 

55.0

 

55.0

 

46.0

 

46.0

 

 

F SNT

 

78.8

 

82.0

 

79.2

 

82.1

 

78.7

 

82.4

 

73.0

 

86.0

 

N/A

F Tobacco

 

77.1

 

80.6

 

76.6

 

79.7

 

77.8

 

81.8

 

79.0

 

93.0

 

 

Quota-share %

 

80%

 

90%

 

70%

 

100%

 

 

Excess

 

N

 

N

 

N

 

Y. $500K per life

 

 

First Dollar

 

Y

 

Y

 

Y

 

N

 

 

Issue Dates

 

4/1/00-12/31/00

 

1/1/01-8/31/03

 

9/1/03-12/31/03

 

1/1/04+

 

 

New business in Canada does not have any reinsurance. Reinsurance on new
business in the U.S. is assumed to be recaptured at the end of the level period,
when the reinsurers generally have the option to increase YRT rates.

 

 

 

B- 10

Milliman

--------------------------------------------------------------------------------

 

APPENDIX C

Detailed Statutory Income Projections

(in US dollars)

 

Line of Business

Page

 

 

Business Inforce as of June 30, 2009: 100% of Inforce

 

 

 

•     Canada - Net (Before New Conversions)

C-2

•     Canada New Conversions - Net

C-5

C- 1

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[g2017022721265960113075.jpg]

 

C- 2

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[g2017022721265967113076.jpg]

 

C- 3

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--------------------------------------------------------------------------------

 

 

[g2017022721265974313077.jpg]

 

C- 4

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--------------------------------------------------------------------------------

 

 

[g2017022721265980613078.jpg]

 

C- 5

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--------------------------------------------------------------------------------

 

 

[g2017022721265987713079.jpg]

 

C- 6

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[g2017022721265995513080.jpg]

 

 

 

C- 7

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Exhibit VIII

Investment Guidelines

[See attached]

The assets held in the Reinsurance Trust Account will be invested in highly
rated assets permitted by the agreed upon Investment Guidelines. The Investment
Guidelines will contain concentration limits, and with respect to the
Reinsurance Trust Account, such assets will comply with OSFI's requirements
under the Reinsurance Trust Agreement

The Reinsurer will appoint either a third-party investment manager or a
Citigroup affiliate, pursuant to an investment management agreement with respect
to the management of assets held in the Reinsurance Trust Account.

 

 

 

 

VIII-1

1540579.6A-New York Server 7A - MSW

 

--------------------------------------------------------------------------------

 

Financial Reassurance Company 2010, Ltd

Primerica Life Insurance Company of Canada Trust Account, Account Number [     ]

Investment Portfolio Guidelines

AS of March 3, 2010

--------------------------------------------------------------------------------

 

FINANCIAL REASSURANCE COMPANY 2010, LTD

PRIMERICA LIFE INSURANCE COMPANY OF CANADA TRUST ACCOUNT,

ACCOUNT NUMBER [ ]

INVESTMENT PORTFOLIO GUIDELINES

A.

ELIGIBLE INVESTMENTS

The Managed Portfolio (as identified in Exhibit II hereto) was established in
accordance with the terms of a trust agreement among Primerica Life Insurance
Company of Canada (“PLICC”), Financial Reassurance Company 2010, Ltd (“FRAC”),
RBC Dexia Investor Services Trust and the Office of the Superintendent of
Financial Institutions, Canada (“OSFI”). The Managed Portfolio may be invested
in the following “Eligible Investments”. Any exceptions to the following list of
Eligible Investments must be pre-approved by the persons set forth in Exhibit I
(jointly, the “Approvers”) and OSFI. All Eligible Investments will be managed in
compliance with all relevant laws and regulations in order to allow PLICC to
receive full financial statement credit from OSFI for the reinsurance under the
coinsurance agreement dated [ ], 2010, by and between PLICC and FRAC.

 

A.I.

Investment Securities

The Investment Adviser is hereby authorized to approve purchases of the
following securities (“Investment Securities”) payable in Canadian currency in
accordance with the Portfolio Restrictions:

 

a.

Canadian Treasury obligations;

 

b.

Canadian Provincial obligations; and

 

c.

Any other obligations directly issued or guaranteed by the Canadian Government
or any Canadian Province.

 

A.II.

Money Market Securities

The Investment Adviser is hereby authorized to approve purchases of the
following money market securities in accordance with the Portfolio Restrictions:

 

•

Short term Canadian Treasury and Provincial obligations without limitation;

B.

INVESTMENT AUTHORITIES

 

B.I.

Ratings

All securities must be rated at least A3 by Moody’s Investors Service, A by
Dominion Bond Rating Service (DBRS) or A- by Standard & Poor’s at the time of
initial purchase. The average portfolio rating should be maintained at least at
A1 by Moody’s, A by DBRS or A+ by Standard & Poor’s. If the security is unrated
by these services, the rating assigned by the Investment Advisor will be used,
with advanced approval of the Approvers and OSFI.

 

B.II.

Trading Authority

The Investment Adviser is hereby authorized to execute the purchase of Eligible
Investments conforming to the Portfolio Restrictions and any sales of such
investments.

The Chief Financial Officer of FRAC authorizes the investment manager to
reinvest maturities and new monies within the Investment Guidelines described
herein.

Any guidelines in this Operating Policy or the Portfolio Guidelines will be
reviewed periodically at the discretion of the portfolio manager appointed to
the Managed Portfolio by the Investment Adviser with any proposed changes to be
approved by the Approvers before implementation.

C.

INVESTMENT COMMITTEE

The Investment Committee shall review and approve the investment results of the
Managed Portfolio, investment policies and strategies. The members of the
Investment Committee may be changed from time to time by the Board of Directors
of FRAC.

AS of March 3, 2010

--------------------------------------------------------------------------------

 

D.

PORTFOLIO RESTRICTIONS

1.

Affiliated Issuers

PLICC, FRAC the Investment Adviser or any of their parents, affiliates or
subsidiaries that issue common stock and debt instruments where the credit is
either PLICC, FRAC or the Investment Adviser, respectively, or a parent,
affiliate or subsidiary of either may not be purchased.

2.

Money Market Securities

Money Market Securities will not exceed a maturity of one year.

3.

Canadian Investment Grade Corporate Securities

Investments in Canadian corporate investments are not permitted.

4.

ABS and CMBS Securities

Investments in ABS and CMBS investments are not permitted.

5.

Investment in Foreign Issuers

Investments in securities issued by entities organized in a jurisdiction other
than Canada are not permitted.

 

AS of March 3, 2010

--------------------------------------------------------------------------------

 

EXHIBIT I

Approvers (Joint)

 

(1)    Investment Committee

Mark Mason

Reza Shah

Francis Genesi

(2)    Clti Holdings Treasurer Designee

Peter Mozer

(3)    Senior Risk Manager

Alfredo Schonbom

(4)    PLICC Designee

John Adams

AS of March 3, 2010

--------------------------------------------------------------------------------

 

EXHIBIT II

Managed Portfolio

Primerica Life Insurance Company of Canada Trust Account, Account number
[               ].

 

 

AS of March 3, 2010

--------------------------------------------------------------------------------

- 25 -

SCHEDULE “B”

TO THE REINSURANCE SECURITY AGREEMENT

DATED AS OF THE 31st DAY OF DECEMBER, 2011

NOTICE OF EXCLUSIVE CONTROL

 

TO:

 

RBC DEXIA INVESTOR SERVICES TRUST (the “Custodian”)

AND TO:

 

FINANCIAL REASSURANCE COMPANY 2010, LTD. (the “Pledgor”)

RE:

 

Reinsurance Security Agreement made as of December 31, 2011 among Primerica Life
Insurance Company of Canada (the “Secured Party”), the Pledgor and the Custodian
(as the same may be amended or modified from time to time, the “Reinsurance
Security Agreement”) as it relates to Account No. 110335034 (the “Account”)

The Secured Party hereby provides notice to the Custodian to, in accordance with
the Reinsurance Security Agreement, act only upon the written instructions,
advice, directions, elections, agreements, opinions, waivers, approvals and
demands of the Secured Party and any receiver or agent having jurisdiction over
the Securities Account which is appointed by the Secured Party (or any court of
competent jurisdiction). The Custodian shall not, hereafter, comply with any
Entitlement Orders (as defined in the Reinsurance Security Agreement) issued by
the Pledgor or any person acting on behalf of the Pledgor.

For the purposes of Section 27.8 of the Reinsurance Security Agreement, the
following persons are authorized to represent the Secured Party in dealing with
the Custodian and true copies of their signatures appear opposite their name:

 

NAME

 

TITLE

 

SIGNATURE

 

 

 

 

 

 

 

 

 

 

This Notice shall terminate only upon written notice from the Secured Party to
the Custodian of such termination.

DATED this            day of         ,20_.

 

PRIMERICA LIFE INSURANCE COMPANY OF CANADA

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

12519155.10

 

Legal*6759570.3

TA17132 Dec 2011

 

--------------------------------------------------------------------------------

 

SCHEDULE “C”

TO THE REINSURANCE SECURITY AGREEMENT

DATED AS OF THE 31st DAY OF DECEMBER, 2011

SECURITIES ACCOUNT

110335034

 

 

 

 

12519155.10

 

Legal*6759570.3

TA17132 Dec 2011

 

--------------------------------------------------------------------------------

- 2 -

SCHEDULE “D”

TO THE REINSURANCE SECURITY AGREEMENT

DATED AS OF THE 31st DAY OF DECEMBER, 2011

CERTIFICATE OF AUTHORIZED SIGNATORIES (“C.O.A.S.”)

 

12519155.10

 

Legal*6759570.3

TA17132 Dec 2011

 

--------------------------------------------------------------------------------

- 3 -

INSERT FORM OF C.O.A.S. HERE

 

 

 

12519155.10

 

Legal*6759570.3

TA17132 Dec 2011

 

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHORIZED SIGNATORIES (including Category Guide)

 

CLIENT NAME:

 

FINANCIAL REASSURANCE COMPANY 2010, LTD

ACCOUNT NUMBER(S)

(the “Account(s)”):

 

 

The Undersigned hereby authorizes the following person(s) (herein called
“Authorized Person(s)”) to direct RBC Dexia Investor Services Trust (“RBC
Dexia”) with respect to certain categories (Column E) of activities requiring
authorization for said Account (see Category Guide for a list of categories of
activities requiring authorization or Direction).

 

 

 

 

 

 

 

D. IS PERSON IN

(A) AN

EMPLOYEE OF UNDERSIGNED?

 

 

 

 

A. NAME

 

B. TITLE

 

C. SPECIMEN

SIGNATURE

 

YES

 

NO

 

IF “NO”. NAME OF COMPANY /

ORGANIZATION and

RELATIONSHIP TO

UNDERSIGNED

 

E.

CATEGORY

REZA SHAH

 

DIRECTOR

 

Illegible

 

✓

 

 

 

CITIGROUP INC

 

1-8

FRANCIS GENESI

 

DIRECTOR

 

Illegible

 

✓

 

 

 

CITGROUP INC

 

1-8

DAVID PICKERING

 

DIRECTOR

 

Illegible

 

✓

 

 

 

IAS

 

1-8

DAVID EZEKIEL

 

DIRECTOR

 

Illegible

 

 

 

✓

 

IAS

 

2-8

DAVID SYKES

 

DIRECTOR

 

Illegible

 

 

 

✓

 

IAS

 

2-8

DAVID ALEXANDER

 

DIRECTOR

 

Illegible

 

 

 

✓

 

IAS

 

2-8

NICK.WARREN

 

DIRECTOR

 

Illegible

 

 

 

✓

 

IAS

 

2-8

All authorizations and Directions provided to RBC Dexia must be signed by the
appropriate number of Authorized Persons indicated in the Category Guide. COAS
is not valid if the Category Guide is not completed and attached. The
Undersigned hereby confirms that RBC Dexia is fully protected in acting upon any
instrument, certificate, direction or other writing (whether in written form or
given by * electronic transmission) presented to it and signed by the
appropriate number of Authorized Persons (whether or not such Authorized Person
is an employee of the Undersigned). The Undersigned also hereby assumes
responsibility to review this Certificate from time to time as required and to
provide RBC Dexia with a new Certificate if changes are made. Unless RBC Dexia
receives a new Certificate, the Undersigned acknowledges and agrees that RBC
Dexia may rely conclusively on the last Certificate filed with them.

This Certificate replaces and supersedes any previously filed Certificate and
becomes effective on the date RBC Dexia receives it. This Certificate shall
remain in full force and effect until the Undersigned pro RBC Dexia with a new
Certificate to replace it.

Signed in the City of New York on this 9th day of March, 2010

 

CERTIFIED ON BEHALF OF

FINANCIAL REASSURANCE COMPANY 2010, LTD

 

NAME OF THE COMPANY/ORGANIZATION/PLAN SPONSOR (the “Undersigned”)

 

I hereby declare that I am duly authorized to provide this Certificate on behalf
of the Undersigned.

 

 

 

 

 

DATE RECEIVED BY RBC DEXIA

Illegible

 

DAVID PlCKERING

 

DIRECTOR

AUTHORIZED SIGNATORY

 

PRINT NAME

 

TITLE

Illegible

 

NICK WARREN

 

DRECTOR

AUTHORIZED SIGNATORY

 

PRINT NAME

 

TITLE

 

COAS Insurance – June12 2008

Page 1 of 2

 

--------------------------------------------------------------------------------

 

CATEGORY GUIDE

 

CLIENT NAME:

FINANCIAL REASSURANCE COMPANY 2010, LTD

 

 

ACCOUNT NUMBER(S)

(the “Account(s)”):

 

In Column E of the Certificate, enter the Category(ies) in which each Authorized
Person is entitled to sign

 

CATEGORY

GUIDE

 

CATEGORY FUNCTION

 

NO. OF

REQUIRED

SIGNATORIES

1.

 

To sign legal documentation to bind the Company/Organization/Plan Sponsor (Note:
Category “I” designation may be given Only to direct employees of the
Company/Organization/Plan Sponsor).

 

1

2.

 

To direct RBC Dexia to settle security transactions including free asset
movements and make disposition of account assets for settlement purposes and to
advise RBC Dexia of corporate action decisions relating to investments,
including direction for proxy voting.

 

2

3.

 

To direct RBC Dexia to pay fees, charges and expenses from the asset (including,
but not limited to, out-of pocket expenses, payments to consultants, lawyers,
investment managers, RBC Dexia as trustee, RBC Dexia as custodian, RBC Dexia in
any other- capacity acting for the account, to any other custodian).

 

1

4.

 

To provide notification to RBC Dexia of the appointment of Investment Managers
and other agents; to provide notification of the termination of an Investment
Manager and direction as to any changes in the management of account assets.

 

1

5.

 

To provide directions to RBC Dexia to with respect to account opening, account
maintenance, or account termination.

 

1

6.

 

To direct RBC Dexia to carry out non-financial transactions including such
matters as changes to statement frequencies and reporting periods, and changes
to access tights or account maintenance in one of RBC Dexia's secured access
channels used by the Client.

 

1

7.

 

To direct RBC Dexia to transfer cash in and out of the account and to enter into
and settle foreign exchange transactions

 

2

8.

 

To direct RBC Dexia in respect of any other activity or matter. Enter the
details regarding such other activity or matter.

 

1

 

 

 

COAS Insurance – June12 2008

Page 2 of 2

 

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHORIZED SIGNATORIES (including Category Guide)

 

CLIENT NAME:

Primerica Life Insurance Company of Canada (RSA with Financial Reassurance
Company 2010 Ltd).

ACCOUNT NUMBER(S)

(the “Account(s)”):

110335034

The Undersigned hereby authorizes the following person(s) (herein called
“Authorized Person(s)”) to direct RBC Dexia Investor Services Trust (“RBC
Dexia”) with respect to certain categories (Column E) of activities requiring
authorization for said Account (see Category Guide for a list of categories of
activities requiring authorization or Direction).

 

 

 

 

 

 

 

D. IS PERSON IN (A) AN

EMPLOYEE OF UNDERSIGNED?

 

 

 

 

A. NAME

 

B. TITLE

 

C. SPECIMEN

SIGNATURE

 

YES

 

NO

 

IF “NO”, NAME OF COMPANY / ORGANIZATION and RELATIONSHIP TO UNDERSIGNED

 

E.

CATEGORY

John A. Adams

 

Executive Vice- President & Chief Executive Officer'“

 

Illegible

 

Yes

 

 

 

 

 

1 to 8

Heather Koski

 

Senior Vice-President, Finance & Chief Financial  Officer

 

Illegible

 

Yes

 

 

 

 

 

1 to 8

David Grad

 

Sr. VP, General Counsel & Corporate Secretary, Chief Compliance Officer, Chief
Anti-Money  Laundering Compliance Officer, Privacy Officer & Ombudsperson

 

Illegible

 

Yes

 

 

 

 

 

1 to 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All authorizations and Directions provided to RBC Dexia must be signed by the
appropriate number of Authorized Persons indicated in the Category Guide. COAS
is not valid if the Category Guide is not completed and attached. The
Undersigned hereby confirms that RBC Dexia is fully protected in acting upon any
instrument, certificate, direction or other writing (whether in written form or
given by electronic transmission) presented to it and signed by the appropriate
number of Authorized Persons (whether or not such Authorized Person is an
employee of the Undersigned). The Undersigned also hereby assumes responsibility
to review this Certificate from time to time as required and to provide RBC
Dexia with a new Certificate if changes are made. Unless RBC Dexia receives a
new Certificate, the Undersigned acknowledges and agrees that RBC Dexia may rely
conclusively on the last Certificate filed with them.

This Certificate replaces and supersedes any previously filed Certificate and
becomes effective on the date RBC Dexia receives it. This Certificate shall
remain in full force and effect until the Undersigned pro RBC Dexia with a new
Certificate to replace it.

Signed in the City of Mississauga on this 26th day of January, 2012.

 

 

 

COAS Insurance – June12 2008

Page 1 of 3

 

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHORIZED SIGNATORIES (including Category Guide)

 

CERTIFIED ON BEHALF OF

 

Primerica Life Insurance Company of Canada (RSA with Financial Reassurance
Company 2010 Ltd).

 

NAME OF THE COMPANY/ORGANIZATION/PLAN SPONSOR (the”Undersigned”)

 

I hereby declare that-I am duly authorized to provide this Certificate on behalf
of the Undersigned.

 

 

 

 

 

 

DATE RECEIVED BY RBC DEXIA

Illegible

 

Heather Kosti

 

SVP Finance E CFO

AUTHORIZED SIGNATORY

 

PRINT NAME

 

TITLE

 

 

John A Aloin

 

CEO

AUTHORIZED SIGNATORY

 

PRINT NAME

 

TITLE

 

 

 

COAS Insurance – June12 2008

Page 2 of 3

 

--------------------------------------------------------------------------------

 

CATEGORY GUIDE

 

CLIENT NAME:

 

Primerica Life Insurance Company of Canada (RSA with Financial Reassurance
Company 2010 Ltd

ACCOUNT NUMBER(S)

 

1100335034

(the “Account(s)”):

 

In Column E of the Certificate, enter the Category(ies) in which each Authorized
Person is entitled to sign.

 

CATEGORY

GUIDE

 

CATEGORY FUNCTION

 

NO. OF

REQUIRED

SIGNATORIES

1.

 

To sign legal documentation to bind the Company/Organization/Plan Sponsor (Note:
Category “1” designation may be given Only to direct employees of the
Company/Organization/Plan Sponsor).

 

2

2.

 

To direct RBC Dexia to settle security transactions including free asset
movements and make disposition of account assets for settlement purposes and to
advise RBC Dexia of corporate action decisions relating to investments,
including direction for proxy voting.

 

N/A

3.

 

To direct RBC Dexia to pay fees, charges and expenses from the asset (including,
but not limited to, out-of pocket expenses, payments to consultants, lawyers,
investment managers, RBC Dexia as trustee, RBC Dexia as custodian, RBC Dexia in
any other capacity acting for the account, to any other custodian).

 

N/A

4.

 

To provide notification to RBC Dexia of the appointment of Investment Managers
and other agents; to provide notification of the termination of an Investment
Manager and direction as to any changes in the management of account assets.

 

N/A

5.

 

To provide directions to RBC Dexia to with respect to account opening, account
maintenance, or account termination.

 

2

6.

 

To direct RBC Dexia to carry out non-financial transactions including such
matters as changes to statement frequencies and reporting periods, and changes
to access rights or account maintenance in one of RBC Dexia’s secured access
channels used by the Client.

 

2

7.

 

To direct RBC Dexia to transfer cash in and out of the account and to enter into
and settle foreign exchange transactions.

 

2

8.

 

To direct RBC Dexia in respect of any other activity or matter. Enter the
details regarding such other activity or matter:

 

N/A

 

 

 

 

COAS Insurance – June12 2008

Page 3 of 3