<PAGE>

                                                                   EXHIBIT 10.24

December 31,2004

Mr. John Burke
Annuity & Life Reassurance, Ltd.
Cumberland House
1 Victoria Street
Hamilton HM 11
Bermuda

Dear Mr. Burke:

This letter of intent ("Letter of Intent") represents an indication of interest
with respect to certain proposed reinsurance transactions involving Annuity &
Life Reassurance, Ltd. ("ALR") and Transamerica Occidental Life Insurance
Company ("TOLIC") (the "Transfer").

The purpose of the Transfer is to conclude, effective December 31, 2004,
retrocession transactions between ALR (as retrocedent) and TOLIC (as
retrocessionaire) as to two separate blocks of life reinsurance business and,
effective November 30, 2004, recapture by TOLIC (as retrocedent) of an annuity
retrocession treaty with ALR (as retrocessionaire). Consideration for said
retrocession of life reinsurance business and annuity retrocession treaty
recapture shall consist of various payments from ALR to TOLIC, as well as the
transfer of beneficial interest and title by ALR to TOLIC of related trust
corpus.

STRUCTURE

The structure is as follows:

(1)   ALR shall retrocede to TOLIC 100% of the liability that the ALR assumes
from Fidelity & Guaranty Life Insurance Company under that Reinsurance Agreement
between Fidelity & Guaranty Life Insurance Company and ALR dated October 1,1999
(hereinafter F&G Agreement), with respect to losses occurring on or after
December 31, 2004 subject to the limitations set forth in below Paragraph (3).

(2)   ALR shall retrocede to TOLIC 100% of the liability that the ALR assumes
from Scottish Re Life Corporation, as the present counter-party and cedent under
those Reinsurance Agreements Nos. 2857 and 2858, originally between Phoenix Home
Life Mutual Insurance Company, American Phoenix Life and Reassurance Company and
Phoenix Life and Reassurance Company of New York and ALR, dated January 1, 1998
(hereinafter Scottish Re Agreements), with respect to losses occurring on or
after December 31, 2004 subject to the limitations set forth in below Paragraph
(3).

(3)   In consideration for the retrocession transactions contemplated by the
preceding Paragraphs (1) and (2), ALR shall pay TOLIC $18,500,000 in immediately
available funds, no

<PAGE>

later than January 31, 2005. Of this total, $15,050,000 is attributable to the
retrocession of the F&G Agreement and $3,450,000 is attributable to the
retrocession of the Scottish Re Agreements. Additional consideration consists of
ALR obtaining the necessary consents of F& G Life Insurance Company and Scottish
Re Life Corporation to the novations described hereinafter in Paragraph (5)
within five (5) business days of the date of this Letter of Intent. Said
consideration addresses, in connection with these retrocession transactions,
the transfer to TOLIC of rights and obligations, but excludes rights to premium
and liability for claims occurring prior to December 31,2004. TOLIC shall not be
compensated for and, hence, will have no exposure to any risk exposures of any
type and/or claims with dates of death occurring at any time prior to December
31, 2004.

(4)   On the sixth business day following the effective date of treaties
documenting the retrocession transactions referenced in Paragraphs (1) and (2),
TOLIC shall agree to be a guarantor as to the letters of credit provided by ALR
as to the F&G Agreement and the Scottish Re Agreements, expressly in order to
facilitate the release by the issuing banks of the funds represented by such
letters of credit.

(5)   ALR shall use its best efforts to assist TOLIC in obtaining the consent of
the ceding companies referenced in Paragraphs (1) and (2) above to a novation
of each of the F&G Agreement and the Scottish Re Agreements, continuing in full
force and effect with respect to the respective ceding company hereunder.
Effective as of and on the novation date, TOLIC shall be substituted in the
place of ALR as the reinsurer of each of the F&G Agreement and the Scottish Re
Agreements, provided however that said novations can be concluded on terms
mutually acceptable to both ALR and TOLIC. Consideration for such novation is
addressed in Paragraph (3) and (4) above, as well as Paragraphs (6) and (7)
hereinafter. In the event that said novations do not take effect by January
31,2005, then the retrocession transactions described in preceding Paragraphs
(1), (2) and (3) shall be unwound and the termination and recapture of the
Annuity Modco Treaty referenced in Paragraphs (8) and (9) hereinafter shall not
occur.

(6)   First, on the effective date of the novation(s) referenced in Paragraph
(5) above, the retrocession agreements between ALR referenced in Paragraphs (1)
and (2) shall terminate. Second, on the effective date of said novation(s), the
letters of credit referenced in preceding Paragraph (4) shall also be cancelled
by ALR and TOLIC and shall immediately terminate. Third and finally, on the
effective date(s) of said novation(s), the title to the trust (the assets as to
which equal or exceed $29 million) established in connection with the Scottish
Re agreements shall be transferred from, ALR to TOLIC. The relevant trust
agreement will be revised to reflect TOLIC as the trust's grantor and
beneficiary, thereby replacing ALR as grantor and Scottish Re Life Corporation
(or its predecessor in interest) as beneficiary.

(7)   Upon termination of the letters of credit and the trust title transfer
referenced in Paragraph (6) above, TOLIC shall direct the trustee (Mellon Bank)
to wire the funds as referenced in preceding Paragraph (3) and totaling
$18,500,000 to TOLIC.

<PAGE>

(8)   TOLIC and ALR shall terminate that certain Automatic Modified Coinsurance
Annuity Reinsurance Agreement (No. 0676-01) between ALR and TOLIC effective
September 30, 1998 (the "Annuity Modco Treaty") and TOLIC shall recapture all
business ceded thereunder as of December 1, 2004. ALR shall remain liable to
TOLIC for all claims under the Retrocession Treaty through and including
November 30,2004 and, given such liability, shall be responsible for all net
settlements under the Annuity Modco Treaty through and including said date.

(9)   In consideration for the termination and recapture contemplated by the
preceding Paragraph (8), ALR shall pay TOLIC, no later than January 31,2005: (a)
amounts owed for all outstanding settlements (revenues, if any, offset from or
by gross paid claims) through November 30, 2004 as reasonably agreed by TOLIC
and ALR and (b) a termination premium of $14,000,000. Said consideration shall
be paid first from the remaining assets from the trust established in connection
with the Scottish Re Agreements and as to which TOLIC has assumed title, with
the remainder to be paid in other immediately available funds.

TERMS AND WARRANTIES

Other terms and warranties are as follows:

A.    Conditions Precedent. The consummation of the Transfer contemplated by any
      paragraph of the Structure Section above is warranted by ALR as a
      condition precedent to the parties' obligations to consummate the
      transactions contemplated by any subsequent paragraph of the Structure
      Section above. For example, if the novations described in paragraph (5) do
      not take place, neither TOLIC nor ALR shall proceed to effect termination
      and recapture of the Annuity Modco Treaty as referenced in Paragraphs (8)
      and (9).

B.    Timing. The parties will use their best efforts to negotiate and execute
      Definitive Agreements by January 31, 2005. Definitive Agreements shall
      include, at a minimum, retrocession agreements as to each of the F&G Re
      Agreement and the Scottish Re Agreements, novation amendments as to each
      of the F&G Re Agreements and the Scottish Agreements, and a termination
      and recapture amendment as to the Annuity Modco Treaty.

C.    Consents. To the extent required, as soon as reasonably possible after
      signing of this Agreement, the parties will work together to obtain the
      consents of the necessary ceding companies; provided however, that the
      consent of any regulatory authorities, including but not limited to the
      Bermuda Monetary Authority, shall be the sole responsibility of ALR,

<PAGE>

D.    Limitations of 'TOLIC's Liability under Retrocession Transactions
      Contemplated in Paragraphs(1) and (2). TOLIC's liability under
      retrocession transactions contemplated in paragraphs (1) and (2) are
      limited as follows: Under no circumstances shall TOLIC assume liability
      for any extracontractual liability or punitive damages liability or bad
      faith liability attributable under the F&G Agreement and the Scottish Re
      Agreements. ALR shall indemnify and hold TOLIC harmless as to any such
      liability. Also, under no circumstances shall TOLIC assume liability for
      any existing claim disputes, arbitrations, lawsuits or other dispute
      resolution proceedings.

E.    Claim Payment Warranty by ALR for Effective Period of Retrocession. With
      respect to the F&G Agreement and the Scottish Re Agreements subject to the
      retrocession transactions described in Paragraphs (1) and (2), ALR
      warrants that all claims owed by ALR to the respective cedents shall be
      promptly paid to said cedents (F&G and Scottish Re) during the period
      during which the TOLIC retrocession transactions are in effect. For
      purposes of this warranty, "promptly" is defined as no later than thirty
      (30) calendar days following the receipt of a claim by ALR, provided
      however, that in the event ALR chooses to contest (rather than pay) any
      such claim in the exercise of commercial reasonableness, then ALR shall
      notify TOLIC of same within five (5) calendar days.

F.    Claim Indemnification by ALR for Claims With Dates of Loss Prior to
      December 31, 2004. As referenced in preceding Paragraph (3), TOLIC has no
      liability of any sort in connection with the F&G Agreement and /or
      the Scottish Re Agreements on any date prior to December 31, 2004. ALR
      shall therefore indemnify and hold TOLIC harmless for any and all causes
      of actions and claims alleged, asserted or presented by third parties
      (including but not limited to Fidelity and Guaranty Life Insurance Company
      and Scottish Re Life Corporation) as against TOLIC, in the event that such
      causes of action and claims have dates cf death or occurrence prior to
      December 31, 2004.

G.    Implementation Due Diligence. ALR warrants that the reserve transfer and
      renewal commissions payable by TOLIC are subject to revision in the event
      of implementation due diligence uncovering misstatement in any of the
      financial information provided by ALR during 2004. Financial information
      is defined as all financial information related to the F&G Agreement and
      the Scottish Re agreements provided by ALR in 2004, including but not
      limited to historic portfolio performance, pricing basis and experience
      studies (lapse and mortality). Said implementation due diligence will
      occur no later than forty-five (45) days following the date of both
      parties' execution of this Letter of Intent (or, if one party executes the
      Letter of Intent on a later date than the other party, then the later dare
      will be used for purposes of this time determination).

H.    Portfolio Model Reliance. Specific reliance was placed by TOLIC on the
      accuracy of the portfolio models used by ALR as to the F&G Agreement and
      the Scottish Re

<PAGE>

      Agreements. These models have not yet been validated against internally
      developed TOLIC models. Said validation shall occur no later than
      forty-five (45) days following the date of both parties' execution of this
      Letter of Intent (or, if one party executes the Letter of Intent on a
      later date than the other party, then the later date will be used for
      purposes of this time determination). In the event of any dispute between
      TOLIC and ALR as to the validation of models, said dispute will be
      adjudicated by an independent qualified actuary who is both a Fellow of
      the Society of Actuaries and a Milliman consultant or employee. Any
      material change (more than 2% of transferred reserves) in the reserve
      required based on future TOLIC models (to be developed during 2005) will
      be payable by ALR.

I.    Updating of Reserve Adjustments. The reserve transfer amounts calculated
      by TOLIC as to the F&G Agreement and the Scottish Re Agreements are based
      on models and data provided by ALR. An adjustment to true these models to
      the actual Fourth Quarter 2004 results will be made to ascertain the
      appropriate reserve transfer amounts. Said true-up will occur no later
      than one hundred twenty (120) days following the date of both parties'
      execution of this Letter of Intent (or, if one party executes the Letter
      of Intent on a later date than the other party, then the later date will
      be used for purposes of this time determination). Any resulting difference
      in reserve transfer amount (positive or negative) will be transferred
      between the parties.

J.    Treaty Terms as as to Retrocession and Novation Transactions. As a
      condition precedent to TOLIC's assumption of liability for the
      retrocession transactions described in preceding Paragraphs (1), (2) and
      (3) as a condition precedent to the novation transactions described in
      preceding paragraphs (5), (6), and (7), TOLIC shall have the right to vary
      and/or revise the treaty terms of the F&G Agreement and the Scottish Re
      Agreements.

K.    Format of Settlement Reports. For 2005, the format of the settlement
      reports (as to premium and claims) to be used with each of the F&G
      Agreement and the Scottish Re Agreements shall be that utilized by ALR in
      2004.

L.    Administration of Scottish Re Agreements. The consummation of the
      transaction is conditioned on whether TOLIC, in its sole discretion, is
      able to assure that Sarbanes Oxley clearance by its Steering Committee is
      granted with respect to the F&G Agreement and the Scottish Re Agreements,
      so as to allow TOLIC to exercise appropriate controls and to allow access
      to adequate and sufficient data for purposes of life reinsurance
      administration. TOLIC will make such determination and communicate same
      within sixty (60) days following the date of both parties' execution of
      this Letter of Intent (or, if one party executes the Letter of Intent on a
      later date than the other party, then the later date will be used for
      purposes of this time determination).

<PAGE>

M.    Cooperation. The parties hereto agree to promptly execute any and all
      supplemental agreements and other documents of any nature or kind, and
      take all such other actions, which any other party may reasonably require
      in order to implement the provisions or objectives of this Letter of
      Intent.

N.    Amendments. Any modification, amendment, addition, alteration of any of
      these terms, covenants or conditions shall not be effective unless reduced
      to writing and duly executed by the parties.

O.    Applicable Law. The validity, construction and enforceability of this
      Letter of Intent shall be governed by the laws of the State of Iowa
      applicable to contracts executed and to be performed solely within the
      State of Iowa.

P.    Counterparts. Provided that both parties hereto execute a copy of this
      Letter of Intent, this Letter of Intent may be executed in counterparts,
      each of which shall be deemed an original and all of which together shall
      constitute one and the same instrument. The parties acknowledge that
      delivery of executed counterparts of this Letter of Intent may be affected
      by facsimile, and that, in such event, the signatures transmitted by said
      facsimile shall be acknowledged by both TOLIC and ALR to be original and
      binding signatures. The exchange of executed Letter of Intent
      counterparts by facsimile will be followed by delivery of the counterparts
      by overnight express to each of TOLIC and ALR.

DILIGENCE; DEFINITIVE AGREEMENTS - Consummation of the Transaction will be
subject to (i) approval of the Board of Directors of ALR and the
President-Reinsurance Division of TOLIC and (ii) negotiation and execution of
Definitive Agreements, as referenced in Paragraph B above. The Definitive
Agreements will contain representations and warranties, covenants, conditions
and indemnities that are customary and appropriate for similar transactions.

EXPENSE REIMBURSEMENT - ALR and TOLIC shall each pay its own costs and expenses
necessary to effect the proposed Transaction, including the expenses of
preparing the Definitive Agreement.

PUBLIC ANNOUNCEMENT - Neither party nor their employees, agents or ostensible
agents will make or issue any public statement or announcement with respect to
the transactions contemplated by this letter without the prior written approval
of the other, except that in the event the parties are unable to agree on a
public statement or announcement and legal counsel for a party is of the opinion
that such statement or announcement is required by law or applicable stock
exchange rules, then such party may issue the legally required statement or
announcement. Each party shall indemnify, defend and hold the other party
harmless from any liability, damage or expense, including reasonable attorneys'
fees, resulting from any breach of this provision by such party or employees,
agents or ostensible agents thereof.

<PAGE>

The obligations set forth in this Letter of Intent shall become binding
obligations of the parties upon execution and delivery by ALR of a counterpart
of this letter to TOLIC. Any modification of the obligations set forth herein
will be only as set forth in Definitive Agreements executed by ALR and TOLIC.

Please do not hesitate to contact me to discuss the terms of the Transaction or
to respond to any questions that may arise with respect to this Letter of
Intent, prior to its execution.

Sincerely,

Transamerica Occidental Life Insurance Company

By: /s/ Patrick B. Kelleher
    ------------------------------------------
Name: Patrick B. Kelleher
Title: Senior Vice President

AGREED AND ACCEPTED

Annuity & Life Reassurance. Ltd.

By: /s/ Robert M. Lichten.
    ------------------------------------------
Name: Robert M. Lichten.
Title: Director & Member of Executive Committee

 c:   Robert Lichten