Exhibit 10.7
 PROSPECTOR PARTNERS, LLC
 INVESTMENT MANAGEMENT AGREEMENT
  1)
    
    Investment Accounts. The investment account of each Client (each an
Investment Account) shall consist of cash and securities in an amount equal to at least
$50,000,000 (the Minimum Account Amount), or such other amount as may be agreed to by
the Adviser, initially furnished by the Client for investment pursuant to this Agreement,
as well as all other assets which become part of each Investment Account as a result of
trading therein or additions thereto, except for amounts withdrawn therefrom and paid to
the Client. Each Client may make additions to the Investment Account in amounts exceeding
$100,000, or in such other amount as may be agreed to by the Adviser; provided that the
Adviser shall have received prompt written notice of such additions. Each Client may make
withdrawals from its Investment Account in such amounts as it shall determine upon not
less than 30 days prior written notice thereof to the Adviser and provided that the
withdrawal shall not cause the assets in the Investment Account to fall below the Minimum
Account Amount, unless otherwise agreed to by the Adviser.2)
    
    Services of Adviser. By execution of this Agreement the Adviser accepts
appointment as adviser for each Investment Account with full discretion and agrees to
supervise and direct the investments of each Investment Account in accordance with the
investment objective, policies and restrictions attached hereto as Schedule 1, and as may
be modified from time to time (Investment Guidelines). Adviser acknowledges that
Clients are bound by state insurance laws regarding permissible investments and Clients
own adopted Statement of Investment Policy, including any Addendums, attached hereto as
Schedule 2, and as may be modified from time to time, applicable to Clients aggregate
investable assets (the Investment Policy). Adviser has read the Investment Policy and
understands that Clients Investment Guidelines, to be furnished to Adviser from time to
time, will not deviate from the Investment Policy but will only summarize the provisions
and limitations applicable to each Investment Account. In the performance of its
services, the Adviser will not be liable for any error in judgment or any acts or
omissions to act except those resulting from the Advisers gross negligence, willful
misconduct or malfeasance. Nothing herein shall in any way constitute a waiver or
limitation of any right of any person under the federal securities laws. The Adviser
shall have no responsibility whatsoever for the management of any assets of Clients other
than such entities Investment Account.




---



##### 



2 
 3)
    
    Discretionary Authority. Subject to the Investment Guidelines, the Adviser
shall have full discretion and authority, without obtaining any prior approval, as the
Clients agent and attorney-in-fact: (a) to make all investment decisions in respect of
each Investment Account on the Clients behalf and at the sole risk of the Client; (b) to
buy, sell, exchange, convert, liquidate or otherwise trade in any stock, bond and other
securities or financial instruments in respect of each Investment Account; (c) to place
orders with respect to, and to arrange for, any of the foregoing; and (d) in furtherance
of the foregoing, to do anything which the Adviser shall deem requisite, appropriate or
advisable in connection therewith, including, without limitation, the selection of such
brokers, dealers, and others as the Adviser shall determine in its absolute discretion.4)
    
    Custody. The assets of each Investment Account shall be held in one or more
separately identified accounts in the custody of one or more banks, trust companies,
brokerage firms or other entities designated by the Client and acceptable to the Adviser.
The Adviser will communicate its investment purchase, sale and delivery instructions
directly with the party identified by the Client or other qualified depositories. The
Client shall be responsible for all custodial arrangements and the payment of all
custodial charges and fees, and the Adviser shall have no responsibility or liability with
respect to custody arrangements or the acts, omissions or other conduct of the custodians.5)
    
    Brokerage. When placing orders for the execution of transactions for an
Investment Account, the Adviser may allocate all transactions to such brokers or dealers,
for execution on such markets, at such prices and commission rates, as are selected by the
Adviser in its sole discretion. In selecting brokers or dealers to execute transactions,
the Adviser need not solicit competitive bids and does not have an obligation to seek the
lowest available commission cost. It is not the Advisers practice to negotiate
execution only commission rates, and, in negotiating commission rates, the Adviser shall
take into account the financial stability and reputation of brokerage firms and brokerage
and research services provided by such brokers. An Investment Account may be deemed to be
paying for research provided or paid for by the broker which is included in the commission
rate although the Investment Account may not, in any particular instance, be the direct or
indirect beneficiary of the research services provided. Research furnished by brokers may
include, but is not limited to, written information and analyses concerning specific
securities, companies or sectors; market, finance and economic studies and forecasts;
financial publications; statistics and pricing services; discussions with research
personnel; and software and data bases utilized in the investment management process.
Symetra acknowledges on behalf of each Client that since commission rates are generally
negotiable, selecting brokers on the basis of considerations which are not limited to
applicable commission rates may at times result in higher transaction costs than would
otherwise be obtainable. The Adviser is hereby authorized to, and Symetra acknowledges on
behalf of each Client that the Adviser may aggregate orders on behalf of each Investment
Account with orders on behalf of other clients of the Adviser. In such event, allocation
of the securities purchased or sold, as well as expenses incurred in the transaction,
shall be made in a manner which the




---



##### 



3 Adviser considers to be the most fair and equitable to all of its clients, including the
Clients.
 6)
    
    Representations and Warranties
 a)
    
    Symetra represents, warrants and agrees that:
 i)
    
    it has full legal power and authority to enter into this Agreement;ii)
    
    the appointment of the Adviser hereunder is permitted by each Clients
governing documents and any investment management agreement between Symetra and
the Clients to this Agreement and has been duly authorized by all necessary
corporate or other action; andiii)
    
    it will indemnify the Adviser and hold it harmless against any and all
losses, costs, claims and liabilities which the Adviser may suffer or incur arising
out of any material breach of these representations and warranties of Symetra.
 b)
    
    The Adviser represents, warrants and agrees that:
 i)
    
    it has full legal power and authority to enter into this Agreement;ii)
    
    it is registered as an investment adviser with the Securities and
Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended
(the Advisers Act);iii)
    
    entering into this Agreement has been duly authorized by all necessary
action; andiv)
    
    it will indemnify Symetra and hold it harmless against any and all
losses, costs, claims and liabilities which Symetra or any Client may suffer or
incur arising out of any material breach of any representations and warranties of
the Adviser.
 7)
    
    Reports. The Adviser shall provide Symetra with reports containing the
status of the Investment Account at least monthly (i.e. Flash Report), and will provide
written advisory report letters on a quarterly basis. All records maintained pursuant to
this Agreement shall be subject to examination by Symetra and by persons authorized by it,
or by appropriate governmental authorities, at all times upon reasonable notice. The
Adviser shall provide copies of trade tickets, custodial reports and other records Symetra
reasonably requires for accounting, tax, regulatory, or audit purposes.8)
    
    Management Fee and Expenses
 a)
    
    The Adviser will be paid a quarterly management fee (the Management Fee) for
its investment advisory services provided hereunder, determined in accordance with
Exhibit A to this Agreement. During the term of this Agreement, the Management Fee
shall be billed and payable in arrears on a quarterly basis within 10 days after the




---



##### 



4 last day of each calendar quarter based upon the value of the Investment Accounts as of
the last day of the immediately preceding calendar quarter, and showing that portion of
the Management Fee attributable to each Investment Account. The Management Fee shall be
pro-rated for any partial quarter. It is understood that, in the event that the
Management Fee is to be paid by the custodian out of the Investment Accounts, Symetra or
the Clients will provide written authorization to the custodian to pay the Management
Fee directly from the Investment Accounts.b)
    
    Each Investment Account shall be responsible for all expenses incurred directly
in connection with transactions effected on behalf of the Investment Account pursuant
to this Agreement and shall include: custodial fees; PAM accounting service fees,
investment expenses such as commissions; Infomediary transactions fees and other
expenses reasonably related to the purchase, sale or transmittal of Investment Account
assets (other than research fees and expenses with respect to the Investment Account).
 9)
    
    Confidential Relationship.
 a)
    
    The Parties hereby agree that all of the information provided to Symetra by the
Adviser and to the Adviser by Symetra shall be considered proprietary and confidential
in nature (hereinafter, the Confidential Information) and, as such, shall not be
disclosed or revealed or caused to be disclosed or revealed, in any manner, to any
non-party to this Agreement, except:
 i)
    
    as may be required by law or any judicial, regulatory or
self-regulatory authority (including without limitation any required filing with
the SEC or any state insurance regulator), provided that notice of any such
disclosure is at the time sent to the other party, except that no notice will be
required for routine SEC or department of insurance filings,ii)
    
    as either party may consent to specifically in advance in writing;
provided, however, thatiii)
    
    any such Confidential Information may be disclosed to each partys
officers, directors, employees, consultants, contractors, advisors, and fiduciaries
(Representatives) who need to know such information in order to carry out the
purpose of the disclosure and so long as they agree to keep it confidential;iv)
    
    Confidential Information does not include any information which (A)
is or subsequently becomes published or available to the public other than by
breach of this Agreement, (B) is received by receiving party from a non-party not
in breach of any obligation of confidentiality, (C) is independently developed by
receiving party, or (D) was in receiving partys possession or known to receiving
party before disclosing party disclosed it to receiving party; andv)
    
    Adviser Confidential Information does not include the identification of
Symetra




---



##### 



5 as a Client or a Clients investments as of a given point in time (which is
consistent with (iv) (A) above).
 b)
    
    Symetra agrees that:
 i)
    
    Adviser may disclose that Symetra (and each of the Clients) is a client
of the Adviser and to the inclusion of Symetra on a list of representative clients
of the Adviser or in other marketing materials;ii)
    
    Adviser shall be permitted to retain copies of all documentation
necessary under the Advisers Act to support the track record or otherwise required
to be retained under the Advisers Act and related rules, but only for such period
as required to be retained; andiii)
    
    Symetra shall not allow the Confidential Information to be used to
purchase, sell, trade or invest in any securities, instruments or other investments
owned by the Account without obtaining the prior written consent of the Adviser,
unless such consent is impossible or impractical due to an event of force majeure
that interferes with Advisers performance under this Agreement; and further
acknowledges that:iv)
    
    the provisions of (b) are reasonable and necessary for the protection
of the Adviser and its affiliates, andv)
    
    the Adviser or its affiliates will be irrevocably damaged if the
covenants herein are not specifically enforced and, accordingly, Symetra hereby
further agrees that, in addition to any other relief or remedies available to the
Adviser, the Adviser shall be entitled to seek and obtain an appropriate injunction
or other equitable remedy from a court with proper jurisdiction for the purposes of
restraining Symetra from any actual or threatened breach of such covenant, and no
bond or security will be required in connection therewith. In any event, Symetra
shall be responsible for any breach of this Agreement by any of Symetras
Representatives, and Symetra agrees, at its sole expense, to take all reasonable
measures (including, without limitation, court proceedings) to restrain its
Representatives from prohibited or unauthorized disclosure or use of the
Confidential Information or any other breach of the terms of this Agreement.
 c)
    
    Adviser agrees that:
 i)
    
    Symetra shall be permitted to report the Investment Track Record (on a
stand-alone basis, as part of its total portfolio return or otherwise) with respect
to the Investment Accounts in any internal or external reports of it or its
affiliates; andii)
    
    Symetra and/or its affiliates will be irrevocably damaged if the
covenants herein are not specifically enforced and, accordingly, Adviser hereby
further agrees that, in addition to any other relief or remedies available to
Symetra, Symetra shall be




---



##### 



6 entitled to seek and obtain an appropriate injunction or other equitable remedy from
a court with proper jurisdiction for the purposes of restraining Adviser from any
actual or threatened breach of such covenant, and no bond or security will be
required in connection therewith. In any event, Adviser shall be responsible for
any breach of this Agreement by any of its Representatives, and Adviser agrees, at
its sole expense, to take all reasonable measures (including, without limitation,
court proceedings) to restrain its Representatives from prohibited or unauthorized
disclosure or use of the Confidential Information or any other breach of the terms
of this Agreement.
 10)
    
    Non-Assignability. No assignment, as that term is defined in the Advisers
Act, of this Agreement shall be made by the Adviser or Symetra without the written consent
of the other party.11)
    
    Directions to the Adviser. All directions by Symetra by or on behalf of the
Clients to the Adviser shall be in writing signed by or on behalf of Symetra. The Adviser
shall be fully protected in relying upon any such writing which the Adviser believes to be
genuine and signed or presented by the proper person or persons, shall be under no duty to
make any investigation or inquiry as to any statement contained therein and may accept the
same as conclusive evidence of the truth and accuracy of the statements therein contained.12)
    
    Consultation with Counsel. The Adviser may consult with legal counsel (who
may be counsel to Symetra) concerning any question that may arise with reference to its
duties under this Agreement, and the opinion of such counsel shall be full and complete
protection in respect of any action taken or omitted by the Adviser hereunder in good
faith and in accordance with such opinion.13)
    
    Services to Other Clients. It is understood that the Adviser acts as
investment adviser to other clients and may give advice and take action with respect to
such clients that differs from the advice given or the action taken with respect to the
Investment Accounts. Nothing in this Agreement shall restrict the right of the Adviser,
its members, managers, officers, employees or affiliates to perform investment management
or advisory services for any other person or entity, and the performance of such service
for others shall not be deemed to violate or give rise to any duty or obligation to the
Client.14)
    
    Investment by the Adviser for Its Own Account. Nothing in this Agreement
shall limit or restrict the Adviser or any of its members, managers, officers, employees
or affiliates from buying, selling or trading any securities for its or their own account
or accounts. Symetra on behalf of each Client acknowledges that the Adviser and its
members, managers, officers, employees, affiliates and other clients may at any time have,
acquire, increase, decrease or dispose of securities which are at or about the same time
acquired or disposed of for the account of a Client. The Adviser shall have no obligation
to purchase or sell for the Investment Accounts or to recommend for purchase or sale by
the Investment Accounts any security that the Adviser or its members, managers,




---



##### 



7 officers, employees or affiliates may purchase or sell for itself or themselves or for any
other client.15)
    
    Proxies. Subject to any other written instructions of Symetra, the Adviser
is hereby appointed Symetras agent and attorney-in-fact in its discretion to vote,
convert or tender in an exchange or tender offer any securities in the Investment
Accounts, to execute proxies, waivers, consents and other instruments with respect to such
securities, to endorse, transfer or deliver such securities and to participate in or
consent to any plan of reorganization, merger, combination, consolidation, liquidation or
similar plan with reference to such securities.16)
    
    Sarbanes-Oxley Compliance. Symetra is subject to certain regulations (SOX)
that require management to assess the effectiveness of its internal controls over
financial reporting and state in its annual report whether such internal controls are
effective. Because Adviser will perform trading execution functions for Symetras
Investment Accounts as described in this Agreement, certain procedures performed by
Adviser are relevant to Symetras evaluation of its internal controls. Having
acknowledged the foregoing, Adviser agrees to cooperate with Symetra as reasonably
necessary to facilitate Symetras ability to comply with its regulatory obligations.17)
    
    Operational Audits. Upon Symetras request, but no more often than once
annually except (a) as necessary for Symetra or Client to respond to any regulatory
requirement or inquiry, or (b) as deemed reasonably necessary by Symetra as a result of
Symetras good faith belief that Adviser has breached any of its obligations hereunder,
Adviser shall allow Symetra and/or any independent third party (Third Party
Representatives) selected by Symetra to perform operational audits with respect to
Advisers performance of its obligations hereunder. Adviser shall grant Symetra and its
Third Party Representatives access to Advisers facilities, personnel, and all books,
records and other documents of Adviser related to trade execution it performs for Symetra
under this Agreement (not otherwise provided under section 7) (Documentation) as may be
required in order for Symetra to ascertain that trades (i) are conducted by authorized
personnel, (ii) are completed, and (iii) reconcile to the accounting and custody records
of Symetra and its other service providers, and such other facts relative to Advisers
performance hereunder. Symetra acknowledges that to the extent such Documentation
contains aggregated data for multiple clients of Adviser, Adviser may redact certain
information contained in the Documentation as reasonably necessary to meet its
confidential obligations to other clients. Adviser shall provide Symetra, or its Third
Party Representatives, such information and assistance as requested in order to perform
such audits, including access to Advisers personnel to explain the control environment by
means of operational walk throughs or other means; provided, however, that the Parties
shall endeavor to arrange such assistance in such a way that it does not interfere with
Advisers performance of the Agreement. Notwithstanding anything to the contrary in
section 17, no amendment to this Agreement shall be required where the Parties mutually
agree to change the scope of audits under this section to permit Symetra to comply with
SOX and related laws as enacted or amended from time to time.




---



##### 



8 18)
    
    Notices. All notices and instructions with respect to securities
transactions or any other matters contemplated by this Agreement shall be deemed duly
given when delivered in writing or deposited by first-class mail to the following
addresses: (a) if to the Adviser, at its address set forth above, Attention: Peter N.
Perugini, CFO, or (b) if to Symetra, at its address set forth above, Attention: Margaret
Meister, CFO. The Adviser or the Client may change its address or specify a different
manner of addressing itself by giving notice of such change in writing to the other party.19)
    
    Entire Agreement; Amendment. This Agreement sets forth the entire agreement
of the parties with respect to management of the Investment Account and shall not be
amended except by an instrument in writing signed by the parties hereto.20)
    
    Termination. This Agreement shall continue in force from the date hereof for
an initial fixed term of three years (initial term), which may be extended by Symetra in
its sole discretion for an additional one year (fourth year extension) at/prior to the
end of the second year of the initial term, and if so extended, then, again in Symetras
sole discretion, for an additional year (fifth year extension) at/prior to the end of
the initial term. Notwithstanding the foregoing, during the initial term and any
extensions, this Agreement shall be terminable without penalty by Symetra upon written
notice to the Adviser at least thirty (30) days prior to the date upon which such
termination is to become effective (i) for cause (including material non-performance by
the Adviser), (ii) if either John Gillespie or Richard Howard are no-longer affiliated
with the Adviser, or (iii) if there is a change in control of the Adviser. Following the
end of the initial term and any extensions, this Agreement may be terminated without
penalty by either party on 60 days written notice. Each Client shall honor any trades
executed but not settled before the date of any termination under this Agreement. The fee
for the calendar quarter during which any termination of this Agreement shall occur shall
be paid as of the date of termination and prorated if the effective date does not coincide
with the end of the quarter.21)
    
    Governing Law. To the extent that the interpretation or effect of this
Agreement shall depend on state law, this Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.22)
    
    Effective Date. This Agreement shall become effective on the date first
written above.23)
    
    Receipt of Disclosure Statement. Symetra acknowledges receipt of a copy of
Part II of the Advisers Form ADV in compliance with Rule 204-3(b) under the Advisers Act
more than 48 hours prior to the date of execution of this Agreement. The Adviser shall
annually and without charge, upon request by Symetra, deliver to Symetra the current
version of such form or a written document containing at least the information then
required to be contained in such form.24)
    
    Counterparts. This Agreement may be executed in two counterparts, each one
of which shall be deemed to be an original.




---



##### 



9 
  ADVISER:
    
    CLIENT:PROSPECTOR PARTNERS, LLC
    
    SYMETRA FINANCIAL CORPORATIONBy:  /s/ John D. Gillespie
    
    By:  /s/ Margaret A. MeisterJohn D. Gillespie
    
    Margaret A. MeisterTitle: Managing Member
    
    Executive Vice President, Chief Financial
OfficerDate: June 29, 2010
    
    Date: 06/29/2010SYMETRA LIFE INSURANCE COMPANYBy: /s/ Margaret A. MeisterMargaret A. MeisterExecutive Vice President, Chief Financial OfficerDate: 06/29/2010




---



##### 



EXHIBIT A
 FEE SCHEDULE TO THE INVESTMENT MANAGEMENT AGREEMENT,
EFFECTIVE JULY 1, 2010 BETWEEN PROSPECTOR PARTNERS, L.L.C. AND
SYMETRA FINANCIAL CORPORATION
   Aggregate Net Assets
    
    Annual Fee
    
    Quarterly FeeUp to $200 million
    
    100 basis points
    
    25 basis points(1.00% or 0.0100)
    
    (0.25% or 0.00250)Greater than $200 million
    
    50 basis points
    
    12.50 basis points




---



##### 



11




---



##### 



Schedule 1
 TO INVESTMENT MANAGEMENT AGREEMENT, EFFECTIVE JULY 1, 2010
BETWEEN PROSPECTOR PARTNERS, L.L.C. AND SYMETRA FINANCIAL
CORPORATION
 Investment Guidelines
 Investment Objective
  Performance Objectives
  Guidelines
  1)
    
    The Adviser may not purchase securities on margin, sell short, or enter into derivative
transactions in an Investment Account without the written consent of Symetra.2)
    
    The Adviser may purchase Rule 144A securities provided such securities are judged by
the Adviser to be liquid and do not in the aggregate exceed 20% of the market value of each
Investment Account. The Adviser shall also be able to purchase securities if such
securities are convertible into publicly traded securities.3)
    
    At least 95% of each Investment Account will consist of securities of companies having
a market capitalization of $100 million or greater.4)
    
    Each Investment Account may include domestic and non-domestic securities (common
stocks, bonds, securities that are convertible to common stocks, preferred stocks, warrants
and rights to subscribe to common stocks) that are listed on registered exchanges or
actively traded in the over-the-counter market.




---



##### 



5)
    
    Issuers of securities located in countries other than the United States, including
emerging market countries, shall not exceed 40% of the market value of each Investment
Account.6)
    
    In terms of diversification, investments shall be allocated with the intent to minimize
the risk of large losses to each Investment Account. The maximum total investment in any
one security shall be limited to 10% of an Investment Account at the time of purchase, and
25% of the market value of such Investment Account.7)
    
    If the aggregate investment in an Investment Account of the equity securities of any
one company exceeds 5% of that companys outstanding shares of all classes of stock of that
issuer, the Adviser will notify Symetra.
 Additional State Law Guidelines for Insurance Company Investment Accounts
 1)
    
    Investment in preferred stock with voting rights plus common stock in the same issuer
is limited to 15% of the issuers outstanding shares having voting rights.2)
    
    Investment is limited to 10% of the outstanding common stock of the same issuer.3)
    
    No investment in the securities issued by an insolvent corporation is permitted. For
purposes of this section 3, insolvent corporation is a corporation for which bankruptcy,
receivership, insolvency, reorganization or other similar proceedings have been instituted
by or against such corporation under any section or chapter of the United States Bankruptcy
Code, as amended, or under any similar laws or statutes of the United States (or any state
thereof).




---



##### 



Board of Directors Approval:
SFC: 8/24/2004
SLIC and SNLIC: 12/6/2004
FSNLIC: 4/8/2005




---



##### 



Schedule 2
 Statement of Investment Policy
Symetra Financial
 Overview
  Investment Objective
   Duration/Convexity




---



##### 



Asset Allocation
  IllustrativeMaximum
    
    Long-termAsset Type
    
    Allocation
    
    Target*Fixed Income
    
    
    100
    %
    
    
    96
    %Corporate Bonds
    
    
    70
    %
    
    
    55
    %MBS/CMO
    
    
    20
    %
    
    
    10
    %Asset Backed
Securities
    
    
    15
    %
    
    
    12
    %CMBS
    
    
    12
    %
    
    
    7
    %Commercial Mortgages
    
    
    10
    %
    
    
    7
    %Other Investment
Grade
    
    
    10
    %
    
    
    2
    %Below Investment
Grade
    
    
    7
    %
    
    
    3
    %Equity/Alternatives
    
    
    5
    %
    
    
    4
    %Public/Private
Equity
    
    
    3
    %
    
    
    1.5
    %Hedge Funds
    
    
    3
    %
    
    
    1.5
    %Real Estate
    
    
    2
    %
    
    
    0.5
    %Other
    
    
    2
    %
    
    
    0.5
    %Cash & short-term
purchases
    
    
    2
    %
    
    
    0
    %
 
 *
    
    Illustrative long-term targets are based on the 2004 liability mix. 2




---



##### 



Liquidity
  Asset Quality
   Concentration Limits
  Issuer  Fixed Income
  3




---



##### 



Senior
    
    Market Value as a %
    
    Approximate % ofDebt Rating
    
    Surplus + AVR
    
    Total Market Value *AAA
    
    
    12
    %
    
    
    0.7
    %AA
    
    
    10
    %
    
    
    0.6
    %A
    
    
    8
    %
    
    
    0.5
    %BBB
    
    
    6
    %
    
    
    0.4
    %BB
    
    
    3
    %
    
    
    0.2
    %< BB
    
    
    2
    %
    
    
    0.1
    %
 
 *
    
    As of 12/2003 Issuer  Equity
  Senior
    
    Market Value as a %
    
    Approximate % ofDebt Rating
    
    Surplus + AVR
    
    Total Market Value *Investment Grade
    
    
    3
    %
    
    
    0.2
    %Below Inv. Grade
    
    
    1
    %
    
    
    0.1
    %
 
 *
    
    As of 12/2003 Insurer
  Servicer
  Funds
  Market Value as a %Type
    
    Surplus + AVRSingle Fund
    
    
    5
    %Single Manager
    
    
    10
    %
 4




---



##### 



Other Diversification
  Currency
  Derivatives
  Investment Managers
  5




---



##### 



ADDENDUM
 TO
 SYMETRA FINANCIAL CORPORATION
 STATEMENT OF INVESTMENT POLICY
 D ERIVATIVES USE PLAN




---



##### 



TABLE OF CONTENTS
 I. POLICY
    
    
    1II. DERIVATIVE INSTRUMENTS AND STRATEGIES
    
    
    1A. DERIVATIVE INSTRUMENT DEFINITIONS
    
    
    1B. EXCHANGE TRADED VERSUS OVER-THE-COUNTER TRANSACTIONS
    
    
    2C. STRATEGIES
    
    
    3D. DUTY TO CONSIDER RISKS INHERENT IN DERIVATIVE TRANSACTIONS
    
    
    4E. RISK/EXPOSURE MEASUREMENT
    
    
    5III. LIMITATIONS AND PARAMETERS
    
    
    5A. QUANTITATIVE AND OTHER LIMITATIONS
    
    
    5B. DOCUMENTATION OF OTC DERIVATIVE TRANSACTIONS
    
    
    7IV. OVERSIGHT, INTERNAL CONTROL PROCEDURES AND REPORTING
    
    
    7A. DELEGATION OF RESPONSIBILITY
    
    
    7B. DAY-TO-DAY RESPONSIBILITY  INVESTMENT MANAGER
    
    
    8C. INTERNAL CONTROL PROCEDURES  PROCESS FOR APPROVAL AND MONITORING
OF INDIVIDUAL TRANSACTIONS
    
    
    8D. MANAGEMENT OVERSIGHT OF DERIVATIVES PROGRAM
    
    
    10E. RECORDS AND DOCUMENTATION
    
    
    10F. SEPARATION OF TRADING AND SETTLEMENT FUNCTIONS
    
    
    11G. ACCOUNTING AND FINANCIAL REPORTING
    
    
    11EXHIBIT A  SAMPLE DERIVATIVE TRANSACTION CONTROL SHEET
    
    
    A-1EXHIBIT B  LIST OF COMPANIES
    
    
    B-1EXHIBIT C  SAMPLE EFFECTIVENESS SUMMARY
    
    
    C-1




---



##### 



I. POLICY
   II. DERIVATIVE INSTRUMENTS AND STRATEGIES
 A.
    
    Derivative Instrument Definitions.
  1.
    
    The definition according to Generally Accepted Accounting Principles
(GAAP):1A financial instrument or other contract with all threeof the following
characteristics:
 -
    
    It has (1) one or more underlyings and (2) one or more notional amounts or
payment provisions or both.-
    
    It requires no initial net investment or an initial net investment that is
smaller than would be required for other types of contracts that would be expected to
have a similar response to changes in market factors.-
    
    Its terms require or permit net settlement, it can readily be settled net by a
means outside the contract, or it provides for delivery of an asset that puts the
recipient in a position not substantially different from net settlement.
 2.
    
    The regulatory definition:2
  
 1
    
    FASB statement No. 133 Accounting for
Derivative Instruments and Hedging Activities.2
    
    Based on the NAICs Derivative Instruments
Model Regulation and Statements of Statutory Accounting Principals (SSAPs). 1




---



##### 



(a)
    
    To make or take delivery of, or assume or relinquish, a specified amount of one
or more underlying interests, or to make a cash settlement in lieu thereof; or(b)
    
    That has a price, performance, value or cash flow based primarily upon the
actual or expected price, level, performance, value or cash flow of one or more
underlying interests.
 3
          B.
    
    Exchange Traded versus Over-the-Counter Transactions.
 
 3
    
    These definitions are based in whole or in
part on definitions found in Washington state insurance laws as may be amended
from time to time. 2




---



##### 



C.
    
    Strategies (All life insurance company strategies will conform to
applicable state statutes).
  Derivative Transactions for Hedging Purposes
   (a)
    
    The risk of a change in the value, yield, price, cash flow, or quantity of
assets or liabilities that the insurer has acquired or incurred or anticipates
acquiring or incurring; or(b)
    
    The currency exchange rate risk or the degree of exposure as to assets or
liabilities that the insurer has acquired or incurred or anticipates acquiring or
incurring.
  3




---



##### 



Income Generation
  D.
    
    Duty to Consider Risks Inherent in Derivative Transactions.
  Basis Risk
  Counterparty Exposure Risk
   -
    
    $25 million for a counterparty with a AAA rating-
    
    $20 million for a counterparty with a AA rating
 4




---



##### 



-
    
    $15 million for a counterparty with a A rating-
    
    $5 million for a counterparty with a BBB+ rating-
    
    $2.5 million for a counterparty with a BBB rating-
    
    $0 for BBB- and lower
  Liquidity Risk
  Systemic Risk
  Operational Risk
  E.
    
    Risk/Exposure Measurement.
  III. LIMITATIONS AND PARAMETERS
 A.
    
    Quantitative and Other Limitations.
  5




---



##### 



Limitations Relating to Strategies and Instruments (to be applied on a
per-Company basis)
  (a)
    
    Hedging.
  
    
    The aggregate financial statement value of options, swaptions, caps,
floors and warrants not attached to another financial instrument that
are purchasedby a Company and used in hedging transactions shall not
exceed 7.5% of the market value of such Companys invested assets
(admitted assets for life insurance companies).
    
    The aggregate financial statement value of options, swaptions, caps
and floors writtenby a Company for hedging transactions shall not
exceed 3% of the market value of the such Companys invested assets
(admitted assets for life insurance companies).
    
    The aggregate potential exposure of collars, swaps, swaptions,
forwards and futures used in hedging transactions shall not exceed 6.5%
of a Companys invested assets (admitted assets for life insurance
companies).
 (b)
    
    Replication.
  
    
    A Company shall aggregate all replicated investment positions with
their direct investments as if such Company had invested in the
replicated asset directly in determining its compliance with applicable
quantitative limitations.
    
    The aggregate financial statement value of assets being replicated
shall not exceed 10% of the market value of a Companys invested assets
(admitted assets for life insurance companies).
 (c)
    
    Income Generation.
  6




---



##### 




    
    The aggregate financial statement value of options writtenby a
Company for income generation transactions shall not exceed 1% of the
market value of such Companys invested assets (admitted assets for
life insurance companies).
 Limitations Relating to Counterparties
  B.
    
    Documentation of OTC Derivative Transactions.
  IV. OVERSIGHT, INTERNAL CONTROL PROCEDURES AND REPORTING
 A.
    
    Delegation of Responsibility.
   7




---



##### 



B.
    
    Day-to-Day Responsibility  Investment Manager.
  Review and Documentation of Derivative Transactions
   C.
    
    Internal Control Procedures  Process for Approval and Monitoring of
Individual Transactions.
  
    
    type of derivative instrument(s) to be used;
    
    type of strategy to be undertaken;
    
    underlying investment position or other balance sheet or income
statement item to which the derivative transaction relates;
    
    description of the transaction, its purpose and its intended effect,
including a precise identification of the risks being hedged or
replicated, if applicable;
    
    identity of the counterparty or, with respect to exchange-traded
transactions, the identity of the exchange and the name of the firm
that handled the trade;
    
    notional amount of the transaction;
    
    consideration for the transaction;
    
    any additional collateral or other credit support taken or provided;
and
 8




---



##### 




    
    Investment Managers recommendation for the most appropriate method
for assessing effectiveness based on acceptable choices provided by a
Company in the event hedge accounting is to be used (final
determination to be made by a Company for accounting/tax purposes).
  
    
    the Control Sheet is complete;
    
    the derivative transaction complies with this Plan, including a
Companys established quantitative and qualitative limits/parameters;
    
    the transaction is reasonably expected to perform as intended, as
demonstrated through stress testing and other techniques designed to
vary market performance and conditions as appropriate;
    
    the counterparty is included on the Investment Managers list of
approved derivative counterparties for such Company;
    
    Such Company has received a copy of the completed Control Sheet so
that it can complete any additional required hedge designation
documentation, including the anticipated accounting and tax treatment
for such derivative transactions. In the event that the transaction is
not of the type where standard language has been provided to the
Investment Manager by such Company, a minimum of 1 day prior notice
must be given to such Company to allow adequate time to complete the
derivative documentation in a timely manner. In all other cases the
Control Sheet will be provided to such Company by noon on the
transaction date.
    9




---



##### 



Corrective Plan
  D.
    
    Management Oversight of Derivatives Program.
  
    
    outstanding derivative positions and unrealized gains or losses on
such positions, if any;
    
    derivative transactions opened and/or closed during the quarter and
realized gains and losses on such transactions, if any;
    
    a performance review of the derivative transactions;
    
    an evaluation of the risks and benefits of the derivative
transactions, including whether a derivative transaction entered into
for hedging purposes continues to be an effective hedging tool;
    
    an assessment of future or potential risk exposure;
    
    a review of all counterparty exposure amounts outstanding;
    
    a valuation of the derivative transactions, including a mechanism
for compensating for any lack of independence in valuing trading
positions;
    
    any other reports, documentation or analysis deemed necessary by a
Company or the Investment Manager to ascertain whether all derivative
transactions have been made in accordance with the delegations,
standards, limitations and objectives contained in this Plan.
 E.
    
    Records and Documentation.
  10




---



##### 



F.
    
    Separation of Trading and Settlement Functions.
  G.
    
    Accounting and Financial Reporting.
  
    
    The Investment Manager will prepare and provide the Companies, on the
trade date, with copies of the completed Control Sheet (see Exhibit A)
relating to each derivative transaction. The Companies will use the
information on the Control Sheet as part of their hedge designation
documentation. The designation documentation supporting the hedge must be
formal, be contemporaneous (i.e., prepared at inception of the hedge),
identify the hedged item, the hedging instrument, the nature of the hedging
relationship (e.g. fair value, cash flow, net investment), the Companies
overall risk management objectives and strategy for undertaking the hedge.
The Investment Manager will suggest the most appropriate method for
determining how hedge effectiveness will be assessed. As part of the
Financial Reporting designated documentation, a statement must be included
that identifies the hedging transaction for tax purposes. This will be
provided by the Companies.
    
    The designation documentation must include support provided by the
Investment Manager (e.g., correlation statistics such as r-squared using
statistical analysis or observations of how effectively the hedging
instrument achieved the dollar offset with the hedged item in the income
statement) for why the hedge is expected to be highly effective at
inception and on a go-forward basis.
    
    To be determined to be a highly effective hedging transaction, such
transaction must be measured on a dollar offset approach and recorded
within an 80-125%effectiveness range.
    
    The designation documentation must define and document the method the
Companies (provided by the Companies) will use to assess the hedge
effectiveness for both prospective considerations and retrospective
considerations: either a dollar-offset approach or a regression or other
statistical analysis approach. However, when it comes to actually
recording the amount of ineffectiveness during a period, the dollar-offset
method must be used.
    
    Investment Manager will provide the Companies with the data supporting
the amount of ineffectiveness and the ongoing assessment.
 11




---



##### 




    
    The Companies will prepare a summary similar to Exhibit C summarizing
the measurement of hedge effectiveness / ineffectiveness on quarterly
basis. See Exhibit C.
    
    Investment Manager will provide the Companies, when reasonably
requested, a quantitative and sensitivity analysis of the hedge transaction
and market risk (equity and interest risks) as required in Management
Discussion and Analysis.
 12




---



##### 



EXHIBIT A
 SAMPLE DERIVATIVE TRANSACTION
CONTROL SHEET
 Attached Documentation
  Description of the Transaction
  1.
    
    Describe the derivative transaction, including the purpose (i.e., strategy) for
engaging in the derivative transaction and the intended effect.
 a.
    
    Describe the underlying investment position or other balance
sheet or income statement item to which the derivative transaction relates.b.
    
    If the derivative transaction is entered into for hedging purposes, describe the
precise risk being hedged or replicated.
 2.
    
    Indicate the type of derivative instrument(s) used.3.
    
    Indicate the notional amount of the derivative transaction.4.
    
    Indicate the consideration paid/received in connection with the derivative
transaction.
 A-1




---



##### 



5.
    
    Identify the counterparty to the derivative transaction, or, if the derivative
instrument is exchange traded, identify the exchange and the brokerage firm that
handled the trade.6.
    
    Describe any collateral or credit support given or received in relation to the
derivative transaction that is in addition to collateral required by the standard CSA.7.
    
    Investment Managers recommendation for most appropriate method for assessing
hedge effectiveness from Companies list of approved methods (Companies will make the
final determination of the method to be used for accounting/tax purposes)
 Performance of the Derivative Transaction
  Investment Manager Approval
  Authorized Traders signatureMember of Operations/Compliance Area
 A-2




---



##### 



LIST OF COMPANIES
    
    DATE ADOPTED BY THE BOARDSymetra Life Insurance Company
    
    December 5, 2006
 B-1




---



##### 



EXHIBIT C
 SAMPLE EFFECTIVENESS SUMMARY
 Company reporting date:
(Effectiveness must be assessed whenever financial statements or
earnings are reported, but at least every 3 months)Company Calculation of:Hedged Item Fair Value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $Hedging Instrument Fair Value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $Retrospective EffectivenessProspective EffectivenessFor cash flow hedge of a forecasted transaction, is the hedged item
still probable of occurring? (yes or no)Company performed and documented assessment of hedge effectiveness in
accordance with the method defined in the hedge designation
documentation? (yes or no)Company concluded that hedge meets criteria for hedge accounting?
(yes or no)Comments/working paper reference
 C-1




---



##### 



Supplementary Investment Guidelines
Symetra Life Insurance Company
Adopted by the Board of Directors on December 6, 2005, as last amended 1/20/2009
  Chart of Statutory Investment Limits:
  Security
    
    Requirement/Restriction
    
    RCWGeneral Qualifications:Interest
bearing or accruing or dividend or
income paying securities that are not
in default and not priced above market
value.
    
    100% of securities purchased or acquired must
satisfy these requirements. (Limited
exceptions may apply.)
    
    48.13.020One Entity:Any combination of
investments in or loans upon the
security of the obligations, property,
and securities of any one person,
institution, or municipal corporation.
    
    Limited to 4% of assets without prior consent
from OIC. (Limit does not apply to general
obligations of the U.S. government or U.S.
state governments.)
    
    48.13.030(1) (See 48.13.273 for limits on
medium and lower grade obligations.)Depository Institutions:Voting
securities of a depository institution
or any company which controls a
depository institution.
    
    Limited to 5% of admitted assets without prior
consent from OIC.
    
    48.13.030(2)Public Obligations:Bonds or other
evidences of debt, not in default as
to principal or interest, that are
obligations issued, assumed or
guaranteed by the U.S. or by any U.S.
state or by any U.S. territory or
possession, or by the District of
Columbia or by any county, city, town,
village, municipality or district
therein or by any political
subdivision thereof or by any civil
division or public instrumentality of
one or more of the foregoing.
    
    Funds may be invested in public obligations
payable (1) from taxes levied or required to
be levied upon all taxable property or all
taxable income within the jurisdiction of such
governmental unit or, (2) from adequate
special revenues, but not including any
obligation payable solely out of special
assessments on properties benefited by local
improvements unless adequate security is
evidenced.
    
    48.13.040Corporate Obligations:Obligations
issued, assumed, or guaranteed by any
solvent institution created or
existing under the laws of the U.S. or
of any state, district or territory
thereof, and are qualified under any
of the following:(1)Obligations which are secured by
adequate collateral security and bear
fixed interest.(2)Fixed interest bearing obligations.
(3)Adjustment, income or other
contingent interest obligations.
    
    Section not applicable to mortgage related
investments authorized under RCW 48.13.110.
In determining the adequacy of collateral
security, not more than 1/3 of the total value
of such required collateral shall consist of
stock other than stock meeting the
requirements of RCW 48.13.080 (preferred or
guaranteed stocks).
Eligible corporate obligations are subject to
issuer earnings requirements under RCW
48.13.050(1), (2) or (3).
    
    48.13.050
See limits under 48.13.273, for medium and
lower grade obligations.
See 48.13.060 and .070 for definition of
net earnings and application of net
earnings test on securities of
merged/reorganized institutions.Preferred or Guaranteed Stocks:
Qualified preferred or guaranteed
stocks or shares (other than common
stock) of solvent U.S. institutions.

Stocks or shares are qualified if they
meet the requirements of RCW
48.13.080(1)(a) for preferred stocks,
or (b) for guaranteed stocks. In
addition, as of the date of
acquisition, all of the prior
obligations and prior preferred stocks
of the institution must be eligible
investments.
    
    Limited to 10% of assets.
Institutions must satisfy net earnings
requirements for preferred stock and RCW
48.13.050 for guaranteed stock.
Subject to limitations of RCW 48.13.030
(single issuer), investment in preferred stock
with voting rights plus common stock in same
issuer (other than investment in certain
subsidiaries of the insurer) is limited to 15%
of issuers outstanding shares having voting
rights.
    
    48.13.080
 2




---



##### 



Security
    
    Requirement/Restriction
    
    RCWTrustees or Receivers Obligations:Certificates, notes or other
obligations issued by trustees or receivers of U.S. institutions
which, or the assets of which, are court administered and which
are adequately secured as to principal and interest.
    
    Limited to 2% of assets.
    
    48.13.090Equipment Trust Certificates:Equipment trust obligations or
certificates which are adequately secured, or in other adequately
secured instruments evidencing an interest in transportation
equipment wholly or in part within the U.S. and the right to
receive determined portions of rental, purchase or other fixed
obligatory payments for the use or purchase of such transportation
equipment.
    
    Limited to 10% of assets.
    
    48.13.100Mortgages, Deeds of Trust, Mortgage Bonds, Notes, Contracts:
(1)(a) Bonds or evidences of debt which are secured by first
mortgages or deeds of trust on improved unencumbered real property
located in the U.S.; (1)(b) chattel mortgages in connection
therewith; (1)(c) the equity of the seller of any such property in
the contract for a deed, covering the entire balance due on a bona
fide sale of such property. (2) Money mortgages or like securities
received upon the sale or exchange of real property acquired
pursuant to RCW 48.13.160. (3) Bonds or notes secured by mortgage
or trust deed guaranteed or insured by the FHA. (4) Bonds or
notes secured by mortgage or trust deed guaranteed or insured as
to principal in whole or in part by the VA. (5) Evidences of debt
secured by first mortgages or deeds of trust upon leasehold
estates, except agricultural leaseholds executed pursuant to RCW
79.11.010. (6) Evidences of debt secured by first mortgages or
deeds of trust upon agricultural leasehold estates executed
pursuant to RCW 79.11.010.
    
    (1)(b) Chattel mortgages are subject to
requirements of RCW 48.13.150.
(1)(c) Sellers equity in any one such deed
covering the balance due on sale of such
property is limited to the greater of
$10,000 or the amount permissible under RCW
48.13.030.
(5) Leasehold estates must run for at least
15 years beyond the maturity of the loan as
made or as extended, in improved real
property, be otherwise unencumbered, and
the mortgagee must be entitled to be
subrogated to all the rights under the
leasehold.
(6) Agricultural leasehold estates must be
otherwise unencumbered, and the mortgagee
must be entitled to be subrogated to all
the rights under the leasehold.
Except for investments made under (3) and
(4) and guaranteed by FHA or VA,
investments are limited to 75% of the fair
value of the property as of the date of
investment (80% of market value for certain
loans secured by first mortgages on
single-family residential buildings). RCW
48.13.120
Exceptions for certain securities received
on the sale or exchange of real property
acquired under RCW 48.13.160.
    
    48.13.110
See 48.13.125 for
limitation on
amortization of
loans on one-family
dwellings.
See 48.13.130 for
definition of
encumbrance.
See 48.13.140 for
appraisal of
property, insurance
requirements and
the limit on loans
upon the security
of any one parcel
of real property
(the greater of
$25,000 or the
amount permissible
under 48.13.030.
See 48.13.265 for
limits on
investments secured
by real estate.Real Property Owned  Home Office Building: (1) insurer home and
branch office buildings; (2) real property acquired in
satisfaction or on account of loans, mortgages etc. previously
owing to the insurer in the course of its business; (3) real
property (a) required for convenient transaction of business;(b)
acquired by gift or devise; (c) acquired in exchange for real
property owned by insurer; (d) acquired through a lawful merger or
consolidation with it of another insurer, (e) requisite or
desirable for the protection or
    
    (1) OIC approval required if investment in
home office etc. exceeds 10% of assets.
(3) Investment in real property can include
repair, alteration, furnishing, or
improvement thereof and is subject to the
requirements of RCW 48.13.160(3). See
statute for complete description, including
when OIC approval may be required.
(4) Investment in income producing
    
    48.13.160
 3




---



##### 



Security
    
    Requirement/Restriction
    
    RCWenhancement of the value of other
real property owned by the insurer; (4) income-producing property.
    
    property
is subject to the requirements of RCW
48.13.160(4). See statute for complete
description with respect to insurer asset
size, capital and surplus, and other
conditions for investment that must be met.Disposal of Real Property  Time Limit:
Real property acquired by an insurer pursuant to loans, mortgages,
liens, judgments, or other debts, or under RCW
48.13.160(3)(a);(b), (c), (d), and (e).
    
    Property acquired under RCW 48.13.160(3)(a)
must be disposed of within 5 years of
ceasing to be of use in the transaction of
business.
Property acquired pursuant to loans,
mortgages, liens, judgments, or other
debts, or under RCW 48.13.160(3)(b), (c),
(d), and (e) must be disposed of within 5
years of acquisition, unless OIC approves a
longer time.
    
    48.13.170Foreign Securities:Obligations of foreign governments including
provinces, counties, municipalities, or similar entities, and
obligations and securities of foreign corporations, which have not
been in default during the five years next preceding date of
acquisition, and if the foreign jurisdiction has a sovereign debt
rating of SVO 1.
    
    Limited to 10% of assets.
Investment made in any one foreign country
is limited to 5% of assets.
    
    48.13.180Policy Loans:Loans to policyholders upon the pledge of the policy
as collateral.
    
    Amount of respective loan cannot exceed the
legal reserve maintained on the policy.
    
    48.13.190Savings and Share Accounts:Share or savings accounts of savings
and loan associations or savings accounts of banks.
    
    Amount deposited in any one institution is
limited to amount insured by FSLIC or FDIC.
    
    48.13.200Insurance Stocks:Stocks of U.S. domiciled insurers that also meet
the qualifications for stocks under RCW 48.13.220.
    
    Limited to the lesser of 5% of assets or
25% of surplus over its capital stock and
other liabilities. Unless a subsidiary,
investment is limited to 5% of the voting
stock of any one insurer and RCW 48.13.030.
    
    48.13.210Note: Limits do not
apply to OIC
approved mergers
and stock dividends
on shares already
owned.Limitation on Insurer Loans or Investments (Investment in
Non-Insurer Subsidiaries):Common stock, preferred stock, debt
obligations, and other securities of one or more subsidiaries as
defined in RCW 48.31B.005.
    
    Limited to the lesser of 10% of assets, or
50% of its surplus as regards
policyholders.
    
    48.13.218Note: Subsidiaries
that are insurers,
healthcare service
providers and HMOs
are excluded.Common Stocks:Common shares of stock in solvent U.S. corporations
that qualify as a sound investment.
    
    Must first satisfy requirements of RCW
48.13.260 for investment of capital and
reserves.
Limited to 50% of surplus over the minimum
required surplus.
Subject to limitations of RCW 48.13.030
(single issuer), investment is limited to
10% of the outstanding common stock of same
issuer (exception for stock of certain
subsidiaries of the insurer).
    
    48.13.220Note: 90 days
notice to OIC is
required prior to
acquisition of a
majority of the
total outstanding
common shares of
any corporation.Collateral Loans:Loans upon the pledge of securities or evidences
of debt eligible for investment.
    
    Limited to 90% of the market value of such
collateral pledged, except that loans upon
pledges of U.S. government bonds may be
equal to the market value of the bonds
pledged, subject to the maximums under RCW
48.13.030.
    
    48.13.230
 4




---



##### 



Security
    
    Requirement/Restriction
    
    RCWMiscellaneous Investments:Loans or investments not otherwise
eligible for investment and not specifically prohibited by RCW
48.13.270 and not described in RCW 48.12.020 (non-allowable
assets).
    
    Limited to the lesser of 10% of assets or
50% of surplus over capital and other
liabilities.
Investment in or loan upon the security of
any one entity is limited to the lesser of
the limit described above or 1% of assets.
[Exceptions require special consent order
from OIC.]
    
    48.13.240Note: The insurer
shall keep a
separate record of
all miscellaneous
investments.Special Consent Investments:
Investments not otherwise eligible, but still qualified under RCW
48.13.020 (general qualifications) and for which advance approval
from the OIC is obtained.
    
    The approval from the OIC will specify
whether the investment may be credited to
required minimum capital or surplus
investments, or to investments of reserves.
    
    48.13.250Required Investments for Capital and Reserves:
for Capital:Cash or investments eligible under RCW 48.13.040
(public obligations), and mortgage loans on real property located
within this state, pursuant to RCW 48.13.110.
    
    Not less than 100% of the investments
required for capital and reserves.
    
    48.13.260for Reserves:Cash or premiums in course of collection or
investments under RCW 48.13:.040 (public obligations),.050 (corporate obligations),.080 (preferred or guaranteed stocks),.090 (trustees or receivers obligations),.100 (equipment trust certificates),.110 (mortgages, loans and contracts),.150 (auxiliary chattel mortgages),.160 (real property home office bldg. etc.),.180 (foreign securities),.190 (policy loans),.200 (savings and share accounts),.220 (common stocks),.230 (collateral loans),.250 (special consent investments).Investments Secured by Real Estate  Amount Restricted:real
estate, real estate contracts, and notes, bonds and other
evidences of debt secured by mortgage on real estate as described
in RCW 48.13.110 and .160.
    
    Limited to 65% of assets-all investments in
mortgage-backed securities qualifying under
the secondary mortgage market enhancement
act of 1984 are included in determining if
an insurer has exceeded the 65% limit.
    
    48.13.265Acquisition of Medium and Lower Grade Obligations:Medium
obligations are rated 3 by the NAICs securities valuation office.
Lower grade obligations are rated 4, 5 or 6 by the NAICs
securities valuation office.
    
    Investment in medium and lower grade
obligations is limited to 20% of admitted
assets. (Limited to 1% in obligations
issued, guaranteed, or insured by one
institution.)
Investment in lower grade obligations is
limited to 10% of admitted assets. (Limited
to 0.5% in obligations issued, guaranteed,
or insured by 1 institution.)
Investment in lower grade obligations rated
5 or 6 is limited to 3% of admitted assets.
Investment in lower grade obligations rated
6 is limited to 1% of admitted assets.
    
    48.13.273Note: If insurer
intends to invest
more than 2% of
admitted assets in
medium and lower
grade obligations,
the BOD must
approve a written
plan for making
those investments.Obligations Rated by the Securities Valuation Office:Obligations
rated 1 or 2 by the NAICs securities valuation office.
    
    Investment subject to the limitations under
RCW 48.13.030 (single issuer).
    
    48.13.275
 5




---



##### 



Security
    
    Requirement/Restriction
    
    RCWDerivative Transactions:
Options, warrants used in hedging transactions and not attached to
another financial instrument, caps, floors, collars, swaps,
forwards, futures, and any other agreements, options, or
instruments substantially similar thereto or any series or
combination thereof and any agreements, options, or instruments
permitted under rules adopted by the OIC.
Income generation transactions:
(1) Sales of covered call options on noncallable fixed income
securities, callable fixed income securities; (2) Sales of covered
call options on equity securities, (3) Sales of covered puts on
investments that the insurer is permitted to acquire under Chapter
13, (4) Sales of covered caps or floors.
    
    Aggregate statement value (ASV) of
options, caps, floors, and warrants not
attached to a financial instrument
purchased and used in hedging transactions
is limited to 7.5% of admitted assets.
(ASV of options, caps, and floors written
in hedging transactions is limited to 3% of
admitted assets.) The aggregate potential
exposure of collars, swaps, forwards, and
futures used in hedging transactions is
limited to 6.5% of admitted assets.
For income generation transactions, the ASV
of fixed income assets subject to call or
that generate cash flows for payments under
the caps or floors, plus the face value of
fixed income securities underlying a
derivative instrument subject to call, plus
the amount of the purchase obligations
under the puts, is limited to 10% of
admitted assets.
(1) Permitted if the option expires by its
terms prior to the end of the noncallable
period, or derivative instruments based on
fixed income securities.
(2) Permitted if the insurer holds or can
immediately acquire through the exercise of
options, warrants, or conversion rights
already owned, the equity securities
subject to call during the complete term of
the call option sold.
(3) Permitted if the insurer has escrowed,
or entered into a custodian agreement
segregating, cash or cash equivalents with
a market value equal to the amount of its
purchase obligations under the put during
the complete term of the put option sold.
(4) Permitted if the insurer holds the
investments generating the cash flow to
make the required payments under the caps
or floors during the complete term that the
cap or floor is outstanding.
    
    48.13.285Note: Permitted
only to engage in
hedging
transactions and
certain income
generation
transactions, not
for speculation.
Insurer must be
able to demonstrate
to the OIC the
intended hedging
characteristics and
the ongoing
effectiveness of
the derivative
transaction(s)
through cash flow
testing or other
appropriate
analysis.Prohibited Investments:
    
    
    
    48.13.270(1) Issued shares of its own capital stock.(2) Securities issued by any corporation if a majority of its stock having voting power is owned directly or
indirectly by or for the benefit of any one or more of the insurers officers and directors.(3) Any investment or loan ineligible under the provisions of RCW 48.13.030 (single issuer or depository
institution).(4) Securities issued by any insolvent corporation.(5) Obligations contrary to the provisions of RCW 48.13.273 (medium and lower grade obligations).(6) Any investment or security found by the OIC to be designed to evade prohibition of the Insurance Code.Securities Underwriting, Agreements to Withhold or Repurchase  Prohibited:
    
    48.13.280No insurer shall:(1) participate in the underwriting of the marketing of securities in advance of their issuance or enter into any
transaction for such underwriting for the account of such insurer jointly with any other person; or(2) enter into any agreement to withhold from sale any of its property, or to repurchase any property sold by it.
 6




---



##### 



Security
    
    Requirement/Restriction
    
    RCWDisposal of Ineligible Property or Securities:
    
    48.13.290(1) Any ineligible personal property or securities acquired by an insurer may be required to be disposed of within
the time not less than six months specified by order of the commissioner, unless before that time it attains the
standard of eligibility, if retention of such property or securities would be contrary to the policyholders or
public interest in that it tends to substantially lessen competition in the insurance business or threatens
impairment of the financial condition of the insurer.(2) Any personal property or securities acquired by an insurer contrary to RCW 48.13.270 shall be disposed of
forthwith or within any period specified by order of the commissioner.(3) Any property or securities ineligible only because of being excess of the amount permitted under Chapter 13 to
be invested in the category to which it belongs shall be ineligible only to the extent of such excess.Authorization of Investments:
    
    48.13.340No investment, loan, sale or exchange thereof shall, except as to the policy loans of a life insurer, be made unless
authorized or approved by the insurers board of directors or by a committee charged by the board of directors or
the bylaws with the duty of making such investment, loan, sale or exchange. The minutes of any such committee shall
be recorded and reports thereof shall be submitted to the board of directors for approval or disapproval.Record of Investments:
    
    48.13.350A written record in permanent form showing the authorization of each investment or loan shall be made and signed by
an officer of the insurer or by the chair of such committee authorizing the investment or loan. Records shall
contain:(a) In the case of loans: the name of the borrower; the location and legal description of the property; a physical
description, and the appraised value of the security; the amount of the loan, rate of interest and terms of
repayment.(b) In the case of securities: the name of the obligor; a description of the security and the record of earnings;
the amount invested, the rate of interest or dividend, the maturity and yield based upon the purchase price.(c) In the case of real estate: the location and legal description of the property; a physical description and the
appraised value; the purchase price and terms.(d) In the case of all investments:(i) the amount of expenses and commissions if any incurred on account of any investment or loan and by whom and to
whom payable if not covered by contracts with mortgage loan representatives or correspondents which are part of the
insurers records;(ii) the name of any officer or director of the insurer having any direct, indirect, or contingent interest in the
securities or loan representing the investment, or in the assets of the person in whose behalf the investment or
loan is made, and the nature of such interest.
 Policy for Investment in Affiliates:
  Approval Procedures for Mortgage Loans:
    7