EQUAL TO $39,103,148.31 IN THE FUNDS WITHHELD ACCOUNT (THE
AGGREGATE OF SUCH DEPOSITS, THE "INITIAL DEPOSIT AMOUNT").
THE PARTIES
ACKNOWLEDGE THAT INTEREST SHALL BE PAYABLE BY THE CEDING COMPANY TO THE
REINSURER ON SUCH INITIAL DEPOSIT AMOUNT AT A RATE EQUAL TO SIX AND THREE-TENTHS
PERCENT (6.30%) PER ANNUM FROM AND INCLUDING JANUARY 1, 2009 TO AND EXCLUDING
SEPTEMBER 1, 2009; PROVIDED THAT, FOR THE PURPOSE OF CALCULATING SUCH INTEREST
AMOUNT, THE REINSURANCE PREMIUMS, NET OF POLICY EXPENSES, WITH RESPECT TO EACH
REINSURED POLICY ISSUED PRIOR TO SEPTEMBER 1, 2009 SHALL BE DEEMED (I) TO HAVE
BEEN RECEIVED BY THE CEDING COMPANY ON THE FIFTEENTH (15TH) DAY OF THE CALENDAR
MONTH IN WHICH SUCH REINSURED POLICY WAS ISSUED AND (II) NOT TO HAVE BEEN
DEPOSITED IN THE FUNDS WITHHELD ACCOUNT.
(B)
THE FUNDS WITHHELD AMOUNT SO HELD IN THE FUNDS WITHHELD ACCOUNT
SHALL INCREASE OR DECREASE AT THE END OF EACH BUSINESS DAY, MONTHLY ACCOUNTING
PERIOD AND EACH QUARTERLY ACCOUNTING PERIOD BASED ON THE SETTLEMENT PROCEDURES
SET FORTH IN SECTION 9.03.
(C)
THE CEDING COMPANY SHALL ESTABLISH AND MAINTAIN AN ACCOUNT PAYABLE
TO THE REINSURER ON ITS STATUTORY BOOKS AND RECORDS IN THE AMOUNT OF THE FUNDS
WITHHELD AMOUNT.
THE ASSETS CONSTITUTING THE FUNDS WITHHELD AMOUNT SHALL BE
INVESTED IN AND CONSIST ONLY OF PERMITTED ASSETS AND SHALL BE VALUED ACCORDING
TO THEIR STATUTORY CARRYING VALUE.
(D)
THE FUNDS WITHHELD ACCOUNT SHALL REMAIN IN EFFECT FOR AS LONG AS
THE REINSURER HAS OUTSTANDING OBLIGATIONS UNDER THIS AGREEMENT, UNTIL THE
REINSURER EFFECTUATES THE PROVISION OF ALL OF THE REINSURANCE CREDIT REQUIRED TO
BE PROVIDED TO THE CEDING COMPANY HEREUNDER THROUGH THE USE OF ANY METHOD OTHER
THAN THE METHOD SET FORTH IN SECTION 10.02(A) OR UNTIL EARLIER TERMINATED BY
MUTUAL AGREEMENT.
THE FUNDS WITHHELD ACCOUNT SHALL BE ESTABLISHED AND
MAINTAINED BY THE CEDING COMPANY EXCLUSIVELY FOR THE PURPOSES SET FORTH IN THIS
AGREEMENT.
(E)
NOTWITHSTANDING ANY OTHER PROVISION HEREOF, ASSETS HELD IN THE
FUNDS WITHHELD ACCOUNT MAY BE WITHDRAWN BY THE CEDING COMPANY AT ANY TIME AND
SHALL BE UTILIZED AND APPLIED BY THE CEDING COMPANY OR ANY OF ITS SUCCESSORS IN
INTEREST BY OPERATION OF LAW, INCLUDING ANY LIQUIDATOR, REHABILITATOR, RECEIVER
OR CONSERVATOR OF THE CEDING COMPANY, WITHOUT DIMINUTION BECAUSE OF INSOLVENCY
ON THE PART OF THE CEDING COMPANY OR THE REINSURER, ONLY FOR THE FOLLOWING
PURPOSES:
(I)
TO REIMBURSE THE CEDING COMPANY FOR THE QUOTA SHARE OF PREMIUMS
WHICH ARE RETURNED TO THE OWNERS OF THE REINSURED POLICIES BECAUSE OF
CANCELLATIONS OF SUCH REINSURED POLICIES;
(II)
TO REIMBURSE THE CEDING COMPANY FOR ANNUITIZATION PAYMENTS AND
THE QUOTA SHARE OF CLAIMS PAID PURSUANT TO THE PROVISIONS OF THE REINSURED
POLICIES;
(III)
TO PAY ANY OTHER AMOUNTS WHICH THE CEDING COMPANY CLAIMS ARE DUE
UNDER THIS AGREEMENT; AND
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(IV)
TO PAY ANY NET SETTLEMENT AMOUNT, FUNDS WITHHELD ADJUSTMENT OR
WEEKLY ASSIGNED HEDGE PROCEEDS SETTLEMENT AMOUNT DUE FROM THE CEDING COMPANY TO
THE REINSURER.
NOTWITHSTANDING THE FOREGOING, OTHER THAN WITHDRAWALS MADE BY THE CEDING COMPANY
FOR THE PURPOSE OF EFFECTUATING