ASSETS WITHDRAWN BY THE CEDING COMPANY, INCLUDING
ANY REINSURANCE TRUST EXCESS WITHDRAWALS, SHALL BE HELD BY THE CEDING COMPANY OR
ANY SUCCESSOR IN INTEREST OF THE CEDING COMPANY IN TRUST FOR THE BENEFIT OF THE
REINSURER AND SHALL AT ALL TIMES BE MAINTAINED SEPARATE AND APART FROM ANY
ASSETS OF THE CEDING COMPANY, FOR THE SOLE PURPOSES DESCRIBED IN PARAGRAPHS
(I) THROUGH (V) IMMEDIATELY ABOVE.
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(G)
THE REINSURER MAY SEEK THE APPROVAL OF THE CEDING COMPANY (WHICH
APPROVAL SHALL NOT BE UNREASONABLY OR ARBITRARILY WITHHELD OR DELAYED) TO
WITHDRAW FROM THE REINSURANCE TRUST ALL OR ANY PART OF THE ASSETS CONTAINED
THEREIN AND TRANSFER SUCH ASSETS TO THE REINSURER, PROVIDED THAT:
(I)
THE REINSURER SHALL, AT THE TIME OF SUCH WITHDRAWAL, REPLACE THE
WITHDRAWN ASSETS WITH OTHER QUALIFIED ASSETS HAVING A MARKET VALUE AT LEAST
EQUAL TO THE MARKET VALUE OF THE ASSETS WITHDRAWN; OR
(II)
AFTER SUCH WITHDRAWALS AND TRANSFERS, THE MARKET VALUE OF THE
ASSETS HELD IN THE REINSURANCE TRUST IS NO LESS THAN 102% OF (A) CEDED RESERVES
MINUS (B) THE BOOK VALUE OF ASSETS IN THE FUNDS WITHHELD ACCOUNT, IF ANY, MINUS
(C) THE AMOUNT AVAILABLE UNDER LETTERS OF CREDIT PURSUANT TO SECTION 10.05.
(H)
THE REINSURER SHALL BEAR THE ADMINISTRATIVE COSTS AND EXPENSES
RELATED TO THE ESTABLISHMENT AND MAINTENANCE OF THE REINSURANCE TRUST, INCLUDING
THE FEES OF ANY INVESTMENT MANAGER APPOINTED PURSUANT TO SECTION 10.07.
SECTION 10.05
LETTERS OF CREDIT.
(A)
EACH LETTER OF CREDIT SHALL BE CLEAN, IRREVOCABLE, UNCONDITIONAL,
"EVERGREEN" AND ISSUED OR CONFIRMED BY A QUALIFIED UNITED STATES FINANCIAL
INSTITUTION FOR THE BENEFIT OF THE CEDING COMPANY.
(B)
NOTWITHSTANDING ANY OTHER PROVISION HEREOF, ANY LETTERS OF CREDIT
MAY BE DRAWN UPON IN FULL OR IN PART 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 FUND AN ACCOUNT WITH THE CEDING COMPANY (WHEN COMBINED WITH
ANY FUNDS WITHHELD AMOUNT, THE MARKET VALUE OF ANY ASSETS HELD IN A REINSURANCE
TRUST PURSUANT TO SECTION 10.04 AND ANY UNDRAWN AMOUNTS AVAILABLE UNDER LETTERS
OF CREDIT PURSUANT TO THIS SECTION 10.05) IN AN AMOUNT AT LEAST EQUAL TO THE
CEDING COMPANY'S DEDUCTION FOR REINSURANCE CEDED ON CEDED RESERVES;
(IV)
TO PAY ANY OTHER AMOUNTS WHICH THE CEDING COMPANY CLAIMS ARE DUE
UNDER THIS AGREEMENT; AND
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(V)
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