(SUCH CONSENT NOT TO BE
UNREASONABLY WITHHELD), ADJUST THE AMOUNT OF SECURITY OR CHANGE THE TYPE OF
SECURITY TO COMPLY WITH THE REVISED REQUIREMENTS.
SUCH ADJUSTMENTS MAY INCLUDE
REDUCING THE SECURITY IN OR TERMINATING IN ITS ENTIRETY THE FUNDS WITHHELD
ACCOUNT, ANY REINSURANCE TRUST OR ANY LETTER OF CREDIT.
THE REINSURER AND THE
CEDING COMPANY WILL COOPERATE IN GOOD FAITH TO EFFECTUATE THIS PROVISION.
FURTHERMORE, IN THE EVENT AT ANY TIME THE FUNDS WITHHELD ACCOUNT, ANY
REINSURANCE TRUST OR ANY LETTER OF CREDIT BECOMES UNNECESSARY IN ORDER FOR THE
CEDING COMPANY TO RECEIVE CREDIT FOR REINSURANCE UNDER THIS AGREEMENT, THE
CEDING COMPANY AND THE REINSURER SHALL COOPERATE IN GOOD FAITH TO TERMINATE THE
FUNDS WITHHELD ACCOUNT, ANY REINSURANCE TRUST OR ANY LETTER OF CREDIT, AND ALL
OTHER TERMS AND CONDITIONS OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND
EFFECT.
SECTION 9.03
FUNDS WITHHELD ACCOUNT.
(A)
ON AUGUST 18, 2009, THE CEDING COMPANY
DEPOSITED PERMITTED ASSETS WITH A STATUTORY CARRYING VALUE, AS OF THE DATE OF
SUCH DEPOSIT, EQUAL TO THE INITIAL DEPOSIT AMOUNT 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 QUARTERLY ACCOUNTING PERIOD BASED ON THE
SETTLEMENT PROCEDURES SET FORTH IN SECTION 8.03.
(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 9.02(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ASSETS HELD IN THE FUNDS WITHHELD ACCOUNT MAY BE WITHDRAWN BY THE CEDING COMPANY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 THE
QUOTA SHARE OF CLAIMS PAID PURSUANT TO THE PROVISIONS OF THE REINSURED POLICIES;
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(III)
TO PAY ANY OTHER AMOUNTS WHICH THE CEDING
COMPANY CLAIMS ARE DUE