Document:

Exhibit 10.23

 

 

 

REINSURANCE AGREEMENT

 

between

 

FINANCIAL ASSURANCE
COMPANY LIMITED

 

and

 

VIKING INSURANCE COMPANY,
LIMITED

 

Dated as of
[      ] 2004

 

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE I  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II  COVERAGE

  	
   

  
	
   

  	
   

  
	
  ARTICLE III  ADMINISTRATION: GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV  CEDING COMMISSION

  	
   

  
	
   

  	
   

  
	
  ARTICLE V  ACCOUNTING AND SETTLEMENT: RESERVE
  ADJUSTMENT

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI  DURATION AND TERMINATION

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII  INSOLVENCY

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII  DISPUTE RESOLUTION

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE A
  – Part I  CEDING COMMISSION

  	
   

  
	
   

  	
   

  
	
  SCHEDULE A
  – Part II  ESTIMATED CEDING COMMISSION

  	
   

  
	
   

  	
   

  
	
  SCHEDULE A
  - PART III  ESTIMATED CEDING
  COMMISSION FOR FIRST 12 ACCOUNTING PERIODS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE B  ACCOUNTING PERIOD REPORTS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE C  THE BONDS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE D  LIST OF REINSURANCE ARRANGEMENTS

  	
   

  

 

 

 

REINSURANCE
AGREEMENT

 

 

This
Agreement, dated as of
                          ,
2004 (this “Agreement”) is made and entered into by and between Financial
Assurance Company Limited, an insurance company organised under the laws of
England (the “Company”), and Viking Insurance Company, Limited, an insurance
company organised under the laws of Bermuda (the “Reinsurer”).  Defined terms used herein are defined below.

 

The Company
and the Reinsurer mutually agree to reinsure under the terms and conditions
stated herein.  This Agreement is solely
between the Company and the Reinsurer, and the performance of the obligations
of each party under this Agreement shall be rendered solely to the other party.  In no instance, except as set forth in
Article VII of this Agreement, shall anyone other than the Company or the
Reinsurer have any rights under this Agreement. The Company shall be and shall
remain the only party that is liable to any insured, policyholder, claimant or
beneficiary under any insurance policy or contract reinsured hereunder.

 

ARTICLE I

 

DEFINITIONS

 

1.1                                Definitions.  As used in this Agreement, the following terms shall have the
following meanings (definitions are applicable to both the singular and the
plural forms of each term defined in this Article):

 

“Accounting
Period” means each period of a calendar month the first such period
commencing at 00.01 Bermuda local time (Atlantic Standard Time) on 1
January 2004 and the last such period commencing on the first day of the
calendar month in which the Termination Date falls and ending on the
Termination Date.

 

“Affiliate”
means any other Person that directly or indirectly controls, is controlled by,
or is under common control with, the first Person.  “Control” (including the terms, “controlled by” and
“under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.

 

“Agreement”
shall have the meaning specified in the first paragraph of this Agreement.

 

“Applicable
Law” means any law (including common law), statute, ordinance, rule,
regulation, order, writ, injunction, judgment, permit, governmental agreement
or decree applicable to a Person or any of such Person’s subsidiaries,
properties, assets, or to such Person’s officers, directors, managing
directors, employees or agents in their capacity as such.

 

 

“Bonds”
means the categories of products written by the Company, whether before, on or
after the Inception Date, which are listed in Schedule C.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
banks in London are closed for trading.

 

“Ceded
Reinsurance” means all reinsurance ceded by the Company pursuant to
contracts, binders, certificates, treaties or other evidence of reinsurance
relating to the Relevant Risks in effect on or prior to the Inception Date, or,
in accordance with Section 2.5, following the Inception Date, except the
reinsurance provided pursuant to this Agreement.

 

“Ceded
Reinsurance Agreements” means all of the contracts, binders, certificates,
treaties or other evidence for Ceded Reinsurance.

 

“Ceding
Commissions” shall have the meaning specified in Schedule A Part I.

 

“Commutation”
means, with respect to any portion of the Ceded Reinsurance, a commutation or
other similar transaction that results in the termination of such Ceded
Reinsurance with respect to the Relevant Risks.

 

“Distributor
Agreements” means all distributor, agency or profit sharing agreements or
arrangements with third parties (each, a “Distributor”) relating to the
Relevant Risks whether entered into before, on or after the Inception Date.

 

“Estimated
Ceding Commission” shall have the meaning
specified in Section 4.1.

 

“Extra
Contractual Liabilities” means all liabilities of the Company for damages
(including compensatory, consequential, exemplary, punitive, bad faith or
similar or other damages) which relate to the marketing, sale, underwriting,
issuance, delivery, cancellation or administration of contracts under which the
Company assumes Relevant Risks, including liability arising out of or relating
to any alleged or actual act, error or omission by the Company or its agents,
whether intentional or otherwise, with respect to any of such contracts,
including (A) any alleged or actual reckless conduct or bad faith in connection
with the handling of any claim arising out of or under such contracts, or (B) the
marketing, sale, underwriting, issuance, delivery, cancellation or
administration of any of such contracts.

 

“FINCL”
shall mean Financial New Life Company Limited, a company incorporated in
England and Wales with registered number 4873014 and whose registered office is
at Vantage West Great West Road, Brentford, Middlesex TW8 9AG.

 

“FSA”
means the Financial Services Authority of the United Kingdom.

 

“Governmental
Authority” means any national government, any state or other political
subdivision thereof or any self-regulatory authority, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

2

 

“Inception
Date” shall have the meaning specified in Section 2.1.

 

“Insolvency
Fund” means any guarantee fund, insolvency fund, plan, pool, association,
or other arrangement, however denominated, established or governed, which
provides for the payment by the Company of any levy, amount or charge in
respect of, or assumption by the Company of part or all of any claims, debts,
charges, fees or other obligations of an insurer or reinsurer, or its
successors or assigns, as a result of its having been declared by any competent
authority to be insolvent, or as a result of its having otherwise been deemed
unable to meet any such claims, debts, charges, fees or other obligations in
whole or in part.

 

“Mathematical
Reserves” means, as of any given date, the mathematical reserves of the
Company calculated in accordance with the Valuation and Accounting Principles
but excluding any mathematical reserves attributable to the Bonds.

 

“Monthly
Report” shall have the meaning specified in Section 5.1.

 

“Negative
Settlement Amount” means, with respect to each Accounting Period, the
amount of any net deficit set forth in Line 11 of the Monthly Report for such
Accounting Period as calculated in accordance with Section 5.3(a).

 

“Person”
means any natural person, firm, limited liability company, general partnership,
limited partnership, joint venture, association, corporation, trust,
Governmental Authority or other entity.

 

“Positive
Settlement Amount” means, with respect to each Accounting Period, the
amount of any net surplus set forth in Line 11 of the Monthly Report for such
Accounting Period as calculated in accordance with Section 5.3(a).

 

“Relevant
Liabilities” means all insurance liabilities and obligations arising under
the Relevant Risks including, without limitation (i) benefits, surrender
amounts and other amounts payable to policyholders under the terms of the
Relevant Risks, (ii) other consideration paid on or after the Inception Date
with respect to the Relevant Risks, (iii) Insolvency Fund or premium based
assessments based on premiums and other consideration paid on or after the
Inception Date with respect to the Relevant Risks, (iv) all amounts payable on
or after the Inception Date for returns or refunds of premiums under the
Relevant Risks, (v) all liability for commission or profit sharing payments and
other fees or compensation payable, including under Distributor Agreements,
with respect to the Relevant Risks in respect of premiums and other
consideration paid on or after the Inception Date, (vi) all Extra Contractual
Liabilities and (vii) compensation paid in respect of, or in relation to
changes to, Distributor Agreements on or after the Inception Date, unless
otherwise agreed to in writing by the Reinsurer.

 

“Relevant
Risks” means the whole or, as the case may be, such part of the insurance
or reinsurance risks as are assumed or borne by the Company under or in
connection with any and all insurance and reinsurance policies and contracts to
which it is a party and which are in force at any time on or prior to the
Termination Date (with the exception of

 

3

 

the
Bonds).  Where the Company is a
co-insurer with any other company or companies under any such insurance or
reinsurance policy or contract, the insurance or reinsurance risks which are to
be treated as assumed or borne by the Company for these purposes are:-

 

(i)                                     those risks which the Company has agreed with its co-insurer or
co-insurers are to be assumed or borne by the Company; and

 

(ii)                                  those other risks (if any) which the Company has agreed with its
co-insurer or co-insurers are to be assumed or borne by such co-insurer or
co-insurers, but only to the extent that such co-insurer or co-insurers shall
have defaulted in meeting its or their obligations in respect of those risks
and the Company incurs a liability in respect of those risks as a result.

 

For the
avoidance of doubt, in the event that the rights and obligations of the Company
under this Agreement are transferred to FINCL under the Scheme, the “Relevant
Risks” hereunder shall include any reinsurance risks assumed by FINCL under the
Scheme in respect of any Retained Insurances (as defined in the Scheme).

 

“RIR” means the investment return in respect of an Accounting Period
calculated in accordance with Section 5.3(c).

 

“Scheme”
means the scheme for the transfer of the business of the Company to FINCL
pursuant to section 105 of the Financial Services and Markets Act 2000.

 

“Statutory
Format” means the profit and loss account format set out in Chapter I of
Part I of Schedule 9A of the Companies Act 1985.

 

“Termination
Date” means the effective date of any termination of this Agreement as
provided in Article VI.

 

“Valuation
and Accounting Principles” means the valuation rules for determining the
amount of the assets and liabilities of the Company in accordance with the
Interim Prudential Sourcebook for Insurers issued by the FSA (as amended or
replaced from time to time) under the powers conferred on the FSA pursuant to
the Financial Services and Markets Act 2000, as such rules are required to be
applied by the Company in the preparation of its annual returns to the FSA
(taking into account any waivers or modifications of such valuation rules as
are approved by the FSA from time to time in respect of the Company) and, to
the extent not inconsistent therewith, the accounting principles and practices
hitherto adopted by the Company in preparing its annual audited accounts.

 

“3 Month
LIBOR” means the British Bankers Association Interest Settlement Rate for
sterling quoted for a three month period as displayed on the appropriate
Telerate screen page at 11.00 a.m. (London time) on the day on which such
Interest Settlement Rate is required to be computed pursuant to this Agreement.

 

4

 

ARTICLE II

 

COVERAGE

 

2.1                                Coverage.  Upon the terms and subject to the conditions and other provisions
of this Agreement, as of 00.01. Bermuda local time (Atlantic Standard Time) on
1 January 2004 (the “Inception Date”), the Reinsurer agrees to reinsure
the Relevant Liabilities by way of the Reinsurer indemnifying the Company in
respect of each Negative Settlement Amount. 
As consideration for the reinsurance by the Reinsurer under this
Agreement, the Company shall pay to the Reinsurer each Positive Settlement
Amount.  The parties shall also pay
Ceding Commission and Estimated Ceding Commission in accordance with the
provisions of this Agreement.

 

2.2                                Conditions.  Except as otherwise set forth or contemplated herein, no changes,
amendments or modifications made on or after the Inception Date in the terms
and conditions of the Relevant Risks in-force as of the Inception Date which
adversely affect the liability of the Reinsurer hereunder shall be covered
hereunder without the prior written approval of such changes, amendments or modifications
by the Reinsurer, which approval shall not be unreasonably withheld or
delayed.  In the event that any such
changes, amendments or modifications are made in any such Relevant Risk without
the prior written approval of the Reinsurer, this Agreement will cover
liability incurred by the Company for Relevant Risks as if the unapproved
changes, amendments or modifications had not been made.

 

2.3                                Territory.  The territorial limits of the Agreement shall be identical to
those of the Relevant Liabilities.

 

2.4                                Commutation of Ceded Reinsurance.  The Company shall not, without the
Reinsurer’s prior written approval, in its sole discretion, take any action to
amend or terminate any Ceded Reinsurance under any Ceded Reinsurance Agreement
or enter into any Commutation of Ceded Reinsurance.

 

2.5                                New Reinsurance Covers.  Subsequent to the Inception Date, the
Company shall not enter into any reinsurance arrangements with respect to the
Relevant Liabilities without the prior written consent of the Reinsurer, in its
sole discretion.  For these purposes,
the Reinsurer consents to the Company having entered into the reinsurance
arrangements specified in Schedule D.

 

ARTICLE III

 

ADMINISTRATION: GENERAL
PROVISIONS

 

3.1                                Contract Administration.  The Company shall procure that the Relevant
Risks are administered in accordance with their terms and the terms of any
applicable Distributor Agreement, including, but not limited to, the collection
of premiums and other amounts due from policyholders, the payment of all Relevant
Liabilities and the administration of claims and disbursements.  All benefits under the contracts and
policies constituting the

 

5

 

Relevant Risks
paid by the Company shall be binding upon the Reinsurer, provided, however,
that such payments are within the terms, conditions and limitations of the
contracts and policies constituting the Relevant Risks.  The Company shall procure that the Relevant
Risks are administered in good faith and with the care, skill, prudence, and
diligence of a person experienced in administering payment protection insurance
business.  The Company shall procure
that the Relevant Risks are administered in compliance with Applicable Law and
the current service provider’s administrative performance standards in effect
on the date hereof, with such revisions to such standards as are no less
favourable to the Reinsurer than such standards.  Notwithstanding the foregoing, the parties may, from time to
time, mutually develop specific and/or different standards for the
administration of the Relevant Risks.

 

3.2                                Sub-contracting of Contract Administration.  The Company may
subcontract the performance of any service or services which the Company is
required to procure in connection with the administration of the Relevant Risks
to (i) an Affiliate, (ii) a service provider utilised by the Company with
respect to the Relevant Risks or its other business as of the date hereof,
(iii) any Person to whom such subcontracting is required to be effected under
the terms of any Distributor Agreement or (iv) with the prior written consent
of the Reinsurer, any other Person, such consent not to be unreasonably
withheld; provided, that no such subcontracting shall relieve the
Company from any of its obligations or liabilities hereunder, and the Company
shall remain responsible for all obligations or liabilities of such
subcontractor with regard to the provision of such advice or services as if
provided by the Company.

 

3.3                                Ceded Reinsurance Agreements and Distributor Agreements.  The Company shall manage
and administer the Ceded Reinsurance Agreements and the Distributor Agreements,
including:-

 

(i)                                     providing all reports and notices required with regard to the Ceded
Reinsurance Agreements and the Distributor Agreements to the reinsurers or
other third parties, as applicable, within the time required by the applicable
Ceded Reinsurance Agreement or Distributor Agreements; and

 

(ii)                                  doing all other things necessary to comply with the terms and
conditions of the Ceded Reinsurance Agreements and the Distributor Agreements.

 

Without
limiting the foregoing, the Company shall:-

 

(i)                                     promptly pay when due all reinsurance premiums due to reinsurers
under the Ceded Reinsurance Agreements and use all commercially reasonable efforts
to collect from such reinsurers all amounts due under Ceded Reinsurance; and

 

(ii)                                  promptly pay when due all profit sharing, commissions or other
compensation due to third parties under the Distributor Agreement and use all
commercially reasonable efforts to collect from such third parties all amounts
due thereunder.  Notwithstanding the
obligation of the Company under this Section 3.3 to use all commercially
reasonable efforts to collect such reinsurance recoverables, the

 

6

 

risk of the
Company not collecting or being unable to collect (for whatever reason) any
amount due under Ceded Reinsurance shall be borne by the Reinsurer in
accordance with Line 2 of Schedule B of this Agreement.

 

3.4                                Reinsured Policy Terms.  The Company shall set all insurance rates
and underwriting criteria in respect of the Relevant Risks from and after the
Inception Date consistently with the manner in which it has done so in the
past, consulting with the Reinsurer on any issue which is expected to have a
material adverse impact on any amounts which the Reinsurer reasonably expects
to become payable to it under the terms of this Agreement.

 

3.5                                Claims Settlements.  The Company agrees that if so requested by
the Reinsurer it will provide notice to the Reinsurer as soon as is reasonably
practicable of its intention to commence litigation proceedings in respect of a
claim in excess of £100,000 with respect to a Reinsured Policy along with (if
requested by the Reinsurer) copies of all pleadings and reports of
investigation with respect to that claim. 
The Reinsurer shall have the right, at its own expense, to participate
jointly with the Company in the investigation, adjustment or defence of such
claims.

 

3.6                                Inspection.  The Company shall keep accurate and complete records, files and
accounts of all transactions and matters with respect to the Relevant Risks in
accordance with its record management practices in effect from time to
time.  The Reinsurer or its designated
representative (or Person appointed or charged with the duty to examine or
investigate the Reinsurer under Applicable Law) may upon reasonable notice
inspect and copy (and take away such copies), at the offices of the Company
where such records are located, the papers and any and all other books or
documents of the Company reasonably relating to the Relevant Risks and the
administration thereof (including compliance with the provisions of
Section 3.1), during normal business hours for such period as this
Agreement is in effect or for as long thereafter as the Company seeks
performance by the Reinsurer pursuant to the terms of this Agreement or the
Reinsurer reasonably needs access to such records for regulatory, tax or
similar purposes.  Where any papers,
books or documents relating to the Relevant Risks and the administration
thereof are those of any sub-contractor of the Company, the Company shall
procure at the Reinsurer’s expense, to the extent that the Company is entitled
and able to do so, that the Reinsurer may upon reasonable notice inspect and
copy such papers, books or documents (and take away such copies) at the office
of the sub-contractor where such papers, books or documents are located.  The information obtained shall be used only
for purposes relating to reinsurance under this agreement and as permitted
under Section 3.7.

 

3.7                                Co-operation.  Each party hereto shall co-operate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement
including making available to each their respective officers and employees for
interview and meetings with Governmental Authorities and furnishing any
additional assistance, information and documents as may be reasonably requested
by either party from time to time.  Each
party is permitted to furnish such documents and information concerning this
Agreement, the reinsurance under this Agreement and the objectives of this
Agreement

 

7

 

(i) to its
advisors, insurance managers and auditors as may be desirable in connection
with servicing the business of the party concerned or such party complying with
Applicable Law and (ii) as required under Applicable Law.

 

3.8                                Errors and Omissions.  If any delay, omission, error or failure to
pay amounts due or to perform any other act required by this Agreement is
unintentional and caused by misunderstanding or oversight, the Company and the
Reinsurer will adjust the situation to what it would have been had the
misunderstanding or oversight not occurred. 
The party first discovering such misunderstanding or oversight, or an
act resulting from such misunderstanding or oversight, will notify the other
party in writing promptly upon discovery thereof, and the parties shall act to
correct such misunderstanding or oversight within twenty (20) Business Days of
such other party’s receipt of such notice. 
However, this Section shall not be construed as a waiver by either
party of its right to enforce strictly the terms of this Agreement.

 

3.9                                Age, Sex and Other Adjustments.  The liability of the Reinsurer shall follow
that of the Company including in circumstances where the Company’s liability
under any of the Relevant Risks is changed because of a misstatement of age or
sex or any other material fact, and the Company and the Reinsurer will make all
appropriate adjustments to amounts due to each other under this Agreement in
such circumstances.

 

3.10                          Setoff. 
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favour of or against either
the Company or the Reinsurer with respect to this Agreement are deemed mutual
debts or credits, as the case may be, and shall be setoff from any amounts due
to the Company or the Reinsurer hereunder, as the case may be, and only the net
balance shall be allowed or paid.

 

ARTICLE IV

 

CEDING COMMISSION

 

4.1                                Ceding Commission.  On and subject to the terms of this
Agreement, the Reinsurer shall pay to the Company (or, as the case may be, the
Company shall pay to the Reinsurer), an estimate of the Ceding Commission (the
“Estimated Ceding Commission”) payable in respect of that Accounting Period in
an amount determined in accordance with Schedule A Part II.  The amount of the Estimated Ceding
Commission in respect of each Accounting Period shall, subject to
Section 4.2 below, be calculated by the Reinsurer in good faith on the
basis of information provided by the Company and shall be paid, by the
Reinsurer or the Company as the case may be, at the same time as any Negative
or Positive Settlement Amount required to be paid in respect of the previous
Accounting Period becomes due in accordance with the arrangements set out in
Section 5.4 below. The Estimated Ceding Commission in respect of any
Accounting Period is, for the avoidance of doubt, an estimate of the actual
Ceding Commission due in respect of that Accounting Period and the adjustment
to such estimate shall be effected through the Ceding Commission Adjustments
referred to in Schedule B and Section 5.5.

 

8

 

4.2                                Estimated Ceding Commission initially due.  Notwithstanding
Section 4.1, the amounts of the Estimated Ceding Commission in respect of
each of the first 12 Accounting Periods shall be in the respective amounts set
out in Schedule A Part III.  The
Reinsurer shall pay to the Company an amount equal to the Estimated Ceding
Commission amounts in respect of all Accounting Periods commencing prior to the
execution and delivery of this Agreement as set out in Schedule A Part III
and, for the avoidance of doubt, the Company shall take account of such amount
payable when producing the First Monthly Report in accordance with
section 5.4(b) below.  Subsequent
amounts due as Estimated Ceding Commission under Schedule A Part III shall
be paid in accordance with Section 5.4 below.

 

ARTICLE V

 

ACCOUNTING AND
SETTLEMENT: RESERVE ADJUSTMENT

 

5.1                                Monthly Reports.  Subject as set out in Section 5.4(b),
no later than 3 Business Days before the end of each Accounting Period (or more
frequently as mutually agreed by the parties) the Company shall supply the
Reinsurer with a report that shall provide an estimate of the financial data
for such Accounting Period required in Schedule B together with details of
the Ceding Commission estimated to be payable in respect of the following
Accounting Period (the “Monthly Report”).

 

5.2                                Computations. At the end of each
Accounting Period the Company shall compute:

 

(i)                                     the amount (being “X” in the formula set out in Section 5.3
below) shown in Line 3 in the table contained in Schedule B; and

 

(ii)                                  the amount (being “Y” in the formula set out in Section 5.3
below) shown in Line 7 in the table contained in Schedule B,

 

in each case
in accordance with the notes set out in Schedule B and insofar as not
inconsistent with such notes otherwise in accordance with the Valuation and
Accounting Principles.

 

5.3                                Positive and Negative Settlement Amounts.

 

(a)                                  In respect of each Accounting Period, if the formula:

 

(X – Y + RIR –
A + B)

 

shall produce
a positive amount, that shall be the Positive Settlement Amount for that
Accounting Period, and if it shall produce a negative amount, that shall be the
Negative Settlement Amount for that Accounting Period, and that Positive
Settlement Amount or Negative Settlement Amount, as the case may be, shall be
the amount set out in Line 11 of Schedule B.

 

(b)                                 For the purposes of the formula set out in Section 5.3(a):

 

9

 

(i)                                    “A” shall be the Reinsurer’s Ceding Commission Adjustment shown in
Line 9 in the table contained in Schedule B; and

 

(ii)                                 “B” shall be the Company’s Ceding Commission Adjustment shown in
Line 10 in the table contained in Schedule B.

 

 (c)                               The amount of RIR in respect of any Accounting Period shall be
determined by multiplying an amount equal to:

 

(i)                                    the Mathematical Reserves as at the opening of business on the first
day of the Accounting Period; less

 

(ii)                                 the amount of the Company’s provision for deferred acquisition costs
(excluding any provision for deferred acquisition costs attributable to the
Bonds) as at the opening of business on the first day of the Accounting Period,

 

by a rate
equal to:

 

C

D

 

where:

 

(A)                             “C”
is the amount of investment income receivable by the Company in respect of the
Accounting Period; and

 

(B)                               “D”  is
the total market value of the Company’s investments (other than any investments
acquired in connection with the Bonds or to which the Bonds are linked in any
way and other than any investment of the Company in its subsidiary
undertakings) as at the opening of business on the first day of the Accounting
Period.

 

For the
purposes of this Section 5.3(c), “investment income” shall mean all
amounts derived from the holding of investments (other than any investments
acquired in connection with the Bonds or to which the Bonds are linked in any
way and other than any investment of the Company in its subsidiary
undertakings) which are treated, in accordance with the Company’s normal
accounting policies, as being of an income nature, including any gains on the
realisation of those investments and having taken account of any losses on the
realisation of those investments.  For
the avoidance of doubt, “investment income” shall not include any unrealised
gains or unrealised losses attributable to such investments.

 

5.4                                Payments.

 

(a)                                   Subject as provided in Section 5.4(b) below:

 

10

 

(i)            For each Accounting
Period in respect of which there is a Negative Settlement Amount, the Reinsurer
shall pay to the Company by telegraphic transfer within 5 Business Days of the
delivery of the Monthly Report by the Company an amount equal to the absolute
value of such Negative Settlement Amount together with the Estimated Ceding
Commission (if any) payable by the Reinsurer to the Company in respect of the
following Accounting Period.

 

(ii)                                 For each Accounting Period in respect of which there is a Positive
Settlement Amount, the Company shall pay to the Reinsurer by telegraphic
transfer within 5 Business Days of the delivery of the Monthly Report by the
Company an amount equal to the absolute value of such Positive Settlement
Amount together with the Estimated Ceding Commission (if any) payable by the
Company to the Reinsurer in respect of the following Accounting Period.

 

(iii)                              If there is a Negative Settlement Amount for any Accounting Period
and the Company is required to pay the Estimated Ceding Commission to the
Reinsurer in respect of the following Accounting Period, a net payment shall be
made by the Company or the Reinsurer as appropriate.

 

(iv)                             If there is a Positive Settlement Amount for any Accounting Period
and the Reinsurer is required to pay the Estimated Ceding Commission to the
Company in respect of the following Accounting Period, a net payment shall be
made by the Company or the Reinsurer as appropriate.

 

(b)                                In relation to all Accounting Periods commencing prior to the
execution and delivery of this Agreement, the Company shall calculate and
deliver a report (“the First Monthly Report”) to the Reinsurer as to the total
aggregate net amount payable by the Company (or as the case may be the
Reinsurer) to place the Company and the Reinsurer in the respective financial
positions in which they would have been under this Agreement on the date of
such payment, disregarding for this purpose the time cost of money, had this
Agreement been executed and delivered at the commencement of the first
Accounting Period.  Such payment shall
be made by telegraphic transfer within 5 Business Days of the delivery of the
First Monthly Report.

 

5.5                                Actual Data.  In preparing all reports required under this Agreement, the
Company shall use all commercially reasonable efforts to supply the actual
data.  If the actual data cannot be supplied
with the appropriate report, the Company shall produce best estimates and shall
provide amended reports based on actual data no more than ten (10) Business
Days after the actual data becomes available and the parties will settle any
additional amounts due within five (5) Business Days thereafter, together with
interest as provided in Section 5.7 hereof.

 

11

 

5.6                                Additional Reports and Information.  For so long as this Agreement remains in
effect and for a period of 7 years after its termination, each of the parties
shall periodically furnish to the other such other reports and information as
is reasonably available to it and as may be reasonably requested by such other
party for regulatory, tax or similar purposes. Nothing in this Agreement shall
restrict the Company from being entitled to apply to the Court for its
dissolution at any time during such 7 year period but it shall first make
arrangements for all data in its possession which may be requested by the
Reinsurer to be handed over to a successor company which shall have undertaken,
mutatis mutandis, to the Reinsurer in the terms of this Section 5.6.

 

5.7                                Delayed Payments.  In the event that all or any portion of any
payment due to either party pursuant to this Agreement becomes overdue the
portion of the amount overdue shall bear interest at an annual rate equal to 3
Month LIBOR on the date that the payment becomes overdue plus 200 basis points
per annum, for the period that the amount is overdue.

 

5.8                                Certificate of the Chief Financial Officer of the Company. The certificate of the Chief Financial Officer of the Company as
to any matter arising in respect of the amount of any payment falling to be
made under this Agreement shall, in the absence of manifest error, be final and
binding on the parties.

 

5.10                          Breach of Required Minimum Margin of Solvency. No payment required to be made by the Company to the Reinsurer at
a relevant time under the terms of this Agreement shall be required to be made
at that time if that payment would cause the Company to breach the “Required
Minimum Margin” required to be maintained by the Company in accordance with the
FSA’s Interim Prudential Sourcebook for Insurers (as amended or replaced from
time to time).  Any payment not made by
the Company to the Reinsurer for this reason shall be paid by the Company to
the Reinsurer as soon as the making of the payment would not cause that
“Required Minimum Margin” to be breached.

 

ARTICLE VI

 

DURATION AND TERMINATION

 

6.1                                Duration.  Except as otherwise provided herein, this Agreement shall be
unlimited in duration.

 

6.2                                Reinsurer’s Liability.  The Reinsurer’s liability with respect to
the Relevant Liabilities will terminate on the date that termination takes
effect as a result of any notice given at the option of the Reinsurer or the
Company in accordance with Section 6.3 or Section 6.4 and otherwise
on the date this Agreement is terminated upon the written agreement of the
parties.

 

6.3                                Termination on Insolvency.  In the event of the insolvency of the
Reinsurer, the Company shall have the right to terminate this Agreement and the
reinsurance hereunder, such termination to be effective as soon as notice of
the termination is given by the Company to the Reinsurer.  With effect from the date that the notice of

 

12

 

termination is
given under this Section 6.3, any amounts which are or become owing by the
Company to the Reinsurer under this Agreement, whether prior to, on or after
the date of that notice of termination, shall cease to be payable by the
Company to the Reinsurer.

 

6.4                                Optional Termination.  Either the Reinsurer or the Company may
terminate this Agreement and the reinsurance hereunder upon prior written
notice given at any time to expire on the last day of the Accounting Period in
which such notice is given, (i) at any time after the Reinsurer and the Company
have both become wholly owned subsidiaries of Genworth Financial, Inc. or (ii)
at any time after the Scheme becomes effective (with such amendments, deletions
or additions to the Scheme as the parties to it may approve).

 

For the
purposes of this Section, a company shall be a wholly owned subsidiary of
Genworth Financial, Inc. if all of its ordinary shares are owned:-

 

(i)                                    by Genworth Financial, Inc., or

 

(ii)                                 by any other company the ordinary shares of which are owned directly
by Genworth Financial, Inc. or by another wholly owned subsidiary of Genworth
Financial, Inc.

 

6.5                                Consequence of Termination

 

(a)                                 In the event that this Agreement is terminated pursuant to
Section 6.4, this Agreement shall terminate as of the end of the
applicable Accounting Period in which the notice of termination pursuant to
Section 6.4 is received by the non-terminating party and a net accounting
and settlement as to any balance due under this Agreement shall be undertaken
by the parties for such Accounting Period and in respect of adjustments
required for any earlier Accounting Period (the “Final Settlement”).

 

(b)                                In the event that, subsequent to the Final Settlement, the Company
receives any amount, or is required to pay any amount, or actual data becomes
available to the Company, which in any such case was not taken into account in
calculating any Positive or Negative Settlement Amount but which would have
been so taken into account had it been received or paid or become available
prior to the Termination Date or the Final Settlement, the Company or (as the
case may be) the Reinsurer shall make such payment or payments to the other as
is required to reflect as nearly as possible the position that would have prevailed
had such amount or data been so taken into account, provided, however,
that the obligations under this Section 6.5(b) to make any such payment
shall terminate 18 months after the date on which any notice is served under
Section 6.4.

 

13

 

ARTICLE VII

 

INSOLVENCY

 

7.1                                Payments.  In the event of the insolvency of the Company, payment due to the
Company under this Agreement shall be payable by the Reinsurer directly to the
Company or to its liquidator, receiver, or statutory successor on the basis of
the liability of the Company under the contract or contracts reinsured, without
diminution because of the insolvency of the Company.  It is agreed and understood, however, that (i) in the event of
the insolvency of the Company, the Company shall give to the Reinsurer written
notice of the pendency of a claim against the insolvent Company on a Reinsured
Policy within a reasonable time after such claim is filed in the insolvency
proceeding and (ii) during the pendency of such claim the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated any defences which it may deem available
to the Company or its liquidator, receiver or statutory successor.

 

7.2                                Expenses.  It is further understood that any expense thus incurred by the
Reinsurer pursuant to Section 7.1 shall be chargeable, subject to court
approval, against the insolvent Company as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to the
Company solely as a result of the defence undertaken by the Reinsurer.

 

ARTICLE VIII

 

DISPUTE RESOLUTION

 

8.1                                General Provisions.

 

(a)                                  Any dispute, controversy or claim arising out of or relating to this
Agreement or the validity, interpretation, breach or termination thereof (a
“Dispute”), shall be resolved in accordance with the procedures set forth in
this Article VIII, which shall be the sole and exclusive procedure for the
resolution of any such Dispute.

 

(b)                                 Commencing with the request contemplated by Section 8.2, all
communications between the parties or their representatives in connection with
the attempted resolution of any Dispute, including any mediator’s evaluation
referred to in Section 8.3, shall be deemed to be without prejudice
communications and to have been delivered in furtherance of a Dispute
settlement and shall be exempt from inspection, and shall not be admissible in
evidence for any reason (whether as an admission or otherwise).

 

(c)                                  In connection with any Dispute, the parties expressly waive and
forego any right to (i) punitive, exemplary, statutorily-enhanced or similar
damages in excess of compensatory damages, and (ii) trial by jury.

 

14

 

(d)                                 The specific procedures set forth below, including but not limited
to the time limits referenced therein, may be modified by agreement of the
parties in writing.

 

(e)                                  The running of time shall be suspended in respect of any Dispute for
the purposes of any defences based upon the passage of time (whether under the
Limitation Act 1980 (in its present form or as subsequently amended or
replaced) or otherwise) while the procedures specified in this
Article VIII are pending. The parties will take such action, if any,
required to effectuate this suspension.

 

8.2                                Consideration by Senior Executives.  If a Dispute is not resolved in the normal
course of business at the operational level, the parties shall attempt in good
faith to resolve any Dispute by negotiation between executives who hold, in
respect of each of the business entities involved in the Dispute, at a minimum,
the office of President, Chief Executive Officer or Chief Financial
Officer.  Either party may initiate the
executive negotiation process by written notice to the other.  Fifteen (15) days after delivery of the
notice, the receiving party shall submit to the other a written response. The
notice and response shall include (i) a statement of the Dispute and of each
party’s position, and (ii) the name and title of the executive who will
represent that party and of any other person who will accompany the
executive.  Such executives will meet in
person or by telephone within 30 days of the initial notice to seek a
resolution.

 

8.3                                Mediation.  If a Dispute is not resolved by negotiation as provided in
Section 8.2 within forty-five (45) days from the initial notice, then
either party may submit the Dispute for resolution by mediation pursuant to the
Center for Public Resources (“CPR”) Model Mediation Procedure as then in
effect.  The parties will select a
mediator from the CPR Panels of Distinguished Neutrals, but such mediator must
have prior reinsurance experience either as a lawyer or as a present or former
officer or management employee of a reinsurance company, but not of the
Company, or the Reinsurer, or any of their respective affiliates.  Either party at commencement of the
mediation may ask the mediator to provide an evaluation of the Dispute and the
parties’ relative positions.

 

8.4                                Arbitration.  If a Dispute is not resolved by mediation as provided in
Section 8.3 within thirty (30) days of the selection of a mediator (unless
the mediator chooses to withdraw sooner), either party may submit the Dispute
to be finally resolved by arbitration pursuant to the CPR Rules for
Non-Administered Arbitration as then in effect.  The parties consent to a single, consolidated arbitration for all
known Disputes existing at the time of the arbitration and for which
arbitration is permitted.

 

(a)                                  The neutral organisation for purposes of the CPR rules will be the
CPR.  the arbitral tribunal shall be
composed of three arbitrators who are each experienced in the reinsurance
business, of whom each party shall appoint one in accordance with the
“screened” appointment procedure provided in Rule 5.4 of the CPR rules.  The non-party appointed arbitrator must have
prior U.S. reinsurance experience as a present or former officer or management
employee of a reinsurance company, but not of the Company, or the Reinsurer, or
any of

 

15

 

their
respective affiliates.  The arbitration
shall be conducted in New York. Each party shall be permitted to present its
case, witnesses and evidence, if any, in the presence of the other party.  A written transcript of the proceedings
shall be made and furnished to the parties. 
The arbitrators shall determine the dispute in accordance with English
law, without giving effect to any conflict of law rules or other rules that
might render such law inapplicable or unavailable, and shall apply this
Agreement according to its terms, provided that the provisions relating to
arbitration shall be governed by the Federal Arbitration Act,
9 U.S.C. § 1 et seq.

 

(b)                                 The parties agree to be bound by any award or order resulting from
any arbitration conducted hereunder and further agree that judgment on any
award or order resulting from an arbitration conducted under this
Section may be entered and enforced in any court having jurisdiction
thereof.

 

(c)                                  Except as expressly permitted by this Agreement, no party will
commence or voluntarily participate in any court action or proceeding
concerning a Dispute, except (i) for enforcement as contemplated by
Section 8.4(c) above, (ii) to restrict or vacate an arbitral decision
based on the grounds specified under Applicable Law, or (iii) for interim
relief as provided in paragraph (e) below. 
For the purposes of the foregoing the parties hereto submit to the
non-exclusive jurisdiction of the courts of England.

 

(d)                                 In addition to the authority otherwise conferred on the arbitral
tribunal, the tribunal shall have the authority to make such orders for interim
relief, including injunctive relief, as it may deem just and equitable.  Notwithstanding paragraph (d) above, each
party acknowledges that in the event of any actual or threatened breach of
certain of the provisions of this Agreement, the remedy at law may not be
adequate, and therefore injunctive or other interim relief may be sought
immediately to restrain such breach.  If
the tribunal shall not have been appointed, either party may seek interim
relief from a court having jurisdiction if the award to which the applicant may
be entitled may be rendered ineffectual without such interim relief.  Upon appointment of the tribunal following
any grant of interim relief by a court, the tribunal may affirm or disaffirm
such relief, and the parties will seek modification or rescission of the court
action as necessary to accord with the tribunal’s decision.

 

(e)                                  Each of the parties will bear its own legal costs in relation to any
arbitration proceedings considered under this Section.

 

8.5                                Agreement to an alternative procedure.  If the parties to this Agreement mutually
agree that the alternate procedure set out in Section 8.6 and 8.7 below
shall apply to a particular Dispute, then the parties shall resolve that
Dispute in accordance with Sections 8.6 and 8.7 below rather than in accordance
with Sections 8.3 and 8.4 above.

 

8.6                                Alternative Mediation procedure.  If the parties have mutually agreed under
Section 8.5 that this section shall apply to a Dispute and such
Dispute is not resolved by negotiation

 

16

 

as provided in
Section 8.2 within 45 days from the initial notice (or such longer period
as the parties may agree)  then the
parties will attempt to settle that Dispute by mediation in accordance with the
Centre for Effective Dispute Resolution (CEDR Solve) Model Mediation Procedure
(the “Model Procedure”).  To initiate a
mediation, either party shall give notice in writing (“ADR Notice”) to the
other party in accordance with the provisions of Section 9, requesting
mediation in accordance with the provisions of the Model Procedure.  A copy of the ADR Notice should also be sent
to CEDR Solve.

 

8.7                                Alternative Arbitration procedure.  If the parties have mutually agreed under
Section 8.5 that this section shall apply to a Dispute and such
Dispute is not resolved within 42 days (or such longer period as the parties
may agree) of the giving of the ADR Notice, or if one of the parties refuses to
participate in mediation, the Dispute shall be referred to and finally resolved
under the Rules of Arbitration of the International Chamber of Commerce (the
“Rules”) by 3 arbitrators appointed in accordance with the Rules, and so that:

 

(a)                                 The Tribunal shall consist of three arbitrators to be appointed in
accordance with the Rules.

 

(b)                                The place of arbitration shall be London.

 

(c)                                 The language to be used in the arbitral proceedings shall be English.

 

ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

9.1                                Headings and Schedules.  Headings used herein are not a part of this
Agreement and shall not affect the terms hereof.  The attached Schedules are a part of this Agreement.

 

9.2                                Notices.  All notices, requests, demands and other communications under
this Agreement must be in writing and will be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail with a return
receipt requested, upon receipt; (b) if sent by reputable overnight air
courier, four Business Days after mailing; (c) if sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in (a)
or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if
otherwise actually personally delivered, when delivered, and shall be delivered
as follows.

 

If to the
Company:

 

Vantage West,

Great West Road,

Brentford,

Middlesex TW8 9AG

 

17

 

Facsimile: +44
(0) 20 8380 3065

Attention:  Company Secretary

 

If to the
Reinsurer:

 

Craig Appin
House,

8 Wesley Street, 

Hamilton, 

Bermuda,

 

Facsimile:
+441 292 4910

Attention: Iain Lever (Aon Insurance Managers (Bermuda) Limited),

 

or to such
other address or to such other Person as either party may have last designated
by notice to the other party.

 

9.3                                Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
permitted assigns and legal representatives. 
Neither this Agreement, nor any right or obligation hereunder, may be
assigned by any party without the prior written consent of the other party
hereto save that all of the rights and obligations of the Company under this
Agreement shall automatically transfer to FINCL upon the Scheme becoming
effective (with such amendments, deletions or additions to the Scheme as the
parties to it may approve).  Any
assignment in violation of this Section 9.3 shall be void and shall have
no force and effect.  Nothing in this
Section 9.3 shall be construed to prohibit the Reinsurer from retroceding
all or any portion of the business reinsured hereunder.

 

9.4                                Execution in Counterpart.  This Agreement may be executed by the
parties hereto in any number of counterparts, and by each of the parties hereto
in separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

9.5                                Currency.  Whenever the acronym “GBP” or the “£” sign appears in this
Agreement, they shall be construed to mean British Pounds Sterling and all
transactions under this Agreement shall be in British Pounds Sterling.

 

9.6                                Amendments.  This Agreement may not be changed, altered or modified unless the
same shall be in writing executed by the Company and the Reinsurer.

 

9.7                                Governing Law.  This Agreement will be construed, performed and enforced in
accordance with the laws of England without giving effect to its principles or
rules of conflict of laws thereof to the extent such principles or rules would
require or permit the application of the laws of another jurisdiction.

 

9.8                                Entire Agreement: Severability.  This Agreement constitutes the entire
agreement between the parties hereto relating to the subject matter hereof and
supersedes all prior

 

18

 

and
contemporaneous agreements, undertakings, statements, representations and
warranties, negotiations and discussions, whether oral or written of the
parties and there are no general or specific warranties, representations or
other agreements by or among the parties in connection with the entering into
of this Agreement or the subject matter hereof except as specifically set forth
or contemplated herein.

 

9.9                                Enforceability.  If any provision of this Agreement is held
to be void or unenforceable, in whole or in part, (i) such holding shall not
affect the validity and enforceability of the remainder of this Agreement,
including any other provision, paragraph or subparagraph, and (ii) the parties
agree to attempt in good faith to reform such void or unenforceable provision
to the extent necessary to render such provision enforceable and to carry out
its original intent.

 

9.10                          No Waiver: Preservation of Remedies.  No consent or waiver, express or implied, by
any party to or of any breach or default by any other party in the performance
by such other party of its obligations hereunder shall be deemed or construed
to be a consent or waiver to or of any other breach or default in the
performance of obligations hereunder by such other party hereunder.  Failure on the part of any party to complain
of any act or failure to act of any other party or to declare any other party
in default, irrespective of how long such failure continues, shall not
constitute a waiver by such first party of any of its rights hereunder.  The rights and remedies provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or equity.

 

9.11                          Third Party Beneficiary.  Nothing in this Agreement shall confer any
rights upon any Person that is not a party or a successor or permitted assignee
of a party to this Agreement.

 

9.12                          Interpretation.  Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”.

 

9.13                          Survival.  Articles VIII and IX shall survive the termination of this
Agreement and Section 6.5(b) shall remain in force for a period of 18
months after the date on which any notice is served under Section 6.4.

 

9.14                          Negotiated Agreement. This Agreement has
been negotiated by the parties and the fact that the initial and final draft
will have been prepared by either party or an intermediary will not give rise
to any presumption for or against any party to this Agreement or be used in any
respect or forum in the construction or interpretation of this Agreement or any
of its provisions.

 

19

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their
duly authorised representatives.

 

	
   

  	
  FINANCIAL
  ASSURANCE COMPANY LIMITED

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VIKING
  INSURANCE COMPANY, LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

20

 

SCHEDULE A – Part I

 

CEDING COMMISSION

 

The Company
shall calculate in respect of each Accounting Period the amount by which the
deferred acquisition costs of the Company (excluding the deferred acquisition
costs attributable to the Bonds) shall have increased or decreased over such
Accounting Period (the “Ceding Commission”). 
The Ceding Commission in respect of such Accounting Period for the
purposes of Article IV of this Agreement:

 

(i)                                    shall be payable by the Reinsurer to the Company in an amount equal
to the amount, if any, by which the deferred acquisition costs of the Company
(excluding the deferred acquisition costs attributable to the Bonds) shall have
decreased over that Accounting Period; and

 

(ii)                                 shall be payable by the Company to the Reinsurer in an amount equal
to the amount, if any, by which the deferred acquisition costs of the Company
(excluding the deferred acquisition costs attributable to the Bonds) shall have
increased over that Accounting Period.

 

For the
avoidance of doubt, the amount of deferred acquisition costs at any relevant
time shall be calculated in accordance with the Valuation and Accounting
Principles.

 

In calculating
the Ceding Commission for the first Accounting Period, the deferred acquisition
costs of the Company (excluding the deferred acquisition costs attributable to
the Bonds) shall at the commencement of such Accounting Period be taken as
£423,938,000.

 

21

 

SCHEDULE A – Part II

 

ESTIMATED CEDING
COMMISSION

 

Subject as provided in Schedule A Part III below, the Reinsurer
shall produce at the end of each Accounting Period on the basis of information
provided by the Company a best estimate of the Ceding Commission for the next
following Accounting Period.

 

 

SCHEDULE A - PART III

 

ESTIMATED CEDING
COMMISSION FOR FIRST 12 ACCOUNTING PERIODS

 

For the first
12 Accounting Periods the Estimated Ceding Commission shall, in the case of
each amount, be payable by the Reinsurer and shall be as follows, provided that
the parties acknowledge that such amounts are estimates only and shall be the
subject of the Reinsurer’s Ceding Commission Adjustment and the Company’s
Ceding Commission Adjustment, as appropriate, in accordance with Lines 9 and 10
of Schedule B of this Agreement and Section 5.5:

 

	
  Accounting
  Period ending on:

  	
   

  	
  Amount
  of Ceding Commission:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  31st January 2004

  	
   

  	
  £

  	
  26,007,000

  	
   

  
	
  29th February 2004

  	
   

  	
  £

  	
  24,848,000

  	
   

  
	
  31st March 2004

  	
   

  	
  £

  	
  23,028,000

  	
   

  
	
  30th April 2004

  	
   

  	
  £

  	
  19,476,000

  	
   

  
	
  31st May 2004

  	
   

  	
  £

  	
  19,532,000

  	
   

  
	
  30th June 2004

  	
   

  	
  £

  	
  17,194,000

  	
   

  
	
  31st July 2004

  	
   

  	
  £

  	
  16,968,000

  	
   

  
	
  31st August 2004

  	
   

  	
  £

  	
  15,205,000

  	
   

  
	
  30th September 2004

  	
   

  	
  £

  	
  14,074,000

  	
   

  
	
  31st October 2004

  	
   

  	
  £

  	
  13,715,000

  	
   

  
	
  30th November 2004

  	
   

  	
  £

  	
  12,007,000

  	
   

  
	
  31st December 2004

  	
   

  	
  £

  	
  11,850,000

  	
   

  

 

22

 

SCHEDULE B

 

ACCOUNTING PERIOD
REPORTS

 

Note: All
amounts paid or payable or received or receivable by the Company in respect of
the Bonds are to be excluded in any of the items listed below. No account shall
be taken in any of the items listed below of any amount payable or receivable
under this Agreement or of any change in the Company’s provision for deferred
acquisition costs provided that this shall not affect the requirement to
include the Reinsurer’s Ceding Commission Adjustment or the Company’s Ceding
Commission Adjustment as the case may be.

 

	
  Line no.

  	
   

  	
  Item

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Earned
  Premiums

  	
   

  	
  £

  	
   

  	
   

  
	
  2.

  	
   

  	
  Other Income

  	
   

  	
  £

  	
   

  	
   

  
	
  3.

  	
   

  	
  Total Income (Lines 1 to 2)

  	
   

  	
  £

  	
   

  	
   

  
	
  4.

  	
   

  	
  Claims Incurred

  	
   

  	
  £

  	
   

  	
   

  
	
  5.

  	
   

  	
  Expenses
  Payable

  	
   

  	
  £

  	
   

  	
   

  
	
  6.

  	
   

  	
  Other
  Changes In Technical Provisions

  	
   

  	
  £

  	
   

  	
   

  
	
  7.

  	
   

  	
  Total Expenditure (Lines 4 to 6)

  	
   

  	
  £

  	
   

  	
   

  
	
  8.

  	
   

  	
  RIR

  	
   

  	
  £

  	
   

  	
   

  
	
  9.

  	
   

  	
  Reinsurer’s
  Ceding Commission Adjustment

  	
   

  	
  £

  	
   

  	
   

  
	
  10.

  	
   

  	
  Company’s
  Ceding Commission Adjustment

  	
   

  	
  £

  	
   

  	
   

  
	
  11.

  	
   

  	
  Positive / (Negative) Settlement Amount (Line 3 - Line 7 + Line 8 -
  Line 9 + Line 10)

  	
   

  	
  £

  	
   

  	
   

  

 

 

where, in
respect of each Accounting Period:

 

Line 1:                               “Earned Premiums” shall mean gross premiums written in such
Accounting Period plus any decrease or minus any increase in the provision for
unearned premiums over such Accounting Period, as described in item II.1 of the
Statutory Format and the notes thereto. 
In calculating the gross premiums written in any Accounting Period there
shall be deducted the outward reinsurance premiums paid in such Accounting
Period.  To the amount of any increase
in the provision for unearned premiums over such Accounting Period there shall
be added any decrease or there shall be subtracted any increase, over such
Accounting Period, in the amount of the unearned reinsurance premiums paid by
the Company.  To the amount of any
decrease in the provision for unearned premiums over such Accounting Period,
there shall be added any increase, or there shall be subtracted any decrease,
over such Accounting Period, in the amount of the unearned reinsurance premiums
paid by the Company.  In calculating the
gross premiums written, full account shall be taken of

 

 

the effect of
cancellations notified in such Accounting Period and of any other arrangement
under which a policy is terminated in such Accounting Period;

 

Line 2:                               “Other Income” shall mean all other income becoming due to the
Company in the relevant Accounting Period, excluding any income from
investments and any realised or unrealised gains on investments and excluding
any amount received or becoming due under Ceded Reinsurance;

 

Line 3:                               “Total Income” shall mean the sum of Earned Premiums and Other
Income;

 

Line 4:                               “Claims Incurred” shall mean claims paid in respect of the Relevant
Liabilities less reinsurance recoveries received in respect of the Relevant
Liabilities in the relevant Accounting Period plus any increase (or minus any
decrease) over such Accounting Period in the provision for claims.  For these purposes, such provision for
claims shall be calculated, at the beginning and end of each Accounting Period,
net of any available credit for reinsurance, not being a credit in respect of
any reinsurance claim which is due but unpaid, and otherwise in accordance with
the manner in which such provision for claims would be calculated for the
purposes of item II.5(b) of the Statutory Format;

 

Line 5:                               “Expenses Payable” shall mean operating expenses incurred in the
relevant Accounting Period including without limitation:-

 

(a)                bonuses
and rebates, net of reinsurance, as described in item II.7 of the Statutory
Format;

 

(b)               acquisition
costs, administrative expenses, reinsurance commissions and profit
participation, as described in item II.8 of the Statutory Format and the notes
thereto; and

 

(c)                the
charges described in items II.11 and III.8 of the Statutory Format,

 

but, for the
avoidance of doubt, shall exclude investment expenses and charges, realised or
unrealised losses on investments, and income and corporation tax;

 

Line 6:                               “Other Changes in Technical Provisions” shall mean the increase in
technical provisions (or the decrease in technical provisions in which event
such decrease shall be expressed as a negative amount) not accounted for in any
other line of this Schedule B, as described in item II.6 of the Statutory
Format and any other increases in reserves (or decreases in reserves, in which
event such decreases shall be expressed as negative amounts) required to be
taken into account for the purposes of the returns made to the FSA but not
required to be so taken into account under Schedule 9A of the Companies
Act 1985 in respect of the Company including any change required as a result of
the Company not having received any amount due in respect of Ceded Reinsurance;

 

23

 

Line 7:                               “Total Expenditure” shall mean the sum of Claims Incurred, Expenses
Payable and Other Changes in Technical Provisions;

 

Line 8:                               “RIR” shall mean the amount calculated pursuant to
Section 5.3(c) of this Agreement; and

 

Line 9:                               “Reinsurer’s Ceding Commission Adjustment” shall mean the amount (if
any) due from the Reinsurer as a result of the actual Ceding Commission for
such Accounting Period calculated in accordance with Schedule A Part I
being different from the Estimated Ceding Commission for that Accounting
Period;

 

Line 10:                         “Company’s Ceding Commission Adjustment” shall mean any amount due
from the Company as a result of the actual Ceding Commission for such
Accounting Period calculated in accordance with Schedule A Part I being
different from the Estimated Ceding Commission for that Accounting Period;

 

Line 11:                         the “Positive Settlement Amount” and the “Negative Settlement
Amount” shall mean the amounts calculated pursuant to Section 5.3(a) of
this Agreement.

 

Any amounts
included in any of the items listed above shall be included in the calculation
set out in this Schedule B only to the extent that such amounts have not
been accounted for in any Monthly Report relating to any previous Accounting
Period.  Any amount specifically
excluded from any line item shall be treated as though it were excluded from
all other line items unless the context shall expressly require otherwise.  No amount shall be included in more than one
line item.  In the event of any conflict
between the application of any express provision in these notes or this
Agreement, and the application of any statutory or regulatory rule under this
Schedule, in each case for the purposes of determining the amount of any line
item in this Schedule, the express provisions in these notes and this Agreement
shall prevail.

 

In calculating
the Positive or Negative Settlement Amount (as the case may be) for the first
Accounting Period:-

 

(i)                                    the provision for unearned premiums shall at the commencement of
such Accounting Period be taken as £785,731,000;

 

(ii)                                 the amount of the unearned reinsurance premiums shall at the
commencement of such Accounting Period be taken as £16,897,000;

 

(iii)                              the claims provision net of any available credit for reinsurance, not
being a credit in respect of any reinsurance claim which is due but unpaid at
the commencement of such Accounting Period shall at such commencement be taken
as £89,517,000; and

 

(iv)                             the technical provisions and reserves referred to in Line 6 above
shall at the commencement of such Accounting Period be taken as £3,000,000.

 

24

 

SCHEDULE C

 

THE BONDS

 

 

1.                                      Guaranteed Equity Bonds - single premium life endowment products
with a fixed term of five to six years.

 

2.                                      Guaranteed Bonds - single premium life endowment products with a
fixed term of up to seven years.

 

3.                                      Flexible Term Guaranteed Bonds - single premium whole life
guaranteed bonds on an annually renewable basis.

 

4.                                      Investment Bonds - single premium unit linked whole life polices,
the benefits of which are linked to one of three internal linked funds, equity,
international or managed.

 

5.                                      Flexible Access Bonds - single premium unit linked whole life
policies with the benefits linked to an internal deposit fund.

 

6.                                      Structured Settlements - whole life purchased life annuities
generally written as the result of a court settlement.  The payment stream is predefined but may be
monthly, annual or even five yearly. 
Payments are either fixed or linked to the Retail Price Index.

 

7.                                      Individual Term Assurance – non-creditor regular premium temporary
assurances providing life or long-term disability cover.

 

 

SCHEDULE D

 

LIST OF REINSURANCE
ARRANGEMENTS

 

 

1.                                      Stop loss treaty between the Company and White Rock Insurance
Company PCC Limited which became effective as of 31 March 2004 for a
period of 12 months from that date.

 

25Exhibit 10.24

 

	
   

  

 

 

REINSURANCE AGREEMENT

 

between

 

VIE PLUS

 

and

 

R.D PLUS

 

Dated as of [         ] 2004

 

 

	
   

  

 

 

This Agreement, dated as of
                       2004
(the “Agreement”) is made and entered into by and between VIE PLUS, an
insurance company organised under French law (the “Company”), and R.D PLUS, an
insurance company organised under French law (the “Reinsurer”).

 

The Company and the Reinsurer mutually agree
to reinsure the risks described in this Agreement under the terms and
conditions stated herein.  This
Agreement is solely between the Company and the Reinsurer, and the performance
of the obligations of each party under this Agreement shall be rendered solely
to the other party. In no instance shall anyone other than the Company or the Reinsurer
have any rights under this Agreement. The Company shall be and shall remain the
only party that is liable to any insured, policyholder, claimant or beneficiary
under any insurance policy or contract reinsured hereunder.

 

ARTICLE  1 
-  DEFINITIONS

 

As used in this Agreement, the following
terms shall have the following meanings:

 

“Accounting Period” means each period
of a quarter the first such period commencing at 00.01 Paris time on 1 January
2004 and the last such period commencing on the first day of the quarter in
which the Termination Date falls and ending on the Termination Date.

 

“Affiliate” means any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, the first Person. “Control” (including the terms, “controlled by”
and “under common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.

 

“Ceded Reinsurance” means all
reinsurance ceded by the Company pursuant to contracts, binders, certificates,
treaties or other evidence of reinsurance relating to the Reinsured Risks in
effect on or prior to the Inception Date, except the reinsurance provided
pursuant to this Agreement.

 

“Ceded Reinsurance Agreements” means
all of the contracts, binders, certificates, treaties or other evidence for
Ceded Reinsurance.

 

“Commutation”
means, with respect to any portion of the Ceded Reinsurance, a commutation or
other similar transaction that results in the termination of such Ceded
Reinsurance with respect to the Reinsured Risks.

 

“Direct Commission” means all
commissions and other consideration now or hereafter accrued or payable to the
brokers and other intermediaries for the Reinsured Risks, which are composed of
a fixed commission based on the net earned premiums and a variable commission
based on a profit sharing mechanism. 
For the avoidance of doubt, it is intended that the Agreement have no
impact on the calculation of the profit sharing in any arrangement with a
broker or an intermediary.

 

“EURIBOR” means the European
InterBank Offered Rate.

 

2

 

“Extra Contractual Liabilities” means
all liabilities of the Company for damages (including compensatory,
consequential, exemplary, punitive, bad faith or similar or other damages)
which relate to the marketing, sale, underwriting, issuance, delivery,
cancellation or administration of contracts under which the Company assumes
Reinsured Risks, including liability arising out of or relating to any alleged
or actual act, error or omission by the Company or its agents, whether
intentional or otherwise, with respect to any of such contracts, including (A)
any alleged or actual reckless conduct or bad faith in connection with the
handling of any claim arising out of or under Reinsured Risks, or (B) the
marketing, sale, underwriting, issuance, delivery, cancellation or
administration of any of such contracts.

 

“Inception Date” means 00.01 Paris
time on 1 January 2004.

 

“Negative Settlement Amount” means
with respect to each Accounting Period the amount of any net deficit set forth
in the Quarterly Settlement for such Accounting Period as provided in Article
7.

 

“Person” means any natural person,
firm, limited liability company, general partnership; limited partnership,
joint venture, association, corporation, trust, Governmental Authority or other
entity.

 

“Portfolio Transfer” means the
transfer by the Company to FINCL of the Reinsured Risks in application of the
provisions of article L.324-1 of the French Insurance Code.

 

“Positive Settlement Amount” means
with respect to each Accounting Period the amount of any net surplus set forth
in the Quarterly Settlement for such Accounting Period as provided in Article
7.

 

“Reinsured Liabilities” means all insurance liabilities and
obligations arising under the Reinsured Risks including, without limitation (i)
benefits, surrender amounts and other amounts payable to policyholders under
the terms of the Reinsured Risks, (ii) other consideration paid on or after the
Inception Date with respect to the Reinsured Risks, (iii) all amounts payable
on or after the Inception Date for returns or refunds of premiums under the
Reinsured Risks and (iv) all Extra Contractual Liabilities.

 

“Reinsured Risks” means the whole or, as the case may be, such
part of the insurance risks related to payment protection insurance business as
are assumed or borne by the Company under or in connection with any and all
insurance policies and contracts to which it is a party and which are in force
at any time on or prior to the Termination Date.

 

“Reinsurance Recoverables” means the
amount of reinsurance recoverables that is actually collected under Ceded
Reinsurance.

 

“Reserves” means the sum of all
reserves and liabilities required to be maintained by the Company for the
Reinsured Liabilities including any reserve for any Extra Contractual
Liability, calculated consistent with the reserve requirements, statutory
accounting rules and actuarial principles under the French laws.

 

“Termination Date” means the effective
date of any termination of this Agreement as provided in Article 8.

 

3

 

ARTICLE 2  - 
COVERAGE

 

Coverage. Upon the terms and subject to the
conditions and other provisions of this Agreement, as of the Inception Date,
the Reinsurer agrees to reinsure the Reinsured Liabilities by way of the Reinsurer
indemnifying the Company in respect of each Negative Settlement
Amount.  As consideration for the
reinsurance by the Reinsurer under this Agreement, the Company shall pay to the
Reinsurer each Positive Settlement Amount.

 

Conditions.  Except as otherwise set forth
or contemplated herein, no changes, amendments or modifications made on or
after the Inception Date to the terms and conditions of the Reinsured Risks
in-force as of the Inception Date which adversely affect the liability of the
Reinsurer hereunder shall be covered hereunder without the prior written
approval of such changes, amendments or modifications by the Reinsurer, which
approval shall not be unreasonably withheld or delayed.  In the event that any such changes,
amendments or modifications are made in any such Reinsured Risk without the
prior written approval of the Reinsurer, this Agreement will cover liability
incurred by the Company for Reinsured Risks as if the unapproved changes,
amendments or modifications had not been made.

 

Territory.  The territorial limits of the
Agreement shall be identical to those of the Reinsured Risks.

 

Commutation of Ceded Reinsurance. 
The Company shall not, without the Reinsurer’s prior written approval,
in its sole discretion, take any action to amend or terminate any Ceded
Reinsurance under any Ceded Reinsurance Agreement or enter into any Commutation
of Ceded Reinsurance.

 

New reinsurance covers. 
Subsequent to the Inception Date, the Company will not enter into any
reinsurance arrangements with respect to the Reinsured Risks without the prior
written consent of the Reinsurer, in its sole discretion.

 

ARTICLE 3  - 
ADMINISTRATION - GENERAL PROVISIONS

 

Contract Administration. 
The Company shall procure that the Reinsured Risks are administered in
accordance with their terms, in good faith and with the care, skill, prudence,
and diligence of a person experienced in administering insurance business.

 

Sub-contracting of Contract Administration.  The Company may subcontract the performance
of any service or services which the Company is required to procure in
connection with the administration of the Reinsured Risks to (i) an Affiliate,
(ii) a service provider utilized by the Company with respect to the Reinsured
Risks or its other business as of the date hereof, (iii) any Person to whom
such subcontracting is required to be effected under the terms of any
distribution agreement or (iv) with the prior written consent of the Reinsurer,
any other Person, such consent not to be unreasonably withheld; provided,
that no such subcontracting shall relieve the Company from any of its
obligations or liabilities hereunder, and the Company shall remain responsible
for all obligations or liabilities of such subcontractor with regard to the
provision of such advice or services as if provided by the Company.

 

4

 

Ceded Reinsurance Agreements: 
The Company shall manage and administer the Ceded Reinsurance
Agreements. Without limiting the forgoing, the Company shall promptly pay when
due all reinsurance premiums due to reinsurers under the Ceded Reinsurance
Agreements and use all commercially reasonable efforts to collect from such
reinsurers all Reinsurance Recoverables due thereunder, it being understood
that the Reinsurer will bear the risk of collectability of any Reinsurance
Recoverable.

 

Reinsured Policy Terms. 
The Company shall set all insurance rates and underwriting criteria in
respect of the Reinsured Risks from and after the Inception Date consistently
with the manner in which it has done so in the past, consulting with the
Reinsurer on any issue which is expected to have a material adverse impact on
any amounts which the Reinsurer reasonably expects to become payable to it
under the terms of this Agreement.

 

Claims Settlements. 
The Company agrees that if so requested by the Reinsurer it will provide
notice to the Reinsurer as soon as is reasonably practicable of its intention
to commence litigation proceedings in respect of a claim in excess of €100,000
with respect to a Reinsured Policy along with (if requested by the Reinsurer)
copies of all pleadings and reports of investigation with respect to that
claim.  The Reinsurer shall have the
right, at its own expense, to participate jointly with the Company in the
investigation, adjustment or defence of such claims.

 

Inspection. 
The Company shall keep accurate and complete records, files and accounts
of all transactions and matters with respect to the Reinsured Risks in
accordance with its record management practices in effect from time to
time.  The Reinsurer or its designated
representative may upon reasonable notice inspect and copy, at the offices of
the Company where such records are located, the papers and any and all other
books or documents of the Company reasonably relating to the Reinsured Risks
and the administration thereof, during normal business hours for such period as
this Agreement is in effect or for as long thereafter as the Company seeks
performance by the Reinsurer pursuant to the terms of this Agreement or the
Reinsurer reasonably needs access to such records for regulatory, tax or
similar purposes.  The information
obtained shall be used only for purposes relating to reinsurance under this
agreement.

 

Co-operation. 
Each party hereto shall co-operate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement
including making available to each their respective officers and employees for
interview and meetings with governmental authorities and furnishing any additional
assistance, information and documents as may be reasonably requested by either
party from time to time.

 

Errors and Omissions. 
If any delay, omission, error or failure to pay amounts due or to
perform any other act required by this Agreement is unintentional and caused by
misunderstanding or oversight, the Company and the Reinsurer will adjust the
situation to what it would have been had the misunderstanding or oversight not
occurred.  The party first discovering
such misunderstanding or oversight, or an act resulting from such
misunderstanding or oversight, will notify the other party in writing promptly
upon discovery thereof, and the parties shall act to correct such
misunderstanding or oversight within twenty (20) business days of such other
party’s receipt of such notice. 
However, this section shall not be construed as a waiver by either party
of its right to enforce strictly the terms of this Agreement.

 

5

 

Age, Sex and Other Adjustments.  The liability of the Reinsurer shall follow
that of the Company including in circumstances where the Company’s liability
under any of the Reinsured Risks is changed because of a misstatement of age or
sex or any other material fact, and the Company and the Reinsurer will make all
appropriate adjustments to amounts due to each other under this Agreement in
such circumstances.

 

Setoff. 
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favour of or against either
the Company or the Reinsurer with respect to this Agreement between the Company
and the Reinsurer, are deemed mutual debts or credits, as the case may be, and
shall be set off from any amounts due to the Company or the Reinsurer hereunder,
as the case may be, and only the net balance shall be allowed or paid.

 

ARTICLE 4 
- REINSURANCE PREMIUM

 

The reinsurance premium due as of the day the
parties enter into this Agreement by the Company to the Reinsurer shall be
equal to the Reserves as of December 31, 2003 (the “Reinsurance Premium”).

 

The amount of the Reinsurance Premium and the
amount of the Deposit referred to in article 5 hereafter being equal as of the
day the parties enter into this Agreement, the Company shall not make any
payment in cash of the Reinsurance Premium and shall retain such Reinsurance
Premium to constitute the Reinsurer’s Deposit as of the day the parties enter
into this Agreement.

 

ARTICLE 5  - 
DEPOSIT

 

In order to allow the Company to take credit
in its balance sheet of this quota share reinsurance, the Reinsurer will
deposit in the Company’s accounts as of the day  the parties enter into this Agreement an amount equal to the
Reserves as of December 31, 2003 in accordance with article R332.17 of the
French Insurance Code (the “Deposit”).

 

The amount of the Deposit will be increased
or decreased every quarter, in the framework of the Quarterly Settlements until
the Termination of this Agreement, such adjustment(s) being equal to the
increase or decrease in the Reserves referred to in Article 7.

 

The Deposit will bear an interest equal to
five point two per cent (5.2%) per annum that will be computed every quarter
through the Quarterly Settlements.

 

ARTICLE 6 
-  CEDING COMMISSION

 

The Reinsurer shall pay a ceding commission
(the “Ceding Commission”) to the Company for each Accounting Period in an
amount equal to four point four per cent (4.4%) of the earned premiums that
will be paid through the Quarterly Settlements.

 

6

 

ARTICLE 7 -
ACCOUNTING AND SETTLEMENT

 

(a) Quarterly Settlement

 

As soon as feasible but no more than fifteen
(15)] days after the end of each Accounting Period, the Company shall supply
the Reinsurer with a report that shall compute the following financial data for
such Accounting Period:

 

•                  The earned premiums plus other income excluding any investment income
and realized and/or unrealised capital gains, related to the Reinsured Risks
net of any insurance taxes and of any guarantee fund contribution related to
these premiums and net of any reinsurance cost related to the Ceded
Reinsurance;

 

•                  Minus the claims paid on the Reinsured Liabilities, net of any
reinsurance received under the Ceded Reinsurance;

 

•                  Minus the Direct Commission net of any portion thereof actually paid
under Ceded Reinsurance;

 

•                  Minus any increase in the Reserves;

 

•                  Plus any decrease of the Reserves;

 

•                  Plus interest on the Deposit
calculated in reference to Article 5 hereof;

 

•                  Minus the Ceding Commission.

 

Payments.

 

For each Accounting Period as to which there
is a Negative Settlement Amount, the Reinsurer shall pay to the Company an
amount equal to such Negative Settlement Amount within ten (10) days of the
delivery of the Quarterly Report by the Company.

 

For each Accounting Period as to which there
is a Positive Settlement Amount the Company shall pay to the Reinsurer an
amount equal to such Positive Settlement Amount within ten (10) days of the
delivery of the Quarterly Report by the Company.

 

Delayed Payments.  In the event that all or any portion of any payment due to either
party pursuant to this Agreement becomes overdue the portion of the amount
overdue shall bear interest at an annual rate equal to 3 Month EURIBOR on the
date that the payment becomes overdue plus 200 basis points per annum, for the
period that the amount is overdue.

 

(b) Other Report

 

Annual Reports. 
Within forty-five (45) days after the end of each calendar year the
Company shall supply the Reinsurer with a report that shall provide the
financial data specified in the previous section for such calendar year.

 

Additional Reports and Updates. 
For so long as this Agreement remains in effect, each of the parties
shall periodically furnish to the other such other reports and information as
is reasonably available to it and as may be reasonably requested by such other
party for regulatory, tax or similar purposes.

 

7

 

(c) Actual Data

 

In preparing all reports required under this
Agreement, the Company shall use all commercially reasonable efforts to supply
the actual data. If the actual data cannot be supplied with the appropriate
report, the Company shall produce best estimates and shall provide amended
reports based on actual data no more than ten (10) days after the actual data
becomes available and the parties will settle any additional amounts due within
five (5) days thereafter, together with interest as provided in the last
paragraph of Article 7 (a) hereof.

 

ARTICLE 8  - 
DURATION AND TERMINATION

 

8.1                                 Duration. 
Except as otherwise provided herein, this Agreement shall be unlimited
in duration.

 

8.2                                 Reinsurer’s Liability. 
The Reinsurer’s liability with respect to the Reinsured Risks under this
Agreement will terminate on the earlier of: (i) the date that all amounts
due  under this Agreement have been paid
; (ii) the date this Agreement is terminated at the option of the Reinsurer or
the Company in accordance with Article 8.3 hereof; and (iii) the date this
Agreement is terminated upon the written agreement of the parties.

 

8.3                                 Optional Termination: Final Payment
Obligations.  Either the Reinsurer or the Company may
terminate this Agreement and the reinsurance hereunder upon at least 3 business
days prior written notice of its intent to terminate this Agreement upon the
execution of the Portfolio Transfer by the Company of the Reinsured Risks.

 

8.4                                 Consequence of Termination

 

a)                                      In the event that this Agreement is
terminated pursuant to section 8.3, this Agreement shall terminate as of the
end of the quarter in which the notice of termination pursuant to the previous
section is received by the non-terminating party and a net accounting and
settlement as to any balance due under this Agreement shall be undertaken by
the parties for such Accounting Period (the “Final Settlement”).

 

b)                                     In
the event that, subsequent to the Final Settlement but not later than eighteen
(18) months after the Termination Date, the Company receives any amount, or is
required to pay any amount, which was not taken into account in calculating any
Positive or Negative Settlement Amount but which would have been so taken into
account had it been received or paid prior to the Termination Date or the Final
Settlement, the Company or (as the case may be) the Reinsurer shall make such
payment or payments to the other as is required to reflect as nearly as
possible the position that would have prevailed had such amount been so taken
into account.

 

ARTICLE 9  - 
DISPUTE RESOLUTION

 

9.1                                 General
Provisions.

 

(a)                                 Any dispute,
controversy or claim arising out of or relating to this Agreement or the
validity, interpretation, breach or termination thereof (a “Dispute”), shall be
resolved

 

8

 

in accordance
with the procedures set forth in this Article 9, which shall be the sole and
exclusive procedure for the resolution of any such Dispute.

 

(b)                                Commencing with the
request contemplated by Section 9.2, all communications between the parties or
their representatives in connection with the attempted resolution of any
Dispute, including any mediator’s evaluation referred to in Section 9.3, shall
be deemed to have been delivered in furtherance of a Dispute settlement and
shall not be admissible in evidence for any reason (whether as an admission or
otherwise), in any arbitral or other proceeding for the resolution of the
Dispute.

 

(c)                                  The present
arbitration clause does not exclude the right of recourse to the courts in
respect of any measure which the Code of Civil Procedure permits to be taken by
court order (“ordonnance”), including, without limitation, any measure ordered
in proceedings “en référé”, where such order does not prejudge the legal
determination of the substance of any issue submitted to arbitration.

 

(d)                                 The specific
procedures set forth below, including but not limited to the time limits
referenced therein, may be modified by agreement of the parties in writing.

 

(e)                                  The parties agree and
accept that the commencement of arbitration proceedings hereunder will
interrupt any prescription which may at the relevant time be running in respect
of any right which is the object of, or is otherwise affected by, such
proceedings.

 

9.2                                 Consideration
by Senior Executives.  If a Dispute
is not resolved in the normal course of business at the operational level, the
parties shall attempt in good faith to resolve any Dispute by negotiation
between executives who hold, in respect of each of the business entities
involved in the Dispute, at a minimum, the office of President, Chief Executive
Officer or Chief Financial Officer. 
Either party may initiate the executive negotiation process by written
notice to the other.  Fifteen (15) days
after delivery of the notice, the receiving party shall submit to the other a
written response. The notice and response shall include (i) a statement of the
Dispute and of each party’s position, and (ii) the name and title of the
executive who will represent that party and of any other person who will
accompany the executive.  Such
executives will meet in person or by telephone within 30 days of the initial
notice to seek a resolution.

 

9.3                               Mediation.  If a Dispute is not resolved by negotiation
as provided in Section 9.2 within forty-five (45) days from the initial notice,
then either party may submit the Dispute for resolution by mediation pursuant
to the Center for Public Resources (“CPR”) Model Mediation Procedure as then in
effect.  The parties will select a
mediator from the CPR Panels of Distinguished Neutrals, but such mediator must
have prior reinsurance experience either as a lawyer or as a present or former
officer or management employee of a reinsurance company, but not of the
Company, or the Reinsurer, or any of their respective affiliates.  Either party at commencement of the
mediation may ask the mediator to provide an evaluation of the Dispute and the
parties’ relative positions.

 

9.4                                 Arbitration.  If a Dispute is not resolved by mediation as
provided in Section 9.3 within thirty (30) days of the selection of a mediator
(unless the mediator chooses to withdraw sooner), either party may submit the
Dispute to be finally resolved by arbitration pursuant to the CPR Rules for
Non-Administered Arbitration as then in

 

9

 

effect.  The parties consent to a single,
consolidated arbitration for all known Disputes existing at the time of the
arbitration and for which arbitration is permitted.

 

(a)                                 The neutral
organisation for purposes of the CPR rules will be the CPR.  the arbitral tribunal shall be composed of
three arbitrators who are each experienced in the reinsurance business, of whom
each party shall appoint one in accordance with the “screened” appointment
procedure provided in Rule 5.4 of the CPR rules.  The non-party appointed arbitrator must have prior French
reinsurance experience as a present or former officer or management employee of
a reinsurance company, but not of the Company, or the Reinsurer, or any of
their respective affiliates.  The
arbitration shall be conducted in Paris. Each party shall be permitted to
present its case, witnesses and evidence, if any, in the presence of the other
party.  A written transcript of the
proceedings shall be made and furnished to the parties.  The arbitrators shall determine the dispute
in accordance with French law, without giving effect to any conflict of law
rules or other rules that might render such law inapplicable or unavailable,
and shall apply this Agreement according to its terms.

 

(b)                                The parties agree to be
bound by any award or order resulting from any arbitration conducted hereunder and
further agree that judgment on any award or order resulting from an arbitration
conducted under this Section may be entered and enforced in any court having
jurisdiction thereof.

 

(c)                                  Except as expressly
permitted by this Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute, except (i) for
enforcement as contemplated by Section 9.4(b) above, (ii) to restrict or vacate
an arbitral decision based on the grounds specified under French Law, or (iii)
for interim relief as provided in paragraph (e) below.  For the purposes of the foregoing the
parties hereto submit to the non-exclusive jurisdiction of the French courts.

 

(d)                                 Each party will bear
its own attorneys’ fees and costs.

 

ARTICLE 10  -  MISCELLANEOUS
PROVISIONS

 

Notices. 
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed to have been duly given or made
as follows: (a) if sent by registered or certified mail in France with return
receipt requested, upon receipt; (b) if sent by reputable overnight air
courier, four business days after mailing; (c) if sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in (a)
or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if
otherwise actually personally delivered, when delivered, and shall be delivered
as follows.

 

If to the Company:

 

To the
Reinsurer:

 

10

 

or to such other address or to such other
person as either party may have last designated by notice to the other party.

 

Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, permitted assigns and legal
representatives.  Neither this
Agreement, nor any right or obligation hereunder, may be assigned by any party
without the prior written consent of the other party hereto. Any assignment in
violation of this section shall be void and shall have no force and
effect.  Nothing in this section shall
be construed to prohibit the Reinsurer from retroceding all or any portion of
the business reinsured hereunder.

 

Amendments. 
This Agreement may not be changed, altered or modified unless the same
shall be in writing executed by the Company and the Reinsurer.

 

Governing Law. 
This Agreement will be construed, performed and enforced in accordance
with the French laws without giving effect to its principles or rules of
conflict of laws thereof to the extent such principles or rules would require
or permit the application of the laws of another jurisdiction.

 

Entire
Agreement: Severability.  This Agreement constitutes the entire agreement between the
parties hereto relating to the subject matter hereof and supersedes all prior
and contemporaneous agreements, undertakings, statements, representations and
warranties, negotiations and discussions, whether oral or written of the
parties and there are no general or specific warranties, representations or
other agreements by or among the parties in connection with the entering into
of this Agreement or the subject matter hereof except as specifically set forth
or contemplated herein.

 

Survival. 
Section 8.4(b) and Articles 9 and 10 shall survive the termination of
this Agreement but shall, in the case of Section 8.4(b), terminate no later
than eighteen (18) months after the Termination Date.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.

 

 

	
   

  	
  VIE PLUS

  
	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  R.D PLUS

  
	
   

  	
  By  

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

11

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