Document:

EXHIBIT NO. 10.1

                            SHARE EXCHANGE AGREEMENT

         THIS AGREEMENT (the "Agreement") is dated as of June 22, 2002, between
B&B Capital Group, Inc., a Florida corporation ("B&B"), The American Life and
Annuity Company, Inc., a Tennessee corporation ("American"), and the
shareholders of American set forth on Exhibit A attached hereto and incorporated
herein by such reference (the "Shareholders").

                                    PREAMBLE

         WHEREAS, B&B is a corporation duly organized and existing under the
laws of the State of Florida, and having authorized capital stock consisting of
100,000,000 shares of common stock, par value $.001 per share, and 5,000,000
shares of preferred stock, par value $.001 per share, of which 50,150 shares of
common stock and no shares of preferred stock are issued and outstanding; and

         WHEREAS, American is a corporation duly organized and existing under
the laws of the State of Tennessee, having authorized capital stock consisting
of 5,000,000 shares of common stock, par value $.35 per share and 5,000,000
shares of preferred stock, par value $.35 per share; and

         WHEREAS, the Shareholders own 319,794 shares of the common stock of
American (the "American Common Stock"), which represents 100% of the issued and
outstanding shares of capital stock of American; and

         WHEREAS, the laws of the States of Florida and Tennessee permit the
Shareholders to exchange their shares of American Common Stock for shares of
common stock of B&B ("B&B Common Stock"); and

         WHEREAS, it is intended that this transaction be a tax-free exchange
pursuant to the provisions of the Internal Revenue Code, as amended; and

         WHEREAS, as a result of this Agreement, the parties hereto intend that
American will be a wholly-owned subsidiary of B&B, and B&B will be the parent
corporation of American.

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants herein contained, as of the "Effective Date," as
hereinafter defined, it is agreed that the Shareholders shall exchange their
shares of American Common Stock for shares of B&B Common Stock, subject to the
terms and conditions set forth and the mode of carrying it into effect as are
and shall be as follows:

         1. RECITALS. The above recitals are true, correct and are herein
incorporated by reference.

         2. EXCHANGE OF SHARES. The Shareholders hereby agree to transfer to B&B

<PAGE>

at the Closing referred to in Section 3 below all of the shares of American
Common Stock currently held of record by the Shareholders in exchange for shares
of B&B Common Stock, and B&B agrees to deliver to each of the Shareholders a
certificate representing shares of the B&B Common Stock so acquired on the basis
of one share of B&B Common Stock for each share of American Common Stock so
exchanged.

         The Shareholders agree to deliver, as applicable, any certificates
representing the shares of American Common Stock held by the Shareholders as set
forth above to B&B on the Closing Date. The certificate to be delivered by the
Shareholders at the Closing shall be in negotiable form, and the certificate
delivered by B&B at the Closing shall be subject to restrictions on
transferability pursuant to Federal and state securities laws including, but not
limited to, Rule 144 of the Securities Act of 1933, as amended (the "Securities
Act") or as applicable.

         3. CLOSING DATE. The closing ("Closing") shall be held on the date
hereof or such other date and time as may be agreed upon by the parties
("Closing Date").

         4. EFFECTIVE DATE. The "Effective Date" shall be the Closing Date.

         5. REPRESENTATIONS OF AMERICAN. American hereby makes the following
representations and warranties to B&B, each of which is true as of the date
hereof and will be true as of the Closing Date with the same effect as though
such representations and warranties had been made on the Closing Date:

                  (a) American is a corporation duly organized and existing
under and by virtue of the laws of the State of Tennessee, and is in good
standing under the laws thereof with an authorized capitalization of consisting
of 5,000,000 shares of common stock, par value $.35 per share and 5,000,000
shares of preferred stock, par value $.35 per share of which 319,794 shares of
common stock and no shares of preferred stock are issued and outstanding, with
100% of the issued and outstanding American Common Stock held by the
Shareholders. There are no outstanding options, contracts, calls, commitments or
demands of any character relating to the authorized but unissued capital stock
of American, except as set forth on Schedule 5a hereto.

                  (b) The shares of American Common Stock to be exchanged at the
Closing are validly issued, fully paid and non-assessable.

                  (c) The execution and delivery of this Agreement by American
and the performance by American of its covenants and undertakings hereunder have
been duly authorized by all requisite corporate action, and American has the
full corporate power and authority to enter into this Agreement and to perform
the covenants and undertakings to be performed by it hereunder.

                  (d) American has the corporate power to carry on its business
as now

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<PAGE>

conducted. There has been no material adverse change in the condition of
American since the date of organization. To the best of the knowledge of
American, the only changes in the financial condition of American since said
date are those arising from the normal and regular conduct of the business of
American.

                  (e) There is no litigation, governmental proceeding or
investigation threatened or in respect to American which could materially affect
American, its business and operations. Except for the approval of the Tennessee
Department of Insurance, which such approval American believes will be granted,
there are government or other approvals or filings necessary to consummate the
exchange herein contemplated.

                  (f) Neither the execution nor the delivery of this Agreement,
nor the consummation of the transaction herein contemplated, nor compliance with
the terms hereof, will conflict with or result in a breach of any of the terms,
conditions or provisions of Articles of Incorporation or the Bylaws of American,
as amended, any agreement or instrument to which American is now a party or by
which its assets are bound.

         6. REPRESENTATIONS OF THE SHAREHOLDERS. Each of the Shareholders
severally and not jointly represent, warrant and agree that:

                  (a) The Shareholder is the beneficial owner of the shares of
American Common Stock set forth opposite his/her/its respective name on Exhibit
A attached hereto. The shares of American Common Stock to be transferred by the
Shareholder to B&B hereunder are free and clear of all voting trusts,
agreements, arrangements, encumbrances, liens, claims, equities and liabilities
of every nature and the Shareholder is conveying clear and unencumbered title
thereto to American.

                  (b) The Shareholder does not own, nor does the Shareholders
know of any other person, corporation or firm that owns any material interest in
any property, invention, license, patent, patent application, copyright, trade
secret or trade-mark used by American or relating in any way to its business.

                  (c) There are no agreements to which Shareholder is a party
nor does the Shareholder know of any other agreements that in any way materially
restrict or impinge upon the business of American or the transfer of the shares
of American Common Stock contemplated hereby.

                  (d) The Shareholder has (i) such knowledge and experience in
financial, investment and business matters that he/she/is capable of evaluating
the merits and risks of the prospective investment in the securities of B&B, and
(ii) consulted with such independent legal counsel or other advisers as the
Shareholder has deemed appropriate to assist he/she/it in evaluating the
proposed investment in B&B.

                  (e) The Shareholder represents that he/she/it has adequate
means of providing for his/hers/its current financial needs and possible
personal contingencies and

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<PAGE>

has no need for liquidity of investment in B&B and can afford to hold
unregistered securities for an indefinite period of time.

                  (f) The Shareholder has been afforded the opportunity to ask
questions of, and receive answers from the officers and/or directors of each B&B
and American acting on their respective behalf concerning the terms and
conditions of this transaction and to obtain any additional information, to the
extent that either company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information furnished; and the Shareholder has availed himself/herself/itself of
such opportunity to the extent the Shareholder considers appropriate in order to
permit the undersigned to evaluate the merits and risks of an investment in B&B.

                  (g) The Shareholder acknowledges that neither B&B nor American
are making any investment or other recommendations to the Shareholder concerning
the transactions herein contemplated.

         7. REPRESENTATIONS OF B&B. B&B hereby makes the following
representations and warranties to the Shareholders and American, each of which
is true as of the date hereof and will be true as of the Closing Date with the
same effect as though such representations and warranties had been made on the
Closing Date:

                  (a) B&B is a corporation duly organized and existing under and
by virtue of the laws of the State of Florida, and is in good standing under the
laws thereof with an authorized capitalization of consisting of 100,000,000
shares of common stock, par value $.001 per share and 5,000,000 shares of
preferred stock, par value $.001 per share of which 50,150 shares of common
stock and no shares of preferred stock are issued and outstanding, with 100% of
the issued and outstanding B&B Common Stock held by the B&B shareholders. There
are no outstanding options, contracts, calls, commitments or demands of any
character relating to the authorized but unissued capital stock of B&B.

                  (b) The shares of B&B Common Stock to be issued to the
Shareholders at the Closing will be validly issued, fully paid and
non-assessable.

                  (c) The execution and delivery of this Agreement by B&B and
the performance by B&B of its covenants and undertakings hereunder have been
duly authorized by all requisite corporate action, and B&B has the full
corporate power and authority to enter into this Agreement and to perform the
covenants and undertakings to be performed by it hereunder.

                  (d) B&B has never commenced operations. There is no
litigation, government proceeding or investigation or in respect to B&B which
could materially affect B&B.

                  (c) The copies of the Articles of Incorporation and the Bylaws
of B&B heretofore delivered to the Shareholders are true and correct copies.

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<PAGE>

                  (d) Neither the execution nor the delivery of this Agreement,
nor the consummation of the transaction herein contemplated, nor compliance with
the terms hereof, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Articles of Incorporation or the Bylaws of B&B,
as amended, or any agreement or instrument to which B&B is now a party.

         8. CONDITIONS OF CLOSING. All of the obligations of B&B under this
Agreement are subject to the fulfillment, prior to or on the Closing Date set
forth in Section 3 of this Agreement, of each of the following conditions:

                  (a) Delivery by the Shareholders of the following:

                           (i) Certificates representing the shares of American
Common Stock, endorsed in blank and with signatures guaranteed by a bank or
trust company, and

                           (ii) Delivery by B&B of the certificates for the
shares of B&B Common Stock as set forth on Exhibit A attached hereto.

                  (b) American shall have obtained such consents and approvals
as are necessary from the Tennessee Department of Insurance or such other
regulatory body as are necessary for the continued conduct of American's
business following the share exchange.

                  (c) T. Lynn Tarpy, the sole officer and director of B&B, shall
tender his resignation as an officer and director of B&B and the following
individuals will be elected or appointed to the positions set forth opposite
their respective names below:

                Name                                Positions

         Dr. Archer W. Bishop, Jr.             Chairman of the Board
         Stanley P. Brown, III                 President, CEO and director
         Lila K. Pfleger                       Secretary, Treasurer and director
         Oscar R. Scofield                     Director
         Dr. John H. Bell                      Director

         9. INVESTMENT PURPOSE. The Shareholders represent that each are
acquiring the shares of B&B Common Stock to be delivered at the Closing solely
for investment and not for distribution or resale. By such representation, the
Shareholder means that no other person has a beneficial interest in the shares
of B&B Common Stock to be issued at the Closing. The Shareholder does not intend
to dispose of all or any part of the shares of B&B Common Stock except in
compliance with the provisions of the Securities Act and applicable state
securities laws. The Shareholders acknowledge that the shares of B&B Common
Stock to be issued at Closing have not been registered under the Securities Act

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<PAGE>

in reliance on an exemption available under the rules and regulations of the
Securities Act, and further understands that the undersigned is acquiring the
shares of B&B Common Stock without being furnished any offering material. The
Shareholder hereby agrees that the following or similar legend will be placed on
the face of the certificates evidencing shares of B&B Common Stock if required
in compliance with the Securities Act or state securities laws:

         "These securities have not been registered under the Securities Act of
         1933, as amended ("Act"), or any state securities laws and may not be
         sold or otherwise transferred or disposed of except pursuant to an
         effective registration statement under the Act and any applicable state
         securities laws, or an opinion of counsel satisfactory to counsel to
         the issuer that an exemption from registration under the act and any
         applicable state securities laws is available."

         10. REPRESENTATIONS TO SURVIVE CLOSING. All the terms, conditions,
warranties, representations and guarantees contained in this Agreement shall
survive delivery of the shares of American Common Stock transferred hereunder at
the Closing and any investigations made by or on behalf of B&B at any time.

         11. SHAREHOLDER CONSENT TO POST-CLOSING ACTIONS. By executing this
Agreement, in addition to consenting to the share exchange and related
transactions herein contemplated, each Shareholder hereby irrevocable grants
his/her/its written consent pursuant to Section 607.0821 of the Florida Business
Corporations Act to an amendment to B&B's articles of incorporation changing
B&B's corporate name to "American Life Holding Company, Inc."

         12. FUTURE ISSUANCE OF PREFERRED STOCK WITH SUPER MAJORITY VOTING
RIGHTS. Following the Closing, as consideration for Dr. Archer W. Bishop, Jr.
providing B&B with a $250,000 line of credit, B&B will issue to Dr. Bishop a
series of to-be-created shares of preferred stock, which such series will
consist of 250,000 shares and be designated as Series A Preferred Stock (the
"Series A Preferred"). It is anticipated that the designations, rights and
preference of the Series A Preferred will include the following provisions:

                  i.       the stated value of each share is $ 1.00 per share,

                  ii.      the shares will not be redeemable without the consent
                           of the holders of a majority of the issued and
                           outstanding shares of Series A Preferred,

                  iii.     each share of Series A Preferred will be convertible
                           into shares of B&B's Common Stock at B&B's option at
                           a ratio to be agreed upon by the B&B and the holder
                           at the time of conversion,

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<PAGE>

                  iv.      the shares of Series A Preferred will not pay any
                           dividends,

                  v.       each share of Series A Preferred will carry voting
                           rights equal to 75 votes, and

                  vi.      so long as the shares of Series A Preferred are
                           outstanding, B&B will be prohibited from taking
                           certain actions without the approval of the holders
                           of a majority of the issued and outstanding shares of
                           Series A Preferred, including:

                           -        selling, conveying, or otherwise disposing
                                    of or encumbering all or substantially all
                                    of B&B' property or business on a
                                    consolidated basis or merging into or
                                    consolidating with any other corporation
                                    (other than a wholly-owned subsidiary
                                    corporation) or effecting any transaction or
                                    series of related transactions in which more
                                    than 50% of the voting power of B&B is
                                    transferred or disposed of;

                           -        altering or changing the rights, preferences
                                    or privileges of shares of Series A
                                    Preferred;

                           -        increasing or decreasing the total number of
                                    authorized shares of Series A;

                           -        authorizing or issuing, or obligating B&B to
                                    issue, any other equity security, including
                                    any other security convertible into or
                                    exercisable for any equity security having
                                    rights, preferences or privileges over, or
                                    being on a parity with or similar to, the
                                    Series A Preferred ;

                           -        redeeming, purchasing or otherwise acquiring
                                    (or paying into or setting aside for a
                                    sinking fund for such purpose) any of B&B's
                                    securities;

                           -        amending B&B's articles of incorporation or
                                    bylaws;

                           -        changing the authorized number of its
                                    directors; or

                           -        declaring, ordering or paying any dividends
                                    on any class of B&B's securities.

         B&B's articles of incorporation grant its Board of Directors the right
to establish a series of preferred stock with such designations, rights and
preferences as the Board of Directors may determine in their sole discretion
without shareholder consent. Accordingly, the designations, rights and
preferences of the Series A Preferred, when ultimately

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<PAGE>

finalized, may differ materially from those set forth above, and the consent of
the Shareholders is not required to finalize the designations, rights and
preferences of the Series A Preferred, nor to authorize its issuance.

         13. NOTICES. Any notice or communication necessary or desirable
hereunder shall be considered sufficient and delivery thereof shall be deemed
complete if delivered in person or mailed by registered mail to:

If to B&B and/or Tarpy:             c/o 900 South Gay Street
                                    Suite 2100
                                    Knoxville, Tennessee 37902
                                    Attn: T. Lynn Tarpy, Esq.

If to American:                     4823 Old Kingston Pike
                                    Suite 125
                                    Knoxville, Tennessee 37919
                                    Attention: Stanley P. Brown, III, President

If to the Shareholders:             to the addresses on the books and records
                                    of American

or to such other address as either party may hereafter specify in writing as her
or its own address to the other party.

         14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings of the parties in
connection herewith.

         15. SEVERABILITY. The Shareholders and American hereby agree and affirm
that none of the above provisions is dependent on the validity of any other
provision and invalidity as to any provision or any part thereof shall not
affect any other provision.

         16. CONSTRUCTION AND ENFORCEMENT. This Agreement shall be construed in
accordance with the laws of the State of Florida, without and application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
and such legal action results in a final judgment in favor of such party
("Prevailing Party"), then the party or parties against whom said final judgment
is obtained shall reimburse the Prevailing Party for all direct, indirect or
incidental expenses incurred, including, but not limited to, all attorney's's
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder. Any suit, action or proceeding with respect to this Agreement shall
be brought in the state or federal courts located in Broward County in the State
of Florida. The parties hereto hereby accept the exclusive jurisdiction and
venue of those courts for the purpose of any such suit, action or proceeding.
The parties hereto hereby irrevocably waive, to the fullest extent permitted by

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<PAGE>

law, any objection that any of them may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement or any judgment entered by any court in respect thereof brought in
Broward County, County Florida, and hereby further irrevocably waive any claim
that any suit, action or proceeding brought in Broward County, Florida, has been
brought in an inconvenient forum.

         IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.

                              B&B Capital Group, Inc.

                              By:
                                  ---------------------------------------------
                                       T. Lynn Tarpy, President

                              The American Life & Annuity Company, Inc.

                              By:
                                  ----------------------------------------------
                                       Stanley P. Brown, III

                              --------------------------------------------------
                              Roxanne K. Beilly

                              SHAREHOLDERS:

                              --------------------------------------------------
                              Dr. Archer W. Bishop, Jr.

                              --------------------------------------------------
                              Stanley P. Brown, III

                              --------------------------------------------------
                              Lila K. Pfleger

                              --------------------------------------------------
                              Dr. John H. Bell

                              --------------------------------------------------
                              Oscar R. Scofield

                                       9
<PAGE>

                              --------------------------------------------------
                              Ann Scofield

                              --------------------------------------------------
                              Dr. Archer W. Bishop, Jr. Trustee for the Kristin
                              K. Bishop Irrevocable Trust

                              --------------------------------------------------
                              Dr. Archer W. Bishop, Jr. Trustee for the Archer
                              W. Bishop Irrevocable Trust

                              --------------------------------------------------
                              Dr. Archer W. Bishop, Jr. Trustee for the Baker
                              O. Bishop Irrevocable Trust

                              --------------------------------------------------
                              Dr. Archer W. Bishop, Jr. Trustee for the
                              Thompson A. Bishop Irrevocable Trust

                              --------------------------------------------------
                              Dr. John H. Bell f/b/o Jane P. Bell

                              --------------------------------------------------
                              John T. Bible

                              --------------------------------------------------
                              Henry F. Bertelkamp, Jr.

                              --------------------------------------------------
                              Stanley P. Brown Jr.

                              --------------------------------------------------
                              Kathryn M. Brown

                                       10
<PAGE>

                              --------------------------------------------------
                              Ronnie Callihan

                              --------------------------------------------------
                              Dr. David W. Dickey, III

                              --------------------------------------------------
                              Bruce Fox, Trustee, Ridenour & Ridenour
                              KEOGH

                              --------------------------------------------------
                              Larry L. Johnson

                              --------------------------------------------------
                              James P. Lowe

                              --------------------------------------------------
                              Charles F. Troutt

                              --------------------------------------------------
                              Lindsay Young

                              --------------------------------------------------
                              Amanda L. Williams

                              --------------------------------------------------
                              Judy R. Powell

                              --------------------------------------------------
                              Dr. David W. Dickey, III

                              --------------------------------------------------
                              Bruce D. Fox

                                       11
<PAGE>

                              --------------------------------------------------
                              Marc P. Powell

                              --------------------------------------------------
                              Chadwick S. Lange

                                     12EXHIBIT NO. 10.3

                         ANNUITY RETROCESSION AGREEMENT

                          EFFECTIVE AS OF APRIL 1, 1998

                                     BETWEEN

                    THE AMERICAN LIFE & ANNUITY COMPANY, INC.
                       (REFERRED TO HEREIN AS "AMERICAN")

                                       AND

                         REASSURANCE COMPANY OF HANNOVER
                          (REFERRED TO HEREIN AS "RCH")

                                                                     HA-ALAC-50
                                                      COINSURANCE FUNDS WITHHELD
<PAGE>

                                TABLE OF CONTENTS

Reinsurance Coverage                                                        3
Placing Reinsurance in Effect                                               3
Payments by RCH                                                             3
Payments by American                                                        4
Terms of Reinsurance                                                        4
Unusual Expenses and Adjustments                                            5
Investment Policy                                                           6
Errors                                                                      6
Reductions                                                                  6
Audit of Records and Procedures                                             6
Arbitration                                                                 6
Choice of Law and Forum                                                     7
Insolvency                                                                  7
Offset                                                                      7
Reserve Credit Account                                                      8
Parties to Agreement                                                        8
Recapture                                                                   9
Effective Date                                                              9
Duration of Agreement                                                       9
Entire Agreement                                                            9
Execution                                                                   10

SCHEDULE I
         POLICIES SUBJECT TO REINSURANCE                                    11
SCHEDULE II
         AMOUNT OF REINSURANCE                                              12
SCHEDULE III
         ANNUITY COINSURANCE FUNDS WITHHELD
         MONTHLY REPORT                                                     13
SCHEDULE IV
         ANNUAL REPORT                                                      15
SCHEDULE V
         ALLOWANCES                                                         16
SCHEDULE VI
         INTEREST RATE                                                      17
SCHEDULE VII
         ARBITRATION SCHEDULE                                               18
SCHEDULE VIII
         SECTION 1.848-2(g)(8) ELECTION                                     20
SCHEDULE IX
         STATEMENT OF INVESTMENT POLICY                                     21

<PAGE>

                              REINSURANCE COVERAGE

A.       The annuity policies (referred to herein as "policies") issued by
         Allianz Life Insurance Company of North America on the forms listed on
         Schedule I are 100% coinsured by RCH and shall be retroceded on a 15%
         quota share coinsurance funds withheld basis. by American
         automatically. Coinsurance funds withheld basis means reinsurance on a
         basis whereby RCH retrocedes to American 15% of reserves underlying the
         policies and retains possession of assets, valued at book value, in
         accordance with the statutory accounting practices and procedures
         permitted or prescribed by the state of domicile of Allianz, which
         assets (i) satisfy the reserve requirements necessary or required by
         applicable law or regulation with respect to American's proportionate
         share of liability hereunder, and (ii) are invested in accordance with
         the investment guidelines of RCH.

B.       The reinsurance liability of American with respect to the contractual
         benefits provided by the policies shall be as specified in Schedule II.

C.       The liability of American shall begin simultaneously with that of RCH,
         but in no event prior to the effective date of this Agreement.
         Reinsurance with respect to any policy shall not be
         effective and binding against American unless the insurance issued
         directly by Allianz is in force and unless the issuance and delivery of
         such insurance constituted the doing of business in a state of the
         United States of Allianz, the District of Columbia, or a country in
         which Allianz was legally and properly licensed.

D.       The reinsurance under this Agreement with respect to any policy shall
         be maintained in force without reduction so long as the liability under
         such policy reinsured hereunder remains in force without reduction,
         unless reinsurance is terminated or reduced as provided herein.

                          PLACING REINSURANCE IN EFFECT

         Reinsurance with respect to policies issued after the effective date of
this Agreement shall become effective simultaneously with the liability of RCH,
provided however, that RCH shall give written notification of such reinsurance
to American simultaneously with the monthly reconciliation prescribed in
paragraph B of the "Terms of Reinsurance" article.

                                 PAYMENTS BY RCH

         RCH shall pay American as reinsurance premiums the gross contributions
or premiums RCH receives on and after the effective date of this Agreement with
respect to the portion of all policies reinsured hereunder.

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<PAGE>

                              PAYMENTS BY AMERICAN

A.       Benefits and Expenses
         ---------------------

         American shall pay RCH:

                  (1)      the gross amount of all contractual benefits paid by
                           RCH (i.e., without deduction for reserves) with
                           respect to the portion of the policies reinsured
                           hereunder;

                  (2)      the net cash surrender values paid by RCH with
                           respect to the portions of the policies reinsured
                           hereunder; and

                  (3)      any premium taxes paid by RCH with respect to
                           premiums received by RCH and paid to American on the
                           portion of the policies reinsured hereunder,
                           provided:

                                    (a)      American shall not be obligated to
                                             pay such premium taxes directly,
                                             but shall only be obligated to
                                             reimburse RCH for premium taxes
                                             actually paid by RCH;

                                    (b)      RCH shall use its best efforts to
                                             net its premium tax obligation
                                             against payments to American; and

                                    (c)      American shall not be obligated to
                                             pay premium taxes for premiums
                                             repaid or refunded by Allianz to
                                             the policyholder.

                  (4)      assessments of the various state guaranty
                           associations paid by RCH with respect to portions of
                           the policies reinsured hereunder.

B.       Policy Expense Allowances
         -------------------------

         Expense Allowances shall be paid in accordance with the terms and
         provisions of Schedule V.

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<PAGE>

                              TERMS OF REINSURANCE

A.       Except as otherwise specifically provided herein, all amounts due to be
         paid to either RCH or American shall be determined on a net basis as of
         the last day of the calendar month to which such amount is
         attributable. All amounts shall be due and accrued as of such date. The
         payment of such amounts shall be submitted in accordance with the
         provisions of paragraph B of this article.

B.       RCH shall provide periodic reports to American as specified below:

                  (1)      RCH shall submit monthly, not later than twenty (20)
                           days after the end of each calendar month, a monthly
                           report substantially in accord with Schedule III. Any
                           amounts indicated in the monthly report due and
                           payable to American shall accompany such report.

                  (2)      Any amounts indicated in the monthly report due and
                           payable to RCH shall be paid by American within
                           twenty (20) days after the receipt of the monthly
                           report.

                  (3)      Not later than twenty (20) days after the end of each
                           calendar year, RCH shall submit to American an annual
                           report substantially in accord with Schedule IV.

                  (4)      Interest as specified in the Schedule VI shall be
                           paid on amounts not paid by either American or RCH
                           when due.

                  (5)      If RCH ever becomes aware that its monthly reports as
                           required in this article did not accurately reflect
                           the actual experience of the policies during the
                           month, it shall promptly submit a revised summary to
                           American. Any amount shown by the revised summary as
                           owed by either American or RCH to the other shall be
                           paid promptly.

                  (6)      RCH may unilaterally change Schedule III and Schedule
                           IV in order to obtain the data it reasonably needs to
                           administer properly this Agreement or to prepare its
                           financial statements.

C.       The parties elect to have this Agreement treated in accordance with
         Section 1.848-2(g)(8) of the Income Tax Regulations issued under
         Section 848 of the Internal Revenue Code of 1986. Specific details of
         this election are set forth in Schedule VIII.

                                       3
<PAGE>

                        UNUSUAL EXPENSES AND ADJUSTMENTS

A.       Any unusual expenses incurred by RCH in defending or investigating a
         claim for policy liability or rescinding a policy reinsured hereunder,
         but net of unusual expenses receivable under other reinsurance
         agreements with respect to the portion of the policies reinsured
         hereunder, shall be participated in by American in the same proportion
         as its reinsurance bears to the total insurance under such policy.

B.       For purposes of this Agreement (but not as limitation on American's
         liability under Paragraph A), it is agreed that penalties and interest
         imposed automatically by statute against RCH or Allianz and arising
         solely out of a judgment rendered against RCH or Allianz in a suit for
         policy benefits reinsured hereunder shall be considered unusual
         expenses.

C.       In no event shall the following categories of expenses or liabilities
         be considered for purposes of this Agreement as "unusual expenses":

                  (1)      Routine investigative or administrative expenses;

                  (2)      Expenses incurred in connection with a dispute or
                           contest arising out of conflicting claims of
                           entitlement to policy proceeds or benefits which RCH
                           admits are payable.

                  (3)      Expenses, fees, settlements or judgments arising out
                           of or in connection with claims against RCH for
                           punitive or exemplary damages;

                  (4)      Expenses, fees, settlements or judgments arising out
                           of or in connection with claims made against RCH or
                           Allianz and based on alleged or actual bad faith,
                           failure to exercise good faith or tortious conduct;
                           and
                  (5)      Attorney's fees incurred by RCH or Allianz.

D.       American agrees to indemnify RCH for American's equitable share of
         those punitive and exemplary damages awarded against RCH if:

                  (1)      American actively participated in the acts or
                           omissions, including the decision to deny a claim for
                           policy benefits; and

                  (2)      Those acts or omissions serve as a material basis for
                           the award of punitive or exemplary damages.

American's equitable share shall be determined by an assessment of American's
participation in the particular case.

                                INVESTMENT POLICY

Unless otherwise agreed by RCH and American, the investments of the assets
underlying the reserves relating to the policies reinsured hereunder shall be
made in accordance with the Statement of Investment Policy in Schedule IX.

                                       4
<PAGE>

                                     ERRORS

If either American or RCH shall fail to perform an obligation under this
Agreement and such failure shall be the result of an error on the part of
American or RCH, such error shall be corrected by restoring both American and
RCH to the positions they would have occupied had no such error occurred; an
"error" is a clerical mistake made inadvertently and excludes errors of judgment
and all other forms of error.

                                   REDUCTIONS

If a portion of the insurance issued by Allianz on a policy reinsured hereunder
is reduced or terminated, reinsurance on that policy hereunder shall be reduced
or terminated correspondingly.

                         AUDIT OF RECORDS AND PROCEDURES

RCH and American each shall have the right to audit, at the office of the other,
all records and procedures relating to reinsurance under this Agreement. During
such audit, a party may suspend payment of any amount due, provided, however,
that the provisions of Schedule VI shall continue to apply.

                                   ARBITRATION

A.       It is the intention of American and RCH that the customs and practices
         of the insurance and reinsurance industry shall be given full effect in
         the operation and interpretation of this Agreement. The parties agree
         to act in all things with the highest good faith. If American and RCH
         cannot mutually resolve a dispute which arises out of or relates to
         this Agreement, however, the dispute shall be decided through
         arbitration as set forth in Schedule VII. The arbitrators shall base
         their decision on the terms and conditions of this Agreement plus, as
         necessary, on the customs and practices of the insurance and
         reinsurance industry rather than solely on a strict interpretation of
         the applicable law. There shall be no appeal from their decision,
         except that either party may petition a court having jurisdiction over
         the parties and the subject matter to reduce the arbitrator's decision
         to judgment.

B.       The parties intend this article to be enforceable in accordance with
         the Federal Arbitration Act (9 U.S.C., Section 1) including any
         amendments to that Act which are subsequently adopted. In the event
         that either party refuses to submit to arbitration as required by
         paragraph A, the other party may request a United States Federal
         District Court to compel arbitration in accordance with the Federal
         Arbitration Act. Both parties consent to the jurisdiction of such court
         to enforce this article and to confirm and enforce the performance of
         any award of the arbitrators.

                                       5
<PAGE>

                             CHOICE OF LAW AND FORUM

Florida law shall govern the terms and conditions of the Agreement. In the case
of arbitration, the arbitration hearing shall take place in the city of the home
office of the responding party.

                                   INSOLVENCY

A.       In the event of the insolvency of RCH and the appointment of a
         conservator, liquidator or statutory successor of RCH, reinsurance
         shall be payable to such conservator, liquidator or statutory successor
         on the basis of claims allowed against RCH by and court of competent
         jurisdiction or by the conservator, liquidator or statutory successor
         of RCH without diminution because of the insolvency of RCH.

B.       In the event of the insolvency of RCH, the conservator, liquidator or
         other statutory successor of RCH agrees to deliver to American written
         notice of the pendency of a claim on a policy within a reasonable time
         after such claim is filed in the insolvency proceeding. During the
         pendency of any such claim, American may investigate such claim and
         interpose in the proceeding where such claim is to be adjudicated in
         the name of RCH (its conservator, liquidator or statutory successor),
         but at its own expense, any defense or defenses which American may deem
         available to RCH or its conservator, liquidator or statutory successor.

C.       The expense thus incurred by American shall be chargeable, subject to
         court approval, against RCH as part of the expense of liquidation to
         the extent of a proportionate share of the benefit which may accrue to
         RCH solely as a result of the defense undertaken by American.

                                     OFFSET

         Any debts or credits, matured or unmatured, liquidated or unliquidated,
         regardless of when they arose or were incurred, in favor of or against
         either American or RCH with respect to this Agreement or with respect
         to any other claim of one party against the other, arising from any
         other agreement or act of the parties, are deemed mutual debts or
         credits, as the case may be, and shall be set off, and only the balance
         shall be allowed or paid.

                             RESERVE CREDIT ACCOUNT

A.       RCH shall establish an account that complies with Florida requirements
         relating to reinsurance credit. The account shall consist of assets
         which constitute admitted assets under Florida law, and shall be
         contributed to the account by RCH. The statutory book value of assets
         held in the account shall at all times equal or exceed the statutory
         reserves for the portion of the policies reinsured hereunder which
         American would have established pursuant to the laws of its state of
         domicile if it had retained the policies. Assets in the account will be
         invested by RCH in accordance with the Schedule IX hereof and RCH
         shall, in its discretion, set and maintain crediting rates for the
         policies reinsured hereunder.

B.       American, may draw upon such account any time for any one or more of
         the following

                                       6
<PAGE>

         purposes, with such amounts drawn to be applied without diminution
         because of the insolvency of American or RCH;

                  (1)      To reimburse American for RCH's quota share of
                           premiums returned to owners of policies due to
                           cancellations of policies;

                  (2)      To reimburse American for RCH's quota share of
                           surrenders and benefits or losses paid by American
                           under the terms and provisions of policies; and

                  (3)      To fund an account with American in an amount at
                           least equal to the deduction. for reinsurance ceded,
                           from American's liabilities for policies ceded under
                           this Agreement. Such amount shall include, but not be
                           limited to, amounts for policy reserves, reserves for
                           claims and losses incurred (including losses incurred
                           but not reported), and unearned premium reserves.

C.       American agrees immediately to return to RCH any amounts drawn on such
         account which are in excess of the actual amounts required for the
         purposes of subparagraphs B(1), B(2) and B(3) above.

D.       American agrees to pay RCH interest compounded monthly, at the prime
         rate as of the end of such month, on the amounts held pursuant to
         subparagraph B(3), above.

                              PARTIES TO AGREEMENT

         This is an agreement for indemnity reinsurance solely between American
         and RCH. The acceptance of reinsurance hereunder shall not create any
         right or legal relation whatsoever between RCH or American, on the one
         hand, and the insured or the beneficiary under any policy reinsured
         hereunder, on the other hand, and Allianz shall be and remain solely
         directly liable to such insured or beneficiary under any such policy.

                                    RECAPTURE

         Within the first 36 months after the effective date of this Agreement
and upon 90 days prior written notice to RCH by American, American shall have
the right to cause RCH to recapture, on an "all or none" basis, policies that
have not yet attained the third anniversary of their issue date, and to
terminate the reinsurance hereunder with respect to such policies. For each
policy so recaptured and the reinsurance with respect thereto to terminated,
American shall pay to RCH, coincident with such recapture and termination, an
amount equal to 101% of the statutory reserves relating to each such policy.

                                 EFFECTIVE DATE

       The effective date of this Agreement is 12:01 a.m., April 1, 1998.

                                       7
<PAGE>

                              DURATION OF AGREEMENT

A.       This Agreement may be terminated at any time by either RCH or American
         upon thirty (30) days' prior written notice with respect to reinsurance
         not yet placed in force. American shall continue to accept reinsurance
         during the thirty (30) day notice period and shall remain liable on all
         reinsurance placed in effect under the Agreement until the termination
         or expiry of the insurance reinsured, unless the policies reinsured
         hereunder are recaptured by RCH.

B.       The termination of this Agreement or of the reinsurance in effect under
         this Agreement shall not extend to or affect any of the rights or
         obligations of American and RCH applicable to any period prior to the
         effective date of such termination. In the event that, subsequent to
         the termination of this Agreement, an adjustment is made necessary with
         respect to any accounting, hereunder, a supplementary accounting shall
         take place. Any amount owed to either party by reason of such
         supplementary accounting shall be paid promptly upon the completion
         thereof.

                                ENTIRE AGREEMENT

A.       This Agreement represents the entire agreement between American and RCH
         and supersedes any prior oral or written agreements between the parties
         regarding its subject matter.

B.       No modification of this Agreement shall be effective unless set forth
         in a written amendment executed by both parties.

C.       A waiver of a right created by this Agreement shall constitute a waiver
         only with respect to the particular circumstances for which it is given
         and not a waiver in any future circumstance.

                                    EXECUTION

         American and RCH, by their respective officers, executed this Agreement
         in duplicate on the dates shown below. As of the Effective Date, this
         Agreement consists of

                  o        This Annuity Retrocession Agreement;
                  o        Schedule I, Policies Subject to Reinsurance;
                  o        Schedule II, Amount of Reinsurance;
                  o        Schedule III, Annuity Coninsurance Funds Withheld
                           Monthly Report;
                  o        Schedule IV, Annual Report;
                  o        Schedule V, Allowances;
                  o        Schedule VI, Interest Rate;
                  o        Schedule VII, Arbitration Schedule;
                  o        Schedule VIII, Section 1.848-2(g)(8) Election; and
                  o        Schedule IX, Statement of Investment Policy

                                       8
<PAGE>

THE AMERICAN LIFE & ANNUITY COMPANY, INC.
Taxpayer I.D. # 62-1493545

By:
     ----------------------------------------------------------------------

Title:
        -------------------------------------------------------------------

Date:
       -------------------------------------------------------------------

REASSURANCE COMPANY OF HANNOVER
Taxpayer I.D. # 59-2859797

By:
     ---------------------------------------------------------------------

Title:
        ------------------------------------------------------------------

Date:
       -------------------------------------------------------------------

                                       9
<PAGE>

                                   SCHEDULE I

                         POLICIES SUBJECT TO REINSURANCE
                         -------------------------------

         Ultima Flex-Premium Deferred Annuity policies and contracts issued by
         Allianz and sold to customers of First Banks, Inc. with the assistance
         of First Institutional Marketing, Inc., which policies and contracts
         are effective as of April 1, 1998.

                                       10
<PAGE>

                                   SCHEDULE II

                              AMOUNT OF REINSURANCE
                              ---------------------

         The amount of reinsurance under this Agreement shall be fifteen (15%)
         of the contractual liability of RCH on all policies listed in Schedule
         I.

                                       11
<PAGE>

                                  SCHEDULE III

                ANNUITY COINSURANCE FUNDS WITHHELD MONTHLY REPORT
                -------------------------------------------------
                                       to
                    The American Life & Annuity Company, Inc.
                                      from
                         Reassurance Company of Hannover

AMOUNTS DUE THE AMERICAN LIFE & ANNUITY COMPANY, INC.
<TABLE>
<CAPTION>
<S>                                                                             <C>
Ultima Annuity Premiums (gross premium received during                          $
the month multiplied by the quota share percentage)                               --------------------------------

Premium Tax Reimbursements                                                      $
                                                                                  --------------------------------

Commission charge-backs                                                         $
                                                                                  --------------------------------

Sum of amounts due to The American Life & Annuity                               $
Company, Inc.                                                                     --------------------------------

                                       12
<PAGE>

AMOUNTS DUE REASSURANCE COMPANY OF HANNOVER

Commission allowance (as defined in Schedule V) multiplied                      $
by (i) gross premium received during the month and (ii) the                       --------------------------------
quota share percentage.

Acquisition allowance (as defined in Schedule V) multiplied                     $
by (i) the premium collected and (ii) the quota share percentage.                 --------------------------------

Override allowance (as defined in Schedule V) multiplied                        $
                                                                                  --------------------------------
by (i) the account value at the end of the month and (ii)
the quota share percentage.

Maintenance allowance (as defined in Schedule V) multiplied                     $
by (i) the account value at the end of the month on all policies                  --------------------------------
in force at least one year and (ii) the quota share percentage.

Surrender values paid during the month, multiplied by the                       $
quota share.                                                                      --------------------------------

Annuity payments made during the month, multiplied by                           $
the quota share percentage.                                                       --------------------------------

Death benefits paid during the month, multiplied by the                         $
quota share percentage.                                                           --------------------------------

Premium taxes paid during the month, multiplied by the                          $
quota share percentage.                                                           --------------------------------

Guaranty fund assessments paid during the month, multiplied                     $
by the quota share percentage.                                                    --------------------------------

Sum of amounts due to Reassurance Company of Hannover.                          $
                                                                                  --------------------------------

Net amount due (sum of amounts due Reassurance Company                          $
of Hannover minus sum of amounts due to The American Life                         --------------------------------
and Annuity Company, Inc.

                                       13
<PAGE>

ADDITIONAL ITEMS NEEDED BY THE AMERICAN LIFE & ANNUITY
------------------------------------------------------
COMPANY, INC. FOR FINANCIAL REPORTING
-------------------------------------

Surrender charges realized during the month, multiplied by                      $
the quota share.                                                                  ------------------------------

Surrender charges waived on death during the month, multiplied                  $
by the quota share percentage.                                                    ------------------------------
</TABLE>

A monthly listing of reserves, account values and interest credited.

Other information reasonably requested by American from RCH, if available to RCH
and in its possession.

Note:    (1)      If the net amount due is negative, then that amount is due
                  from Reassurance Company of Hannover to The American Life &
                  Annuity Company, Inc.

         (2)      If the net amount due is positive, then that amount is due
                  from The American Life & Annuity Company, Inc. to Reassurance
                  Company of Hannover.

                                       14
<PAGE>

                                   SCHEDULE IV

                                  ANNUAL REPORT
                                  -------------

         The annual report provided by the administrator shall provide the
following information:

                  A.       Exhibit 8 from the NAIC-prescribed annual statement;

                  B.       A breakdown of the reserves by withdrawal
                           characteristics of the annuity contract;

                  C.       "Analysis of Increase in Reserves" from the
                           NAIC-prescribed annual statement;

                  D.       "Exhibit of Annuities" from the NAIC-prescribed
                           annual statement;

                  E.       An actuarial certification for verification of ceded
                           statutory reserves;

                  F.       Tax reserves and required interest;

                  G.       Other information reasonably requested

                                       15
<PAGE>

                                   SCHEDULE V

                                   ALLOWANCES
                                   ----------

I.       Commission Allowance

                           5 and 7 Year Surrender Charge

                  Policy Year                             Allowance
                  -----------                             ---------

                      1+                                    6.25%

II.      Administration Allowance

         A.       Acquisition Allowance:

                  .55% for the first $20,000,000 of premium collected;
                  .45% for the next $20,000,000 of premium collected;
                  .35% for the next $60,000,000 of premium collected;
                  .30% for the next $100,000,000 of premium collected; and
                  .35% for all premium collected in excess of $200,000,000.

         B.       Maintenance Allowance:

                  Policy Year                             Allowance
                  -----------                             ---------

                       1                                    0.0000%
                       2+                                   0.0075%

C.                Override Allowance

                  Policy Year                             Allowance
                  -----------                             ---------

                       1+                                   0.0125%

                                       16
<PAGE>

                                   SCHEDULE VI

                                  INTEREST RATE
                                  -------------

         Interest on amounts overdue shall be at the prime rate from The Wall
         Street Journal on the last business day of the month for which amounts
         are due.

                                       17
<PAGE>

                                  SCHEDULE VII

                              ARBITRATION SCHEDULE
                              --------------------

To initiate arbitration, either American or RCH shall notify the other party in
writing of its desire to arbitrate, stating that nature of its dispute and the
remedy sought. The party to which the notice is sent shall respond to the
notification in writing within ten (10) days of its receipt.

The arbitration hearing shall be before a panel of three (3) arbitrators, each
of whom must be a present or former officer of a life insurance company. An
arbitrator may not be a present or former officer, attorney, or consultant of
American or RCH or either's affiliates.

American and RCH shall each name five (5) candidates to serve as an arbitrator.
American and RCH shall each choose one (1) candidate from the other's party list
and these two (2) candidates shall serve as the first two (2) arbitrators. If
one (1) or more candidates so chosen shall decline to serve as an arbitrator,
the party which name such candidate shall add an additional candidate to its
list and the other party shall again choose one (1) candidate from the list.
This process shall continue until two (2) arbitrators have been chosen and have
accepted. American and RCH shall each present their initial list of five (5)
candidates by written notification to the other party within twenty-five (25)
days of the date of the mailing of the notification initiating the arbitration.
Any subsequent additions to the list which are required shall be presented
within ten (10) days of the date the naming party receives notice that a
candidate that has been chosen declines to serve.

The two (2) arbitrators shall then select the third arbitrator from the eight
(8) candidates remaining on the lists of American and RCH within fourteen (14)
days of the acceptance of their positions as arbitrators. If the two (2)
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to American and RCH. American and RCH shall take turns striking
the name of one (1) of the remaining candidates from the initial eight (8)
candidates until only one (1) candidate remains. If the candidate so chosen
shall decline to serve as the third arbitrator, the candidate whose name was
stricken last shall be nominated as the third arbitrator. The process shall
continue until a candidate has been chosen and accepted. This candidate shall
serve as the third arbitrator. The first turn at striking the name of a
candidate shall belong to the party that is responding to the other party's
initiation of the arbitration. Once, chosen, the arbitrators are empowered to
decide all substantive and procedural issues by a majority of votes.

It is agreed that each of the three (3) arbitrators shall be impartial regarding
the dispute on the basis described in the "Arbitration article". Therefore, at
no time will either American or RCH contact or otherwise communicate with any
person who is to be or has been designated as a candidate to serve as an
arbitrator concerning the dispute, except upon the basis of jointly drafted
communications provided by both American and RCH to inform those candidates
actually chosen as arbitrators of the nature and facts of the dispute. Likewise,
any written or oral arguments provided to the arbitrators concerning the dispute
shall be coordinated with the other party and shall be provided simultaneously
to the other party or shall take place in the presence of the other party.
Further, at no time shall any arbitrator be informed that the arbitrator has
been named or chosen by one (1) party or the other.

                                       18
<PAGE>

The arbitration hearing shall be held on the date fixed by the arbitrators and
shall take place in the city of the Home Office of the responding party. In no
event shall this date be later than six (6) months after the appointment of the
third arbitrator. As soon as possible, the arbitrators shall establish
pre-arbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) days prior to the arbitration hearing, each
party shall provide the other party and the arbitrators with a detailed
statement of the facts and arguments it will present at the arbitration hearing.
The arbitrators may consider any relevant evidence; they shall give the evidence
such weight as they deem it entitled to after consideration of any objections
raised concerning it. The party initiating the arbitration shall have the burden
of proving its case by a preponderance of the evidence. Each party may examine
any witnesses who testify at the arbitration hearing. Within twenty (20) days
after the end of the arbitration hearing, the arbitrators shall issue a written
decision that sets forth their findings and any award to be paid as a result of
the arbitration, except that the arbitrators may not award punitive or exemplary
damages. In their decision, the arbitrators shall also apportion the costs of
arbitration, which shall include, but not be limited to, their own fees and
expenses.

                                       19
<PAGE>

                                  SCHEDULE VIII

                         SECTION 1.848-2(g)(8) ELECTION
                         ------------------------------

American and RCH agree to the following pursuant to Section 1.848-2(g)(8) of the
Income Tax Regulations issued under Section 848 of the Internal Revenue Code of
1986 (hereinafter "Section 1.848-2(g)(8).")

         1.       As used below, the term "party" will refer to American or RCH
                  as appropriate.

         2.       As used below, the phrases "net positive consideration" ,
                  "capitalize specified policy acquisition expenses", "general
                  deductions limitation" and "net consideration" shall have the
                  meaning used in Section 1.848-2(g)(8).

         3.       The party with net positive consideration for this Agreement
                  for any taxable year beginning with the taxable year
                  prescribed in paragraph 5 below will capitalize specified
                  policy acquisition expenses with respect to this Agreement
                  without regard to the general deductions limitation.

         4.       The parties agree to exchange information pertaining to the
                  amount of net consideration under this Agreement to ensure
                  consistency. This will be accomplished as follows:

                           (a)      American shall submit to RCH by the
                                    fifteenth day of May in each year its
                                    calculation of the net consideration for the
                                    preceding calendar year. Such calculation
                                    will be accompanied by a statement signed by
                                    an officer of American stating that American
                                    will report such net consideration in its
                                    tax return for the preceding calendar year.

                           (b)      RCH may contest such calculation by
                                    providing an alternative calculation to
                                    American in writing within thirty (30) days
                                    of RCH's receipt of American's calculation.
                                    If RCH does not so notify American, RCH will
                                    report the net consideration as determined
                                    by American in RCH's tax return for the
                                    previous calendar year.

                           (c)      If RCH contests American's calculation of
                                    the net consideration, the parties will act
                                    in good faith to reach an agreement as to
                                    the current amount within thirty (30) days
                                    of the date RCH submits its alternative
                                    calculation. If American and RCH reach
                                    agreement on an amount of net consideration,
                                    each party shall report such amount in their
                                    respective tax returns for the preceding
                                    calendar year.

         5.       This election shall be effective for 1998 and all subsequent
                  taxable years for which the Reinsurance Agreement remains in
                  effect.

                                       20
<PAGE>

                                   SCHEDULE IX

                         STATEMENT OF INVESTMENT POLICY
                         ------------------------------

I.       GENERAL

         These investment guidelines are developed under the premise that RCH
         will continue to depend upon a steady, secure and calculable income
         generated by its invested assets to meet cash flow needs, thus
         necessitating a well balanced, low risk portfolio. However, growth is
         also important in order to guarantee maintenance of principal and to
         increase the future value of the portfolio. The purpose of these
         investment guidelines is to assure and secure a steady investment
         income stream while allowing for growth within the portfolio.

         RCH's management expects a controlled growth in RCH's underwriting
         activities over the next several years producing a positive cash flow.
         The funds to be invested will be generated by underwriting, as well as
         investment activities.

         The basic underlying strategy will, therefore, be a core portfolio of
         buy and hold positions, as well as, a percentage of trading vehicles in
         order to better take advantage of market cycles. Appreciation in the
         core portfolio will be recognized from time to time if considered
         advantageous by the Investment Committee.

II       OBJECTIVES

         The following objectives, ranked by priority, should be accomplished:

                  1.       The investments should be secured. To provide safety
                           of principal and interest, investment instruments
                           have to be of high quality.

                  2.       A high return on investment on an after tax basis.

                  3.       The portfolio has to be well diversified by category
                           as well as by issuer.

II       INVESTMENT RESTRICTIONS

                  1.       All executed investment transactions have to comply
                           with the regulatory restrictions imposed by the
                           Florida Insurance Department and any other applicable
                           regulatory requirements. The attached exhibit of
                           eligible investments specified by Florida law form an
                           integral part of these guidelines.

                  2.       All investment transactions must be reviewed,
                           approved and ratified quarterly By the Investment
                           Committee or the Board of Directors.

                                       21
<PAGE>

                  3.       Investments in real estate, acquisition of stocks
                           representing an equity interest of five percent (5%)
                           or more, and capital contributions to subsidiaries
                           require the prior written approval of the Boards of
                           Directors.

                  4.       Investments will be denominated in U.S.-$ only.
                           Investments in foreign currencies or in debt
                           instruments located outside of the United States
                           require the prior approval of the Board of Directors.
                           (Exception: See Convertible Bond Investment
                           Guidelines).

                  5.       Investment must be listed with the SVO of the NAIC.
                           If a given security is not listed at the time of the
                           purchase, RCH is responsible for applying for listing
                           prior to the current quarter's end.

                  6.       No MBS derivatives (defined as inverse-floaters,
                           interest only strips and/or residuals) will be
                           permitted in the portfolio.

IV       PORTFOLIO GUIDELINES

         A.       DURATION

                  Portfolio duration must equal liability duration +_.5 years
                  (liability duration to be determined through a
                  duration/convexity study to be performed by the Company).
                  Current liability duration is assumed to be approximately five
                  (5) .

         B.       CONVEXITY

                  Portfolio convexity should be maximized to a level as close as
                  possible to that of the liabilities, not to fall below - 1.0.

         C.       CREDIT

                  Overall portfolio credit quality must be equal to or greater
                  than AA/AA. Individual securities must be rated at least
                  investment grade (Baa3/BBB) with no more than ten percent
                  (10%) overall permitted in the BBB (NAIC 2) category. At least
                  forty percent (40%) of the portfolio must be invested in U.S.
                  Government, U.S. Government guaranteed or U.S. Government
                  Agency issues with a least 20% invested in U.S. Treasury
                  securities.

                  An exception to this shall be the convertible securities which
                  shall have a minimum average quality of BBB- and shall not be
                  included in the ten percent (10%) overall limitation of BBBs
                  mentioned in the above paragraph.

                                       22
<PAGE>

         D.       LIQUIDITY

                  At least forty percent (40%) of the portfolio must be invested
                  in highly liquid securities defined as follows:

                  o         U.S. Treasury Bonds
                  o         U.S. Agency Debentures
                  o         GNMA Pass-Through Pools
                  o         FNMA, FHLMC Pass-Through Pools

V.       DIVERSIFICATION

                  A.       No more than forty percent (40%) of the portfolio
                           will be permitted in any one of the following
                           categories:

                  o        U.S. Government Agency Debentures
                  o        Mortgage Backed Securities (CMOs, CMBS, and
                           pass-through pools combined)
                  o        Corporate Bonds

                  B.       No more than twenty percent (20%) of the portfolio
                           will be permitted in any of the following categories:

                  o        Municipal Bonds
                  o        Private Placement Bonds

                  C.       No more than fifteen percent (15%) of the portfolio
                           will be permitted in any of the following
                           catergories:

                  o        Preferred Stocks
                  o        Asset Backed Securities
                  o        Convertible Securities (both bond and preferred
                           stocks), with no more than five percent (5%) of
                           convertible allocation permitted in any one issue.

                  D.       No more than ten percent (10%) of the portfolio will
                           be permitted in short term securities with a minimum
                           of one percent (1%) required as defined below. (No
                           one issuer should exceed five million dollars
                           ($5,000,000).

                  o        Certificates of Deposit
                  o        Money Market Funds
                  o        Commercial Paper (A1/P1 rated)
                  o        Repurchase Agreements
                  o        Time Deposits

                                       23
<PAGE>

VI.      PRIVATE PLACEMENT UNDERWRITING GUIDELINES

         A.       All investments must be of investment grade quality - a
                  minimum rating of Baa3/BBB-NAIC 2 or its equivalent by a
                  nationally recognized rating agency, i.e., Standard & Poor;
                  Moody's: Duff & Phelps; Fitch; Canadian Bond Rating Co.;
                  International Bond Rating Co., etc., or indirectly via a
                  shadow rating (i.e., other outstanding public public and/or
                  private debt that is structurally equivalent rated
                  Baa3/BBB-NAIC 2 or better).

         B.       Both affirmative and negative covenants shall be appropriate
                  for the type of company and transaction and protect the
                  noteholder against unwanted subordination and unreasonable
                  credit deterioration.

         C.       Private placements must include explicit language regarding
                  prepayment terms. Preferably non-call or callable with a make
                  whole provision.

         D.       The average quality of the Private placement portfolio shall
                  be no lower than A3/A-.

         E.       The private placement portfolio shall be well diversified
                  across industries, with no more than ten percent (10%) of
                  invested assets in any one industry and one and one- half
                  percent (1.5%) of invested assets in any one issuer.

         F.       The private placement portfolio shall make up no more than ten
                  percent (10%) of invested assets. All issue restrictions in
                  guidelines shall also apply to private placement issues.

VII.     CONVERTIBLE BOND INVESTMENT GUIDELINES

         G.       All investments will be of investment grade quality at the
                  time of purchase. For this purpose, a security is investment
                  grade if (1) the issuer of the security has outstanding senior
                  indebtedness rated BBB- or better by Standard & Poors, Baa3 or
                  better by Moody's Investor Services or a comparable rating by
                  a reorganized rating agency (an "Investment Grade Rating"), or
                  (2) in the event that an issuer of the security has
                  outstanding senior indebtedness that is not rated by a
                  recognized rating agency, in good faith judgment of Advisor,
                  such indebtedness would, if rated, have an Investment Grade
                  Rating, or (3) if the issuer of the security does not have any
                  outstanding senior indebtedness, in the good faith judgment of
                  Advisor, if such indebtedness existed, it would have an
                  Investment Grade Rating. A convertible security generally
                  carries a rating that is lower than the credit rating of the
                  issuer's outstanding senior indebtedness. As a result, a
                  portion of the portfolio (up to 25%) may consist of securities
                  that carry a minimum credit of BB-/Ba3.

                                       24
<PAGE>

         H.       All investments will be U.S.-$ denominated only. The
                  convertible portfolio may invest up to 50% of its assets in
                  U.S.-$ denominated obligations of non-U.S. entities.

         I.       The convertible portfolio may invest up to 30% of its assets
                  in convertible preferred stocks.

         J.       The convertible portfolio may invest in 144A placement
                  securities.

VIII.    EXECUTION OF PORTFOLIO TRANSACTIONS

         The management of RCH is hereby vested with the authority to execute
         purchases and sales of investments within the objectives and
         restrictions referenced herein.

         Asset Allocation & Management Company, LLC (AAM) will recommend the
         investments to be purchased and/or sold. The actual execution of
         investment transactions will be performed by AAM or a responsible RCH
         official appointed by the President, Treasurer, or by the Investment
         Department of Hannover Ruckverischerungs-AG.

         The management of RCH is responsible for monitoring the existing
         security holdings, implementing proper internal control procedures,
         accurate recording of all investment transactions, and for all overall
         investment performance.

IX.      PERFORMANCE Measuremen

         The yield on the whole invested portfolio should exceed a minimum of
         six percent (6%).

         RCH management will prepare for review by the Investment Committee
         yearly comparisons with investment returns accomplished by other
         comparable companies and/or appropriate published indexes shall be
         conducted.

                                       25
<PAGE>

                                   AMENDMENT 1

                      TO THE ANNUITY RETROCESSION AGREEMENT

                                     BETWEEN

                    THE AMERICAN LIFE & ANNUITY COMPANY, INC.
                 (Referred to in this Amendment 1 as "American")

                                       AND

                         REASSURANCE COMPANY OF HANNOVER
                   (Referred to in this Amendment 1 as "RCH")

         This Amendment I is to be attached to and made a part of the Annuity
Retrocession Agreement HA-ALAC-50 effective as of April 1, 1998 (the "Effective
Date") between American and RCH (the "Agreement"). Except as otherwise provided
herein, all terms and provisions of the Agreement shall continue unchanged in
full force and effect.

1        The section of the Agreement entitled "PAYMENTS BY AMERICAN" is amended
by adding the following:

         I.       Coinsurance Funds Withheld Reserves

                  American shall pay to RCH on a monthly basis an amount, if
negative, equal to the difference of (i) reserves with respect to the portion of
the policies reinsured hereunder for the prior month minus (ii) reserves with
respect to the portion of the policies reinsured hereunder for the month for
which such amount is being calculated.

2.       Schedule III of the Agreement is deleted in its entirety and replaced
with Schedule III attached hereto and incorporated herein by reference.

         In witness whereof, the parties have executed this Amendment I
effective as of the Effective Date.
<TABLE>
<CAPTION>

         THE AMERICAN LIFE &                                           REASSURANCE COMPANY OF
         ANNUITY COMPANY                                               HANNOVER
         Knoxville, Tennessee                                          Orlando, Florida
<S>                                                                    <C>
By:                                                                    By:
         ------------------------------------------------                   ----------------------------------------------------

Title:                                                                 Title:

Witness:                                                               Witness:
        ----------------------------------------------                          ---------------------------------------------

Date:                                                                  Date:
      --------------------------------------------------                     --------------------------------------------------
</TABLE>

                                       26
<PAGE>

                                  SCHEDULE III

                ANNUITY COINSURANCE FUNDS WITHHELD MONTHLY REPORT
                -------------------------------------------------
                                       to
                    The American Life & Annuity Company, Inc.
                                      from
                         Reassurance Company of Hanover

AMOUNTS DUE THE AMERICAN LIFE & ANNUITY COMPANY, INC.
-----------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                                     <C>
Ultima Annuity Premiums (gross premium received during
the month multiplied by the quota share percentage)                                     $
                                                                                         ---------------------------

Premium Tax Reimbursements                                                              $
                                                                                         ---------------------------

Commission charge-backs                                                                 $
                                                                                         ---------------------------

Sum of amounts due to The American Life & Annuity                                       $
Company, Inc.                                                                            ---------------------------

AMOUNTS DUE REASSURANCE COMPANY OF HANNOVER
-------------------------------------------

Coinsurance funds withheld reserve amount, if negative, equal to (A) the
difference between (i) reserves underlying the policies for the prior month
minus (ii) reserves underlying the policies for this month, multiplied by (B)
the quota share percentage (then use the absolute value of such amount)                 $
                                                                                         ---------------------------
Commission allowance (as defined in Schedule V) multiplied
by (i) the gross premium received during the month and
(ii) the quota share percentage.                                                        $
                                                                                         ---------------------------

Acquisition allowance (as defined in Schedule V) multiplied
by (i) the premium collected and (ii) the quota share percentage.                       $
                                                                                         ---------------------------

Override allowance (as defined in Schedule V) multiplied by
(i) the account value at the end of the month and (ii) the quota                        $
share percentage.                                                                        ---------------------------

Maintenance allowance (as defined in Schedule V) multiplied by
(i) the account value at the end of the month on all policies in
force at least one year and (ii) the quota share percentage.                            $
                                                                                         --------------------------

Surrender values paid during the month, multiplied by the
quota share percentage.                                                                 $
                                                                                         --------------------------

Annuity payments made during the month, multiplied by the
quota share percentage.                                                                 $
                                                                                         --------------------------

Death benefits paid during the month, multiplied by the
quota share percentage.                                                                 $
                                                                                         --------------------------

                                       27
<PAGE>

Guaranty fund assessments paid during the month, multiplied
by the quota share percentage.                                                          $
                                                                                         --------------------------

Sum of amounts due to Reassurance Company of Hannover.                                  $
                                                                                         --------------------------

Net amount due (sum of amounts due Reassurance Company
of Hannover minus sum of amounts due to the American Life
& Annuity Company, Inc.                                                                 $
                                                                                         --------------------------

ADDITIONAL ITEMS NEEDED BY THE AMERICAN LIFE & ANNUITY
------------------------------------------------------
COMPANY, INC. FOR FINANCIAL REPORTING
-------------------------------------

Surrender charges realized during the month, multiplied by the
quota share percentage.                                                                 $
                                                                                         ---------------------------

Surrender charges waived on death during the month, multiplied
by the quota share percentage.                                                          $
                                                                                         --------------------------

A monthly listing of reserves, account values and interest                              $
credited.                                                                                --------------------------
</TABLE>

Other information reasonably requested by American from RCH, if available to RCH
and in its possession.

Note:    (1)      If the net amount due is negative, then the amount is due from
                  Reassurance Company of Hannover to The American Life &
                  Annuity Company, Inc.

         2.       If the net amount due is positive, then that amount is due
                  from The American Life & Annuity Company, Inc. to Reassurance
                  Company of Hannover.

                                       28

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