Document:

<PAGE>   1

                                                                    EXHIBIT 10.3

     Automatic Flexible Premium Variable Life Reinsurance Agreement Number 3
                         (Referred to as this Agreement)

                                     Between

                   WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

                             St. Petersburg, Florida
                         (referred to as the Reinsured)

                                       and

                       WMA LIFE INSURANCE COMPANY LIMITED

                                Hamilton, Bermuda
                         (referred to as the Reinsurer)

                            Effective October 1, 1999

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

ARTICLE TITLE                                                                                        PAGE
                                                                                                     ----
<S>                                                                                                  <C>
I.           BASIS OF REINSURANCE                                                                      3
II.          DEFINITIONS                                                                               3
III.         LIABILITY                                                                                 5
IV.          THE AMOUNT REINSURED                                                                      6
V.           REDUCTION AND TERMINATIONS                                                                6
VI.          PREMIUMS                                                                                  6
VII.         PAYMENTS BY REINSURER                                                                     7
VIII.        REPORTING                                                                                 7
IX.          REINSURANCE RESERVES                                                                      7
X.           SETTLEMENT OF CLAIMS                                                                      8
XI.          GENERAL PROVISIONS                                                                       10
XII.         REINSTATEMENTS                                                                           14
XIII.        POLICY CHANGES                                                                           14
XIV.         RECAPTURE                                                                                14
XV.          ARBITRATION                                                                              14
XVI.         IMPROPER SOLICITATION OF REINSURED PLAN OWNERS                                           15
XVII.        DAC TAX (Section 1.848-2(g)(8) Election)                                                 15
XVIII.       DURATION OF AGREEMENT                                                                    16
XIX.         CONVERSION                                                                               17
XX.          WRITTEN NOTICE                                                                           18
XXI.         EXECUTION                                                                                19
</TABLE>

                                       2
<PAGE>   3

         The Reinsured and the Reinsurer mutually agree to reinsure on the terms
and conditions set out below.

I.       BASIS OF REINSURANCE

         1.       Insurance. The reinsured will cede on an automatic basis and
                  the Reinsurer will accept as reinsurance the individual
                  Reinsured Plans (policies) written by the Reinsured as shown
                  in Schedule A1. The Reinsured shall have the right to amend
                  the Automatic Acceptance Limits if the Reinsured modifies its
                  Retention Limits, as shown in Schedule A2.

         2.       Risks are reinsured on a monthly renewable term plan basis.
                  The Reinsurance Premiums shall be payable on a monthly
                  renewable term basis, with quarterly settlements as described
                  in Article III, Liability.

         3.       Coverages. The individual Reinsured Plans reinsured as shown
                  in Schedule A1, are the Financial Freedom Builder contracts
                  and any riders, supplemental benefits or endorsements attached
                  thereto, with an issue date on or after January 1, 1999.
                  Reinsurance will be limited in percentage as provided in
                  Schedule B1. Only plans sold by a Producer registered with an
                  affiliated broker-dealer identified in Exhibit A shall be
                  reinsured under this Agreement.

         4.       In no event shall reinsurance under this Agreement be in force
                  with respect to a Reinsured Plan unless the issuance and
                  delivery of the Reinsured Plan is in compliance with the laws
                  of all applicable jurisdictions and the Reinsured's corporate
                  charter.

         5.       The Reinsured declares and agrees that all Reinsured Plans and
                  benefits covered under this Agreement shall be issued in
                  accordance with its normal practices in effect when the
                  Reinsured Plan is issued. These practices will be provided to
                  the Reinsurer on request. The Reinsured will also notify the
                  Reinsurer of any material changes made to these practices
                  before applying them to Reinsured Plans and benefits covered
                  by this Agreement.

         6.       Reinsurance Outside This Agreement. The Reinsured retains the
                  right to reinsure, with any reinsurer, any or all of its plans
                  or coverages automatically in excess of the Reinsured's normal
                  retention and facultatively, where appropriate. The Reinsured
                  agrees to notify the Reinsurer in writing of any change in its
                  normal retention schedule that may affect the Reinsured Plans.

II.      DEFINITIONS

         "AMOUNT REINSURED" OR "AMOUNT OF REINSURANCE" means the amount of
reinsurance ceded by the Reinsured to the Reinsurer under this Agreement on the
life of an insured person(s). It is the amount of life insurance ceded for which
the Reinsurer is at risk under this Agreement on the life of the insured
person(s). The Amount Reinsured per insured life is calculated as set forth in
Paragraph 1 of Article IV, The Amount Reinsured.

         "ARTICLE" OR "PARAGRAPH" refers to an Article or Paragraph of this
Agreement.

                                       3
<PAGE>   4
         "CASH VALUE" has the same meaning ascribed to it in a reinsured policy.

         "THE CO/MODCO AGREEMENT" shall mean the Automatic Flexible Premium
Variable Life Reinsurance Agreement Number 2 between the Reinsured and the
Reinsurer, as amended.

         "EFFECTIVE DATE", with respect to Reinsured Plans, means the date shown
in Article XXI, Execution. The Reinsured is liable for Reinsurance Premiums,
less applicable Reinsurance Allowances, due on or after the Effective Date of a
Reinsured Plan; and the Reinsurer is liable for any reinsured benefits occurring
on or after the Effective Date.

         "EXECUTION DATE" means the date as of which this Agreement has been
executed, as shown in Article XXI, Execution.

         "EXHIBIT" AND "SCHEDULE" mean, respectively, an exhibit or schedule
attached to this Agreement and shall be considered part of this Agreement.

         "EXPERIENCE REFUND" means the portion of the reinsurance premium that
is returned to the Reinsured when claims experience is better than expected when
the premium was calculated. The experience refund, if any, shall be calculated
as shown in Schedule B3.

         "FIXED ACCOUNT" means allocation option(s) other than the Separate
Account.

         "FIXED ACCOUNT VALUE" means the value of the Fixed Account on any
valuation date.

         "MONTHIVERSARY" has the same meaning ascribed to it in a reinsured
policy. It is the day of each calendar month coinciding with a policy's Policy
Date.

         "MONTHLY COST OF INSURANCE" means the monthly cost of insurance for the
reinsured policy together with the charge for benefits provided by riders
attached to the reinsured policy.

         "PARTY" or "PARTY" refers to either the Reinsured or the Reinsurer as
appropriate, and PARTIES refers to both collectively.

         "POLICY DATE" means the policy date as set forth in the Policy Schedule
of a reinsured policy. It is the date coverage is effective under the Policy.
Policy months, years, Monthiversaries and anniversaries are measured from the
Policy Date.

         "PRODUCER" means a licensed representative with a broker-dealer
identified in Exhibit A.

         "REINSURED PLAN" means any life insurance policy form or rider form
reinsured under this Agreement, as set forth in Schedule A1.

         "SEPARATE ACCOUNT" means a separate investment account shown on the
Policy Schedule page which is composed of several sub-accounts established to
receive and invest net premiums under the policy.

                                       4
<PAGE>   5
        "SERIES FUND" means a designated mutual fund from which each
sub-account of the Separate Account will buy shares.

         "SETTLEMENT INTEREST RATE" means the interest rate for ninety (90) day
dealer commercial paper as published in The Wall Street Journal or a successor
or substitute publication, as agreed upon by both parties if The Wall Street
Journal should cease to exist. The Settlement Interest Rate for a given month
will be the Settlement Interest Rate published on the fifteenth (15th) of the
month or the next following business day if the fifteenth (15th) of the month is
not a publication date of The Wall Street Journal.

         "SPECIFIED AMOUNT" means the Specified Amount as set forth in the
Policy Schedule of a reinsured policy.

         "STATUTORY RESERVES AND LIABILITIES" refers to statutory reserves and
liabilities associated with the ceded risk for the reinsured contracts.

         "SUB-ACCOUNT" means a subdivision of the Separate Account. Each
Sub-account invests exclusively in the shares of a specified Series Fund
portfolio.

III.     LIABILITY

         1.       The liability of the Reinsurer on any reinsurance under this
                  Agreement begins upon the effective date of this Agreement as
                  set forth in Article XXI, Execution and ends after all
                  Reinsured Plans reinsured have been terminated or recaptured,
                  as set forth in Article XIV, Recapture.

         2.       The liability of the Reinsurer to the Reinsured under this
                  Agreement will be coexisting with the liability of the
                  Reinsured under the Reinsured Plans reinsured. In no event
                  shall the Reinsurer's liability for reinsurance continue after
                  termination of the Reinsured's liability for any claims
                  relating to its corresponding Reinsured Plans.

         3.       For a Reinsured Plan or rider reinsured under this Agreement:
                  (i) the liability of the Reinsurer under this Agreement shall
                  commence simultaneously with the beginning of the Reinsured's
                  liability under each corresponding Reinsured Plan or any
                  application or conditional receipt therefor; and (ii) the
                  liability of the Reinsured for Reinsurance Premiums under this
                  Agreement shall begin as of the Policy Date of the reinsured
                  policy or as of the effective date of reinsured rider, if
                  different. The Reinsured represents that its normal
                  underwriting practice is to promptly return any premium
                  payment taken with an application which the Reinsured has
                  declined without a counteroffer; however, failure of the
                  Reinsured to do so shall not relieve the Reinsurer for its
                  liability under this Paragraph.

         4.       In no event shall the Reinsurer's liability for reinsurance
                  continue after termination of the Reinsured's liability for
                  any claims relating to its corresponding reinsured policy or
                  rider.

         5.       On an ongoing basis the liability of the Reinsurer,
                  reinsurance premiums, reinsurance allowances, benefits and
                  other items due to or from each party shall be accounted for
                  and settled and paid quarterly on the basis of the quarterly
                  reports prepared by the Reinsured in the form of Schedule E5
                  and sent to Reinsurer via facsimile transmission or such other
                  medium mutually acceptable to both parties. Also included will
                  be any adjustments made necessary by changes in reinsurance
                  effective during the previous quarter, or changes due

                                       5
<PAGE>   6
                  to any agreed upon errors on a previous report. Payment of any
                  amount due to be paid by the Reinsurer or the Reinsured shall
                  be determined on a net basis and shall be paid, in United
                  States currency, within two (2) weeks after receipt by
                  Reinsurer of the quarterly report.

         6.       The settlement, as shown in Schedule E5 will include interest
                  on monthly reinsurance premiums and allowances accruing from
                  the fifteenth (15th) of every month to the settlement date.
                  The interest rate will be the Settlement Interest Rate of the
                  month named on each Schedule E1 in the quarter. Interest will
                  be earned from the fifteenth (15th) of the month named on each
                  Schedule E1 of the quarter to the next following settlement
                  date.

IV.      THE AMOUNT REINSURED

         1.       The Amount Reinsured will be the quota share percentage, as
                  specified in Schedule B1, of the death benefit and all other
                  benefits provided by the Reinsured Plan, including any riders,
                  supplementary benefits or endorsements attached thereto, as
                  specified in Schedule A1, less the cash value.

V.       REDUCTIONS AND TERMINATIONS

         1.       If any of the Reinsured Plans reinsured under this Agreement
                  are reduced or terminated by payment of a death benefit,
                  withdrawal, surrender or termination due to lapsation,
                  maturation or expiration of the Reinsured Plan, the
                  reinsurance will be reduced proportionately. Any policy change
                  which affects the Death Benefit Proceeds, such as a change in
                  Option Type, a change in the policy's Specified Amount, a
                  change in the Face Amount of a rider, or an addition or
                  deletion of a rider, will result in a proportional change in
                  the Amount Reinsured. If the change affects the plan, the
                  amount of reinsurance, premiums, or policy changes under
                  cession, the Reinsured shall inform the Reinsurer in
                  subsequent Reinsurance Reports.

         2.       With regard to liability of the Reinsured under the terms of
                  an application for a policy or rider to be reinsured under
                  this Agreement or under the terms of a conditional receipt
                  issued in connection with such application, the liability of
                  the Reinsurer under this Agreement shall be equal to the quota
                  share percentage of the Reinsured's liability, plus any
                  amounts for which the Reinsurer is responsible under Article
                  III, Liability.

         3.       For purposes of Paragraph 1 of this Article, changes in a
                  policy's death benefit which are due to normal cash value
                  fluctuation shall be calculated and reported quarterly as
                  described in Article VIII, Reporting. Other changes in the
                  Amount Reinsured due to a policy change shall be recalculated
                  and reported under this Agreement in or for the quarter in
                  which the policy change occurs. For this purpose, such policy
                  changes may include, for example, a change in Option Type, a
                  change in the policy's Specified Amount, a change in the Face
                  Amount of a rider, and an addition or deletion of a rider.

VI.      PREMIUMS

         1.       The premium to be paid to the Reinsurer by the Reinsured with
                  respect to each reinsured policy, as specified in Schedule A1,
                  will be the quota share percentage, as specified in Schedule
                  B1 of the total amount "Due WMA", as shown in Schedule E5.

                                       6
<PAGE>   7
VII.     PAYMENTS BY REINSURER

         1.       The Reinsurer shall pay to the Reinsured the Reinsurer's quota
                  share percentage of the total amount "Due WRL", as shown in
                  Schedule E5.

VIII.    REPORTING

         1.       The Reinsured shall assume responsibility for the
                  administration of all reinsurance under this Agreement and
                  will provide the Reinsurer with information as set forth in
                  Schedules E1 through E6, and Schedule K of this Agreement. The
                  Reinsurer may request, at its option, to review, at the
                  administrative office of the Reinsured, any papers associated
                  with the issuance of any Reinsured Plan subject to Automatic
                  Reinsurance under this Agreement.

         2.       Not later than twenty (20) days after the end of each quarter,
                  the Reinsured will submit a report substantially in accordance
                  with Schedule E2, E3, and E5. The Reinsured agrees to provide
                  or make available to the Reinsurer such documentation as may
                  be necessary to support the items reported.

         3.       Not later than twenty (20) days after the end of each month,
                  the Reinsured will submit a report substantially in accordance
                  with Schedules E1, E4 and K.

         4.       Not later than thirty (30) days after the end of each calendar
                  year, the Reinsured will submit a report substantially in
                  accordance with Schedule E6.

         5.       Not later than ninety (90) days after the end of each calendar
                  year, the Reinsured will provide a copy of its statutory
                  statement as filed with the State of Ohio.

         6.       Not later than one hundred twenty (120) days after the end of
                  each calendar year, the Reinsurer will provide a copy of The
                  WMA Corporation Form 10-K.

         7.       Not later than sixty (60) days after the end of each quarter,
                  the Reinsurer will provide a copy of The WMA Corporation Form
                  10-Q.

IX.      REINSURANCE RESERVES

         1.       The Reinsurer will set up Statutory Reserves and Liabilities
                  not less than the reduction taken by the Reinsured for the
                  reinsured contracts.

         2.       For purposes of Paragraph 1 of this Article, the Statutory
                  Reserves shall be calculated by the Reinsured according to the
                  "Commissioners Reserve Valuation Method," as prescribed in the
                  NAIC Standard Valuation Law and approved by the State of Ohio
                  Department of Insurance. The Statutory Reserves and
                  Liabilities will include the reserves for any supplemental
                  benefits and riders.

         3.       In the event the Reinsurer is not licensed or otherwise
                  accredited or authorized as a reinsurer in the State of Ohio,
                  and in any other jurisdiction where the Reinsured is

                                       7
<PAGE>   8
                  licensed to do business, the Reinsurer agrees to provide
                  Letter(s) of Credit or other forms of security acceptable to
                  the State of Ohio otherwise available. Such Letter(s) of
                  Credit or other method(s) shall be issued in compliance with
                  the statutes and regulations of the State of Ohio and shall be
                  issued by a financial institution located in the United States
                  chosen by the Reinsurer, which has applied for and has met the
                  standards of financial conditions set forth by the NAIC's
                  Securities Valuation Office.

         4.       The Letter(s) of Credit in favor of the Reinsured will be an
                  amount which at all times must equal or exceed the reinsurance
                  credits taken or reasonably estimated to be taken by the
                  Reinsured in connection with this Agreement under Exhibit 8,
                  and under Exhibit 11, Part 1, Column 3, Line 4c, and any other
                  liabilities held for the Reinsured Policies and reported on
                  the Reinsured's statutory financial statements.

         5.       The Letter(s) of Credit shall be substantially in the form set
                  forth in Exhibit B or in such other form as the Ohio Insurance
                  Department or other applicable state Insurance Department may
                  require or permit. The terms of the Letter(s) of Credit shall
                  provide that: it is not conditioned on the delivery of any
                  other documents or materials; it is irrevocable without the
                  consent of the Reinsured; it is automatically renewable as
                  provided in Exhibit B; and its initial term is for a period of
                  not less than one (1) year. Such Letter(s) of Credit may be
                  drawn upon at any time, notwithstanding any other provisions
                  in this Agreement, but shall be utilized by the Reinsured or
                  its successors only for one or more of the following reasons:

                  (i)      to fund an account on behalf of the Reinsured in an
                           amount at least equal to the deduction, for
                           reinsurance ceded, from the Reinsured's reserves and
                           liabilities for Reinsured Plans, as specified in this
                           Article; and

                  (ii)     to pay any other amounts the Reinsured claims are due
                           under this Agreement.

         6.       Such Letter(s) of Credit shall be promptly issued and
                  delivered to the Reinsured; but in no event shall the
                  Letter(s) of Credit be issued or confirmed later than December
                  31st in respect of the year for which the Reinsured is taking
                  credits for such reinsurance in its statutory financial
                  statements, and in no event shall the Letter(s) of Credit be
                  delivered to the Reinsured later than thirty (30) days after
                  such December 31st.

X.       SETTLEMENT OF CLAIMS

         1.       Notice. On a monthly basis, the Reinsured shall provide notice
                  to the Reinsurer of any death claims reported, paid, or
                  outstanding in a report in the form of Schedule K. On a
                  quarterly basis, the Reinsured shall account to the Reinsurer
                  for any death claims due, as provided in Paragraph 1 of
                  Article IV, The Amount Reinsured. Reinsured agrees to furnish
                  Reinsurer with copies of the proof of loss or other written
                  materials relating to a specific claim upon request of
                  Reinsurer or as provided in Paragraph 5 of this Article.

         2.       Standard Claim Practices. Reinsured agrees to act in accord
                  with its standard practices applicable to all claims in
                  enforcing the terms and conditions of the reinsured policies
                  or reinsured riders and with respect to the administration,
                  negotiation, payment, denial, or settlement of any claim or
                  legal proceeding.

                                       8
<PAGE>   9
         3.       Payment and Settlement of Claim. Reinsurer agrees to accept
                  the good faith decision of the Reinsured in payment or
                  settlement of any claim for which Reinsurer has received the
                  required notice. Reinsurer agrees to pay Reinsured the Amount
                  Reinsured on which Reinsurance Premiums have been computed
                  upon receiving proper evidence the Reinsured has paid a policy
                  claim.

         4.       Reinsurer's Liability for Covered Claim Expenses. Except as
                  provided in Paragraph 5 of this Article, Reinsurer's liability
                  shall include indemnification of the quota share percentage of
                  any covered claim expenses incurred by Reinsured in defending
                  or investigating a policy claim. Covered claim expenses are in
                  addition to the claim expense allowance and shall include, but
                  not be limited to, cost of investigation, legal fees, court
                  costs and interest charges and cost of interpleader
                  proceedings. Covered claim expenses shall not include:

                  a)       Compensation of salaried officers and employees; and

                  b)       routine investigative expenses of incontestable
                           claims.

         5.       Contested, Litigated or Compromised Claims. The Reinsured
                  shall promptly notify Reinsurer of its intention to contest,
                  compromise or litigate any claim on a Reinsured Plan or its
                  intention to investigate or defend any litigation initiated
                  against the Reinsured in response to the Reinsured's denial of
                  a claim on a Reinsured Plan. With or immediately following
                  such notice, the Reinsured shall furnish Reinsurer with copies
                  of written materials relating to such claim. Reinsurer shall
                  promptly notify Reinsured of its decision whether or not to
                  accept any such action. If Reinsurer declines to accept any
                  such action, it will pay the full Amount Reinsured, as if
                  there had been no such contest, compromise or litigation, and
                  will be fully discharged as of the date of such payment from
                  any further liability on that claim under Paragraph 4 of this
                  Article. If the Reinsurer accepts such action, then: (i)
                  Reinsurer shall continue to share in the covered claim
                  expenses as described in Paragraph 4; (ii) the Reinsured shall
                  keep the Reinsurer informed of the status of any legal
                  proceeding or settlement negotiations in connection with such
                  claim; and (iii) if the contest or compromise reduces the
                  amount of the Reinsured's liability, the Reinsurer's liability
                  shall be reduced to its quota share percentage of the reduced
                  amount.

         6.       Recovery from Third Party. The Reinsured shall promptly notify
                  Reinsurer if the Reinsured should assert or bring a claim or
                  action against a third party for contribution, indemnification
                  or similar grounds to recover from the third party any monies
                  paid or expenses incurred by the Reinsured in connection with
                  a policy claim reinsured under this Agreement. Upon request,
                  the Reinsured shall furnish Reinsurer with copies of written
                  materials relating to such third party claim or action.
                  Reinsurer shall promptly notify Reinsured of its decision
                  whether or not to share in the expenses and potential recovery
                  of any such proceeding. If Reinsurer declines to so accept any
                  such proceeding, Reinsurer shall not participate in any costs
                  of such proceeding and shall not share in any monies so
                  recovered by the Reinsured. If the Reinsurer accepts such
                  action, then the Reinsurer shall continue to share in the
                  expenses of that proceeding and the Reinsurer shall share in
                  any monies recovered by the Reinsured. The Reinsured shall
                  keep the Reinsurer informed of the status of such proceeding
                  or settlement negotiations in connection with such proceeding.

                                       9
<PAGE>   10
         7.       Adjustments for Misstatements. If the amount claimed as death
                  benefit under a reinsured policy or reinsured rider is
                  increased or reduced because of a misstatement of age, sex or
                  smoker status, the Reinsured Amount will be calculated based
                  on the adjusted amount of death benefit and the Amount
                  Reinsured will, if applicable, be increased or decreased
                  proportionately.

         8.       Interest. If the Reinsured pays interest on a claim, Reinsurer
                  agrees to pay the interest on the Amount Reinsured computed at
                  the same rate and for the same period as that paid by the
                  Reinsured, but in no event later than the date the claim is
                  finally adjudicated by the Reinsured.

         9.       Statutory Penalties. If the Reinsured is required to pay
                  penalties or interest imposed automatically by statute, other
                  than penalties or interest arising from Reinsured's negligent
                  or intentional violation of such a statute, Reinsurer shall
                  indemnify the Reinsured for the quota share percentage of such
                  penalties and interest.

         10.      Terminal Illness Accelerated Death Benefit Rider. The
                  Reinsurer shall participate in any claim under any Terminal
                  Illness Accelerated Death Benefit Rider in connection with the
                  Reinsured Plans. A claim for accelerated death benefits shall
                  be treated under this Agreement as though it were a death
                  claim and as though the death occurred on the date the claim
                  was made. If the claimant elects to take less than 100% of the
                  benefit under the Terminal Illness Accelerated Death Benefit
                  Rider and the reinsured policy thereby remains in force, then
                  the Reinsurer shall pay the Reinsured for the Terminal Illness
                  Accelerated Death Benefit Rider an amount equal to the
                  accelerated percentage elected by the claimant multiplied by
                  the present value, calculated in accordance with the rider
                  form, of the Amount Reinsured; and the reduced Amount
                  Reinsured for the policy shall be equal to the original Amount
                  Reinsured reduced by the same percentage used to calculate the
                  benefits paid under the Terminal Illness Accelerated Death
                  Benefit Rider.

XI.      GENERAL PROVISIONS

         1.       Parties to Agreement. This Agreement is a contract solely
                  between the Reinsurer and the Reinsured. The acceptance of
                  reinsurance hereunder shall not create any right or legal
                  relation between the Reinsurer and the insured, beneficiary,
                  or any other party to any Reinsured Plan hereunder.

         2.       Reinsurance Conditions. The reinsurance is subject to the same
                  limitations and conditions as the insurance under the
                  Reinsured Plan written by the Reinsured on which the
                  reinsurance is based.

         3.       Expenses. The Reinsurer will not have liability for any
                  extra-contractual damages which are rendered against the
                  Reinsured as a result of acts, commission or course of conduct
                  committed by a Producer of an affiliated broker-dealer
                  identified in Exhibit A, in connection with the Reinsured
                  Plans. In no event whatsoever will the Reinsured have any
                  liability for extra-contractual damages assessed against the
                  Reinsurer as a result of acts, omissions, or course of conduct
                  committed by the Reinsurer in connection with the reinsurance
                  of the Reinsured Plans under this Agreement.

                                       10
<PAGE>   11
         4.       Oversights. If failure to pay any premium due or to perform
                  any other act required by this Agreement is unintentional and
                  is caused by misunderstanding oversight or clerical error, the
                  Reinsured and the Reinsurer shall be restored to the position
                  they would have occupied had the misunderstanding, oversight
                  or clerical error not occurred.

         5.       Inspection. The Reinsured and the Reinsurer, their auditors
                  and any regulators having authority over the Reinsured and/or
                  the Reinsurer, shall have the right, at all reasonable times,
                  and at their expense, to inspect at the office of the other
                  party all books, records, procedures, and documents of the
                  other party relating to this Agreement. A party or its auditor
                  conducting such inspection shall give the other party one (1)
                  week advance written notice. The Reinsured, its auditors and
                  regulators shall have the same right to inspect,  verify and
                  value any assets held in a trust account or  otherwise held
                  for the benefit of the Reinsured. The party being audited or
                  inspected agrees to cooperate in the audit, including
                  providing any information requested by the other party or its
                  auditor in advance of the audit or inspection. Upon request,
                  the Reinsured agrees to permit the Reinsurer, at all
                  reasonable times and at Reinsurer's expense, to inspect at
                  the office of the Reinsured, any underwriting information in
                  the Reinsured's files pertaining to a reinsured policy or
                  reinsured rider.

                  It is mutually agreed by the Reinsured and the Reinsurer that
                  any information that is made available for inspection under
                  this section of the Agreement shall, to the extent legally
                  possible, be kept confidential and under no circumstances may
                  this information be disclosed to, or made available for
                  inspection by, any third party without the prior consent of
                  the other contracting party.

         6.       Assignment or transfer. In no event shall either the Reinsured
                  or the Reinsurer assign any of its rights, duties or
                  obligations under this Agreement without the prior written
                  approval of the other party. Such approval shall not
                  unreasonably be withheld.

                  In no event shall either the Reinsured or the Reinsurer
                  transfer either the Reinsured Plans reinsured under this
                  Agreement or the reinsurance without the prior written
                  approval of the other party. Such approval shall not
                  unreasonably be withheld.

         7.       Entire Agreement. This Agreement represents the entire
                  agreement between the Reinsurer and the Reinsured and
                  supersedes any prior oral or written agreements between the
                  parties regarding its subject matter.

         8.       Alterations to Agreement. Any alteration, which may from time
                  to time become necessary in this Agreement, shall be made by
                  amendment attached to the Agreement embodying such alterations
                  as may be agreed upon and taken as part of this Agreement and
                  equally binding. No modification or waiver of any provision of
                  this Agreement shall be effective unless set forth in written
                  amendment to this Agreement, which is executed by both
                  parties. A waiver shall constitute a waiver only with respect
                  to the particular circumstance for which it is given and not a
                  waiver of any future circumstance.

         9.       If any provision of this Agreement shall be held or made
                  invalid by an order of a court of competent jurisdiction,
                  statute, rule or otherwise, the remainder of this Agreement
                  shall not be affected thereby. This Agreement shall be
                  construed in accordance with the applicable federal law and
                  the laws of the State of Ohio and the rights and obligations
                  of this Agreement shall, at all times, be regulated under the
                  laws of the State of Ohio.

                                       11
<PAGE>   12
         10.      Taxes. The Reinsurer shall reimburse the Reinsured for any
                  U.S. Excise Tax the Reinsured is required to pay under the
                  U.S. Internal Revenue Code for the reason that the Reinsurer
                  fails to make an election or terminates its election to file
                  U.S. federal income tax returns or otherwise ceases or fails
                  to file such return. This Paragraph does not diminish in any
                  way the provisions of Article XVII, DAC Tax.

         11.      Insolvency of the Reinsured.

                  (a) The Reinsured shall immediately give Reinsurer written
                  notice of an event constituting insolvency of the Reinsured.
                  However, whether such notice is timely given or not, in the
                  event of the insolvency of the Reinsured, all amounts relating
                  to reinsurance made, ceded, renewed or otherwise becoming
                  effective under this Agreement shall be payable by the
                  Reinsurer directly to the Reinsured or to its liquidator,
                  receiver or statutory successor on the basis of the liability
                  of the Reinsured without diminution because of the insolvency
                  of the Reinsured or because the Reinsured or Reinsured's legal
                  representative has failed to pay all or a portion of amounts
                  owed to Reinsurer under this Agreement. It is understood,
                  however, that in the event of the insolvency of the Reinsured,
                  the liquidator or receiver or statutory successor of the
                  insolvent Reinsured shall give written notice to the Reinsurer
                  of the pendency of a claim against the insolvent Reinsured on
                  the policy reinsured within a reasonable time after such claim
                  is filed in the insolvency proceeding and that during the
                  pendency of such claim that the Reinsurer may investigate such
                  claim and interpose in the name of the Reinsured (or its
                  liquidator, receiver or statutory successor), at the
                  Reinsurer's own expense, in the proceeding where such claim is
                  to be adjudicated any defense or defenses which it may deem
                  available to the Reinsured or its liquidator or receiver or
                  statutory successor.

                  (b) It is further understood that the expenses thus incurred
                  by the Reinsurer shall be chargeable, subject to court
                  approval, against the insolvent Reinsured as part of the
                  expense of liquidation to the extent of a proportionate share
                  of the benefit which may accrue to the Reinsured solely as a
                  result of the defense undertaken by the Reinsurer. When two or
                  more reinsurers are participating in the same claim and a
                  majority in interest elect to interpose a defense or defenses
                  to such claim, the expense shall be apportioned in accordance
                  with the terms of this Agreement as though such expense had
                  been incurred by the Reinsured.

         12.      Insolvency of the Reinsurer. The Reinsurer shall immediately
                  give the Reinsured written notice of an event constituting
                  insolvency of the Reinsurer. Upon the insolvency of the
                  Reinsurer, whether notice thereof was given by the Reinsurer
                  or not, the Reinsured has the right to immediately, by written
                  notice, terminate this Agreement and recapture all reinsurance
                  under this Agreement. Notwithstanding such termination or
                  recapture, Reinsurer or its legal representative shall
                  continue to be liable to the Reinsured for any obligations of
                  the Reinsurer under this Agreement still outstanding after
                  giving effect to such recapture.

         13.      For the purpose of this Agreement, either the Reinsurer or the
                  Reinsured shall be deemed "insolvent" under the following
                  circumstances:

                  (a)      when a cease and desist order or injunction has been
                           issued by the commissioner or a court of competent
                           jurisdiction in its state or jurisdiction of domicile
                           ordering either party to cease and desist from
                           transacting, soliciting or writing any new

                                       12

<PAGE>   13
                           business of any kind and is reasonably expected to
                           result in conservatorship, rehabilitation,
                           receivership, or liquidation; or

                  (b)      when a court of competent jurisdiction order is
                           issued voluntarily or involuntarily placing either
                           party into conservatorship, rehabilitation,
                           receivership, or liquidation, or appointing a
                           conservator, rehabilitator, receiver or liquidator to
                           take over the business of either party; or

                  (c)      when it files or consents to the filing of a petition
                           in bankruptcy, seeks reorganization or an arrangement
                           with creditors or takes advantage of any bankruptcy,
                           dissolution, liquidation or similar law or statute.

         14.      Offset. The Reinsurer and the Reinsured shall consider any
                  balance due and unpaid, matured or unmatured, liquidated or
                  unliquidated, regardless of when they arose or were
                  incurred, whether on account of premiums, allowances, policy
                  charges, losses, claims expenses, or any other amount in
                  accordance with the terms of this Agreement, or any other
                  reinsurance agreement, due from one party to another to be
                  mutual debits or credits under this Agreement and shall be
                  offset and only the balance allowed or paid. If either the
                  Reinsured or Reinsurer is then under any formal insolvency
                  proceedings, this right of offset shall be subject to the laws
                  of the domiciliary jurisdiction of the then insolvent party.

         15.      Non-Guaranteed Charges and Benefits. The Reinsured agrees to
                  manage the non-guaranteed charges and benefits in a way that
                  balances the interests of the owners, agents, stockholders,
                  contract owners, and the Reinsurer, while exercising sound
                  actuarial professional judgment. Any changes in the
                  non-guaranteed contract charges and benefits will be
                  accompanied by an actuarial report prepared in accordance with
                  the standards described in the Actuarial Standards of Practice
                  No. 1, as Reformatted and Readopted in 1990 by the Actuarial
                  Standards Board. The actuarial report should disclose a
                  description of the framework within which the actuary's advice
                  has been developed, a description of the facts, methods,
                  procedures and assumptions upon which the advice was based,
                  and the other information called for by the Actuarial Standard
                  of Practice No. 1. Should the Reinsurer determine that the
                  Reinsured has not balanced the interests of the Reinsured with
                  the interests of the Reinsurer and agreement cannot be
                  reached, any claims may be settled by arbitration in
                  accordance with Article XV, Arbitration.

         16.      Forms and Manuals. The Reinsured agrees to make available to
                  the Reinsurer copies of all appropriate policy forms,
                  prospectuses, application forms, and other related material.
                  If new material is published, or changes are made in the
                  material already filed, the Reinsured agrees to promptly
                  provide the Reinsurer with copies of such material.

         17.      Headings. The headings of the Articles, Paragraphs and any
                  subparagraphs and Schedules of this Agreement are inserted for
                  convenience of reference only and shall not constitute a part
                  of this Agreement.

         18.      Definitions. Any defined term used in this Agreement shall
                  have the meaning ascribed to it in this Article. Any term not
                  defined in this Agreement which is in general usage in the
                  life reinsurance industry shall be given the same meaning as
                  such general usage ascribes to that term, giving due
                  consideration to the context in which the term is used in this
                  Agreement.

                                       13
<PAGE>   14
XII.     REINSTATEMENTS

         1.       Should a Reinsured Plan lapse and subsequently be reinstated
                  in accordance with its terms and the normal rules of the
                  Reinsured, the reinsurance shall be reinstated automatically.
                  The Reinsured shall pay reinsurance premiums, net of
                  allowances, to the Reinsurer for the same period of time cost
                  of insurance charges are calculated and received by the
                  Reinsured on the reinstated policy.

XIII.    POLICY CHANGES

         1.       Should the Reinsured make any material changes (including but
                  not limited to a change in Face Amount, Specified Amount or
                  Rating Classification) in the provisions and conditions of a
                  Reinsured Plan issued to an insured and upon which reinsurance
                  shall have been granted hereunder, the Reinsured shall reflect
                  such policy changes, as appropriate, in the monthly reports
                  called for in Article VIII, Reporting.

         2.       The Reinsured agrees to notify the Reinsurer in writing of any
                  anticipated material changes in the terms and conditions of
                  the Reinsured Plans.

XIV.     RECAPTURE

         1.       Business reinsured under this Agreement will not be eligible
                  for recapture, except the Reinsured reserves the right to
                  recapture:

                  (i)      any business that has been inforce twenty (20) years
                           after the policy issue date, or

                  (ii)     all business subject to a decrease in the expense
                           allowances otherwise applicable as shown in Schedule
                           B2, provided the Reinsured notifies the Reinsurer of
                           its election to recapture within ninety (90) days
                           following notification by the Reinsurer of a decrease
                           in allowances in accordance with the terms shown in
                           Schedule B2.

         2.       Furthermore, should a state regulatory body rule that this
                  Agreement is not valid for any reason, and there is no
                  remedial action available to correct the situation, the
                  Reinsured reserves the right to recapture that portion of the
                  business that was reinsured. Any adjustment in values as a
                  result of recapture will be agreed upon at the time of the
                  recapture. If agreement cannot be reached, any claims will be
                  settled in accordance with the provision of Article XV,
                  Arbitration.

XV.      ARBITRATION

         1.       Any controversy or claim between the Reinsured and the
                  Reinsurer, arising out of or relating to this Agreement or the
                  breach thereof or the coverage of this arbitration provision,
                  shall be settled by arbitration.

         2.       There shall be three (3) arbitrators who shall be current or
                  former officers of life insurance companies or life
                  reinsurers. However, unless otherwise consented to in

                                       14
<PAGE>   15
                  writing by the parties, such person shall not be a current or
                  former employee of, or current or former consultant to, the
                  parties or any affiliate or reinsurer of the parties; nor
                  shall he or she have any current employment or affiliation
                  with, consulting or contractual engagement with, or financial
                  interest in: a party to this Agreement or persons or companies
                  affiliated or associated with a party to this Agreement. The
                  Reinsured shall appoint one of the arbitrators and the
                  Reinsurer shall appoint a second arbitrator and these two
                  arbitrators shall select the third. If either party shall fail
                  to appoint an arbitrator within thirty (30) days after the
                  other party has given notice of its appointment of an
                  arbitrator, the appointment of the arbitrator for the party
                  which has so failed to appoint an arbitrator shall be left to
                  the other party. Should the two arbitrators appointed by or
                  for the parties fail to agree on the choice of the third,
                  within sixty (60) days of their appointment then each of them
                  shall name three (3) individuals, of whom the other shall
                  decline two (2), and the decision shall be made by drawing
                  lots.

         3.       Arbitration shall be conducted in accordance with the
                  Commercial Arbitration Rules of the American Arbitration
                  Association which shall be in effect on the date of delivery
                  of demand for arbitration; except, however, that arbitrators
                  shall be appointed in accordance with the provisions of
                  Paragraph 2 of this Article and that, to the extent any other
                  terms or provisions of this Article are inconsistent with or
                  in conflict with the Commercial Arbitration Rules, this
                  Article shall control.

         4.       The arbitration shall be conducted in a location to be
                  determined by a majority of the Arbitrators.

         5.       The Reinsured and the Reinsurer shall each pay that part of
                  the expense of arbitration which shall be apportioned to it by
                  the arbitrators.

         6.       The award rendered by the arbitrators shall be final, and
                  judgment may be entered upon it in any court having
                  jurisdiction thereof.

         7.       The Arbitrators shall base their decision on the terms and
                  conditions of this Agreement and, as necessary, on the customs
                  and practices of the life reinsurance and life insurance
                  industries rather than on a strict interpretation of
                  applicable law.

XVI.     IMPROPER SOLICITATION OF REINSURED PLAN OWNERS

         1.       Neither party, nor any affiliate thereof, shall contact or
                  authorize any other person to contact owners of the Reinsured
                  Plans for the purpose of soliciting surrender of the Reinsured
                  Plans, conversion of the Reinsured Plans to another form of
                  insurance, making policy loans or withdrawals without prior
                  written approval of the other party.

XVII.    DAC TAX - SECTION 1.848-2(G)(8) ELECTION

         1.       The Reinsurer and the Reinsured each acknowledge that it is
                  subject to taxation under Subchapter "L" of the Internal
                  Revenue Code of 1986 (The "Code").

         2.       The Reinsured and the Reinsurer hereby agree to the following
                  pursuant to Section 1.848-2(g)(8) of the Income Tax
                  Regulations issued December 1992, under Section 848 of the

                                       15
<PAGE>   16
                  Internal Revenue Code of 1986, as amended. This election shall
                  be effective for 1998 and for all subsequent taxable years for
                  which this Agreement remains in effect.

         3.       The terms used in this Article are defined by reference to
                  Regulation Section 1.848-2 in effect December 1992.

         4.       Each party agrees to attach a schedule to its federal income
                  tax return which identifies this Agreement for which the joint
                  election under the Regulation has been made.

         5.       The party with the net positive consideration for this
                  Agreement for each taxable year will capitalize specified
                  policy acquisition expenses with respect to this Agreement
                  without regard to the general deductions limitation of Section
                  848(c)(1).

         6.       Both Parties agree to exchange information pertaining to the
                  amount of net consideration under this Agreement each year to
                  ensure consistency or as otherwise required by the Internal
                  Revenue Service.

         7.       The Reinsured will submit a schedule to the Reinsurer by May
                  1, of each year, of its calculation of the net consideration
                  for the preceding calendar year. This schedule of calculations
                  will be accompanied by a statement signed by an officer of the
                  Reinsured stating that the Reinsured will report such net
                  consideration on its tax return for the preceding calendar
                  year.

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

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

XVIII.   DURATION OF AGREEMENT

         1.       Except as provided in Article XIV, Recapture, inforce
                  reinsurance which has been ceded under this Agreement shall be
                  unlimited as to its duration and shall be maintained in force
                  for so long as such policies shall remain in force and the
                  reinsurance premiums and payments referenced in Articles VI,
                  Premiums and Article VII, Payments By Reinsurer are paid when
                  due.

         2.       Term of Agreement. The initial term of this Agreement shall be
                  three and one-half (3 1/2) years. During and after the initial
                  term, this Agreement may be canceled as it pertains to the
                  reinsurance of new business thereafter:

                  (a)      immediately upon written notice by a party if the
                           other party becomes insolvent, dissolves, ceases to
                           legally exist, or otherwise ceases to be legally
                           authorized to act as a reinsurer or insurer,
                           respectively, in its domiciliary jurisdiction;

                                       16
<PAGE>   17

                  (b)      upon thirty (30) days written notice by a party if
                           the other party has materially breached this
                           Agreement and has failed to cure such breach within
                           such thirty (30) days;

                  (c)      when and as agreed upon by the parties in writing.

         3.       After the initial term of this Agreement, this Agreement may
                  also be canceled by either party, as it pertains to the
                  reinsurance of new business thereafter, by giving three
                  hundred sixty-five (365) days advance notice of cancellation
                  in writing. In such case, the Reinsured shall continue to
                  cede, and the Reinsurer shall continue to accept reinsurance,
                  under this Agreement on policies and riders issued during the
                  three hundred sixty-five (365) day period, and the interest of
                  the Reinsurer in new business shall cease at the end of the
                  three hundred sixty-five (365) day period.

XIX.     CONVERSION

         1.       At any time, on or after January 1, 2000 and before April 1,
                  2003, the Reinsurer shall have the option (provided the
                  Reinsurer demonstrates sufficient capacity) to convert the
                  reinsurance on policies and riders issued from the beginning
                  of the prior calendar year to the date the Reinsurer elects to
                  convert the reinsurance of the policies and riders, to the
                  Co/ModCo Agreement. The Reinsurer shall demonstrate its
                  capacity by showing the Reinsured that its unassigned invested
                  securities, together with anticipated cash flows
                  (including retrocession facilities), will be sufficient to
                  meet expected reinsurance settlements, with regard to the
                  converted reinsurance, for a period of not less than
                  twenty-four months following the date the Reinsurer elects to
                  convert the reinsurance of the policies and riders to the
                  Co/ModCo Agreement. Upon election to convert the reinsurance
                  of the policies and riders, the initial ceding allowance
                  payable to the Reinsured shall equal (a) less (b) less (c),
                  where:

                  (a)      equals settlements that would have otherwise occurred
                           under the Co/ModCo Agreement, had the policies and
                           riders been reinsured under the Co/ModCo Agreement
                           from the beginning of the prior calendar year to the
                           date the Reinsurer elects to convert the reinsurance
                           of the policies and riders, accrued at an effective
                           rate of *%,

                  (b)      equals all settlements due or paid under this
                           Agreement from the beginning of the prior calendar
                           year to the date the Reinsurer elects to convert the
                           reinsurance of the policies and riders, accrued at an
                           effective rate of *%, and

                  (c)      equals the settlement paid for business that was
                           recaptured for quarters one through three of 1999
                           under the Co/ModCo Agreement. This amount is $458,456
                           measured from October 1, 1999 or $482,441 measured
                           from November 3, 1999, accrued at an effective rate
                           of *%. This settlement is applicable only during Year
                           2000.

                  The initial ceding allowance shall be payable within 14 days
                  after the Reinsurer's election to convert the reinsurance of
                  the policies and riders.

         ----------------

         * Material omitted pursuant to Rule 24b-2 under the Securities Exchange
         Act of 1934.

                                       17
<PAGE>   18

         2.       The Reinsured shall continue to provide the schedules
                  contained in the Co/ModCo agreement showing the policy
                  activity that would otherwise occur should the reinsurance on
                  policies and riders be converted to the Co/ModCo agreement,
                  until the option to convert said reinsurance on the policies
                  and riders expires.

XX.      WRITTEN NOTICE

         1.       Any notice given in connection with this Agreement shall be
                  deemed to be provided when it is sent by facsimile to the
                  numbers shown below, or by first class mail or by courier to
                  the addresses set forth below, or to the last address or
                  facsimile number of record such party designates in writing:

<TABLE>
          <S>                                                   <C>
          If to the Reinsured:                                  With a Copy to:
          --------------------                                  ---------------
          Western Reserve Life Assurance Co. of                 Western Reserve Life Assurance Co. of
          Ohio                                                  Ohio
          P. 0. Box 5068                                        P. O. Box 5068
          Clearwater, Florida 33758                             Clearwater, Florida  33758
          Attn: Alan Yaeger, Chief Actuary                      Attn: Larry Kirkland, Managing Actuary
          Facsimile (727) 299-1833                              Facsimile:  (727) 299-1833

          If to the Reinsurer:                                  With a Copy to:
          --------------------                                  ---------------
          WMA Life Insurance Company Limited                    The WMA Corporation
          Third Floor, 44 Church Street                         11315 Johns Creek Parkway
          Hamilton HM 12, Bermuda                               Duluth, GA  30097-1517
          Attn: Manager                                         Attn: Chief Financial Officer
          Facsimile: (441) 296-1058                             Facsimile:  (770) 248-3331

                                                                James F. Tenney, Esq.
                                                                Merritt & Tenney
                                                                200 Galleria Parkway, Suite 500
                                                                Atlanta, GA  30067
                                                                Facsimile:  (770) 952-0028
</TABLE>

                                       18
<PAGE>   19

XXI.     EXECUTION

         In witness of the above, the Reinsured and the Reinsurer, by their
         respective officers have executed this Agreement in duplicate at the
         dates and places indicated and shall be effective as of October 1,
         1999.

             WESTERN RESERVE LIFE                 WMA LIFE INSURANCE
             ASSURANCE CO. OF OHIO                LIMITED COMPANY

             at  St. Petersburg, FL               at  Kamuela, Hawaii

             on March 16, 2000.                   on  March 20, 2000.

             By:  /s/ Larry Kirkland              By: /s/ Edward F. McKernan
                ----------------------------         --------------------------
             Title:  VP & Managing Actuary        Title:  VP & Actuary

             By: /s/ Alan Yaeger                  By:/s/ Thomas W. Montgomery
                ----------------------------         --------------------------
             Title: EVP                           Title:

                                       19
<PAGE>   20

                                    Exhibit A

                                    PRODUCER

Flexible Premium Variable Life policies, applicable riders, and endorsements
must be sold by and distributed through: WMA Securities, Inc. (and/or its
successors) and its affiliates.

                                       20
<PAGE>   21

                                    Exhibit B
                            FORM OF LETTER OF CREDIT

Effective Date

Western Reserve Life Assurance Co. of Ohio
P. O. Box 5068
Clearwater, FL 33758

Gentlemen:
We have established this clean, irrevocable and unconditional Letter of Credit
in your favor as beneficiary for drawings up to _______________________________
effective immediately. This Letter of Credit is issued, and payable at our
office at ______________________________ and expires with our close of business
on ___________________. Except when the amount of this Letter of Credit is
increased, this Letter of Credit cannot be modified or revoked without your
consent.

The term "Beneficiary" includes any successor by operation of law of the named
Beneficiary. If a court of law appoints a successor in interest to the named
Beneficiary, then the named Beneficiary includes and is limited to the court
appointed domiciliary receiver (including conservator, rehabilitator or
liquidator).

We hereby undertake to promptly honor your sight draft(s) drawn on us,
indicating our Letter of Credit No. _________, for all or any part of this
Letter of Credit upon presentation of your draft drawn on us at our office
specified in paragraph one on or before the expiration date hereof or any
automatically extended expiry date.

Except as expressly stated herein, this undertaking is not subject to any
agreement, requirement or qualification. Our obligation under this Letter of
Credit is our individual obligation and is in no way contingent upon
reimbursement with respect thereto, or upon our ability to perfect any lien,
security interest or any other reimbursement.

This Letter of Credit is deemed to be automatically extended, without amendment,
for one year from the expiration date hereof, or any future expiration date,
unless at least thirty days prior to such expiration date we notify you by
Registered Mail or Certified Mail that this Letter of Credit will not be renewed
for nay such additional period.

                                       21
<PAGE>   22
This Letter of Credit is subject to and governed by the Laws of the State of
Ohio and the 1993 Revision of the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce (Publication 500) and, in the
event of any conflict, the Laws of the State of Ohio will control. If this
Letter of Credit expires during an interruption of business as described in
Article 17 of said Publication 500, we hereby specifically agree to effect
payment if this Letter of Credit is drawn against within thirty days after the
resumption of business.

                                   Very truly yours,

                                       22
<PAGE>   23

                                   Schedule A1

                               BUSINESS REINSURED

<TABLE>
<CAPTION>

FORM NUMBER                DESCRIPTION
-----------                -----------

<S>                      <C>
VL.03                    Flexible Premium Variable Life Insurance
ACCDB-10/94              Standard Accelerated DB Rider
ACCDB CT-10/94           Accelerated DB Rider   -- CT
ACCDB IN-10/94           Accelerated DB Rider   -- IN
ACCDB MN-10/94           Accelerated DB Rider   -- MN
ACCDB MS-01/95           Accelerated DB Rider   -- MS
ACCDB SC-02/95           Accelerated DB Rider   -- SC
ACCDBTX                  Accelerated DB Rider   -- TX
AG.41.07.80-SD           All SD Replacements
END.05.04.79             All IL policies
EVL123MT-1997            MT FFBs
Form IGAIL               All IL policies
IGAKS                    All KS policies
IGAMD                    All MD policies
IGAMT                    All MT policies
IGANC                    All NC policies
IGANH-V                  All variable NH policies
IGATX                    All TX policies
IGA.NP.TX2               All TX FFBs
IGA00012                 All CA policies
IGA00013                 All NV policies
IGA00015                 All HI Variable policies
IGA00016                 All AR policies
IGA00017                 All CO policies
IGA00019-09/92R          All LA policies
IGA00020 - 11/92         All NJ policies
IGA00021 - 11/92         All UT policies
IGA00022 - 06/93         All DC policies
IGA.01.03.89-MO-R3       All MO policies
IGA.02.06.89-OK-R        All OK policies
IGA.03.02.90-SD          All SD policies
IGA.05.04.90-TN          All variable TN policies
IGA.08.07.90-ND          All ND policies
IGA.09.12.90             All OH policies
IGA.10.05.91             All WY policies
IGA24194-WV              All WV policies
ITPCA30L                 All CA policies - Owner 60 and over
ITP.01.09.88             VA policies - Agent info filled in by Assembly area
ITP0007                  All TX policies
ITP.02.09.88             AR policies - Agent info filled in by Assembly area
</TABLE>

                                       23
<PAGE>   24

<TABLE>
<S>                      <C>
ITP.03.09.88             All TN & UT policies
ITP.06.12.90-R3          All CA policies
ITP9L                    All Replacement policies - CA, CO, DE, ID, IN, IA, KS, LA, MD, MA, MN, MO,
                         NE, NM, NC, OH, OK, OR, PA, SC, TN, UT, VT. WA, WI, WY
LD00084-12/96            Welcome letter
PIR10                    Standard PIR
PIR11                    Standard PIR+
PIR10-AA                 PIR - PA, WV
PIR11-AA                 PIR+ - PA, WV
PIR10MO                  PIR - MO
PIR11MO                  PIR+ - MO
PIR10NC                  PIR - NC
PIR11NC                  PIR+ - NC
PIR10ND                  PIR+ - ND
RE.END.02.05.89          All VT WRL (internal) Replacements
RE.END.03.06.90          All KS (life) Replacements
SUIC.01.06.84            All CO FFBs
ULB1.01.05.84            Standard Disability Waiver Rider
ULB1.02.08.84            Disability Waiver Rider - NJ, PA (although FFB not available)
ULB1.03.08.84            Disability Waiver Rider - SC, WV
ULB1.04.08.84            Disability Waiver Rider - VT
ULB1.05.11.84            Disability Waiver Rider - CA
ULB2.01.05.84            Standard Accidental Death Benefit Rider
ULB2.02.06.84            Accidental Death Benefit Rider - TN
ULB2.03.07.84            Accidental Death Benefit Rider - IN, MN
ULB2.04.07.84            Accidental Death Benefit Rider - AR, GA, MO, NH, SC, WA
ULB2.05.08.84            Accidental Death Benefit Rider - PA (although FFB not available)
ULB2.06.11.84            Accidental Death Benefit Rider - CA, WV
ULB2.07.11.84            Accidental Death Benefit Rider - CT
ULB2.08.11.84            Accidental Death Benefit Rider - NJ (although FFB not available)
ULB4.01.03.86            Standard Disability Waiver and Income Rider
ULB4.03.04.86            Disability Waiver and Income Rider - SC, WV
ULB4.04.04.86            Disability Waiver and Income Rider - VT
ULB4.05.04.86            Disability Waiver and Income Rider - MO, SD
ULB4.06.05.86            Disability Waiver and Income Rider - TN
ULB4.07.12.86            Disability Waiver and Income Rider - CT
ULR2.01.05.84            Standard Other Insured Rider
ULR2.02.08.84            Other Insured Rider - WV, PA (although FFB not available in PA)
ULR2.03.10.84            Other Insured Rider - TX (although FFB not available in TX)
ULR3.01.05.84            Standard Children's Insurance Rider
ULR3.02.08.84            Children's Insurance Rider - WV, PA (although FFB not available in PA)
ULR3.03.10.86            Children's Insurance Rider - NJ (although FFB not available in NJ)
</TABLE>

                                       24
<PAGE>   25

                                   Schedule A2

                              REINSURANCE COVERAGE

I.       Retention Schedule of the Reinsured:

         1.       Life Policies and Riders and Accidental Death Benefit Rider:
                  In determining retention limits, the Reinsured will retain
                  coverage in the following order: (1) Base Policy first and
                  coverages on Other Insured Riders; (2) Riders covering death
                  on the primary insured for all causes next; (3) the ADB Rider
                  last.

                  The Reinsured will retain 80% of all coverages and 20% will be
                  reinsured with the Reinsurer. The Reinsured will retain all
                  additional amounts of coverage until the total coverage of any
                  life exceeds the amount shown below.

                           ALL BUSINESS                      $750,000

                  The net effect is that the Reinsured will not retain more than
                  $600,000 on any one life under any one type of coverage. Note
                  that life insurance policies, life insurance riders and ADB
                  riders are considered he same type of coverage. "Single Life"
                  coverages and "Joint Insured" coverages are considered
                  different types of coverages.

         B.       Disability Waiver Rider, Disability Waiver and Income Rider:
                  Fully retained except for reinsurance provided through this
                  Agreement and the Co/ModCo Agreement.

II.      Pool Automatic Acceptance Limits

         A.       Life

<TABLE>
<CAPTION>

                 --------------------------------------------------------------------
                                  Standard Through Table "4"             Tables "5"
                 Issue Ages       Flat Extras up to $5/$1,000            Through "16"
                 --------------------------------------------------------------------
                 <S>              <C>                                    <C>
                 0-75             $15,000,000                            $10,000,000
                 --------------------------------------------------------------------
                 76-80            $  7,500,000                           $  5,000,000
                 --------------------------------------------------------------------
</TABLE>

                                       25
<PAGE>   26

                                   Schedule B1

                              AMOUNT OF REINSURANCE

The amount of reinsurance under this Agreement shall be the Reinsurer's quota
share percentage shown below of the liability of the Reinsured on all Reinsured
Plans in the forms listed in Schedule A1.

Quota Share Percentages for Issue Dates in 1999 and 2000: For issue dates in
1999 and 2000, the quota share percentage will be 20%.

Quota Share Percentages for Issue Dates in 2001 and later: The Reinsurer and the
Reinsured will jointly determine the quota share percentages no later than
December 1st applicable to new issues in the following calendar year. The
determining factors for the quota share percentage are the expected WMA Total
Flexible Premium Variable Life First Year Target Premiums Collected by the
Reinsured for the calendar year that the quota share percentage will be
applicable. This determination of the quota share percentage will be on a
mutually acceptable basis, recognizing the good faith nature of this Agreement,
and with references to the estimates made by both parties, based on results from
prior periods.

The Scheduled Quota Share Percentages for each threshold of expected WMA Total
Flexible Premium Variable Life First Year Target Premiums Collected by the
Reinsured are shown in the following table:

<TABLE>
<CAPTION>

         ----------------------------------------------------------
         WMA TOTAL FLEXIBLE PREMIUM VARIABLE LIFE        SCHEDULED
                    FIRST YEAR TARGET                   QUOTA SHARE
                    PREMIUMS COLLECTED                   PERCENTAGE
              BY THE REINSURED (IN MILLIONS)
         ----------------------------------------------------------
         <S>                                            <C>
                         $50-149                            20%
         ----------------------------------------------------------
                         $150-199                           25%
         ----------------------------------------------------------
                         $200-249                           30%
         ----------------------------------------------------------
                         $250-599                           35%
         ----------------------------------------------------------
                          $600+                             40%
         ----------------------------------------------------------
</TABLE>

                                       26
<PAGE>   27

                                   Schedule B2

                     REINSURANCE RATES & EXPENSE ALLOWANCES

1.       The reinsurance premium rates shall be the base policy monthly cost of
         insurance deductions and rider monthly deductions. No policy fee will
         be charged.

2.       The reinsurance allowances, as a percentage of premiums, are as
         follows:

<TABLE>
<CAPTION>

                 -----------------------------------------
                 POLICY YEAR         REINSURANCE ALLOWANCE
                 -----------------------------------------
                 <S>                 <C>
                        1-20                  * %
                 -----------------------------------------
                         21+                  * %
                 -----------------------------------------
</TABLE>

         The reinsurance allowances are non-guaranteed and may be reduced by the
         Reinsurer upon providing ninety (90) days written notice. While the
         parties anticipate that the reinsurance premiums and allowances will
         not change, it may become necessary to pay an allowance that will
         result in a net premium greater than that otherwise contemplated upon
         the execution of this Agreement. Regardless, the Reinsurer shall not
         re-determine an allowance, that, when taken together with the
         reinsurance premium, exceeds the corresponding statutory net premium
         rate based on the 1980 CSO Table at 4.0% interest for the applicable
         mortality rating.

3.       The Reinsurer will only change the reinsurance allowances in accordance
         with its redetermination policy for non-guaranteed elements. *

4.       The Reinsurer will not reimburse the Reinsured premium taxes for
         reinsurance ceded under this agreement.

---------

       * Material omitted pursuant to Rule 24b-2 under the Securities Exchange
Act of 1934.

                                       27
<PAGE>   28
                                  Schedule B3

                           EXPERIENCE REFUND FORMULA

The Reinsurer shall pay an experience refund to the Reinsured. The experience
refund shall be determined by accruing two experience funds: (a) expected
claims, as determined using the Reinsurer's pricing mortality table applicable
on December 31, 1999, less actual claims and experience refunds, accrued with
interest, and (b) expected claims, as determined using the Reinsurer's pricing
mortality table applicable on December 31, 1999, less expected claims, as
determined using the Reinsured's pricing mortality table applicable on
December 31, 1999, and experience refunds, accrued with interest. Provided both
(a) and (b) are greater than zero (0), the experience refund to be paid shall
be the lessor of (a) or (b), times a factor not less than one-third (1/3)
multiplied by one-fourth (1/4). Where,

    A[t]     =  WMA Life Expected Claims in calendar quarter "t"

    B[t]     =  WRL Expected Claims in calendar quarter "t"

    C[t]     =  Actual Claims in calendar quarter "t"

    i[t]     =  The average of the 52 week high and low Merrill Bond Yield
                Index for 1-10 year high quality corporate bonds, as
                published in the Wall Street Journal the first publication
                date of each calendar quarter or, if not available, as
                otherwise mutually agreed upon by the Reinsured and Reinsurer.

    EFA[t]   =  {EFA[t-1] - ER[t-1]} x (1+ i[t] ) 1/4 + A[t] - B[t]

    EFB[t]   =  {EFB[t-1] - ER[t-1]} x (1+ i[t] ) 1/4 + A[t] - C[t]

    ER[t]    =  Experience Refund in calendar quarter "t"
             =  Max{0, (1/3 x 1/4) x Min[EFA[t], EFB[t]] }

Further, considering the complexities of calculating the experience refund,
this determination will be on a mutually acceptable basis, recognizing the good
faith nature of this Agreement.

                                      28
<PAGE>   29

                         Schedule E1 - Monthly Reports
                   Monthly Production and Policy Loads Report
                         WRL Financial Freedom Builder
                              Modified Coinsurance
          31-Dec-1999

<TABLE>
<CAPTION>
                                1999 ISSUES        Base            Riders              Base       Rider       1998 WMA
                                                 Policies    PiR, PIR+     Others      Units      Units     Quota Share     Source
                                                             ---------     ------                           -----------     ------
<S>                                              <C>         <C>           <C>         <C>        <C>       <C>             <C>
In Force                          30-Nov-1999            0            0           0           0          0      XX%         E1(mr)

Issues                                                   0            0           0           0          0                    LEx
Coverage Increases (decreases)                                        0           0           0          0                    LEx
Reinstatements                                           0            0           0           0          0                    LEx
   Total Increases                                       0            0           0           0          0

Disabilities                                             0            0           0           0          0                    LEx
Surrenders                                               0            0           0           0          0                    LEx
Not-Takens                                               0            0           0           0          0                    LEx
Maturities                                               0            0           0           0          0                    LEx
Lapses                                                   0            0           0           0          0                    LEx
Expiry                                                   0            0           0           0          0                    LEx
Deaths                                                   0            0           0           0          0                    LEx
   Total Terminations                                    0            0           0           0          0

Net Change                        31-Dec-1999            0            0           0           0          0

In Force                          31-Dec-1999            0            0           0           0          0

</TABLE>

<TABLE>
<CAPTION>
                                                                 Allocated to                         Quota Share of
                                                                                                         Premiums
                                                            Fixed Acct    Separate                  Fixed       Separate
                                                                            Acct                     Acct         Acct
<S>                                                         <C>           <C>                       <C>         <C>           <C>
Gross Premiums
           Target Premiums  - Year 1                                  0           0                      0              0     Ext
           Excess Premiums  - Year 1                                  0           0                      0              0     Ext
    1st Year ..........................................               0           0                      0              0

           Target Premiums  - Years 2 - 10                            0           0                      0              0     Ext
           Excess Premiums  - Years 2 - 10                            0           0                      0              0     Ext
    Renewal Years 2 - 10 ..............................               0           0                      0              0

           Target Premiums  - Years 11+                               0           0                      0              0     Ext
           Excess Premiums  - Years 11+                               0           0                      0              0     Ext
    Renewal Years 11+ .................................               0           0                      0              0

Total Premiums for all years: .........................               0           0                      0              0
</TABLE>

                                      29
<PAGE>   30

<TABLE>

<S>                                                                   <C>         <C>                    <C>            <C>   <C>
Administrative Charges
     Base COI Monthly Deductions                                      0           0                      0              0     Ext
     Rider Monthly Deductions                                         0           0                      0              0     Ext
     Monthly Policy Fee Deductions                                    0           0                      0              0     Ext
     Premium Collection Charges                                       0           0                      0              0     Ext
     Percent of Premium Charges                                       0           0                      0              0     Ext
Total Policy Administrative Charges: ..................               0           0                      0              0
</TABLE>

Benefits Paid During Month:

<TABLE>
<CAPTION>
                                                                  Fixed Account                       Separate Account
                                                                Gross W/D   Surr Chgs              Gross W/D      Surr Chgs
    <S>                                                         <C>         <C>                    <C>            <C>        <C>
    1. Surrenders                                                     0           0                      0              0    Stat
    2. Not-Taken Refunds                                              0           0                      0              0    Stat
    3. Maturities                                                     0           0                      0              0    Stat
    4. Disabilities                                                   0           0                      0              0    Stat
    5. Partial Withdrawals                                            0           0                      0              0    Stat
    6. Death Claims                                                   0                                  0                   Stat
    7. New Loans                                                      0                                  0                   Stat
</TABLE>

                                      30
<PAGE>   31

                        Schedule E2 - Quarterly Reports
                  Quarterly Production and Policy Loads Report
                         WRL Financial Freedom Builder
                              Modified Coinsurance

    31-Dec-1999

<TABLE>
<CAPTION>
                        1999 ISSUES        Base            Riders              Base           Rider         1998 WMA
                                         Policies   PiR, PIR+    Others        Units          Units       Quota Share      Source
                                                    ---------    ------                                   -----------      ------
<S>                                      <C>        <C>          <C>           <C>             <C>        <C>              <C>
In Force                  30-Sep-1999            0           0           0             0               0      XX%          E1(mr)

Issues                                           0           0           0             0               0                     LEx
Coverage Increases (decreases)                   0           0           0             0               0                     LEx
Reinstatements                                   0           0           0             0               0                     LEx
   Total Increases                               0           0           0             0               0

Disabilities                                     0           0           0             0               0                     LEx
Surrenders                                       0           0           0             0               0                     LEx
Not-Takens                                       0           0           0             0               0                     LEx
Maturities                                       0           0           0             0               0                     LEx
Lapses                                           0           0           0             0               0                     LEx
Expiry                                           0           0           0             0               0                     LEx
Deaths                                           0           0           0             0               0                     LEx
   Total Terminations                            0           0           0             0               0

Net Change                31-Dec-1999            0           0           0             0               0

In Force                  31-Dec-1999            0           0           0             0               0

</TABLE>

<TABLE>
<CAPTION>
                                                        Allocated to                        Quota Share of Premiums
                                                   Fixed Acct   Separate                   Fixed Acct    Separate Acct
                                                                  Acct
<S>                                                <C>          <C>                        <C>           <C>                 <C>
Gross Premiums
           Target Premiums  - Year 1                         0           0                             0              0      Ext
           Excess Premiums  - Year 1                         0           0                             0              0      Ext
    1st Year .....................................           0           0                             0              0

           Target Premiums  - Years 2 - 10                   0           0                             0              0      Ext
           Excess Premiums  - Years 2 - 10                   0           0                             0              0      Ext
    Renewal Years 2 - 10 .........................           0           0                             0              0

           Target Premiums  - Years 11+                      0           0                             0              0      Ext
           Excess Premiums  - Years 11+                      0           0                             0              0      Ext
    Renewal Years 11+ ............................           0           0                             0              0

Total Premiums for all years: ....................           0           0                             0              0
</TABLE>

                                      31
<PAGE>   32

<TABLE>

<S>                                                          <C>         <C>                           <C>            <C>    <C>
Administrative Charges
     Base COI Monthly Deductions                             0           0                             0              0      Ext
     Rider Monthly Deductions                                0           0                             0              0      Ext
     Monthly Policy Fee Deductions                           0           0                             0              0      Ext
     Premium Collection Charges                              0           0                             0              0      Ext
     Percent of Premium Charges                              0           0                             0              0      Ext
Total Policy Administrative Charges: ............            0           0                             0              0
</TABLE>

Benefits Paid During Month:

<TABLE>
<CAPTION>
                                                        Fixed Account                           Separate Account
                                                 Gross With's     Surr Charges             Gross With's   Surr Charges
    <S>                                          <C>              <C>                      <C>            <C>               <C>
    1. Surrenders                                           0                0                        0              0      Stat
    2. Not-Taken Refunds                                    0                0                        0              0      Stat
    3. Maturities                                           0                0                        0              0      Stat
    4. Disabilities                                         0                0                        0              0      Stat
    5. Partial Withdrawals                                  0                0                        0              0      Stat
    6. Death Claims                                         0                0                        0              0      Stat
    7. New Loans                                            0                0                        0              0      Stat
</TABLE>

                                      32
<PAGE>   33

                        Schedule E3 - Quarterly Reports
                            Quarterly Reserve Report
                         WRL Financial Freedom Builder
                              Modified Coinsurance
   31-Dec-1999

<TABLE>
<CAPTION>
                  1999 ISSUES                                                                     WMA
                                                                            Total             Quota Share      Source
                                                                            -----             -----------      ------
<S>                                                                   <C>            <C>      <C>         <C>  <C>
A.  Sources of Reserve Splits:
  1.  Total FFB Cash Values                                             N/A                       N/A           Ext
  2.  Reinsured FFB SA Values                                                        0                    0     Ext
  3.  Reinsured FFB GA Values
          a.   Fixed Account Values                                   0
          b.   Loan Collateral Fund                                   0
          c.   Total Reinsured FFB GA Values                                         0                    0     Ext
  4.  Total Reinsured FFB Cash Values                                                0                    0

B. CRVM Statutory Reserves Split between SA and GA:
  1.  Total FFB CRVM Statutory Reserves                                 N/A                       N/A           Ext
  2.  Reinsured FFB CRVM Statutory Reserves - Total                                  0                    0     Ext
  3.  Reinsured FFB CRVM Statutory Reserves - SA only                                0                    0
  4.  Reinsured FFB CRVM Statutory Reserves - GA only                                0                    0

C. Additional Reserves Split between SA and GA:
  1.  Reinsured Mortality Charge Reserves - GA Only                                  0                    0     Ext
  2.  Reinsured IPC Reserves - Total (.02 x B(2) )                                   0                    0
  3.  Reinsured IPC Reserves - SA only                                               0                    0
  4.  Reinsured IPC Reserves - GA only                                               0                    0

D.  Other GA Reserves and Liabilities
  1.  Exhibit II, Part I, Column 3, Line 4a Liability                                0                    0     Acct
  2.  Disabled Lives Reserves                                                        0                    0     Acct
  3.  Other Reserves and Liabilities                                                 0                    0     Acct
  4.  Total Other GA Reserves and Liabilities                                        0                    0

E.  Total Reinsured FFB SA Reserves and Liabilities                                  0                    0

F.  Total Reinsured FFB GA Reserves and Liabilities                                  0                    0

</TABLE>

                                      33
<PAGE>   34

                         Schedule E4 - Monthly Reports
                 Monthly Renewable Term Premiums and Allowances
                         WRL Financial Freedom Builder
                                  31-Dec-1999

<TABLE>
<CAPTION>
                                                                                                 WMA
                                                                                             Quota Share
                                                                                                  XX%
                                                                                                 Total
<S>                                                                                           <C>
A.  1.  Base Monthly Cost of Insurance Deduction
    2.  Rider Monthly Deductions

B.  Reinsurance Premiums (20% times total Monthly Deductions)

C.  Reinsurance Allowances (* % of  Reinsurance Premium)

D.  Quota Share of Death Claims Paid
    1.  Actual Death Claims Paid
    2.  Less Cash Value
    3.  Equals Net Amount at Risk

E.  Premiums less Allowances and Claims ( E = B - C - D )

F.  Number of Policies In Force
    Number of Riders In Force
</TABLE>

---------

    * Material omitted pursuant to rule 24b-2 under the Securities Exchange
Act of 1934.

                                      34
<PAGE>   35

                        Schedule E5 - Quarterly Reports
                 Monthly Renewable Term Premiums and Allowances
                         WRL Financial Freedom Builder
                                  31-Dec-1999

                                                                        Total

A.  1.   Base Monthly Cost of Insurance Deduction
    2.   Rider Monthly Deductions

B.  Reinsurance Premiums (20% times total Monthly Deductions)

C.  Reinsurance Allowances (* % of  Reinsurance Premium)

D.  Quota Share of Death Claims Paid
    1.  Actual Death Claims Paid
    2.  Less Cash Value
    3.  Equals Net Amount at Risk

E.  Total Due WMA    ( E = B - C - D )

F.  Experience Fund A
    1.  Expected Claims using Reinsurer's Pricing Mortality
    2.  Actual Claims accrued to end of Quarter
    3.  Accrued Experience Refund (if any)
    4.  Expected Claims less Actual Claims and Experience Refunds
        (4 = 1 - 2 - 3 )

G.  Experience Fund B
    1.  Expected Claims using Reinsurer's Pricing Mortality
    2.  Expected Claims using Reinsured's Pricing Mortality
    3.  Accrued Experience Refund (if any)
    4.  Reinsurer's Expected Claims less Reinsured's Expected Claims
        and Experience Refunds ( 4 = 1 - 2 - 3 )

H.  Experience Refund
    (Minimum of F and G times Factor, if they are both greater than zero)
    Factor is 1/3 x 1/4

I.  Settlement Due WMA   ( I = E - H )
    (Settlement is payable to WMA if positive, payable to WRL if negative)

J.  Number of Policies In Force
    Number of Riders In Force

K.  Quota Share of Aggregate Death Benefit (000's omitted)

L.  Quota Share of Aggregate Net Amount at Risk (000's omitted)

M.  Reinsurance Reserve at Quarter End

----------------

   * Material omitted pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934.

                                      35
<PAGE>   36

                          Schedule E6 - Annual Report
                 Monthly Renewable Term Premiums and Allowances
                         WRL Financial Freedom Builder
                                  31-Dec-1999

                                                                          Total

A.  1.  Base Monthly Cost of Insurance Deduction
    3.  Rider Monthly Deductions

B.  Reinsurance Premiums (20% times total Monthly Deductions)

C.  Reinsurance Allowances (* % of  Reinsurance Premium)

D.  Quota Share of Death Claims Paid
    1.  Actual Death Claims Paid
    2.  Less Cash Value
    3.  Equals Net Amount at Risk

E.  Total Due WMA    ( E = B - C - D )

F.  Experience Fund A
    1.  Expected Claims using Reinsurer's Pricing Mortality
    2.  Actual Claims accrued to ends of Quarters
    3.  Accrued Experience Refund (if any)
    4.  Expected Claims less Actual Claims and Experience Refunds
        (4 = 1 - 2 - 3 )

G.  Experience Fund B
    1.  Expected Claims using Reinsurer's Pricing Mortality
    2.  Expected Claims using Reinsured's Pricing Mortality
    3.  Accrued Experience Refund (if any)
    4.  Reinsurer's Expected Claims less Reinsured's Expected Claims
        and Experience Refunds ( 4 = 1 - 2 - 3 )

H.  Experience Refund
    (Minimum of F and G times Factor, if they are both greater than zero)
    Factor is 1/3 x 1/4

I.  Settlement Due WMA   ( I = E - H )
    (Settlement is payable to WMA if positive, payable to WRL if negative)

J.  Number of Policies In Force
    Number of Riders In Force

K.  Quota Share of Aggregate Death Benefit (000's omitted)

L.  Quota Share of Aggregate Net Amount at Risk (000's omitted)

M.  Reinsurance Reserve at Quarter End

-----------------

     * Material omitted pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934.

                                      36
<PAGE>   37

                        SCHEDULE K - DEATH CLAIM REPORT

DEATH CLAIMS PAID

-        Claims Paid From (Date)
-        Report Run Date
-        Claim Number
-        Issue State
-        Name
-        Sex
-        Issue Age
-        Policy Number
-        Risk Class
-        Death Benefit Option Code
-        Plan Code
-        Issue Date
-        Date of Death
-        Date Death Reported
-        Policy Face Amount
-        Reinsurance Amount
-        Cash Value
-        Interest Paid
-        Expenses Paid
-        Date Claim Paid
-        Remark Code
-        Marketing Organization
-        Quarter to Date Totals
-        Month Totals

                                      37
<PAGE>   38

                        SCHEDULE K - DEATH CLAIM REPORT

DEATH CLAIMS OUTSTANDING

-        Claims Outstanding From (Date)
-        Report Run Date
-        Claim Number
-        Issue State
-        Name
-        Sex
-        Issue Age
-        Policy Number
-        Risk Class
-        Death Benefit Option Code
-        Plan Code
-        Issue Date
-        Date of Death
-        Date Death Reported
-        Policy Face Amount
-        Reinsurance Amount
-        Cash Value
-        Interest Due
-        Expenses Paid
-        Date Claim Paid
-        Remark Code

                                      38
<PAGE>   39

                        SCHEDULE K - DEATH CLAIM REPORT

DEATH CLAIMS REPORTED

-        Claims Reported From (Date)
-        Report Run Date
-        Claim Number
-        Issue State
-        Name
-        Sex
-        Issue Age
-        Policy Number
-        Risk Class
-        Death Benefit Option Code
-        Plan Code
-        Issue Date
-        Date of Death
-        Date Death Reported
-        Policy Face Amount
-        Reinsurance Amount
-        Cash Value
-        Interest Due
-        Expenses Paid
-        Date Claim Paid
-        Remark Code

                                      39<PAGE>   1
                                                                   EXHIBIT 10.4

                           Amendment Number 2 to the

                Automatic Variable Annuity Reinsurance Agreement
                         (Referred to as the Agreement)

                                    Between

                   WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
                            St. Petersburg, Florida
                         (referred to as the Reinsured)

                                      and

                       WMA LIFE INSURANCE COMPANY LIMITED
                               Hamilton, Bermuda
                         (referred to as the Reinsurer)

                           Effective October 1, 1999

I.  Article II, DEFINITIONS, "Cumulative Effective Growth Rate" is added to
    read as follows:

     "Cumulative Effective Growth Rate" equals the five year rolling growth of
     premiums collected in years t = 1 to 5, defined by:

     { ( [ (1/5) x (P1 + P2 + P3 + P4 + P5) ]/[(1/2) x (P1 + P2)) ] ) 1/2 - 1},

     where P1, ..., P5 are the WMA Total Variable Annuity First Year Payments
     collected by the Reinsured in previous five years, including an accrual to
     the end of the current year, based on premiums collected through November
     of the current year. P5 stands for the premiums collected in the current
     year with an accrual to the end of the calendar year. P1 stands for premium
     collected in the current calendar year minus four.

II. Schedule B1, AMOUNT OF REINSURANCE, is replaced by the following:

     The amount of reinsurance under this Agreement shall be the Reinsurer's
     quota share percentage shown below of the liability of the Reinsured on all
     annuity contracts in the forms listed in Schedule A, Business Reinsured.

     Quota Share Percentages for Issue Dates in 1998, 1999, and 2000: For issue
     dates in 1998, the quota share percentage will be 40%.

<PAGE>   2

    The quota share percentage shall be 10%, commencing as of the effective
    date of this amendment, for policies issued from January 1, 1999 through
    September 30, 1999 previously reinsured on a 40% quota-share basis.
    Pursuant to Amendment Number 1 to the Agreement, Article XIV, RECAPTURE,
    Paragraph 1, the Reinsured elects to recapture seventy five percent (75%)
    of the Reinsured Policies issued from January 1, 1999, through September
    30, 1999. The Reinsured will pay the Reinsurer a Recapture Fee equal to
    $4,439,173 plus accrued interest at an effective rate of 9%, which shall
    accrue from October 1, 1999 to the date such amount is settled and paid,
    which shall be paid no later than January 31, 2000. The Reinsured may
    offset the Recapture Fee against amounts otherwise due the Reinsured.

    For policies issued from October 1, 1999 through December 31, 2000, the
    quota share percentage will be 10%.

    Quota Share Percentages for Issue Dates in 2001 and later: The Reinsurer
    and the Reinsured will jointly determine the quota share percentages no
    later than December 1st applicable to new issues in the following calendar
    year. The determining factors for the quota share percentage are the
    expected WMA Total Variable Annuity First Year Payments Collected by the
    Reinsured for the calendar year that the quota share percentage will be
    applicable. This determination of the quota share percentage will be on a
    mutually acceptable basis, recognizing the good faith nature of this
    Agreement, and with references to the estimates made by both parties, based
    on results from prior periods.

    Notwithstanding the provisions of the previous three paragraphs and at any
    time on or after January 1, 2000 and before January 1, 2003, the Reinsurer
    shall have the option (provided the Reinsurer demonstrates sufficient
    capacity) to prospectively increase the quota share percentage on all
    reinsured policies issued from the beginning of the prior calendar year to
    the date the Reinsurer elects to increase the quota share percentage. The
    quota share percentage, as increased, shall not exceed the Scheduled Quota
    Share Percentage in accordance with terms contained in Schedule B1 of the
    Agreement, as amended. The Reinsurer shall demonstrate its capacity by
    showing the Reinsured that its unassigned invested securities, together
    with anticipated cash flows (including retrocession facilities), will be
    sufficient to meet expected reinsurance settlements, with regard to the
    policies subject to the increased quota share percentage, for a period of
    not less than twenty-four months following the date the Reinsurer elects to
    increase the quota share percentage. Upon election to increase the quota
    share percentage, the initial ceding allowance payable to the Reinsured
    shall equal (a) less (b), where:

    (a) equals settlements that would have otherwise occurred under the
        Agreement, had the increased quota share percentage been applicable
        from the beginning of the prior calendar year to the date the Reinsurer
        elects to increase the quota share percentage, accrued at an effective
        rate of * %, and

    ----------------

    *   Material omitted pursuant to Rule 24b-2 under the Securities Exchange
        Act of 1934.

                                       2
<PAGE>   3

    (b) equals all settlements due or paid under the Agreement from the
        beginning of the prior calendar year to the date the Reinsurer elects
        to increase the quota share percentage, accrued at an effective rate of
        * %.

    The initial ceding allowance shall be payable within 14 days after the
    Reinsurer's election to increase the quota share percentage.

    Thereafter, the quota share percentage applicable to all new policies
    issued and reinsured shall be determined in accordance with terms contained
    in Schedule B1 of the Agreement, as amended.

    The Scheduled Quota Share Percentages for each threshold of expected WMA
    Total Variable Annuity First Year Payments Collected by the Reinsured are
    shown in the following table:

<TABLE>
<CAPTION>
       --------------------------------------------------------------
        WMA TOTAL VARIABLE ANNUITY FIRST               SCHEDULED
        YEAR PAYMENTS COLLECTED BY THE                QUOTA SHARE
            REINSURED (IN MILLIONS)                    PERCENTAGE
       --------------------------------------------------------------
       <S>                                            <C>
                 $100-249                                  40%
       --------------------------------------------------------------
                   $250+                                   50%
       --------------------------------------------------------------
</TABLE>

    The scheduled quota share percentages may be reduced 5%, if the expected
    WMA Total Variable Annuity First Year Payments Collected by the Reinsured
    are anticipated to decline from the sum of the most recent twelve months'
    Payments and the Cumulative Effective Growth Rate is less than 15%. A
    reduction in the quota share percentage will be mutually acceptable to both
    parties.

----------------

*   Material omitted pursuant to Rule 24b-2 under the Securities Exchange Act
    of 1934.

                                       3
<PAGE>   4

                                   * * * * *

Except as expressed herein, all terms, covenants and provisions of the
Automatic Variable Annuity Reinsurance Agreement not in conflict with the
provisions of this amendment shall remain unaltered and in full force and
effect.

In witness of the above, the Reinsured and the Reinsurer, by their respective
officers have executed this amendment in duplicate at the dates and places
indicated and shall be effective as of October 1, 1999.

  WESTERN RESERVE LIFE                        WMA LIFE INSURANCE
  ASSURANCE CO. OF OHIO                       COMPANY LIMITED

  at     St. Petersburg, Fl                   at    Kamuela, Hawaii
  on     March 16, 2000                       on    March 20, 2000

  By:   /s/ Larry Kirkland                    By:   /s/ Edward F. McKernan
      -----------------------------               ------------------------
  Title:   VP & Managing Actuary              Title:      Vice President

  By:  /s/ Alan Yaeger                        By: /s/ Thomas W. Montgomery
      -----------------------------               ------------------------
  Title:  EVP                                 Title:   Vice President

                                       4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]